Warren R. True
Pipeline/Gas Processing Editor
Pipeline construction in the U.S. Gulf of Mexico has improved considerably in recent years, especially activity in shallow water (less than 300 ft). Construction for middle depths (300-600 ft) has been flat, while deepwater (600+ ft) projects have held firm or increased slightly.
Overall pipeline mileage constructed in federal waters 1985-89 showed a strengthening industry, especially during the 1988-89 period.
These trends are evident from analyses of 5-year data compiled by the U.S. Department of Interior (DOI) Minerals Management Service (MMS). Fig. 1 tracks comparisons between pipeline-construction applications that were approved by the MMS during this period and projects that have been reported to the MMS as completed.
This article continues a series of updates based on MMS gulf-pipeline data (OGJ, July 4, 1988, p. 27). These installments track construction patterns in water depths, diameter classifications, and mileage. The figures are also evaluated in terms of pipeline-construction cost data published in Oil & Gas Journal's annual Pipeline Economics Reports.
GOVERNMENT JURISDICTION
The two U.S. government departments concerned with pipeline matters on the gulf Outer Continental Shelf (OCS) are the DOI and the Department of Transportation (DOT).
A memorandum of understanding has existed between the two departments providing that the DOI's area of responsibility includes "those pipeline facilities from where hydrocarbons are first produced to the outlet flange at each facility where the produced hydrocarbons are first separated, dehydrated, or otherwise processed. The DOT's area of responsibility extends from the above-mentioned outlet flange shoreward."
Installation or modification of DOI OCS pipelines requires DOI approval. The DOI's functions in Gulf of Mexico and the other three OCS regions are performed by the MMS, which regulates and issues approval on all pipelines to be constructed in federal OCS waters. These pipelines are classified as either "lease-term" or "right-of-way" (ROW) pipelines.
The MMS Pipeline Guidelines & Procedures defines as lease-term pipelines those contained entirely within the "boundaries of a single lease, the boundaries of unitized leases, or the boundaries of contiguous (not cornering) leases which are of the same owner or operator" if installed by a lease holder or operator.
ROW pipelines are those that cross lease boundaries, outside of the lease-term pipeline limits, or unleased blocks. Such pipelines represent most of the major pipeline construction in the Gulf of Mexico.
ROW pipelines are the subject here.
The MMS conducts a technical review for each proposed pipeline project to ensure compliance with various regulatory orders and applicable standards, especially DOT Title 49 CFR Parts 191, 192, and 195 where applicable.
An operator wishing to modify existing lines or build new ones must seek approval from the MMS. But even if approval is granted, the operator is not required to carry out the modification or construction.
For a new ROW grant, construction must occur within 5 years or the grant expires.
If the construction or modification takes place, however, the operator must inform the MMS with a date of completion.
This date is the certification of successful hydrostatic testing. Despite the requirement, some projects dating back several years remain officially uncompleted because of company failure to report completion.
For each of these pipeline projects, the MMS collects the following information: beginning and terminus of line, operator, line size, length, line service (gas, crude oil, gas/condensate, so forth), maximum allowable operating pressure (MAOP), whether the line is buried and the type of cathodic protection, whether the line is bidirectional, and the deepest and shallowest water depths along the line.
So far as construction is concerned, the relationship based on the memorandum of understanding is unlikely to change.
But because of severe staffing shortages in the DOT's Office of Pipeline Safety (OPS), the two departments are currently discussing the transfer of regulatory (including safety) jurisdiction for oil and gas pipelines in federal waters to the DOI's MMS.
YEARLY DEPTH PATTERNS
Comparing total completion-mileage distribution among the three depth categories suggests confirmation of the trend toward more deepwater (600 + ft) installations evident for the 1983-87 period covered 2 years ago (Table 1).
For the 1983-87 period, completion mileage in the 0300 ft depth category was 74%. For the more recent period (1985-89), that percentage has held constant (73.9%; 1,373 miles).
Completions in the 300600 ft range for the 1983-87 period made up 12% of the total; for the 1985-89 period, mileage for these depths had dropped to slightly more than 10% (191.54 miles).
Completions in deepwater tracts for 1983-87 were 14% (207.32 miles) of total mileage reported completed. For 1985-89, mileage at these depths had increased its share of the total, to almost 16% (292.62 miles).
