Exxon-Mobil to receive millions for Sable gas decommissioning

Nova Scotia taxpayers will be sending a cheque to one of the world's largest corporations when the Sable Offshore Energy Project stops producing.

A portion of decommissioning costs incurred by Exxon Mobil and its partners in the Sable project will be deducted from past royalties paid to the province.

"Knowing this was a potential liability for the province, the moneys have been set aside," Nova Scotia Energy Minister Michel Samson said.

Sable accounts for the vast majority of the $1.9-billion Nova Scotia has made from offshore energy. 

Samson was asked about the repayment after officials from Exxon-Mobil provided an update Thursday on their plans to wind down Canada's first offshore natural gas project.

Decommissioning manager Friederich Krispin said that work will begin as early as 2017 when the company hires a rig to plug and abandon wells.

"This work will increase our level of activity over and above our to day to work. It will involve more people, more effort and more support, and this will carry on for a number of years," he told the Maritimes Energy Association in Halifax.

'I don't have an exact number'

Samson said Nova Scotia has been planning for this by setting aside a portion of royalties for repayment when decommissioning costs are incurred.

"I don't have the exact number. We don't have the full cost of decommissioning, if decommissioning even does take place," Samson said.

Exxon has said it's open to having another company develop its fields with commercial access to its infrastructure but so far there are no takers.

"To date those efforts have not been successful," Sable manger Dylan Pugh said.

Officials from the large American-based oil and gas company provided an update Thursday to an audience of the Maritimes Energy Association.

Exxon said it will issue a number of expressions of interest later this year as part of decommissioning including one for a jack-up rig that will carry out well plugging.

Exxon said it will take another year of study before it knows when the five fields will stop producing.

Krispin was unable to specifically say how long it will take to dismantle the offshore wells and production platform.

Krispin announced, as part of decommissioning, it is looking at establishing an onshore base at Point Tupper in the Strait of Canso to dismantle project platforms.

Point Tupper is one of three options, including a regional yard in Atlantic Canada or using an international facility.

Sable is Canada's first offshore natural gas project. It began producing in late 1999. At that time, the lifespan of the Sable natural gas fields was projected to be 25 years.

Most of the gas was shipped to New England via pipeline. It has generated more than $1.7-billion in royalties.

Sable production has been steadily declining over the past seven years.