EnCana Sees a Future for Deep Panuke

Article Excerpt

ENCANA CORP. $59 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; SI Rating: Average) suspended work in 2003 on its Deep Panuke offshore natural gas field near Sable Island. The company feared that rising development and other costs would hurt the project’s feasibility. EnCana now hopes to restart work on Deep Panuke in the next year or two. Based on new drilling data, the company has scaled down its original plan, from three offshore platforms to one. A new royalty deal with the Nova Scotia government has also improved the project’s prospects. Gas prices have more than doubled since the discovery of Deep Panuke seven years ago. However, they have come down in the past few months as mild winter weather cut demand. Gas prices could come under more pressure over the next few years as imports of liquefied natural gas rise. We have a high opinion of EnCana’s prospects. But the high cost of projects like Deep Panuke and its oil sands…

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