BP and Shell to Build Natural Gas Pipeline to Serve GOM

BP and Shell announced construction plans for a $150-million pipeline project to gather natural gas from offshore fields in the ultra-deepwater Gulf of Mexico production area. The 100-mile Okeanos gas pipeline will have a capacity of at least 1 billion cubic feet of gas per day and will be the first Gulf of Mexico gas pipeline built to operate in water depths in excess of 6,000 feet, making it the deepest gas gathering system in the Gulf of Mexico.

The Okeanos Gas Gathering Company will be owned 2/3 BP and 1/3 Shell Gas Transmission, with BP serving as the operator. Okeanos will connect ultra- deepwater developments with the Destin Pipeline, which comes onshore in Mississippi and interconnects with five interstate pipelines that serve growing natural gas markets throughout the entire eastern United States. Gas gathered through the Okeanos pipeline and transported by Destin will be processed at the BP-operated Pascagoula Gas Processing Plant. This pipeline is the first of the Mardi Gras Transportation System projects that will serve new BP developments in the deepwater Gulf of Mexico.

The Okeanos gas pipeline will be built in two phases, beginning in 2002. Shell Gas Transmission will serve as construction manager for the first segment, which will consist of a 74-mile, 24-inch diameter pipeline to gather gas produced from the Shell and BP "Na Kika" project. Na Kika is under development by Shell about 150 miles southeast of New Orleans. The project consists of the subsea development of six individual fields tied back to the Gulf of Mexico's deepest permanently moored semisubmersible development and production system, operating in a water depth of 6,350 feet. Construction of the first segment of the Okeanos pipeline will be completed in time for the 2003 start-up of the Na Kika fields, and will be another milestone in Shell's history of deepwater accomplishments.

The second phase, for which BP will act as construction manager, will consist of a 26-mile segment to connect the BP and Exxon "Crazy Horse" field to the Okeanos gas pipeline near Na Kika. Construction on this segment will be completed in 2005 in time for the start-up of the Crazy Horse field. The Crazy Horse field is the largest oil and gas discovery in the Gulf of Mexico and will be operated by BP.

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