$2 billion gas platform set to break records in Gulf

[peejay 327]

Gulf project, teamwork run deep

By KRISTEN HAYS

2007 Houston Chronicle

INDEPENDENCE HUB

• What: World's deepest offshore production platform, moored in 8,000 feet of water.

• Where: 185 miles southeast of New Orleans.

• Capacity: 1 billion cubic feet of natural gas per day — 10 percent of the Gulf of Mexico's gas production and 2 percent of the nation's.

• Weight: 25,000 tons.

• Pipeline: Gas will be transported through the 134-mile Independence Trail, the world's deepest export pipeline at its origin under the hub.

• Owners: Pipeline and storage company Enterprise Products Partners owns 80 percent of the platform; producer Helix Energy Solutions owns 20 percent. Enterprise owns and operates the Independence Trail.

• Platform operator: Anadarko Petroleum Corp.

• Producers: Anadarko, Devon Energy Corp., Norsk Hydro, Eni.

• Fields: 10 fields with combined estimated reserves of 2 trillion cubic feet: Merganser, Vortez, Jubilee, Cheyenne, Atlas, Atlas NW, Mondo NW, Spiderman, Q and San Jacinto. Cheyenne, one of eight fields operated by Anadarko, has the world's deepest seafloor production facilities at 9,000 feet below the water's surface.

• Name: Original members of the consortium of companies that participated in the project were independent oil and gas explorers and producers, so they dubbed the platform and the pipeline "Independence" to reflect the project and the players.

ABOARD INDEPENDENCE HUB — A few years ago, fields beneath some of the east-central Gulf of Mexico's deepest waters held a lot of natural gas with nowhere to go.

That's about to change.

The new $2 billion Independence Hub project is poised to start producing gas later this month at a rate expected to reach 1 billion cubic feet per day by year's end — about 2 percent of the nation's natural gas production.

When ramped up to that capacity, a day's production would provide enough gas to heat or cool 11,000 homes for a year, said Chico Broussard, a team leader on the platform.

On the seabed a mile and a half below the water's surface is its critical partner, a 134-mile pipeline dubbed the Independence Trail, which will transport the gas to another pipeline close to shore so it can get to market.

"By the end of July, we should have production start-up, barring any hurricanes or mishaps," said Darrell Hollek, vice president of the Gulf for Anadarko. "That's pretty aggressive."

So is the record-breaking project. Moored in 8,000 feet of water about 185 miles southeast of New Orleans, the 25,000-ton Independence Hub is the deepest to date of any platform worldwide. Its mooring lines are 2 1/2 miles long.

The Independence Trail is the world's deepest pipeline at its origin beneath the hub. One of the 10 wells hooked up to Independence, Anadarko's Cheyenne, is the world's deepest subsea production well.

The gas that the two-deck platform will produce would have sat untapped had Anadarko and several other independent oil and gas explorers not joined forces to connect their individual fields to the central facility.

Reserves in the combined fields are estimated to reach 2 trillion cubic feet.

"Any one of the fields by themselves weren't enough for a platform, and there was no infrastructure in the area," said Susan Holley, Anadarko's general manager for the eastern Gulf.

Finding the incentive

However, the potential bounty from a consortium of companies formed in 2003 gave Enterprise Products Partners, a Houston-based pipeline and storage company, incentive to provide the infrastructure.

"It would have been so expensive for just one well," Hollek said. "We're hoping we have additional discoveries now that we've got a hub out here."

Enterprise owns 80 percent of the platform, and independent producer Helix Energy Solutions owns the rest. Enterprise is the sole owner of the Independence Trail.

Anadarko operates the platform as well as eight of the 10 fields. Devon Energy owns half of one of Anadarko's fields. Norway's Norsk Hydro and Spain's Eni own or share ownership of the other two.

Companies routinely seek partners to share the risk of costly deepwater exploration, typically with an operator calling the shots while minority partners go along for the ride.

The Independence Hub is more of a collaboration.

Chris Oynes, associate director for offshore minerals management for the Minerals Management Service, the Interior Department agency that oversees oil and gas action in the Gulf, said that teamwork likely will inspire other companies.

"There will be other times when you have somewhat of the same situation — several discoveries, none of which justify stand-alone development, where it will take some really creative combination to bring those resources to market," Oynes said.

