Williams to Build, Operate Deepwater Facilities for Dominion, Pioneer

Dominion Exploration & Production and Pioneer Natural Resources signed an agreement with various subsidiaries of Williams that will provide deepwater gas and oil infrastructure development and transportation services for the Devils Tower field. The deal calls for Williams to build and own the floating production facility as well as the gas and oil export pipelines. Dominion is operator of the field, with 75% working interest, and Pioneer owns the remaining 25% working interest.

Williams will build an 18-inch diameter oil export line, Mountaineer Oil Pipeline, which will extend about 120 miles from Mississippi Canyon 773 to Main Pass 34 and will transport about 150,000 b/d of oil. The oil will be delivered to the Empire terminal, offshore Mississippi. Williams also will build the 350 MMcf/d Canyon Chief Gas Pipeline, an 18-inch diameter deepwater line that will extend about 90 miles from Mississippi Canyon 773 to Main Pass 261. The gas will be delivered into Transcontinental Gas PipeLine's Mobile Bay facilities. Dominion will produce oil and gas from Devils Tower through the Williams-owned infrastructure.

Dominion had previously contracted with SparTEC, a subsidiary of J. Ray McDermott, to provide the truss spar floating production facility. Williams will assume responsibility for payments due under the SparTEC contract as part of the agreement.

"Dominion is able to significantly enhance the field economics by monetizing the potential third party use of the infrastructure," said Duane Radtke. "It will also allow Dominion to focus our efforts and our capital resources on our core business of exploration and production. Williams gains a significant contract to anchor these critical infrastructure investments in a deepwater area that is ripe for further development."

Steve Springer, senior vice president and general manager of Williams' Midstream Operations, said the deal adds "significant value to Williams' Mobile Bay infrastructure and complements Williams' ability to serve growing natural gas demand in the Southeast United States."

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