Enbridge Signs LoI Worth $500 Million With Chevron For WRGS In Gulf Of Mexico

Published: 29-Jul-2009

By: Staff Writer Staff Writer Staff Writer

Enbridge Inc. (Enbridge), a company that transports natural gas and crude oil, has signed letters of intent (LoI) with Chevron USA, Inc. for extension of its central Gulf of Mexico offshore pipeline system. As per the LoI, Enbridge will build, own and operate the Walker Ridge gathering system (WRGS) to offer natural gas gathering services to the potential Jack, St. Malo and Big Foot ultra deepwater developments. The WRGS is expected to cost about $500 million.

"The Gulf of Mexico has long been a major producing region for North American oil and gas, and there is a significant trend towards ultra deepwater developments in the Gulf of Mexico," said Patrick D. Daniel, president and chief executive officer, Enbridge. "The Walker Ridge Gathering System will tie in a new supply source for Enbridge's Manta Ray and Nautilus offshore pipeline systems, enhancing Enbridge's existing offshore pipeline business and establishing a strategic base for future growth opportunities in the ultra-deep Gulf of Mexico. In addition, the development of the new gathering system represents an attractive investment opportunity itself, with risk and return characteristics comparable to Enbridge's normal business model."

Daniel continued, "This latest addition to our portfolio of commercially secured projects is indicative of a variety of growth opportunities which are currently under development, supporting our expectation that we will be able to extend our 10% plus 2008-2013 average growth rate at a similar rate well beyond 2013. Enbridge has ample financial capacity to fund the equity component of this investment from internally generated cash flow and surplus balance sheet equity."

The WRGS is expected to include about 190 miles of 8-inch, 10-inch and/or 12-inch diameter pipeline at depths of up to 7,000 feet and will have a capacity of 100 million cubic feet per day (mmcf/d).

Enbridge offshore pipelines currently transport about 40% of all deepwater Gulf of Mexico natural gas production and include the UTOS, Stingray, Garden Banks, Nautilus, Manta Ray, Mississippi Canyon, Okeanos and Destin systems. Enbridge offshore assets include joint venture interests in 12 transmission and gathering pipelines in six major pipeline corridors in Louisiana, Mississippi and Alabama offshore waters of the Gulf of Mexico. The system moves on average about 30% of the Gulf of Mexico natural gas production at a rate of 2.5 billion cubic feet per day (bcf/d).

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