Conoco Inks Magnolia Pipeline Agreements

Conoco and Ocean Energy Inc. have entered into agreements with various Shell Oil Company affiliates to provide pipeline transportation for oil and natural gas produced from the Conoco-operated Magnolia field in the deepwater Gulf of Mexico.

Conoco announced plans to develop the Magnolia field, some 180 miles south of Cameron, La., in Garden Banks blocks 783 and 784, in December 2001. First production from the field is anticipated during the fourth quarter of 2004.

The Shell affiliates will construct and operate two pipelines, both extending 50 miles from the Magnolia tension leg platform (TLP) to the Shell-operated Enchilada platform hub at Garden Banks 128.

The 16-inch natural gas pipeline will be constructed and owned by Shell Gas Gathering LLC and will have a 275-million cubic feet per day capacity. It will connect into the Shell-operated Garden Banks Gas Pipeline System, which will transport the gas to a variety of pipelines linked to onshore locations.

The 14-inch oil pipeline will be constructed and owned by Shell Pipeline Company LP and will have a 75,000-barrel a day capacity. It will connect to the existing Auger pipeline system at Garden Banks Block 128. "This project is a strategic extension of our existing deepwater oil transportation system into the deeper waters of the Garden Banks area and complements our business strategy of providing customers with reliable, flexible and cost effective oil transportation from the deepwater areas of the Gulf of Mexico," said John Hollowell, general manager, crude business unit of Shell Pipeline Company LP.

The Magnolia TLP production facilities will be capable of handling 50,000 barrels of oil and 150 million standard cubic feet of gas per day.

Conoco, as operator, holds a 75-percent interest in the field and Ocean Energy holds the remaining 25-percent.