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Pioneer: Production from Canyon Express System to be Shut in for Another Month

Pioneer: Production from Canyon Express System to be Shut in for Another Month

Dallas-based independent producer Pioneer Natural Resources Co. said last Wednesday that production from the Canyon Express gas gathering system in the Gulf of Mexico, which serves three major natural gas fields, is expected to resume in about 30 days barring any unforeseen delays in contracting for services to plug a leak. Production has been shut in since early December due to a leak in the methanol delivery system.

Pioneer initially expected that the production impact would be minimal, but it said problems in locating the leak delayed repair operations. The leak in the methanol delivery line was located on Jan. 1, and while the exact cause is still under investigation, it appears to be the result of structural damage caused by accidental impact, the oil and natural gas producer said.

Parts of the gathering system are located at depths of 7,200 feet in the ocean. Methanol is used to prevent hydrates from forming in the line, said Pioneer spokesman Chris Paulsen.

Pioneer said several options for fixing the leak currently were being evaluated, and that the precise timeframe for completing the repair will depend on the option selected. Paulsen declined to give a cost estimate for the damage, but he said repairs are expected to be covered by the company's insurance.

The Canyon Express gathering system off the Louisiana coast links three gas fields: Aconcagua, owned by Elf Exploration Inc. (operator 50%), Mariner Energy Inc. (25%) and Pioneer Natural Resources USA Inc. (25%); King's Peak, owned by BP (operator 100%); and Camden Hills, owned by Marathon Oil Co. (operator 50.03%), Total E&P USA Inc. (16.67%) and Pioneer Natural Resources USA (33.3%). The three fields had total production of 330 MMcf/d before the shut-in, with a peak capability of 500 MMcf/d. The gathering system is operated by Total E&P USA and belongs to the owners of the three fields.

A 57-mile, 12-inch diameter gathering line collects gas from the three fields and transports it to the Canyon Station platform, which is connected to three pipelines delivering natural gas onshore.

Pioneer said its share of the net gas production from Canyon Express averaged approximately 90 MMcf/d prior to the shut-in. The impact to the producer's fourth quarter average daily production was expected to be about 5,000 barrels oil equivalent (boe), leaving total production for the quarter at the lower end of Pioneer's forecasted production range of 190,000 to 205,000 boe/d.

Pioneer made the announcement Wednesday because the shut-in gas was having or was close to having a "material" impact on its overall production, a spokeswoman for Total said.

In late September, Pioneer completed a $2.1 billion merger with Evergreen Resources. The union brought together two independents with widely different exploration and production focuses -- Pioneer's activities primarily are concentrated in the Gulf of Mexico and overseas, while Evergreen is fixed on the Rocky Mountain and Canadian regions (see NGI, Oct. 4, 2004).

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