Dominion Exploration & Production is forecasting some significant daily gas production totals from the new Devils Tower field, which started flowing this week. The field, which is located about 140 miles southeast of New Orleans on Mississippi Canyon block 773 in the deepwater Gulf of Mexico, is expected to produce a total of 60 Bcfe of gas and oil net to Dominion over the next 12 months. Pioneer Natural holds a 25% stake in the project.

“Production and corresponding cash flow from deepwater projects like Devils Tower and Front Runner, which will come on later this year, provide tremendous upside to our E&P program and complements our stable, long-life onshore program,” said Dominion Resources CEO Thomas Capps. “We expect to continue to see increased production, strong operating cash flow and a solid platform for growth from our E&P operations.”

Dominion E&P CEO Duane Radtke said the Devils Tower project is Dominion’s fourth producing property in its deepwater portfolio, and the first that it has operated. It will be “a major contributor to our deepwater production growth over the next two years and will generate significant cash flow,” he said.

Production from the Mississippi Canyon 773 A-1 well began Wednesday. It is the first of eight well completions to be brought on in sequence through the first quarter of 2005. Oil and gas production from Devils Tower flows through a spar floating production facility owned by a unit of Williams. The spar is designed to handle 60,000 bbl/d of oil and 110 MMcf/d of gas.

Located in 5,610 feet of water, the spar facility is the world’s deepest dry-tree spar. In addition to the Devils Tower wells, a three-well subsea development is currently under evaluation to connect the adjacent Triton and Goldfinger discoveries to the host platform. From the platform, oil and gas are fed into export pipelines owned and operated by Williams. Oil is delivered onshore to a third-party terminal. Natural gas is delivered onshore to Williams’ Mobile Bay plant for processing.

“Our deepwater investments are designed to serve multiple fields,” said Alan Armstrong, senior vice president of Williams’ midstream gas and liquids group. “We’ve taken the approach of building strategic hubs where we can aggregate multiple wells and fields into single facilities. This saves producers money and allows them to bring their production online at a faster pace.

“For example, we signed the papers to build the spar for Devils Tower in 2001. Since then, Dominion and Pioneer have made two other discoveries in neighboring blocks at their Triton and Goldfinger prospects. We’re actively working with them to connect these discoveries to the Devils Tower spar,” said Armstrong.

Williams invested $500 million to develop the spar, associated pipelines and related infrastructure for the Devils Tower project. The 117-mile Mountaineer oil pipeline is a combination of 18- and 20-inch- diameter pipe. The 102-mile Canyon Chief gas line consists of 18-inch-diameter pipe. Williams also increased the condensate handling capacity at its Mobile Bay gas plant, adding a 9,000-barrel slug catcher and 3,500 b/d condensate stablizer.

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