The good, the bad and the ugly as Nova Scotia’s offshore natural gas fields fade to black

The good, the bad and the ugly as Nova Scotia’s offshore natural gas fields fade to black

With decommissioning plans in advanced stages, Nova Scotia’s Deep Panuke and Sable offshore natural gas fields provide one final business opportunity for the local supply and services sector

It was while attending the annual CORE Energy Conference in Halifax back in the fall of 2014 that I got the first official word on what the future held for ExxonMobil Canada’s Sable Offshore Energy Project.

The field, located 225 kilometres off the east coast of Nova Scotia, had been in production since 1999. But now 15 years in, the rumour was that ExxonMobil and its four partners were getting ready to abandon the field as production dwindled. Attendees at the conference were looking for answers on the exact timeline of Sable’s decommissioning. When Andrew Barry, who was the president of ExxonMobil Canada at the time, stepped up to the podium to give an update on ExxonMobil’s activities in Atlantic Canada, attendees were waiting to hear what Barry would have to say about the field.

Barry actually said nothing about Sable until the tail end of his remarks. And what he did say, which wasn’t much, left more questions than answers. When would Sable no longer be producing natural gas? “The answer is eventually,” Barry told the crowd. “The date when production will cease has not been determined.”

Fast forward four years, and ‘eventually’ has arrived for Sable. It’s also arrived for Nova Scotia’s only other producing offshore field. Encana Corp.’s Deep Panuke field, located 250 kilometres southeast of Halifax, is also on its last legs even though it only went into production in 2013.

By 2022, it’s quite possible both fields will be plugged and abandoned, putting an end to an era where Nova Scotia supplied its own residents with the cleanest burning fossil fuel and exported billions of cubic feet of natural gas to New England markets through the Maritimes & Northeast Pipeline. With the two fields gone, the province will turn to importing natural gas to meet some of its heating and power needs, and will lose out on the royalties that the two fields brought to the government treasury.

That’s not great news, but there is a bright side. Decommissioning a natural gas field is a major undertaking, and it represents business opportunities for Nova Scotia companies that service the offshore oil and natural gas sector. For the next four or five years, those companies who have been awarded contracts on the Sable and Deep Panuke decommissioning projects will be busy.

ExxonMobil Canada is further along on decommissioning Sable than Encana is with Deep Panuke. It’s a bit of a misnomer to refer to Sable as a single natural gas field. The project is made up of seven different offshore platforms in five different fields with 22 wells and 340 kilometres of subsea pipelines. ExxonMobil Canada spokesperson Merle MacIssac says 2017 was an active year for the company as decommissioning activities ramped up. The ramping up included awarding several key contracts related to Sable’s decommissioning plan, including engineering, preparation, removal and disposal of the offshore platforms. This work will be done by Heerema Marine Contractors.

While Heerema is a Netherlands-based company, MacIssac says there are plenty of Nova Scotia companies supporting the decommissioning work. “Based on contracting activities to date, more than 40 Nova Scotian companies are supporting Sable decommissioning, and we expect the overall Sable workforce to almost double as a result,” MacIssac wrote in an emailed response to Natural Resources Magazine.

In November of 2017 the Noble Regina Allen, a jack-up drilling rig, was towed out to Sable’s Thebaud platform to start the process of permanently sealing Sable’s 22 wells. MacIssac says that job is expected to take up to two years. This year will be another big one for the project. Along with plugging the wells, ExxonMobil Canada will also begin to prepare the offshore facilities for removal. That work will task Heerema with employing a heavy lift vessel that uses cranes to lift the topsides and jackets of the platforms and remove them. The topsides and jackets will then be shipped on barges to an international demolition shipyard. ExxonMobil Canada is targeting 2020 as the year when the platforms will be removed.

The company also has plenty of work to do onshore. It says it has started the regulatory process with the National Energy Board related to the eventual abandonment of Sable’s 26-inch offshore gathering pipeline and the Goldboro gas plant. By 2021, all the decommissioning work is expected to be finished and Sable will be relegated to the history books.

As for the Deep Panuke field, Encana hasn’t announced a start date for decommissioning. What it has done is publish a number of expression of interest documents looking for firms to help it shut down the natural gas field. It’s already had an expression of interest calling for a harsh environment jack-up rig to plug and abandon Deep Panuke’s four wells. Encana has said it plans to have the plugging and abandoning work done between 2019 and 2021. It’s also on the hunt for regulatory and environmental support as well as engineering and technical help.

When Deep Panuke is finally plugged and abandoned, it will put an end to a project that was a disappointment for Encana and the province. The field was discovered in 1999, and in its development plan filed with the Canada-Nova Scotia Offshore Petroleum Board in 2006, Encana expected Deep Panuke to be in production for 13 years, produce 300 million cubic feet per day and cost $750 million to build. However, by the time first gas flowed for Deep Panuke in 2013, it had cost $1 billion. Then in February of 2015 the company announced it was slashing its reserves estimates for the field by about 200 billion cubic feet or 50 per cent. Higher than expected water production from the field was the reason Encana said it downgraded the reserves.

The field has become a seasonal operation. Production is only maximized when the price of natural gas is the highest, usually in the winter months. And now plans for decommissioning are in full swing. Sandy MacMullin, executive director of the Nova Scotia Department of Energy’s petroleum branch admits Deep Panuke has been a dud. “Sometimes you end up with nice surprises. Sometimes you end up with a surprise you weren’t hoping for,” he told the CBC back in June of 2017.

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