Dauphin Island Gathering Partners (DIGP) has signed an uniquesupply and gathering agreement with producers Elf Exploration Inc.,Coastal Oil and Gas, Nippon Oil Exploration U.S.A. and PogoProducing, who are partners in the deep-water Virgo prospect.

The deal commits the producers gas supplies from a four-blockunit around Viosca Knoll Block 823 offshore Gulf of Mexico to theDIGP system. In return DIGP will provide deep-water wellheadproduction handling services as well as downstream gathering andtransmission services. DIGP will build a 17-mile, large-diametergathering lateral to connect the Virgo platform to the existingDIGP system in the vicinity of Main Pass-East Addition Block 225.In addition, DIGP will have rights to the Virgo platformfacilities, which will serve as a strategic hub to attach new gassupplies from other deep-water developments.

The Virgo producers have commissioned construction of a platformthat will be set in 1,130 feet of water in Viosca Knoll Block 823.Construction of the platform is underway, and pipeline constructionis planned for mid-1999 for an anticipated production startup oflate 1999.

DIGP is a 260-mile pipeline system designed to gather naturalgas supplies from the prolific eastern Gulf of Mexico producingregion. It is the only system in the region that provides marketoutlets to both Venice, LA, and Coden, AL. DIGP placed Phase I ofits system expansion into service in April, making it the firsteastern Gulf of Mexico pipeline to transport deep-water gasproduction to onshore facilities in Alabama. The Phase IIexpansion, which was announced in the second quarter, is expectedto be completed in October and will provide delivery capability toonshore pipelines of 1.1 Bcf/d.

DIGP is a partnership of subsidiaries of Duke Energy (37.3%),MCN Energy (34.5%), Coastal (13.6%), Consolidated Natural Gas(13.6%) and Titan Offshore (1%).

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