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Neptune's Pontoon Repair Pushes Start-Up to Late 2Q2008

After discovering "structural anomalies" in late March at its oil and natural gas Neptune tension leg platform (TLP) in the Gulf of Mexico, BHP Billiton said it is performing remediation work to reinforce certain structural components in the hull's pontoons.

BHP evacuated the platform's personnel in late March after irregularities in the hull were found during visual inspections (see NGI, March 31). After a detailed analysis by the engineering contractor that designed and built the hull, it has been determined that part of the support structure inside the pontoons requires additional reinforcement. BHP noted that the finding has been verified by an independent analysis.

"Repairs are already under way to remediate the structure as required to meet the original design intent," BHP said. "The company is working to bring the facility onstream by the end of the second quarter 2008, subject to regulatory approval."

The $1.1 billion Neptune TLP, which is located approximately 120 miles off the Louisiana coastline, originally was scheduled to ramp up at the end of 2007. That start-up date was pushed back till the end of March; however, that start-up was deferred after the problem was identified during a routine inspection. Project development costs of the Neptune project are not expected to increase significantly in light of the warranty obligations of the engineering contractor, BHP said.

Once onstream, Neptune is expected to produce up to 50,000 b/d of oil and 50 MMcf/d of natural gas. Recoverable reserves at the Neptune field are estimated by BHP to range from 100 million boe to 150 million boe. Seven initial subsea wells are to be tied back to the TLP, with the oil and gas exported to shore via the existing Caesar and Cleopatra trunk lines. The Neptune field comprises Atwater Valley Blocks 573, 574, 575, 617 and 618, and water depths range from 4,200 feet to 6,500 feet.

Lars Herbst, regional director for the Gulf of Mexico Outer Continental Shelf Region of the Minerals Management Service (MMS), was asked at the Offshore Technology Conference in Houston last week about the BHP Neptune facility delay. He was asked specifically whether the MMS was concerned by recent deepwater delays at not only Neptune, but also at BP plc's Thunder Horse facility and Atlantis. Herbst said that while there is no official troubleshooting group set up within the MMS, the agency is paying attention to the deepwater delays.

"We are obviously concerned by the delays," Herbst said. However, he noted that the delays were not specifically related to their location, even though all of the major problems have been in deepwater facilities. "Each one has a different scenario...We share some of the infrastructure issues for these structures with the Coast Guard on hull, design...and we are seeing what steps we can take to improve these issues. One thing is to look at the manufacturing standards, where the facility is built...It's most important to look at all of these things."

The TLP is located in Green Canyon Block 613 in about 4,230 feet of water. The 5,900-ton hull was completed by Signal International LLC in Port Arthur, TX, and is said to be the first of its kind for the fabrication yard. According to BHP, the TLP design is similar to the Chevron Corp./BHP Typhoon platform in Green Canyon Blocks 237 and 238.

BHP operates Neptune with a 35% working interest. Partners in the venture are Marathon Oil Corp. (30%), Woodside Petroleum Ltd. (20%) and Repsol YPF SA (15%). When BHP approved the project for development in June 2005, it estimated total costs at US$850 million.

Neptune was discovered in 1995 and was the first discovery in the Western Atwater Foldbelt. An initial appraisal well (Neptune-2) was drilled in 1997. BHP took over operatorship in 2002, subsequently drilling four appraisal wells, with two sidetracks, to delineate the field.

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