The Independence setup allows the explorers to focus spending on finding gas while Enterprise and Helix shoulder the infrastructure costs. And field owners are responsible for their wells.

Enterprise and Helix expect to recoup their investment and more in the coming years, Enterprise spokesman Rick Rainey said. Producers now pay them fees to reserve space to process gas on the hub. And once production starts, producers will pay processing fees based on how much gas from their fields goes through the facility.

Also, like other pipeline operators, Enterprise will collect fees for transporting gas through the Independence Trail.

The arrangement resembles the operation centered in Anadarko's Marco Polo field, where Enterprise owns the platform, Anadarko operates it and nearby field owners hook up to it.

Anadarko discovered the Marco Polo field in 2000. A year later, the company signed a deal with Gulfterra — which Enterprise later acquired — in which Gulfterra would own the platform while Anadarko operated it. Production began in 2004.

Companies that control other nearby fields later signed on to hook up to the platform.

"I would say there, Enterprise rolled the dice a little bit more, saying this is a good location, we're going to build it, and hope they come," Anadarko's Hollek said of the Marco Polo operation.

Sharing proves crucial

"The difference with this one is, we were able to agree together up front to make it happen. We all could have been hardheaded and said, 'No, I'm not going to share anything,' and nothing would have happened," Hollek said.

Jim Guion, vice president of offshore commercial development for Enterprise, said the concept evolved from a partnership his company had with Anadarko and Newfield Exploration on another platform much closer to the Gulf Coast in the early 1990s.

"The model has changed significantly, but that was really the concept — a midstream company and the producer, with the midstream company owning the asset," Guion said.

Keeping track of who owns what can be a challenge with the flurry of mergers and acquisitions that have occurred among participants since the first discovery in 2001.

Original participants included Kerr-McGee Corp.; Anadarko; Australia's BHP Billiton; Spinnaker Exploration; Dominion Exploration and Production; and Gulfterra. Anadarko bought out BHP Billiton and acquired Kerr-McGee. Norsk Hydro bought Spinnaker. Enterprise bought Gulfterra, and Eni recently joined the group when it acquired Dominion's Gulf assets.

The project's name reflects those players. Unlike integrated oil companies that find oil and gas as well as refine and market it, independents focus solely on exploration and production. Eni is the only player that doesn't fit that mold because the company also is a refiner.

"If you look at who was participating when all these decisions were made, it was the independents," Hollek said. "That's one of the reasons it became the Independence Hub."

http://www.chron.com/disp/story.mpl/headli...iz/4950888.html

[Hilarious Clinton 452]

Good. We need more oil. I'm sure all the gasoline powered car owners on VJ would agree.

[Mr. Big Dog 10,747]

Good. We need more oil. I'm sure all the gasoline powered car owners on VJ would agree.

Not me. I get my gas at the pump.

[dalegg 143]

Good. We need more oil. I'm sure all the gasoline powered car owners on VJ would agree.

they're going after natural gas.

[Ban Hammer 14,269]

Good. We need more oil. I'm sure all the gasoline powered car owners on VJ would agree.

they're going after natural gas.

i better stop farting then

[peejay 327]

Good. We need more oil. I'm sure all the gasoline powered car owners on VJ would agree.

Actually this will be a natural gas production platform. I have worked on both natural gas production facilities and crude oil production facilities. They are two different animals and the operations are quite different as one is primarily to produce gasses and the other primarily liquids. The government regualation regarding both differ quite a bit too in some cases. None of it is brain surgery, but it takes a reasonable amount of training and technical expertise to operate these facilities. The days of a weak mind and a strong back passed long ago, but is still valid on occassion. Unfortunately I spend just as much time behind a computer screen and on the telephone in the facility office as I do working with the equipment out in the production unit.

At times it's not just a job...it's an adventure.

[Mr. Big Dog 10,747]

Good. We need more oil. I'm sure all the gasoline powered car owners on VJ would agree.

they're going after natural gas.

i better stop farting then

Good idea. Unless you want them to shove a pipe up your behind to tap that gas.

[Hilarious Clinton 452]

Good. We need more oil. I'm sure all the gasoline powered car owners on VJ would agree.

they're going after natural gas.

good. any fossil fuel will do