This agreement is the first of its kind for the Gulf of Mexico. Williams will own the floating production facility as well as the gas and oil export pipelines. Dominion is operator of Devils Tower field, with 75 percent working interest. Pioneer owns the remaining 25 percent working interest.
Dominion had previously contracted with SparTEC, a subsidiary of J. Ray McDermott, to provide the truss spar floating production facility. Williams will assume responsibility for payments due under the SparTEC contract as part of the agreement.
Williams will install the export pipelines. The 18-inch diameter oil export line, "Mountaineer Oil Pipeline," will extend from Mississippi Canyon 773 to Main Pass 34, approximately 120 miles. The gas export line, "Canyon Chief Gas Pipeline," will include an 18-inch deepwater section from Mississippi Canyon 773 to Main Pass 261, approximately 90 miles. As part of this agreement, Dominion will produce oil and gas from Devils Tower through the Williams-owned infrastructure.
Duane Radtke, president and chief executive officer of Dominion E&P, said: "This is an excellent deal for all of the companies involved. Dominion is able to significantly enhance the field economics by monetizing the potential third party use of the infrastructure. It will also allow Dominion to focus our efforts and our capital resources on our core business of exploration and production. Williams gains a significant contract to anchor these critical infrastructure investments in a deepwater area that is ripe for further development."
Steve Springer, senior vice president and general manager of Williams' Midstream Operations, said: "Today's transaction is consistent with our focused growth strategy which includes the Deepwater Gulf of Mexico. We're pleased to have both Dominion and Pioneer as our anchor customers and plan to complement their continued successes in deepwater. This new business also adds significant value to Williams' Mobile Bay infrastructure and complements Williams' ability to serve growing natural gas demand in the Southeast United States."
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