Sector Plays

[excel]

Lack of gas sets back $1.6 bln Canada-U.S. pipeline
Thursday August 21, 3:53 pm ET


SAN FRANCISCO, Aug 21 (Reuters) - Disappointing results in the search for natural gas off Nova Scotia is holding back El Paso Corp. (NYSE:EP - News) plans to build a giant $1.6 billion pipeline stretching into the U.S. Northeast, El Paso said on Thursday.
"We have completed most of our environmental studies and engineering plans for the pipeline, but continuing the process will require the discovery of natural gas," said Aaron Woods, an El Paso spokesman.

"We were optimistic that gas producers would discover gas last summer and that has not happened," he added.

Woods said El Paso was still working with environmental groups and fishing community for the roughly 1,000-mile (1,600-km) pipeline aimed at delivering about 1 billion cubic feet of gas a day from Nova Scotia to power plants and industrial gas users in the New York region.

Houston-based El Paso announced plans for the 36-inch to 42-inch diameter pipeline in October 2001, at which time the company said it hoped to have the project in commercial service around 2005-2006.

But that timeline is unlikely to be met as El Paso said it expects the project will require a total of four years to receive all regulatory permits and to build the pipeline.

Development of Nova Scotia's offshore gas fields has been hit with a string of setbacks, including several expensive dry holes and EnCana Corp.'s (Toronto:ECA.TO - News) decision earlier this year to put the brakes on its C$1.1 billion Deep Panuke project.

Nova Scotia authorities estimate the deep water region off the coast could contain 15 trillion to 40 trillion cubic feet of gas, but finding those reserves has been elusive.

El Paso is working with several gas producers with drilling experience in the Nova Scotia region, but has not signed contracts with any of them, Woods said. ($1=$1.40 Canadian) (with additional reporting by Jeffrey Jones,[phone])