Offshore

Although no gas is flowing from the Sable Offshore EnergyProject to markets in Maritimes Canada and New England, theMaritimes & Northeast Pipeline crossed a significant politicalhurdle yesterday that smoothes the way for eventual service. Itsigned an agreement with the Assembly of the Nova Scotia Mi’kmaqChiefs covering a wide variety of environmental and socio-economicmatters. Financial details of the agreement were not released, butthe Indians had been demanding about $98 million, according todocuments filed with the National Energy Board. Pipeline officialsdid say they have agreed to contribute funds for a number ofpipeline monitoring and educational activities. They also haveagreed to give the Indians 5% of the project work done in theprovince.

The U.S. Supreme Court agreed Monday to hear appeals byUSX-Marathon and Mobil regarding the drilling ban on leasesoffshore North Carolina. The two producers spent $156 million in1981 on leases that became subject to a drilling ban in 1990 whenCongress adopted the Outer Banks Protection Act.

Newfield Exploration Co. announced yesterday that the A-2 gaswell blowout on the Ship Shoal 354 production platform has beencapped and stabilized. The blowout occurred Sept. 9 andself-ignited on Sept. 12. Newfield operates the platform, which islocated about 140 miles south of New Orleans, LA, in 463 feet ofwater. There were no injuries associated with the blowout or thewell capping operations and pollution from the event has beenminimal, the company said.

After previously estimating that an outage of most production onMatagorda Offshore Pipeline System due to a line leak would last untilnext Wednesday (see Daily GPI, Sept. 10), MOPS operator Northern NaturalGas said leak repairs were completed Friday morning, two days afterthe outage began. Only about 15 MMcf/d remained shut in, a spokesmansaid, and that was expected to be restored late Friday afternoon.

A Matagorda Offshore Pipeline System 24-inch line leak at theMustang Island 758 delivery point was confirmed Wednesday morning,causing the shut-in of 17 of the 24 producing blocks connected toMOPS. Shippers and operators were being notified around noonWednesday that the outage, affecting a total of 129,743 MMbtu/d,will last about seven days.

Energy Secretary Bill Richardson last week announced the Clintonadministration will allow producers with offshore federal leases topay part of their royalties with oil for a limited time rather thanwith cash. With this action, DOE would draw down the oil oversupplythat has been depressing prices and provide some relief, if onlytemporarily, to small oil and gas producers. Richardson indicatedthe department will announce further initiatives this week to boostlagging oil and gas production in the United States.

Energy Secretary Bill Richardson last week announced the Clintonadministration will allow producers with offshore federal leases topay part of their royalties with oil for a limited time rather thanwith cash. This action would help to draw down the oil oversupplythat has been depressing prices and provide some relief, if onlytemporarily, to small oil and gas producers. Richardson indicatedthe department will disclose further initiatives this week to boostlagging oil and gas production in the United States.

Well depletion rates in the Gulf of Mexico have reached astartling 38% this year and within the next three years could reach49%, according to a report by Houston-based Simmons & Co.International.

Leviathan Gas Pipeline Partners subsidiary Flextrend DevelopmentCo. bought a 100% working interest in the Sunday Silence field fromTatham Offshore Development, a wholly-owned subsidiary of DeepTechInternational, which was recently acquired by El Paso Energy. Thefield is contained within four blocks in the Ewing Bank area of theGulf of Mexico in about 1,500 feet of water. Flextrend has begundrilling of a new delineation well, the third to be drilled in thefield. Sunday Silence was discovered in July 1994, and its firstdelineation well was flow tested in September 1994 at a sustainedproduction rate of 8,700 barrels/d of oil and 5.4 MMcf/d of gas.Sunday Silence has received a royalty abatement from the MineralsManagement Service for its first 52.5 million Boe. ElÿPaso Energy,general partner of Leviathan, said the company plans to sell aportion of the field to a development partner as it is not thecompany’s custom to hold a large shares in single E&ampP ventures.