Explorers set sights on Sable sweet spot
  from: Offshore Engineer
  by: Rick von Flatern
  Thursday, August 15, 2002

Amid a few significant discoveries, signs of more to come and a flurry of activity, some observers say the exploration and production industry offshore Nova Scotia is about to become the next world class offshore oil and gas arena. Rick von Flatern reports from the Canadian east coast province.

On the eastern third of this chain of blocks that runs roughly 150 miles out and parallel to the Nova Scotia shoreline is what has come to be known around the Halifax oilfield community as the Sable Hot Spot. A group of blocks on the Scotian shelf, named for the treacherous Sable Island that is the final resting place of many an ill-fated ship, Sable is the birthplace of the modern offshore Nova Scotia oil industry.

Sable's first phase of development included three separate gas fields, three platforms and a pipeline that since the last day of 1999 has been carrying about 550 million cubic feet of gas per day (mmcfd). The pipeline crosses subsea to Nova Scotia, east to New Brunswick and south across Maine and finally to consumers in Massachusetts.

Exploration work on the second phase of Sable, widely referred to as Sable Tier 2, is complete, with development drilling to begin soon. One platform has been contracted to Gulf Island Fabricators in Louisiana and the second is now out for 'expressions of interest'.

In the meantime, other operators prepare to drill along the shelf and, even more significantly, are taking the plunge into deep water, sinking millions in exploratory wells. In all, in early 2002, estimates of gas reserves to be recovered offshore Nova Scotia ranged from 18.5tcf, what an El Paso Company publication characterized as 'conservative', to upwards of 60tcf.

Enthusiasm for producing gas from the Scotian Shelf is spurred by two facts of economic life in Nova Scotia. It is, and traditionally has been, one of the most economically depressed provinces in Canada. An infusion of jobs and money from a significant oil and gas industry could well reverse that position in less than five years.

Secondly, Nova Scotia is within pipeline distance of the northeastern United States, the world's largest consumer of natural gas. Gas demand in that market is projected to double and treble in the next few years even as US domestic gas production declines in the wake of extensive restrictions on domestic drilling.

All in all, if oil companies find only a portion of the success they seem to expect there, the next few years could well change the fortunes of Nova Scotia significantly and forever.

Sable Tier I and II
That the first platform of Sable Tier 2 went to an outside fabricator has been a sore point among some in Nova Scotia. Much of the reason for this is grounded in events more than 20 years past when hopes were raised and dashed that an oil boom was on the way as Shell and others began exploration activities in the area. But Shell found gas at a time when they and most of the rest of the world sought oil. There was no infrastructure for development and the oil finds were not nearly of a size to create one. The would-be oil boom never materialized.

But times have changed. Today there is strong, close-by demand and gas reserves found in just the first round of Sable discoveries are sufficient to already have brought significant investment to the province. And despite initial caution, those close to the events of both today and years ago believe the current spate of activity is only the bare beginnings of a real offshore Nova Scotia industry.

'The oil industry is an optimistic bunch,' says Paul McEachern, current head of the 550-member OTANS (Offshore Technical Association of Nova Scotia). MeEachern had a unique view of the first oil and gas boom that never was. 'As a reporter I saw it all go away after a period of hype and so was quite wary this time. But I was convinced by a geologist at the [Petroleum] Directorate who said it was for real this time.'

Given those earlier letdowns, when ExxonMobil awarded the first big contract for Tier 2, a production platform, to a fabrication yard outside the province, locals wondered aloud if this boom too was illusionary.

'This is a small town really and every contract like that is high profile and people were watching,' McEachern says. 'It set off a serious debate after Exxon gave it to Gulf Island Fabricators. But after a bit of grumbling, people set their minds to not losing the next one.'

Local industry was already skittish about ExxonMobil's assumption of the Sable project via its takeover of Mobil, a company which had become familiar to the community and which held 50.8% of the original partnership that included Shell, Imperial Oil, Nova Scotia Resources and Mosbacher. Mobil had done a good deal of work communicating their intentions to the public, particularly to the fishing community, and many in Halifax felt it was more Canada-friendly than the unknown outsider Exxon.

So when ExxonMobil insisted their decision to let the work out to a Louisiana firm was based on more than simple cost, circumstances conspired to make that a hard sell.

'We have espoused that we will award contracts on best value,' says Allen Jeffers, an ExxonMobil spokesman and Nova Scotia native who understands the concerns of his fellow citizens. 'Best value does involve costs of course but it also involves quality assurances, safety issues, competency and schedules. It involves a lot of things. At the end of the day we awarded that contract on the basis of best value as we saw it.'

