El Paso Energy Partners LP reported that its subsidiary, VK Deepwater Gathering Co. LLC, has entered into a letter of intent to construct a 37-mile natural gas pipeline connecting the deepwater Gulf of Mexico to markets in the Midwest and Northeast.

El Paso entered the agreement with the producers of the Medusa discovery located in Mississippi Canyon Block 582 in the Gulf of Mexico. The new pipeline will run from the terminus of El Paso Energy Partners’ Viosca Knoll Gathering System at South Pass Block 55 to Medusa. The three Medusa partners are Murphy Exploration & Production Co., a subsidiary of Murphy Oil Corp.; British-Borneo Deepwater LLC, which is owned by Agip Petroleum Co. Inc.; and Callon Petroleum Operating Co., a subsidiary of Callon Petroleum Co.

The 12-inch diameter pipeline will extend into the Deepwater Trend in water depths up to 2,200 feet, El Paso said. Located approximately 60 miles offshore Louisiana, the pipeline will be capable of transporting up to 160 MMcf/d of natural gas into the Viosca Knoll Gathering System and to El Paso Corp.’s Tennessee Gas Pipeline system. Construction is scheduled to begin in the spring of 2002 with first production from the Medusa development anticipated in the fourth quarter of the same year.

“We are pleased to be working with Murphy Expro and its partners to provide the pipeline infrastructure needed to serve their major deepwater development at Medusa,” said James Lytal, president of El Paso Energy Partners. “The pipeline will be strategically positioned to serve future discoveries in the surrounding area. This investment illustrates our focus of meeting the demand for pipeline infrastructure to accelerate the development of new energy supplies from the Deepwater Trend in the Gulf of Mexico.”

The new pipeline is the latest of many projects that El Paso Energy Partners has undertaken over the last few years. It has completed a number of deepwater projects, including the Allegheny Oil Pipeline and the East Breaks Gathering System, which serves the Hoover Diana Field development. The company also assumed operation of the Poseidon Oil Pipeline System, acted as project manager on the construction of oil and gas export pipelines for the Typhoon Field development, and successfully installed the Prince Tension Leg Platform and oil and gas export pipelines.

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