The Gulf of Mexico is home to spirited competition among natural gas pipelines. That's the major finding in a study conducted by Foster Associates Inc. for the Interstate Natural Gas Association of America Foundation.
Foster found that about 130 companies operate gas pipelines in Gulf of Mexico state and federal areas, with active lines totaling 14,773 miles-91% in federal water and the rest in state water.
More than 20% of the active pipeline mileage has been laid within the past 5 years. Major and independent gas producers laid three fourths of those lines.
An additional 775 miles of pipe are planned for the Gulf of Mexico, and producers are also responsible for most of the proposed mileage.
Owners of existing offshore pipelines are mainly a mix of interstate transmission companies and gas producers. The 10 largest owners-eight pipeline companies and two producers-hold 53% of the total offshore mileage. Of the next 10 largest owners, four are interstate pipelines and six are producers.
The study said, "The concentration of pipeline ownership (e.g., the top 10 companies hold 53%) is consistent with the concentration of production, where the top 10 lease owners hold 53% of federal offshore leases and the 10 largest producers represent 52% of production."
Interstate pipelines own about half of the offshore mileage, mainly off Central and western Louisiana. Across the entire Gulf of Mexico, major and independent producers own 46% of the pipeline mileage, with concentration of their ownership off Texas and eastern Louisiana. Producers own most of the pipelines in areas of newer activity in the eastern gulf.
State waters hold a higher proportion of large diameter pipelines, mainly because the larger diameter lines from federal waters traverse state waters to reach onshore points.
Interstate pipelines own about 85% of the large diameter pipelines. However, this share will fall when proposed lines start up.
Gas production
The Foster report said the Gulf of Mexico provides U.S. markets with 26% of domestic gas supplies and contains 18% of the country's gas reserves. Potential recoverable re-serves in the gulf total an- other 48 tcf, representing 21% of the Lower 48's potential gas reserves.
A breakout shows 95% of the gulf's proved reserves are in federal water. That leaves 3% in Louisiana water and 2% in Texas water.
Since the mid-1950s, the Minerals Management Service has leased 26 million acres, representing 4,966 leases in the gulf. Of those, 61% are not producing currently.
Foster said, "While the Gulf of Mexico production and lease holdings are not overly concentrated within a few large companies, market shares for the 10 largest producers in the gulf do exceed the U.S. average."
Copyright 1996 Oil & Gas Journal. All Rights Reserved.
