Conoco Inc. said last week it plans to proceed with the $600 million development of the Magnolia Field in the deepwater Gulf of Mexico. The field in Garden Banks blocks 783 and 784, about 180 miles south of Cameron, LA, is expected to begin oil and gas deliveries in the fourth quarter of 2004.

Conoco holds a 75% working interest and is the operator of the field, which is in water nearly 4,700 feet deep. Ocean Energy owns the remaining 25%. Conoco said it expects to install a production platform during the summer of 2004. It also said the location, about 30 miles from existing pipelines and production facilities, will enable Magnolia to be a regional hub for future Conoco-operated developments or third-party tie-ins located in southeastern Garden Banks. Commercial negotiations are underway to determine whether a tension leg platform or a spar will be utilized, and to determine the off-take provider and route.

“The Magnolia facilities will strategically position Conoco by providing early infrastructure in a very active part of the deepwater Gulf of Mexico to handle the tie-in of future production,” said Rob McKee, Conoco’s executive vice president, exploration and production. “The deepwater Gulf is one of the foundations for Conoco’s growth in North America, and the rapid development of fields such as Magnolia supports that growth strategy.”

Daily production from Magnolia is expected to reach 50,000 bbl of oil and 150 MMcf of gas in 2005. Magnolia Field reserves are estimated at 150 MMboe.

The Magnolia Field was discovered with the first well drilled by Conoco’s Deepwater Pathfinder in May 1999, and two further appraisal wells confirmed the field’s commerciality. All previously drilled wells will be converted to production wells as part of the eight wells required to bring Magnolia into full production. First production from the field is anticipated in the fourth quarter of 2004, with peak production occurring in 2005.

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