Total mileage for the three depth categories increased for 1985-89, showing the gradual recovery in the offshore petroleum industry evident during these years. Years 1988 and 1989 showed large gains in construction over the three previous years (Table 1).
The approval/completion pattern for the more recently surveyed period shows a consistently stronger level of activity than was evident for the 1983-87 period. That earlier period reflected the constrained pace of activity at all depths and for all diameters.
For 1985-89, however, a clear recovery has been under way for shallow-water pipelines. Fig. 1 reflects the jump in both approvals and completions for 1987-89.
Total shallow-water pipelines reported completed in 1985-87 was 682.28 miles, or 49% of the total shallow-water lines (for all diameters) installed. The remaining 2 years (1988-89) of the surveyed period make up 51 % of the line installed. Some mileage constructed in these 2 years has yet to be reported.
Approvals and completions reported between 1988 and 1989 for deepwater pipelines, although these numbers are of a different order of magnitude than those for shallow water, show continuing level of activity in the 600 + ft range.
SIZE DISTRIBUTION
Table 1 shows diameter distributions for completion mileage over the 5-year period, 1985-89. These figures are current as of Mar. 31 of this year.
Completions (Fig. 2) reported for all depths for 1985 totaled 301.64 miles: 200.94 miles (66.62%) were 4-10 in.; 77.62 (25.73%), 12-20 in.; 23.08 miles (7.65%); 22-30 in.; and no ROW pipeline construction reported for pipe larger than 32 in. in 1985.
For 1986, 309.47 miles were reported constructed. Of this total, 219.48 miles (70.92%) were 4-10 in.; 65.98 miles (21.32%), 12-20 in.; 18.47 miles (5.97%), 2230 in.; and 5.55 miles (1.79%), 32+ in.
For 1987, total reported mileage was 290.72. In the 410 in. group, 246.54 miles (84.8%) were built; for 12-20 in., 44.18 miles (15.2%); for 22-30 in. and over 32-in. sizes, no mileage was reported built.
For 1988, total reported mileage of ROW lines was 533.06: for 4-10 in., 246.1 miles (46.17%); for 12-20-in., 271.21 miles (50.88%); for 22-30 in., 15.76 miles (2.96%). No mileage was reported for 32+ in. lines.
And for 1989, total reported mileage of ROW pipelines completed was 422.26: 269.74 miles (63.88%) of 4-10 in.; for 12-20 in., 152.52 miles (36.12%). No miles were reported completed in the larger diameter categories for 1989.
Table 1 suggests a recovery not only in mileage balance among the 5-year period surveyed but also in the distribution of mileage among sizes.
The general pattern among 4-10 in. sizes remained fairly constant 1985-89. But almost half of the increased mileage constructed 1988-89 was among the 12-20 in. lines.
For 1985-87, 187.78 miles were constructed in the 12-20 in. sizes, making up 20.82% of the total mileage for that category in the 3 years.
For the same size category for the 2-year period 198889, 423.73 miles were constructed, comprising 44.35% of total mileage for the period.
CONSTRUCTION COSTS
Oil & Gas Journal annual Pipeline Economics Reports provide some guide to the costs of constructing ROW pipelines in the Gulf of Mexico.
Each report lists gas-pipeline construction cost estimates for federal waters as filed with the U.S. Federal Energy Regulatory Commission (FERC).
Detailed cost data for planned or installed liquids pipelines in the U.S. are not available.
In addition, cost-per-mile estimates from OGJ Pipeline Economics Reports do not reflect variations for water depth. Therefore, shallow-water construction is probably lower than estimated here, deepwater probably higher.
Further, there is no break out of costs for diameter classifications of offshore pipelines because of the fewer projects year-to-year relative to onshore projects. Cost estimates here, therefore, are the same for 4 in. as for 36 in.
Finally, estimates used here are taken from construction-permit filings for a 12-month period from one June to the next. The MMS mileage data, on the other hand, cover 12-month, calendar-year periods.
For example, the cost-per-mile average for 1989 reflects gas-pipeline proposals filed with the FERC June 1988 to June 1989 requesting issuance of a "certificate of public convenience and necessity." This average is applied here to mileage reported to the MMS for calendar year 1989.
Despite such qualifications, these figures provide some guide to the cost of building an ROW pipeline in federal waters of the Gulf of Mexico for the 5-year period surveyed (Table 2).