Jeffers says ExxonMobil was anxious to explain its decision more specifically to those affected by it but was hampered by the closed bidding process that forbids any specific post-bid public evaluations.

Tim Brownlow, director of offshore services for local shipbuilder JD Irving, is also a Nova Scotia native and veteran of the oil industry having spent eight years with drilling contractor Rowan as well as a stint as head of OTANS. While he says he understands ExxonMobil's decision, he believes his company by virtue of its experience building ships for the navy as well as four anchor handling vessels for rig mooring off Newfoundland and Nova Scotia, could have done the job in its Halifax shipyards.

'We have not built a deck before, no question,' he says. 'But we have built higher tech facilities than a deck. I will put the navy work against any of those decks. We have not built a deck yet but we will.'

While loss of the first Tier 2 Sable contract to an outsider is still a sore point with many members of the Halifax offshore service industry most, including Brownlow, say they accept ExxonMobil's explanation and are anxious to move on to the next projects. At least part of the reason for their attitude undoubtedly stems from the fact that like much of the rest of the local economy, the service industry is already enjoying significant financial benefits from the new oil and gas industry in town.

JD Irving, for instance, is winterizing and putting the final touches on Rowan's Gorilla V jackup rig as well as Ocean Rig's fifth generation semisubmersible Erik Raude, due to see deepwater service for Canadian oil company Encana soon. Both stand in relief against the Canadian sky on the Dartmouth side of the Harbor across from downtown Halifax and are daily reminders of jobs being created and more to come. According to Brownlow, Irving at one point had as many as 2000 employees and contractors collecting paychecks generated by the Erik Raude.

Most globally oriented service companies have offices in Halifax now and all major as well as many independent operators hold acreage off Nova Scotia. In terms of immediate fiscal impact, even as most observers agree that its offshore industry is only just beginning, more than $1.5 billion of direct offshore industry investment has been funneled through Nova Scotia. According to Jeffers, 'over the construction period of Sable, a third of the contracts were won by Nova Scotia companies'.

And indications are that percentage will increase quickly during Tier 2. The platform being put together in Louisiana is for Alma, the first of three fields that comprise Sable Tier 2, and is expected to be on line in 2003. The second platform, to service the South Venture and Glenelg fields, while not formally approved, is in what Jeffers describes as the 'preliminary engineering and advanced procurement' stage.

Further, ExxonMobil has solicited 'expressions of interest', an invitation to submit a sort of corporate resumé in order to get on the bid list, for the next platform. Requests for proposals are expected to follow that process sometime in the fourth quarter 2002.

Kværner SNC-Lavalin Offshore (KSLO) is handling the EPCM contract for Alma, South Venture and Glenelg. That KSLO is based in Halifax is considered by many observers a strong signal that Nova Scotia is growing in its ability to handle large offshore projects at home and abroad.

'Our message to the supplier industry has been that in order to get into this business and be successful you need to be able to compete on a worldwide basis and not rely on special treatment because special treatment will only work here,' Jeffers says. 'And that is happening. We are very pleased with the ability of a Halifax-based firm (KSLO) to do all the engineering for Alma right here in Halifax.'

ExxonMobil is also doing preliminary work on a standalone compression platform that will some day be necessary to maximize production in the field.

In the sweet spot
Sable is a large area and interests in it are held by numerous companies, all galvanized to action by ExxonMobil's successes of the past three years and modern seismic that tells them the right structures are in place.

The second most closely watched play offshore Nova Scotia is called Deep Panuke. It lies within the Sable hot spot and is operated by Encana, a company lately created by the merger of Pan Canadian and Alberta Energy. First production is expected in 2005 from four or five wells all to be drilled directionally and tied back to a single platform.

'Currently we are in the regulatory process,' says Encana's senior vice president Larry LeBlanc. 'We have made application for the development of the project and we expect approval with conditions by the first quarter next year.'

Once the impact of regulatory conditions is considered the company will finalize engineering, look at the costs and make final development plans after the first of the year. LeBlanc estimates reserves at Deep Panuke, a wholly separate horizon from ExxonMobil's Sable project, to be about 1tcf. At peak it will produce about 400mmcfd and 2000 barrels of liquids. The gas is slightly sour, about 2000ppm, enough that Encana's platforms will include basic sulfur removal processing equipment to render the gas suitable for transport through the existing pipeline.

