HALIFAX, N.S. — EnCana (TSX:ECA) has agreed to sell the natural gas it will produce at its Deep Panuke wells off Nova Scotia to Repsol YPF SA - a Spanish oil-and-gas firm that aims to become a major supplier to the northeastern United States.
EnCana spokeswoman Lori MacLean says that the Calgary-based company's contract with Repsol takes effect immediately and will apply for the life of the offshore project, which is slated to begin in late 2010.
The project is proposing to produce 200 million cubic feet of gas per day at startup and will ramp up to 300 million cubic feet daily, roughly enough gas to heat 1,500 homes for one year.
Kristian Rix, a Barcelona-based spokesman for Repsol, said Monday in an interview that his firm believes Canada and the U.S. northeast is a lucrative market, and the company retains a goal of capturing about 20 per cent of sales in the region.
"Here's a chance to get access to more gas, and it allows us to gain market share and grow faster than we'd originally thought we'd be able to," Rix said.
No details of the deal were released.
The gas from near Sable Island, off Nova Scotia's east coast, will be available to ship through the Maritimes and Northeast pipeline to the U.S. and Canadian markets.
Steve Rankin, a spokesman for Maritimes and Northeast, said there's no firm contract in place yet with Repsol to ship over the Canadian portion of the pipeline, but he speculated the owners of the Deep Panuke gas may buy space from other companies that currently use the pipeline.
Meanwhile, Rix said, Repsol is making its first delivery of liquified natural gas by this May to the Canaport terminal near Saint John, N.B.
The joint project between Repsol and New Brunswick-based Irving Oil Ltd. will source its liquefied natural gas from Trinidad and Tobago, among other places, and ship the gas to the terminal through the company's fleet of 11 tankers.
LNG is created by cooling natural gas into a liquid state, making it easier to store and transport to overseas markets via special tankers.
The Canaport project will receive shipments of LNG, convert the liquid back into a gas, and feed it by the underground Brunswick pipeline (TSX:EMA) to the Maritimes and Northeast pipeline in the United States.
Repsol, which holds a 75 per cent stake in the Canaport LNG project, expects the terminal will be able to process one billion cubic feet per day of gas.
The Deep Panuke gas will now serve to fill any gaps in production from the Saint John facilities, he added.
There has been speculation that EnCana might eventually be interested in selling the Deep Panuke field.
Rix said that Repsol isn't commenting on whether it might become a buyer in the years to come.
Philip Skolnick, a spokesman for Genuity Capital Markets, said analysts would like to see figures from the deal to analyze whether EnCana will want to sell off its Deep Panuke project.
"Generally EnCana has prettied assets up and sold them. It makes the asset (Deep Panuke) more attractive to sell because they can say 'look we have a guaranteed buyer of the production,"' Skolnick said.
Both MacLean and Rix said that Repsol could sell a portion of the natural gas to a Nova Scotia buyer, such as Heritage Gas, in order for the fuel to reach residents of the province.
EnCana shares didn't trade Monday because holidays that closed North American stock market.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment