Group slates gas pipeline system in central gulf

Proposed Gulf of Mexico Gas System [29757 bytes]

Three U.S. companies have proposed a $220 million offshore pipeline system to gather and transport gas produced in key growth areas of the Central Gulf of Mexico.

If all goes as planned, units of Marathon Oil Co., Shell Oil Co., and DeepTech International Inc., Houston, expect to place the new gas system in service in third quarter 1997.

The project consists of two main components: a new interstate gas pipeline to shore and expansion of an existing gas gathering system linking several fields.

The Nautilus interstate project calls for a 30 in. offshore line extending 87 miles from Ship Shoal Block 207 to gas processing plants in the South Bend, La., area. Sponsors expect Nautilus-eventually to have as much as 600 MMcfd of capacity-will be operated under jurisdiction of the Federal Energy Regulatory Commission.

Upstream of the Ship Shoal 207 terminal, partners propose to extend the existing Manta Ray gas gathering system into a broader gathering spine. Manta Ray expansion will enable the gathering system to serve both shelf and deepwater developments around Ewing Bank Block 873 to the east and Green Canyon Block 65 to the west. However, partners will emphasize placement of new gas gathering links near new deepwater development projects. Marathon and Shell have significant deep water acreage positions in the area, including Troika oil and gas field slated for development on Green Canyon Block 244.

Project responsibilities

Marathon will oversee construction of the Nautilus pipeline, and Shell expansions of the Manta Ray system. The two companies will provide most of the capital funding for the new construction.

DeepTech affiliate Leviathan Gas Pipeline Partners LP, Houston, is to provide the balance of project funding by contributing an undisclosed amount of cash and existing Manta Ray gathering assets.

Sponsors said the project's expected third quarter 1997 service date is contingent upon negotiation and execution of definitive documents and receipt of all necessary government approvals.

Marathon Oil is a unit of USX-Marathon Group of USX Corp. Shell's Gulf of Mexico gas pipeline operations are affiliated with Shell Midstream Enterprises, a new business formed to provide services to Gulf of Mexico producers (OGJ, July 1, Newsletter). DeepTech effectively owns 23.2% interest in Leviathan.