The small amounts of liquid will also be removed from the gas and be used to generate power on the platform, at once providing a power source, saving processing considerations at the receiver end and freeing up pipeline space to transport more gas.

Shell is also heavily involved in Sable. As an original partner Shell holds about a 40% stake in the acreage surrounding the current Sable development and drilled the original well, Onondaga. At that time they hit only gas and so gave it up. Last November, taking advantage of a rig slot opened up for the GlobalSantaFe Galaxy on a six-to-nine well program in the area, Shell decided to go back and look at the original find and see what lie beneath it.

'We drilled the discovery well in 1969 and some delineation wells in 1970 and because there was absolutely no market for gas in those days we walked away from it,' says Shell's East Coast operations manager, Doug Gregory. After getting some new seismic over the area, including some 3D seismic over that particular lease, they re-entered what he said was a classic Gulf of Mexico salt dome structure.

The project, to look at some bright spots on the flanks of the salt dome, was budgeted for 120 days and about C$65 million. It took 175 days and cost about C$90 million due to drilling problems including abnormally high pressure that caused loss circulation up hole, a plug back and a sidetrack. In the end, the results were mixed.

'In the upper zone we were encouraged,' Gregory says. 'Back in 1969 we did not get cores or fluid samples and this time we got sidewall cores, gas samples, some liquids and found it is the same kind of gas being produced into the current infrastructure. So we have about 100bcf waiting to be produced in the next round of Sable development.'

The deeper section as it turned out was less successful. The gas was there, and trapped, but was held in silt stringers with poor porosity and permeability rather than high quality sandstones. The lower section was plugged and abandoned.

'So when you get down to it, with no infrastructure [the upper section] would not be economical,' Gregory says. 'But now it is in a good position right in the middle of the infrastructure, right in the Sable hot spot.'

Leading the independents into the offshore Nova Scotia arena is Canadian Superior. A major player in the prolific gas fields of western Canada, the Calgary based operator has brought the Gorilla V to the offshore Nova Scotia arena in order to drill its Marquis prospect, an updip offset to Encana's Deep Panuke.

'We actually shot a big seismic program over the top of Panuke a couple years ago prior to buying the Marquis acreage,' says company president Greg Naval. 'So once we saw what [Encana] hit we went up the trend and since we are updip from the Panuke we are in a geologically favorable spot.'

According to literature provided by Canadian Superior, based on Panuke and more than 1300km of seismic to support the drilling location, 'the potential exists for a discovery of up to 2.4tcf of recoverable reserves'.

'It has very similar structure and trends to Panuke,' explains Canadian Superior's director of east coast operations, Mike Coolen. Coolen spent a good bit of his career working on the Sable project and was in on the discovery and much of the development work. 'Marquis may be bigger than Panuke and we are very optimistic.'

No doubt fueling Canadian Superior's optimism has been the keen interest of partner El Paso who recently joined the Calgary-based company in the Marquis project. 'We have walked into a very good partnership,' says Naval. 'They have vetted our different prospects and are very excited about them. Their experts have gone through hundreds of lines of seismic we have so that is a pretty good stamp of confidence.'

Canadian Superior is also preparing to drill on its Mariner prospect just a few miles north of the Sable hot spot. The company obtained the block only after outbidding the likes of Shell and Encana, attracted by its location abutting what Naval called 'six major fields' and baring a striking geological similarity to Sable's largest discovery, the Venture field. The company estimates its potential recoverable reserves at about 1tcf.

'We are shooting seismic over it this summer,' Naval says. 'And we are going to shoot 3D seismic to pick locations but we know from past seismic last summer that there is a massive structure that looks identical to the main Sable field, the West Venture.'

The company is working on the drilling license at the moment to be prepared to drill by early fourth quarter of this year. If all works out as hoped, Coolen says, his company could be running a rig on Marquis drilling development wells at the same time it is running another on mariner.

Deepwater
While much shallow water acreage remains to be explored along the Scotian Shelf, operators in the area are already looking to the deepwater. Marathon is drilling with Encana as a partner, as is ChevronTexaco and partner Shell, in water depths beyond 3000ft. Canadian Superior has plans to drill on its deepwater 720,000 acre Mayflower project that contains at least three promising and independent structures. And Encana expects to bring the Erik Raude into deepwater after going through sea trials in the third or fourth quarter.

