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Enterprise, Producers Group Expanding Gas Processing, Capacity from Independence Hub Platform, Pipe

Houston-based Enterprise Products Partners LP on Wednesday announced agreements with the Atwater Valley Producers Group to expand both the natural gas processing capacity of its Gulf of Mexico Independence Hub platform and the capacity of its planned Independence Trail gas pipeline to 1 Bcf/d from 850 MMcf/d.

The expansions, said Enterprise, will cost about $28 million, and will accommodate expected output from three additional discoveries made in the area since the project was initially announced in late 2004 (see Daily GPI, Nov. 11, 2004). The expansion will be supported mostly by an increase in fixed fees that the producers group will pay during the first five years of operation of the Independence Hub platform. The facilities, currently under construction, are expected to be installed in 2006 and receive first production in 2007.

The offshore projects will process and gather gas and condensate production from the Atwater Valley, DeSoto Canyon, Lloyd Ridge and Mississippi Canyon areas located in the eastern region of the deepwater Gulf. The producers group is composed of Anadarko Petroleum Corp., Dominion Exploration & Production Inc., Kerr-McGee Oil & Gas Corp., Hydro Gulf of Mexico LLC (formerly Spinnaker Exploration Co.), Devon Energy Corp. and Energy Resources Technology Inc., a subsidiary of Cal Dive International Inc.

At the time of the original announcement, there were seven natural gas fields discovered nearby, and as part of the original agreement, the producers dedicated future production from a number of undeveloped blocks in the area. The decision to expand capacity followed three new gas discoveries last year: Mondo NW field, January 2005 (Anadarko 50% working interest and operator; Murphy Oil 50% working interest); the Cheyenne field, January 2005 (Anadarko 100% working interest); and the Q field, June 2005 (Hydro 50% working interest and operator; Dominion 50% working interest).

Enterprise CEO Robert G. Phillips said the expansion will "increase the capacity of the Independence platform and pipeline projects by 18%, as a result of producers' continuing success in the development of this important area of the deepwater trend. With 10 natural gas fields discovered on the acreage dedicated to these facilities, I believe this project is supported by one of the best reserves to production profiles of any deepwater project that we have developed in the Gulf of Mexico over the past 10 years." The project remains on schedule and on budget, he added.

The Independence Hub is 80%-owned by affiliates of Enterprise and 20%-owned by Cal Dive. The 105-foot deep-draft, semisubmersible platform, which will be located in Mississippi Canyon Block 920, will have a two-level production deck. The platform is currently under construction with the hull 60% complete and the topsides or production facilities 70% complete. The platform is expected to be mechanically complete in 1Q2007. Anadarko will operate the platform, which is designed to process production from the initial 10 anchor fields, with excess payload capacity to tie back up to nine additional subsea pipelines.

The Independence Trail pipeline, which is owned by an affiliate of Enterprise, is a new 134-mile, 24-inch pipeline that will transport production from the Independence Hub to an interconnect with Tennessee Gas Pipeline located in West Delta Block 68. Construction of the pipeline is scheduled to be completed in 4Q2006. Both the platform and the pipeline are fully subscribed by the Atwater Valley Producers Group for the first five years of service.

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