BP Announces GOM Pipeline Construction Plans

BP announced plans for the construction of three large-diameter crude oil pipelines to transport oil from the company's major discoveries in the deepwater Gulf of Mexico. These pipelines will move crude from the BP operated Crazy Horse, Holstein, Mad Dog and Atlantis fields. BP will be the construction manager and operator of these systems, through its wholly owned subsidiary Mardi Gras Transportation System Inc.

The system that will service the Southern Green Canyon area is called the Caesar Oil Pipeline. This line will initially bring oil from Holstein, Mad Dog and Atlantis to Ship Shoal Block 332 in shallow water, and has been designed to capture oil from future discoveries in the Central deepwater of the Gulf of Mexico. Caesar is 120 miles in length. The main portion of the line is 28 inches in diameter, with 24-inch diameter laterals to the Mad Dog, Atlantis and Holstein developments. With a capacity of at least 450,000 barrels per day, Caesar will deliver the commingled oil production from these fields to Ship Shoal Block 332, and connections to markets in Texas and Louisiana. Caesar pipeline is the first of its size to be installed in water depths greater than 5,000 feet in the Gulf of Mexico. The pipeline will be owned by Caesar Oil Pipeline Company, LLC whose members are BP (56%), BHP Billiton (25%), Equilon Pipeline Company LLC (15%), and Unocal (4%).

Concurrently, BP has signed agreements with El Paso Energy Partners, L.P. covering the movement of oil from Ship Shoal Block 332 to Texas markets via the Cameron Highway Offshore Pipeline System to be constructed by El Paso Energy Partners. Caesar and Cameron Highway are scheduled to begin service in 2004, in time for start-up of the Holstein field. The other pipelines to be built will transport crude oil from the Crazy Horse field in the Mississippi Canyon area of the Gulf of Mexico. Crazy Horse is the largest field ever discovered in the Gulf of Mexico, and is estimated to contain gross reserves of about 1.5 billion boe. This development is scheduled to start up in 2005. BP operates Crazy Horse, and owns 75% of the reserves.

The pipeline carrying Crazy Horse oil will consist of two large segments. The deepwater portion is called the Proteus Oil Pipeline. Proteus is a 28-inch diameter, 70-mile long deepwater pipeline, connecting the Crazy Horse platform to a new booster station platform to be installed in South Pass Block 89. From there, the 30-inch diameter Endymion Oil Pipeline will transport the crude a further 90 miles to Clovelly, Louisiana, where it will enter Louisiana Offshore Oil Port (LOOP) storage facilities. The combined systems have been designed with an initial capacity of at least 420,000 bbls, and will offer an attractive solution for future oil production from other fields in its area of influence. From Clovelly, the oil will have access to existing onshore transportation networks.

Proteus and Endymion are scheduled for completion in early 2005, in readiness for the start-up of the Crazy Horse field.


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