- For 1985, the average cost-per-mile figure, $514,228 (OGJ, Nov. 25, 1985, p. 58), results in an estimated total cost of $231,268,901 for constructing 449.74 miles of natural-gas pipeline.
Based on $514,228/mile, therefore, ROW mileage reported to the MMS as completed during calendar 1985 cost $155,111,734.
- For 1986, the average cost-per-mile figure, $794,925 (OGJ, Nov. 24, 1986, p. 40), results in an estimated total cost of $192,133,373 for constructing 241.70 miles of natural-gas pipeline.
Based on $794,925/mile, therefore, ROW mileage reported to the MMS as completed during calendar 1986 cost $246,065,440.
- For 1987, the average cost-per-mile figure, $1,020,095 (OGJ, Nov. 23, 1987, p. 37), results in an estimated total cost of $193,583,428 for 189.77 miles of natural-gas pipeline.
Based on $1,020,095/mile, therefore, ROW mileage reported to the MMS as completed during calendar 1987 cost $296,562,018.
- For 1988, the average cost-per-mile figure, $755,345 (OGJ, Nov. 28, 1988, p. 33), results in an estimated total cost of $303,119,755 for constructing 401.3 miles of natural-gas pipeline.
Based on $755,345/mile, therefore, ROW mileage reported to the MMS as completed during calendar 1988 cost $402,644,206.
- For 1989, the average cost-per-mile figure, $737,474 (OGJ, Nov. 27, 1989, p. 41), results in an estimated total cost of $285,100,193 for constructing 386.59 miles of natural-gas pipeline.
Based on $737,474/mile, therefore, ROW mileage reported to the MMS as completed during calendar 1989 cost $311,405,771.
Fig. 3 shows the trends of estimated costs for ROW pipelines 1985-89 and suggests the size of the Gulf of Mexico pipeline-construction markets for those years.
The drop from 1988 to 1989 will likely be less severe than or the reverse of what it appears when all mileage completed last year has been reported to the MMS. The final figure for 1989 will approach or exceed that for 1988.
RECENT MAJOR PROJECTS
Gulf of Mexico deepwater pipelining has been in the spotlight in recent years.
The most publicized event involved use of towing to install the four pipelines at Placid's Green Canyon 29 project (OGJ, Feb. 1, 1988, p. 21).
R. J. Brown & Associates, Houston, Placid's pipeline contractor, directed what was to be the longest and deepest bottom-tow on record and the deepest rigid-pipeline installation in the Gulf of Mexico.
Four pipelines were to be assembled on a 10.5-mile strip of beach on Texas' Matagorda Peninsula, then towed to the installation area some 450 miles to offshore Louisiana in water between 1,460 ft and 2,240 ft.
On Oct. 14, 1987, the first pipeline was pulled off the beach and towed a record 430 miles to a location between the satellite well at Ewing Bank 999-1 and the Green Canyon 29 template. Two other pipelines were subsequently also towed out and dropped in the Green Canyon area.
These were all flow line bundles to connect the subsea production template satellite wells.
The fourth pipeline, a 10-mile bundle of 14 and 16-in. export lines for connecting the project's subsea drilling/production template to a shallow-water platform on Ship Shoal Block 207, was in the process of bottom tow when it struck an obstruction.
Welds holding the two lines failed; the pipeline bundle broke apart and settled to the seabed in about 950 ft of water.
The obstruction was later determined to have been a crustaceanal tube arising from the seabed in an area off the continental shelf.
The two deepest conventional pipelay installations in the Gulf of Mexico took place in 1989.
Between May 16 and June 10, McDermott's LB29 laid the 7.5-mile, 12-in. line from Shell's Bullwinkle platform on Green Canyon 65 (1,354 ft water depth) to its Boxer platform on Green Canyon 19 (750 ft water depth).
Installation of the pipeline at Bullwinkle set a world depth record for a J-tube pull.
For Conoco's TLWP in the Jolliet field, installation was by conventional barge and reel-ship methods.
The project involved laying rigid steel pipe in 1,390 ft of water and flexible pipe connection with the TLWP (Fig. 4) in 1,760 ft depth.
More than 53 miles of pipe were installed across the Jolliet field. Two gathering lines take gas and an oil-water emulsion from the TLWP to Conoco's central production platform 9 miles away.
The rigid pipe, some 13 miles of it, was installed by McDermott from its DB28. Coflexip installed the flexible pipe.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
