Shell Oil Co. plans to build a dual natural gas and crude oil pipeline project in the deepwater Gulf of Mexico, opening a new transportation corridor for production by 2004. The $87 million project initially would serve the southern Garden Banks area anchored by the 4,700-foot-deep Magnolia development, which is expected to begin production in late 2004. The field is operated by 75% stakeholder Conoco, and Ocean Energy holds the remaining 25% interest.

The pipelines would extend 50 miles from the Magnolia development in Garden Banks Block 783 to Shell’s Enchilada platform hub at Garden Banks Block 128. Future oil and gas developments would be able to connect into the pipelines at Magnolia or elsewhere along the pipeline route.

A new 16-inch natural gas pipeline would have a capacity of 275 MMcf/d, connecting into the Shell-operated Garden Banks Gas Pipeline System, which would then transport the gas to several pipelines linked to onshore locations. The $47 million pipe would be built, owned and operated by Shell Gas Gathering LLC.

“This new pipeline lateral is an important extension to Shell’s network of natural gas pipeline systems in the Gulf of Mexico,” said Doug Krenz, president, Shell Gas Transmission. “The pipeline opens up this area for deepwater producers, providing adequate capacity to serve numerous developments and access to the existing Gulf of Mexico pipeline infrastructure.”

The $40 million, 14-inch oil pipeline will be built and operated by Shell Pipeline Co. LP. It would have a capacity of 75,000 bbl/d, and would connect to the existing Auger pipeline system at Garden Banks Block 128. The Auger system provides downstream transportation and market choices, including the Eugene Island and Bonito Crude markets to maximize value to the producer. The pipe would be built and operated by Shell Pipeline Co. LP.

“This project is a strategic extension of our existing deepwater oil transportation system into the deeper waters of the Garden Banks area and complements our business strategy of providing customers with reliable, flexible and cost-effective oil transportation from the deepwater areas of the Gulf of Mexico,” said John Hollowell, general manager, crude business unit of Shell Pipeline. Both of the pipelines would be 100% owned by Shell affiliates.

Conoco announced plans to develop the Magnolia field, located about 180 miles south of Cameron, LA, in December 2001 (see NGI, Dec. 24, 2001). Daily production from Magnolia is expected to reach 50,000 bbl and 150 MMcf in 2005. 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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