Owners of the Neptune discovery have agreed to chip in $850 million to develop their Gulf of Mexico deepwater oil and gas field, situated in the prolific Atwater Foldbelt play along with several other major discoveries on the same geological trend, including Atlantis and Mad Dog.
Neptune operator BHP Billiton and partners Woodside Petroleum, Marathon Oil and Maxus Exploration, subsidiary of Repsol YPF, also have tapped Canada’s Enbridge to build and operate $100 million worth of lateral oil and gas pipelines necessary to transport Neptune’s production to market.
Neptune represents several firsts for the U.S. Gulf. It would be BHP’s first operated project and Woodside’s first production in the region. BHP and Woodside, Australia’s largest producers, hold large exploration positions in the Gulf. Neptune would be Enbridge’s first oil line in the Gulf.
Neptune close to Green Canyon pipeline
Moreover, Neptune is a major development relatively close to Enbridge’s existing Green Canyon pipeline infrastructure, the company noted.
“The Neptune lateral project is another positive step in our strategy of building on Enbridge’s recently acquired deepwater offshore businesses in the Gulf of Mexico,” Enbridge Vice President Dan Tutcher said June 30. Enbridge already operates natural gas pipelines in the Gulf.
In addition, Neptune would provide a new natural gas supply and potential for additional supply sources for the existing Cleopatra, Manta Ray and Nautilus offshore pipeline systems, all partially owned by Enbridge.
Enbridge said oil from the Neptune would be delivered to the existing Caesar Oil Pipeline, which connects with the Cameron Highway pipeline to Texas markets.
Enbridge will build 23 miles of pipe
Plans call for Enbridge to construct and operate a natural gas lateral pipeline that would consist of 23 miles of 12-3/4-inch diameter pipe and an oil lateral made up of 23 miles of 20-inch diameter pipe. The laterals would have the capacity to deliver more than 200 million cubic feet of natural gas per day and roughly 50,000 barrels of oil per day.
Neptune, about 120 miles from the Louisiana coast in water depths ranging from 4,200 to 6,500 feet, has estimated recoverable reserves of 100 million to 150 million barrels of oil equivalent. BHP has a 35 percent stake in the field, followed by Marathon with 30 percent, Woodside with 20 percent and Maxus with 15 percent.
Pipeline connection to offshore production facilities is scheduled for the second quarter of 2007, with first production expected by year-end 2007.
“Neptune will be our first operated, deepwater standalone facility in the (Gulf) and represents a significant milestone towards building a core business in that region,” said Philip Aiken, BHP’s group president of energy.
With the BP-operated Mad Dog field, which came on stream this year; the BP-operated Atlantis field, which is scheduled to come on line in 2006, and now Neptune, BHP’s daily net production from the U.S. Gulf would exceed 100,000 barrels of oil equivalent.
The Neptune facility has a design capacity to produce up to 50,000 barrels of oil and 50 million cubic feet of gas per day. BHP’s share of the project is $300 million.
The field comprises Atwater Valley blocks 573, 574, 575, 617 and 618. The production facility would be in about 4,250 feet of water.
Tension-leg platform selected
A standalone, tension-leg platform has been selected for the development, BHP said, adding that facilities, wells, and completions “are proven designs” that have been used successfully in the deepwater Gulf.
The wells, subsea systems, flowlines, floating systems, topsides and risers will be designed, procured, fabricated and operated by BHP on behalf of the Neptune joint venture partners, BHP said.
Neptune, found in 1995, was the first discovery in the western Atwater Foldbelt, with an initial appraisal well (Neptune-2) drilled in 1997. Neptune-3, drilled in 2002, encountered about 130 feet of net pay. Neptune-5, drilled in 2003, found a whopping 500 feet of net pay in a 1,200-foot column. And Neptune-7, drilled in 2004, intersected 114 feet of net pay.
