Deep Panuke Work Commitment Update

An onshore rig building program is being extended by two years thanks to a commitment by the province and EnCana Corporation.

The extension will give Laurentian Energy in Cape Breton more time to wait out the decline in Western Canadian drilling activity. Laurentian has a contract to build two onshore rigs for Nabors Canada, with support from EnCana, but the project has been put on hold because of the economic downturn.

"This $35-million project represents real opportunity for Nova Scotia workers, so I am pleased that we are able to keep this project moving ahead," said Energy Minister Bill Estabrooks. "This project is an opportunity to create new industrial capacity in our province."

Under the province's offshore agreement with EnCana, the rig commitment deadline ended in June. EnCana was expected to provide up to $1 million per rig for up to five rigs.

Laurentian received a contract to build two onshore rigs, the first in Nova Scotia, but the project was halted with the rigs partially constructed.

"The extension is great news for Nova Scotia workers," said Laurentian CEO Denis Lanoe. "This positions us to create jobs and show the oil industry that we can build, assemble and commission world-class rigs, right here in Cape Breton."

Mr. Estabrooks said that the province expects EnCana to meet, and likely exceed, the work-hour commitments under the overall Deep Panuke project agreement.

"Helping create jobs for Nova Scotians is a key priority of government," said Mr. Estabrooks. "The intent of the EnCana agreement was to ensure those jobs were created, and it looks like EnCana will meet that commitment, and likely more."

However, it is clear there will be no direct substitution for an accommodation module.

"We are focused on the big picture -- the overall work commitment," said Mr. Estabrooks.

The minister said his department has been monitoring information from EnCana. The minister said the project will deliver at least 1.35 million hours of work, including 850,000 hours by Nova Scotians, as outlined in the energy agreement.

"This project is providing real benefits to families and workers across the province," said Mr. Estabrooks. "The agreement has resulted in hundreds of jobs in construction, and fabricating and engineering. These are good paying jobs for Nova Scotian families."

The hours will be verified through an audit by the province after the first gas is delivered from the project.

To date, the Deep Panuke project has generated jobs at locations around the province, including, a supply vessel built in Halifax, protection structures in Dartmouth, pipe-coating work on the Eastern Shore, fabrication work in Pictou, as well as engineering and other work.