And others, less specific about where they intend to drill, are waiting in the wings. With only a little luck, says Canadian Superior's Naval, the whole complexion of the Canadian offshore oil industry could be changed drastically in very short order.

'The real exciting thing from an explorationist's perspective is it only takes one of these deepwater wells to hit to turn the whole complexion of that basin upside down,' he says. 'And I think that when you see the amount of science that has gone into the planning of these wells in the last three to four years, one or two are going to hit and turn the Scotian Shelf into the next North Sea.'

Marathon was the first to spud in the deepwater with their Annapolis well. Early in the drilling the company experienced an influx of gas that forced them into a well control mode and eventually to abandon the location. They moved just 500m away and began drilling again and there have been no further reports of problems.

While the Annapolis event may at first seem a setback for Marathon and Encana ­ and to no small degree it was ­ it nonetheless did signal that hydrocarbons can be found beyond the shallow water. And if hydrocarbon volumes match the structures seen on seismic and if the trapping mechanisms are present, the Nova Scotia deepwater could well become the world's next great offshore play.

'We are drilling on 3D seismic but what led us in 1999 to acquire our [deepwater] acreage was mostly modern 2D seismic,' says Shell's Gregory. 'We saw big structures and that is what is encouraging and we decided to put in bids on the land.'

ChevronTexaco's drilling effort is being headed up by drilling project co-ordinator Drew Taylor. He says what is motivating deepwater drilling off Nova Scotia is the same as it is anywhere ­ big discoveries.

'You have to be looking for the big reserves,' he says. 'And you don't go into these things without making some reasonable assumptions. The case the company has put together, which looks pretty logical to me as a drilling engineer, is that there is something out there.'

Since during exploration there is no reason not to site the rig where drilling will be least complex, most exploratory wells are vertical. But the seafloor conditions are such, explains Taylor, that the well is offset from vertical to target and being drilled directionally, eventually to a modest 20° angle. The hard seafloor conditions is but one aspect of the area that makes it significantly different from most deepwater environments, particularly the familiar Gulf of Mexico.

'You have to remember that pressure development offshore here is significantly different than in the Gulf of Mexico,' he says. 'The depositional environments are completely different and the mechanism that causes pressure development is completely different.'

Still, says Taylor, he does not expect pressure variances to force him to run an extraordinary number of casing strings as he is confident the upper and lower limits of pore pressure predictions along the planned wellpath are within a very small window of accuracy.

Project-to-project or industry
The offshore industry has been watching activity off Nova Scotia's coast for decades and its interest has been increased sharply in recent years by events at Sable. As a result it is likely that within the next three years activity offshore Canada will evolve from an area of one-off projects into an industry generating many years of activity and billions of dollars of investment.

'We still have to prove our reserves,' says Irving's Brownlow. 'That is what we are doing right now. The success rate around Sable is very high, something like 125 wells drilled at one point offshore and 22 were significant discoveries, commercially viable. That is a hell of a hit record.'

OTANS' McEachern echoes that optimism and says it is up to provincial and federal governments, the public and the industry to keep the momentum going.

'The oil industry is genuinely welcomed here and now the single most important thing is to keep people drilling,' he says. 'The offshore oil business is a brand new thing here. It's been around three-to-five years and there are less than 300 wells drilled in a very large offshore area.'

After visions of a booming oil economy were dashed those many years ago, many in Nova Scotia are cautious about embracing the prospect once again. But the people of the province have long made their living from the sea, through fishing, trade and shipbuilding. It is easy to imagine, with just a modicum of good fortune, that they will add offshore oil and gas extraction to that list very soon.

Economic impacts
As the development of Nova Scotia's offshore gas resources gathered pace in earnest, the Greater Halifax Partnership engaged the Conference Board of Canada to forecast the possible economic impacts it could bring the province. Led by board economist, Louis Theriault, the study returned three possible scenarios with a base case that assumes no more than current activity at Sable Tier 1, an annual exploration investment of less than $100 million and construction of a natural gas distribution system beginning in 2004.

The three cases built from that base, Partnership president and CEO Stephen Dempsey told a gathering of industry and media, were developed by the Conference Board 'based on a set of assumptions around the timing of known projects, assumed investment and employment'.

Dempsey also ranked the three possible scenarios as conservative, moderate and optimistic and called the moderate case also the 'most appropriate for planning purposes.' The middle model assumes Sable Tier 2 and Encana's Deep Panuke will be in production around 2006, Tier 1 reserves depleted before 2010 and investment increasing after 2006.

