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Gas wells in ocean out of favour

LONDON FREE PRESS (CANADA): Gas wells in ocean out of favour

“After Shell Canada paid $28 million after-tax dollars for its 30-per-cent stake in the Weymouth disappointment, it let all three of its deep water licences expire.”

JAMES STEVENSON, CP

2004-09-07 02:02:30

Disappointments in the deep water exploration hunt for new natural gas reserves off the coast of Nova Scotia keep adding up, and with each well costing upward of $100 million to drill, enthusiasm in the basin is getting harder to find than the gas. Despite great hope and nearly a dozen wells drilled in the past three years deep into the North Atlantic, success has been eclipsed by dry holes and abandoned wells.

As energy companies begin to examine their capital spending programs for 2005, it’s possible that no deep water wells will be drilled next year at all.

“There will still be some exploration out there,” says energy analyst Steven Paget, with FirstEnergy Capital in Calgary. “But we might be able to count the wells drilled there in the rest of the decade on one hand.”

“And at that rate, the chance of success is lower as well.”

Nearly a dozen leases held with Nova Scotia’s energy regulator expired this summer, with another twelve due at the end of the year. The Canada-Nova Scotia Offshore Petroleum Board didn’t even bother proceeding with its biannual call for exploration licence bids in June and is yet to decide whether the December call will go ahead.

One of the deep water wells that was abandoned this year was the Weymouth A-45 well located 250 kilometres southeast of Halifax that took 185 days and was one of the deepest wells ever drilled in Atlantic Canada.

After Shell Canada paid $28 million after-tax dollars for its 30-per-cent stake in the Weymouth disappointment, it let all three of its deep water licences expire.

“The deep water is obviously unproven and it’s known that the geology there is pretty complex and the seismic interpretation is challenging,” spokesperson Jan Rowley said.

“And this time around, we just weren’t able to identify any targets on the blocks that looked promising to invest the large amounts of dollars that are required for those kinds of wells.”

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