El Paso To Develop Pipeline Offshore Nova Scotia

El Paso Corporation is proceeding with the development of a major pipeline initiative designed to transport new natural gas supplies off the coast of Nova Scotia to markets in Canada and the Northeastern region of the United States. El Paso is pursuing this project as a result of increased drilling activity near Sable Island and the successful completion of a feasibility study for the project announced earlier this year.

Referred to as the Blue Atlantic Transmission System, the proposed pipeline project currently consists of approximately 750 miles (1,200 km) of 36-inch pipe designed to carry up to 1 billion cubic feet (1,000 dekatherms) of natural gas per day. The estimated US$1.6 billion pipeline will follow a sub-sea route from the anticipated production area to a location on the Southern coast of Nova Scotia, then continuing subsea to landing points in the New York and New Jersey areas.

"We are pleased with the results of the initial feasibility study and confident in developing an effective engineering and environmental plan that will address all appropriate issues," said E. Jay Holm, chief executive officer of the El Paso Eastern Pipeline Group. "The subsea configuration offers several advantages over a land-based alternative, including minimal environmental impact, significant reduction in community disturbances, and anticipated transportation rates substantially less than $1.00 a dekatherm for firm deliveries to the New York and New Jersey markets, as well as reduced rates for deliveries to the province of Nova Scotia. The anticipated rates are significantly less than that of any known current or proposed alternative project to provide firm transportation to these regions."

Blue Atlantic will provide substantial economic benefits to Nova Scotia by creating the first access to natural gas in the province's Southwestern region and address the continued increasing demand for natural gas on the East Coast of the United States. Demand for natural gas in this region is expected to increase an additional 685 million cubic feet (685 dekatherms) per day by 2005, growing to an incremental 2 billion cubic feet (2,000 dekatherms) per day by the end of the decade.

El Paso will open an office in Halifax and has retained the services of Halifax-based Jacques Whitford Environment Limited and the U.S. firm ENSR Corporation to begin the detailed environmental work required. In addition, the company is evaluating bids from several firms to provide overall project management services to assist in the siting and design for the pipeline and related facilities. Selection of a firm will be announced soon.

El Paso will soon enter into negotiations with potential shippers and conduct an open season to determine capacity demands before the end of the year. The company continues to seek input from various regulatory and government organizations, as well as working with local communities and special interest groups addressing specific issues regarding this project. "This is an ambitious project and our goal is to identify various stakeholders and involve them during all phases of the development process," explained Holm.

Once the pipeline route has been determined and all necessary environmental investigations have been completed, Blue Atlantic will seek approval for installation from governing agencies in both Canada and the United States. El Paso anticipates that the necessary regulatory filings will be made by year-end 2002 and that the project could be in service by the fourth quarter 2005.