EPN has entered into agreements with operating subsidiaries of BP p.l.c., BHP Billiton, and Unocal under which BP, BHP Billiton, and Unocal have dedicated production from the Holstein, Mad Dog, and Atlantis Deepwater Trend discoveries for transportation on Cameron Highway.
Cameron Highway will originate at EPN's 50-percent-owned Ship Shoal 332 platform. EPN will build a 30-inch diameter pipeline to one of its platforms in the western Gulf of Mexico and extend it to the High Island Addition area. From High Island, EPN will construct two 24-inch pipelines-one extending north to Port Arthur, Texas and one northwest to Texas City, Texas. Construction is scheduled to begin in the spring of 2002. An interconnect at the Ship Shoal 332 platform to the EPN-operated Poseidon Oil Pipeline system will provide an alternative route to Louisiana oil markets for production that is not dedicated to Cameron Highway.
"Cameron Highway will be strategically positioned to serve the many Green Canyon area prospects currently under development as well as meeting the oil disposition needs of producers in the central and western Gulf of Mexico," said Robert G. Phillips, chief executive officer of El Paso Energy Partners. "Through Cameron Highway producers can access the major Texas oil market areas of Port Arthur and Texas City, providing an alternative to the oil markets in southern Louisiana. Production that is not dedicated to Cameron Highway can also utilize our 36-percent owned Poseidon Oil Pipeline System to access Louisiana markets. Our existing Gulf of Mexico infrastructure, together with the significant new projects we have announced in recent months, position EPN as a leader in the construction and operation of offshore pipelines and platforms."
EPN will seek a partner or partners for up to 50 percent of the $450-million Cameron Highway pipeline and expects to fund the project through permanent project debt financing, which would provide a significant portion of Cameron Highway's capital requirements on a non-recourse basis. EPN estimates that the majority of the capital outlay for the project will occur in 2003 and 2004.
"We expect considerable potential partner interest in forming a joint venture to construct, install, and own Cameron Highway Oil Pipeline," Phillips said. "Additionally, as operator of Cameron Highway, EPN will benefit from bringing in an established partner that provides enhanced benefits and services to our customers in the central and western Gulf of Mexico." El Paso Energy Partners is continuing to expand its asset base in the Gulf of Mexico and is actively working with producers to meet the growing demand for transportation infrastructure and production services arising from the many significant discoveries under development in the Deepwater Trend. Since late 1999, El Paso Energy Partners has completed a number of Deepwater projects, including the Allegheny Oil Pipeline and the East Breaks Gathering System, the world's deepest natural gas pipeline. EPN operates the Poseidon Oil Pipeline System, which serves the Deepwater Trend in the central Gulf of Mexico and constructed oil and gas export pipelines for the Typhoon Field. EPN successfully installed the Prince Tension Leg Platform and related oil and gas export pipelines during 2001 and has recently announced projects to construct a natural gas pipeline for the Medusa discovery and a platform and pipelines at the Marco Polo discovery, as well as to provide gas transportation services for the Matterhorn discovery.
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