A U.S. subsidiary of British-Borneo Petroleum Syndicate agreedto acquire 16.67% interest in Discovery Producer Services and itssubsidiary Discovery Gas Transmission. In addition, British-Borneohas the right to increase its ownership to 33.3% over the nextthree years. The transaction is valued at about $83.3 million.
The Discovery Project, currently owned by Texaco and Williams,is a new system consisting of an offshore and onshore gas pipeline,and a processing and fractionation system located onshore in SouthLouisiana. Williams’ 50% ownership in Discovery results from itssuccessful acquisition of MAPCO Inc. March 28. A Texaco spokesmanwould not disclose the size of ownership shares of Texaco andWilliams following the British-Borneo acquisition. However, ifBritish Borneo exercises its option to expand its share to 33.3%,the other two partners each would end up with one-third of theproject as well, Texaco spokesman Shawn Frederick said. Dependingupon the exploration success of the partners, between 15% and 30%of Discovery’s throughput will be their gas, Frederick said.
British Borneo is one of the original customers of Discovery,and it’s that relationship that spawned the partnership deal, theTexaco spokesman said. British-Borneo has dedicated gas from thedeep-water Allegheny field to Discovery. The company also hasagreed to sell to Discovery the Grand Isle 115 platform and topsidefacilities, and the eight-inch gas flow line connecting theMini-TLP on the Morpeth deep-water field to the Discovery system.The assets will be sold to Discovery Producer Services for $24million. These transactions are subject to government approvals.
“The addition of British-Borneo, with its significant gasreserves in the Gulf of Mexico, greatly enhances Discovery’sposition in this region and provides a secure outlook for itsfuture,” said Terry F. Hudgens, president of Texaco Natural Gas,North America. “With key infrastructure now in place, Discovery ispoised to benefit from ongoing deep-water development andcomplements Texaco’s other activities in the area.”
Alan Gaynor, CEO of British Borneo, said, “This transaction willincrease our influence in this exciting area and expand the Morpethcorridor south into the Green Canyon area whilst providing forexport of gas from our Allegheny development at a competitivetariff. The sale of the Grand Isle 115 platform and Morpeth gasflow line unlocks value for British-Borneo and provides Discoverywith a valuable enhancement to its growing system. Discovery willnow reach well into the deep-water area of the Gulf of Mexico.”
The Discovery Project serves the shallow water Gulf of Mexico,and parts of Ewing Bank, Green Canyon, Mississippi Canyon andAtwater Valley in the deep-water area. The system has an initialdesign capacity of 600 MMcf/d with the potential to be upgraded toat least 900 MMcf/d. In addition, the processing system, operatedby Texaco affiliate Bridgeline Gas Distribution, is currentlyoperating on a limited basis prior to completion of construction.
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