BP Amoco Buying Another Third of Destin
BP Amoco grew its share of the Destin Pipeline from one-third to
two-thirds by acquiring the one-third share of Southern Natural Gas
Co. Tejas Destin LLC holds the remainder.
Destin is a 255-mile offshore and onshore gathering and
distribution system that serves gas producers in the eastern Gulf
of Mexico, connects to the Pascagoula Gas Processing plant, and
delivers gas to markets through five interstate lines. Sonat will
continue to operate the pipeline until the transaction is complete.
BP Amoco and Tejas have yet to determine which will operate the
system after that, said Peter Keith, BP Amoco Pipelines director of
"Generally speaking, we see the eastern Gulf of Mexico to be a
robust corridor for future gas production, and this will be a key
infrastructure element to move that gas to market," Keith said of
the company's decision to buy another third of Destin.
Current Destin throughput is about 600 MMcf/d, which is expected
to grow to the nameplate capacity of 1 Bcf/d in the next several
years. Keith said there are a number of prospects in the area that
could contribute to throughput, and the company is negotiating with
some of the producers. He also said an additional Destin tie-in was
in the works but declined to give details.
El Paso Energy Corp. agreed late last year to sell Sonat Inc.'s interest in
Destin along with East Tennessee Natural Gas and the Sea Robin Pipeline to
gain Federal Trade Commission (FTC) approval of its merger with Sonat (see
NGI Oct. 4). The FTC believed Sonat's interest
in Destin, when joined with El Paso's control of the Viosca Knoll Gathering
System, could lead to a monopoly-type situation in the offshore Mississippi
and Louisiana areas. BP Amoco had right of first refusal to acquire the additional
"The Destin Pipeline is an important link in the value chain
between our significant Gulf of Mexico discoveries and the new,
highly efficient Pascagoula Gas Processing plant," said Tim S.
Hawkins, BP Amoco pipeline business development manager. "Both the
Destin Pipeline and the gas plant were built to accommodate
expansion, reflecting the increased development activity throughout
Keith said Destin throughput is on schedule with initial
expectations for the project. He conceded the eastern Gulf pipeline
infrastructure has turned out to be stronger than what was
predicted back in 1996 when Destin was being proposed. Production
levels have been equal to expectations. Some prospects haven't
panned out, but others have taken their place, he said. "The
corridor is as robust as we thought it was going to be."
Formed as Destin Pipeline, LLC, the original owners were
affiliates of BP Amoco, Sonat Inc. and Shell Oil Co. Construction
of the $460 million pipeline and Pascagoula Gas Plant project began
in December 1997 with initial start up in September1998. In late
1998, a 45-mile extension added a 24-inch diameter pipeline
connecting Destin's 36-inch mainline hub platform at Main Pass
Block 260 to Chevron's facility at Viosca Knoll Block 900.
Destin, which went into service in 1998, has a 121-mile offshore
segment and a 134-mile onshore segment. The 36-inch offshore
mainline runs 76 miles from Main Pass Block 260 to the Pascagoula
Gas Plant. BP Amoco operates the plant and holds a 60% interest,
and Enterprise Products Partners LP of Houston holds the remaining
40% interest. Destin's onshore portion interconnects with five
pipelines to deliver gas to markets served by the Koch Gateway,
Florida Gas, Transcontinental Gas, Tennessee Gas, and Southern
Natural Gas pipelines.
Joe Fisher, Houston