December 2024, Vol. 251, No. 12
Editor's Notebook
Editor’s Notebook: Happier Days Off the U.S. Gulf Coast
By Michael Reed, Editor-in-Chief
(P&GJ) — Enbridge, already keen on building and operating new crude oil and natural gas pipelines in the U.S. Gulf of Mexico, recently announced plans for two new conduits in support of bp’s Kaskida development.
The 200,000-bpd Canyon Oil Pipeline System and the 125-MMcf/d Canyon Gathering System are expected to cost $700 million and be operational by 2029.
Bp made a final investment decision on the Kaskida project in July, with oil production expected to start in 2029. The project will be BP’s sixth hub in the Gulf, involving a floating production platform – this one with the ability to produce 80,000 bpd from six wells during Phase 1.
Engineering work for the Kaskida FPU has begun with Singapore’s Seatrium carrying out the early engineering stage.
Enbridge is already a major gas transporter in the Gulf of Mexico, handling over 40% of the region’s total offshore natural gas production. Enbridge’s offshore pipelines span more than 1,200 miles and connect deepwater developments to delivery points in Louisiana and Mississippi.
The Canyon oil expansion will consist of 24-inch and 26-inch pipelines, dubbed Canyon Oil, which will originate in the Keathley Canyon area and deliver crude to the existing Green Canyon 19 platform, operated by Shell Pipeline Company LP for final delivery to the Louisiana market.
The natural gas pipeline, called Canyon Gas, will consist of a 12-inch pipeline, connecting subsea to Enbridge’s existing Magnolia Gas Gathering Pipeline. The Magnolia system will then deliver to Enbridge’s downstream FERC-regulated Garden Banks Gas Pipeline.
The definitive agreements for the projects are underpinned by long-term contracts, “consistent with Enbridge’s low-risk business model and provide utility-like returns,” the company said.
“This opportunity diversifies our Gulf of Mexico offshore business, strengthens our significant natural gas pipeline portfolio, and enhances our ability to meet the strategic needs of our customers,” said Cynthia Hansen, EVP & president of Enbridge Gas Transmission and Midstream.
The agreements contain options allowing bp to connect potential future production from its emerging Paleogene portfolio into the newly developed pipelines. Both the Canyon Oil and the Canyon Gas pipelines are being designed to accommodate connections from nearby discoveries.
Both the Canyon Oil and the Canyon Gas pipelines are being designed to accommodate connections from nearby discoveries.
For midstream, the announcement serves as a reminder of just how truly active the oil and natural gas offshore pipeline sector in the Gulf has been in recent years, with ongoing development and expansion.
Of course, it doesn’t hurt that over 48% of total U.S. petroleum refining capacity is located along the coast, as is 51% of total U.S. natural gas processing plant capacity is in the Gulf coast area.
But the region also boasts more than 28,000 miles (45,000 km) pipeline that, for the most part, operates in support of Gulf shelf and near-shelf facilities. Notably, more than 20% of these pipelines have been added in the last five years, reflecting a robust expansion in the region’s gas infrastructure. Recently, a growing percentage of that number has been in support of deepwater operations.
There is also optimism in the midstream section of the Gulf due to projected deepwater development and the near-capacity systems operations in the region. This suggests a need for future expansion of the existing pipeline network, which is aging and will need replacement.
To that end, Shell Pipeline Company recently said it had reached a final investment decision for the Rome Pipeline, an offshore pipeline construction project, increasing access between Shell’s Green Canyon Block 19 pipeline hub platform and the Fourchon Junction facility on the Louisiana Gulf Coast.
The pipeline will bring greater capacity to Shell’s extensive Gulf of Mexico footprint, expanding support for domestic oil production in the western and central area of the GoM. It is expected to be in-service in 2028.
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