PanCanadian Produces Electricity From Its First Alberta Power Plant

-- PanCanadian Petroleum Limited announced today that the first of its Alberta power plants - the Cavalier Power Station - has received its commissioning certificate and is now selling electricity to the Alberta Power Pool, supplying the expanding power demand of Calgary and southern Alberta. PanCanadian Energy Services, the Company's gas and power marketing division, will manage the operations of the Cavalier plant.

"This is a very exciting day for PanCanadian because it marks the first time we have produced and sold electricity commercially in Alberta," said Nancy Laird, Senior Vice President Marketing & Midstream. "In a very short time, we have been able to successfully expand our suite of energy products and services and extend the value chain of our natural gas operations by officially entering the Alberta power generation business."

Construction of the Cavalier Power Station started in the fall of 2000. The plant, 100 per cent owned and operated by PanCanadian, is located 55 kilometres east of Calgary and is currently producing up to 85 megawatts of power in its first phase of operations. Eighty-five megawatts of power can supply the electricity requirements for approximately 85,000 homes.

"The plant is being commissioned in a two-stage start-up to get power on to the grid as soon as possible," said Mark Demchuk, Director of PanCanadian's Power Group. "This first phase, called simple cycle, involves operating natural gas-fired turbines to generate power. The second phase, called combined cycle, will involve both gas and steam turbines. This second phase will produce an additional 20 megawatts of power, for a total of 105 megawatts, and will be complete by the end of this year."

When running at capacity, the plant will consume about 20 million cubic feet of natural gas per day. The plant is designed using very efficient natural gas-fired turbines to minimize the impact to the environment.

The Company also announced today that the National Energy Board has approved its electricity export permit, allowing PanCanadian to export electricity into the United States. The export permit is for a period of 10 years, expiring in July 2011.

"This export permit allows us to take advantage of market opportunities south of the border," Laird said.

In addition to the Cavalier Power Station, PanCanadian is building two other plants. The Company is building another power station with Nexen Inc. on the site of their Balzac natural gas plant, located five kilometres north of Calgary. This plant, which will be operated by Nexen, will be operational by December of this year. PanCanadian and Nexen each have a 50 per cent interest in the Balzac Power Station.

PanCanadian is also developing an 85 megawatt cogeneration project in Medicine Hat, Alberta at the Canadian Fertilizers Limited (CFL) Medicine Hat Nitrogen Complex. The cogeneration facility will provide steam under long-term contract to CFL and additional power to the southern Alberta grid.