N.S. gov't and EnCana agree to extend onshore rig project by two years

This is an axtract from http://www.google.com/hostednews/canadianpress/article/ALeqM5h101wQWr0Jy-s1LzKzRtQCxbZD3A

An idle $35-million onshore rig-building program in Cape Breton has been given a two-year extension by the province and EnCana Corp (TSX:ECA).

Nova Scotia Energy Minister Bill Estabrooks said Wednesday the extension will give Laurentian Energy more time to deal with a decline in drilling activity in Western Canada.

The original deal, first announced last October, would have seen Laurentian build two onshore rigs for Nabors Canada at its Sydport facility in Sydney, N.S., creating about 75 jobs.

EnCana was expected to provide up to $1 million per rig, for up to five rigs, as part of offshore energy agreements with the province.

However, work was halted on the partially built rigs because of the downturn in Canada's oilpatch.

Estabrooks wouldn't say whether there was any guarantee that the work on the onshore rigs would be done.

"We've got a two-year extension at this stage and I'm satisfied with that . . . I guess time will tell and it's something we'll have to address in our ongoing relationship with the company."

When pressed about what that meant, Estabrooks said it would depend on the health of the economy in Western Canada.

Under EnCana's agreement with the province, the company must deliver at least 1.35 million hours of work, including 850,000 hours for Nova Scotians.

Questions have dogged the agreement governing the $760-million Deep Panuke offshore gas project, especially after EnCana obtained regulatory approval to hire a foreign company to build its offshore accommodations.

The province has said there is 280,000 person hours involved in building the accommodations but there will not be an equivalent amount of work done in the province.

But Estabrooks said he was confident EnCana would meet the terms for providing work in Nova Scotia as set out in the offshore agreement.

"When we look at the final outcome of this, there will be more jobs available, there will be more contributions to the economy of Nova Scotia," he said. "EnCana has a proven record and we're going to give them an opportunity."

But Liberal energy critic Andrew Younger is skeptical.

"It sounds a bit funny to me because, obviously, the work targets were based on a fairly large accommodations module being done here and that's not being done," said Younger.

Deep Panuke is scheduled to begin producing gas for major markets in the U.S. northeast and to some customers in the Maritimes in 2010.