Fossil Energy – Deepwater Project
Enbridge announced earlier this week that it will build, own, and operate crude oil and natural gas pipelines in the U.S. Gulf of Mexico for the recently sanctioned Kaskida development, operated by BP Exploration & Production.
The crude oil pipeline, named the Canyon Oil Pipeline System (Canyon Oil), will be a combination of 24″ and 26″ pipes with a capacity of 200,000 barrels per day. It will originate in the Keathley Canyon area and deliver crude to the existing Green Canyon 19 platform, operated by Shell Pipeline Company LP for ultimate delivery to the Louisiana market.
The natural gas pipeline, named the Canyon Gathering System (Canyon Gas), will be a 12″ pipeline with capacity of 125 million cubic feet per day and will connect subsea to Enbridge’s existing Magnolia Gas Gathering Pipeline, which then delivers to Enbridge’s downstream FERC-regulated Garden Banks Gas Pipeline.
The definitive agreements are underpinned by long-term contracts consistent with Enbridge’s low-risk business model and provide utility-like returns. The agreements contain options that bp may elect to exercise 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.
Detailed design and procurement activities will commence in early 2025 with the pipelines expected to be operational by 2029. The cost of the pipelines will be approximately US$700 million.
“We are extremely pleased to extend an existing relationship with bp and support their new deepwater development. 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 Gas Transmission and Midstream. “The Canyon Oil and Gas pipelines offer an attractive opportunity for Enbridge to serve customers in the Gulf of Mexico and further expand our U.S. Gulf Coast footprint. The agreements generate stable and predictable cash flow and provide future growth opportunities.”