That same model indicates the creation of about 57,000 jobs throughout the economy by 2020 as a result of offshore investment money flowing into Nova Scotia while the province's jobless rate will fall to 4.5%, bested only by Alberta according to Conference Board projections done for all of Canada. The province's construction and manufacturing sector meanwhile should expect a gain of about $1 billion, more than double what might be expected without monies generated by offshore investors.

The middle case, in fact, struck many in the local offshore industry as conservative. It assumes cumulative reserves of about 27tcf by 2030 as opposed to 14.4tcf and 40.3tcf in cases one and three respectively. According to some numbers being mentioned around the operators' offices, those estimates make the second case seem modest and the third case not unduly optimistic.

While the so-called moderate case considers only production from ExxonMobil's Tiers 1 and 2 and from Encana's Deep Panuke by 2010, deepwater contributions are not considered until the most accelerated case three. Likewise, the middle case would seem to minimize the impact of continued success with shallower water exploration prospects currently in planning stages.

'We are under-explored,' said Sandy MacMullin, a director of resource assessment and royalty at the Nova Scotia Petroleum Directorate when asked about possible expansion of the Scotian Shelf reserve base. 'We have something like 180 wells offshore Nova Scotia, 110 to 115 are exploration wells. So I wouldn't say that we are proved up at all. We know the Sable area is gas prone and there are lots of other prospects out there.'

And while the Petroleum Directorate's Bruce Cameron said the deepwater off the province is still very much frontier, operators' actions would seem to indicate they expect significant discoveries in water depths beyond 1000m.

'The deep water is very much unknown,' he observed. 'There could very well be large discoveries there. There has been a tremendous amount of seismic work done over the past three or four summers and the operators have had an opportunity to assess what they have seen which probably helped fuel the extra half-billion dollars we got last year (in lease sales).'

Some industry members present at the unveiling of the Conference Board report, titled Energy for Smart Growth, said the Partnership may have assumed a conservative tone to avoid the hyperbole of the past that promised quick oil wealth that never materialized for the citizens of Nova Scotia.

'In the development of this industry, since the 1960s, there have been a number of false starts so there is a lot of skepticism,' said Canada's minister responsible for the Petroleum Directorate, Gordon Balser. The minister remarked on the report after having delivered a luncheon address to the Consulting Engineers of Nova Scotia just hours after the report's release.

Too, the report is meant not as a forecast of the Nova Scotia oil industry but as an analysis of impacts with which the local infrastructure may soon have to deal given certain levels of new investment that industry could attract.

And finally, the study was made public out of a sense among many in both business and government that much of the Nova Scotia public is unaware of the scope of the out-of-sight activity off their coast. 'A lot of what had been going on had been outside anyone's consciousness until they started laying pipe or saw the Erik Raude and the Gorilla V in the harbor,' Balser noted. 'So it is understandable that people have concerns now about what it means for Nova Scotia. There has been a lot of misinformation and this [report] is part of the education process.'

Pipeliners prepare for Blue Atlantic challenge
Possibly nothing so defines the state of play off the coast of Nova Scotia as does El Paso's plans for a pipeline. Dubbed by the company 'Blue Atlantic', the line is planned to run the length of the Scotian Shelf to collect gas for delivery to markets in the US. Rick von Flatern spent some time with their man in Halifax.

Blue Atlantic is a very large, very aggressive project to take gas from the shelf to southwest Nova Scotia where it will be cleaned up, the gas and liquids taken out of the gas and made available for local usage,' explains El Paso vice president Bob Otjen, who has come to Halifax specifically to lay the ground work for the project. 'The remainder will move on to New York and New Jersey, subsea all the way.'

With the whole concept hinging on the size and nature of numerous gas discoveries along the shelf, the specifics of the plan are tentative, including whether there will be gas processing at the Canadian landfall or simply a compression station. Still, El Paso is making a considerable investment this year, as Otjen puts it, 'to get our ducks in a row' for when production offshore Nova Scotia does begin in earnest.

'We are spending C$28 million this year split between the US and Canadian sides getting ready for both the NEB (Canada's National Energy Board) and the FERC (US Federal Energy Regulatory Commission) to come sometime next year,' he explains. 'We are risking some money up front but hopefully it gives us a better handle on getting the business and a better project. Unlike pipeliners of the past who were essentially order takers we have to be out there ready when the producers are.'

