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Independence Hub Production 'Suspended' Up to Four Weeks

The deepwater Gulf of Mexico Independence Hub natural gas platform and the associated Independence Trail pipeline were closed last Wednesday after a leak was discovered in the pipe, according to Enterprise Products Partners LP, which owns 80% of the production platform and 100% of the pipeline. The company gave a one-to-four week timeline for repairs.

According to a Friday update from Enterprise spokesman Rick Rainey, the company is making progress on mobilizing equipment and divers, but they probably won't be in place until early this week. He added that he was unaware of any weather concerns for the area that might hamper the repair operation.

"While we are still putting the details together, the main point is that operations on the hub and the Independence Trail have been suspended following the discovery of a leak on the Independence Trail export pipeline," Rainey said on Wednesday. "At this point we have engineers and operational people on site determining the cause and extent [of the leak]. The hub had been averaging production of around 900 MMcf/d."

News of the problem at Independence, combined with a bullish Atlantic hurricane forecast released on the same day by Colorado State University's (CSU) esteemed storm forecast team (see related story), boosted near-month natural gas futures back above $10. The May contract recorded a high last Wednesday of $10.100 before closing out the day at $10.056, up 35.9 cents from last Tuesday's finish.

"The bullish CSU hurricane forecast and the suspended operations at the Independence Hub due to a leak on an associated pipeline were certainly the drivers of Wednesday's run-up, but the weak dollar also saw almost all commodities head higher on the day," said a Washington, DC-based broker.

As for the reports that the Independence Hub could be off-line for one to four weeks for repairs, the broker said he would bet on the shorter outage duration. "The one thing I will always bet on is with prices this high, those repairs will get fixed sooner rather than later. While they are saying one to four weeks, I wouldn't be surprised if things are wrapped up in six days because at these prices they can fly as many helicopters to the site as they want. Now the offshore is the offshore, but Enterprise will get the necessary resources there immediately."

In a press release later Wednesday afternoon, Enterprise expanded upon the details of the incident, noting that no fire or injuries were associated with the leak, which was first suspected last Tuesday, prompting the shutdown of operations as a safety precaution. "The leak was confirmed [Wednesday] morning using a remote-operated vehicle," Enterprise said. "There are no indications of any environmental impact and Enterprise has notified the appropriate regulatory agencies of the situation."

The company said initial investigations indicated that the leak is originating from a stainless steel O-ring gasket located on the flex joint in approximately 85 feet of water. The flex joint assembly, which connects the pipeline to the platform, allows the pipeline to withstand movements caused by the platform. "Enterprise is in the process of dispatching equipment and personnel required to make the necessary repairs, which are expected to arrive within the next few days. The partnership currently estimates that the repairs will take one to four weeks," the company said.

According to Bentek Energy, Anadarko Petroleum, which operates the hub, said it shut in production at Independence Hub on Tuesday after bubbles were noticed rising to the surface. A remotely operated subsea vehicle was expected to inspect the hub Wednesday. "Production dropped to about 218,000 Dth/d in yesterday's I2 cycle from 891,000 Dth/d on Monday," the Golden, CO-based research and analysis firm said. "Flows from the Hub have increased [Wednesday] to 438,000 Dth/d but Anadarko said the increase is related to a line purge. Production is expected to remain shut in for Thursday's gas day and possibly longer unless no serious problems are found during the inspection [Wednesday]."

This is the second production interruption in the platform's short operational history. Natural gas production was interrupted in late November to conduct routine maintenance. The hub, which began operating in late July (see NGI, July 23, 2007), has been producing from 15 wells. Located in 8,000 feet of water on Mississippi Canyon Block 920, approximately 123 miles southeast of Biloxi, MS, the Independence Hub is the deepest-water production platform ever installed and also is the world's largest offshore gas processing facility. Installation was completed last year (see NGI, March 12, 2007).

The hub is a 105-foot, deep-draft semisubmersible platform with a two-level production deck. The gas processed through the hub when operating at full capacity represents an increase of more than 10% in supplies from the Gulf of Mexico. The platform is operated by Anadarko Petroleum Corp. Helix Energy Solutions Group Inc. owns the remaining 20% interest that Enterprise Products Partners LP doesn't hold. Companies producing natural gas from the platform include Anadarko, StatoilHydro, Devon Louisiana Corp. and Italy's Eni Spa.

Enterprise also owns and operates the Independence Trail pipeline, which connects the hub platform to onshore markets via an interconnect with Tennessee Gas Pipeline at Enterprise's West Delta Block 68 shallow-water manifold platform. The 24-inch diameter pipeline is approximately 134 miles long and has the capacity to transport up to 1 Bcf/d.

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