Texaco Press Release - Texaco And Williams Announce British-borneo As New Partner
FOR RELEASE: THURSDAY, APRIL 2, 1998.
HOUSTON, April 2 -- Texaco and Williams announced today that a U.S. subsidiary of British-Borneo Petroleum Syndicate, P.L.C., has entered into an agreement to acquire 16.67 percent interest in Discovery Producer Services LLC and its subsidiary Discovery Gas Transmission LLC. In addition, British-Borneo has the right to increase its ownership to 33.3 percent over the next three years. The transaction is valued at approximately (USD) $83.3 million.
The Discovery Project, currently owned by Texaco and Williams, is a new gas pipeline system consisting of a major offshore and onshore natural gas pipeline, and a processing and fractionation system located onshore in South Louisiana. Williams' 50 percent ownership in Discovery results from its successful acquisition of MAPCO Inc. on March 28, 1998.
Concurrent with this transaction, British-Borneo has dedicated gas from the deepwater Allegheny field to Discovery. British-Borneo has also agreed to sell to Discovery the Grand Isle 115 platform and topside facilities, and the eight-inch gas flowline connecting the Mini-TLP on the Morpeth deepwater field to the Discovery system. The assets will be sold to Discovery Producer Services LLC for $24 million. These transactions are subject to government approvals.
The Discovery Project serves the shallow water Gulf of Mexico, and parts of Ewing Bank, Green Canyon, Mississippi Canyon and Atwater Valley in the deepwater area. The system has an initial design capacity of 600 million cubic feet per day (mmcfpd) with the potential to be upgraded to at least 900 mmcfpd. In addition, the processing system, which is operated by Texaco affiliate Bridgeline Gas Distribution LLC, is currently operating on a limited basis prior to completion of construction. Key components of the Discovery Project include:
- A 30-inch pipeline extending 105 miles from a platform in Ewing Bank Block 873, on the edge of the deepwater province, onshore to Larose, La. Three shallow water gathering lines, including a 20-inch line from British-Borneo's Grand Isle 115 platform, are in place.
- A newly built, 600 mmcfpd cryogenic processing facility at Larose designed to be the most efficient in the region in recovering natural gas liquids.
- A fractionating unit at Paradis, La. capable of processing up to 42,000 barrels per day of natural gas liquids.
Commenting on the agreement, Terry F. Hudgens, President of Texaco Natural Gas - North America, stated, "The addition of British-Borneo, with its significant gas reserves in the Gulf of Mexico, greatly enhances Discovery's position in this region and provides a secure outlook for its future. With key infrastructure now in place, Discovery is poised to benefit from ongoing deepwater development and complements Texaco's other activities in the area."
"This partnership further strengthens Discovery's position in the Gulf of Mexico," said Steve Malcolm, Senior Vice President and General Manager of Williams' midstream gas & liquids unit. "We look forward to expanding our relationship with British-Borneo, a growing producer, and pursuing other opportunities in the Gulf."
Alan Gaynor, Chief Executive for British Borneo, said, "This transaction will increase our influence in this exciting area and expand the Morpeth corridor south into the Green Canyon area whilst providing for export of gas from our Allegheny development at a competitive tariff. The sale of the Grand Isle 115 platform and Morpeth gas flowline unlocks value for British-Borneo and provides Discovery with a valuable enhancement to its growing system. Discovery will now reach well into the deepwater area of the Gulf of Mexico. Combined with the state-of-the-art facilities at Larose and an ability to increase line capacity, Discovery's position should enable it to capture a significant portion of gas discovered in the Morpeth/Allegheny corridor and surrounding areas. It is also well positioned to serve the prospective areas of the ultra deepwater area to the south and east of Morpeth and Allegheny and therefore offers significant growth potential."
Gaynor concluded by saying, "We are delighted to have completed this transaction with Texaco, our existing exploration partner, and look forward to developing a strong business relationship with Williams. Discovery represents a significant new business opportunity for British-Borneo through our involvement in an expanding and strategically important new pipeline system and an opportunity to learn from some of the best companies in this sector."
Updated: April 1998