Current work includes a subsea survey beginning June and discussions with the community that Otjen says are not legal requirements but are 'the right thing to do'. The pipeline will begin in the Sable hot spot, perhaps at the Marathon or Canadian Superior field, and gather gas along the edge of the shelf before swinging west to landfall in Nova Scotia.

The route has several advantages. It is very efficient to have a single line offshore to which numerous developments can run short, less costly flowlines rather than individual lines to some distant gathering place or even to shore. As such, the configuration makes the pipeline an enabling infrastructure that could conceivably render marginal gas reserves economically viable.

El Paso's vice president says the line's reception by Nova Scotians, particularly fishermen, is also a critical factor in its design. '[The layout] is friendlier in the eyes of fisherman and others because if Sable and Encana and the others come in, all of a sudden you have a pipe and another pipe and another,' says Otjen who has devoted a good portion of his time in Halifax to listening to local concerns. 'As one of my higher ups said, the point is to meet early and meet often, and we do. What the people here do not want is a spider web effect. They want as few lines out there as possible.'

El Paso's efforts to assure fishermen that their livelihood will not be threatened by Blue Atlantic have not always gone smoothly. In part that is due to an event some years ago when a private cable company asked locals where they would like to see subsea cables lain. The company listened, made the appropriate responses, and then proceeded to lay them where it chose while ignoring any local input.

'We have heard from the fishermen "yes, you are saying all the right things now but are you going to be like that cable company?",' Otjen says. 'And we say no we are different. For one thing we have dealt with these things and we are regulated and if we don't put it where we say we are going to put it we will never be allowed to flow gas through it.'

Besides preparing for extensive regulatory and public hearings, the pipeline company is also looking closely at just where the line will come ashore in Nova Scotia. 'We are in the process of site selection now,' Otjen says. 'That is a very multidisciplinary thing including engineering, environmental, social and construction activities, land availability and so forth.'

The specific choice of landfall is down to two sites, both in Shelburne County. Laying pipe along the seabed off the eastern coast of Canada offers technical challenges unique to the area. It is the home of the famous Bay of Fundy whose ebb and high tides changes are the most dramatic in the world, creating considerable subsea and surface currents throughout the area. And the bottom is hard rock and marked by the kind of rough, uneven terrain pipeliners work hard to avoid.

Because only two offshore pipelines exist in Canadian waters ­ one from Sable and another on the west coast ­ there are no Canadian regulations dictating subsea pipeline specifications. El Paso has chosen therefore to work under US guidelines that require all pipe in 200ft or less of water be buried. That works as a de facto protection for lobstermen whose traps are always in water depths considerably less than 200ft.

The line itself will be 36in with a 1 billion cubic feet per day capacity, expandable to 1.5bcf/d. The expected total length of the system will be about 800 miles and cost in the area of US$1.6 billion. An alternative plan exists, depending on gas discoveries, to build a 42in line capable of handling twice the volume of gas at about twice the cost to build. The company expects certification from FERC and NEB by mid 2004 with construction to continue from that time to the third quarter 2005.

The line is scheduled to be in service by the end of 2005, a point in time that coincides with what producers working the area have indicated about their own development plans.

Given its timetable, it is plain the project is tied to Nova Scotia proving itself a significant gas play in the next few years. 'Of course we have a lot hanging on the discovery of gas,' Otjen says. 'We have had good discussions with the producers, most of which are under confidentiality agreements, but we, along with them I think, are pretty optimistic.'

No doubt some of those discussions were with El Paso's own exploration and production unit which was apparently sufficiently impressed with Canadian Superior's data on their Sable area Marquis prospect to buy their way into a partnership.

'Obviously, in the end if nobody finds anything, it will all change drastically,' says Otjen of his company's plan. 'But our idea is not necessarily to lay to a specific platform but to where people find something. We have the luxury of putting it on the shelf for a year or two. And the pipeline is a symbiotic thing. We will put in the pipeline because you are drilling and you are drilling because we are putting in the pipeline.'

Even if El Paso were free to say why producers along its proposed route were optimistic, it would probably offer no surprising insights about the future offshore Nova Scotia. It is no secret Sable's gas production will soon expand and that numerous plays in the area have a much better chance of success than of coming up empty.

It is also widely acknowledged, however, that a well any distance from the Sable hot spot must be considered a rank wildcat, particularly in the deepwater where nothing much is known for certain. But if one were looking for signs of which way the smart money was betting offshore Nova Scotia, El Paso's Blue Atlantic project would seem an obvious one. OE