By Brad Petzold, Vice President, Enbridge Offshore Pipelines
A decade can go by in a flash. Yet when we reflect more closely on those 10 years, we realize all that has happened – and, often, how far we have come. Such is the case with Enbridge’s Offshore Pipelines unit.
Enbridge acquired offshore pipeline assets from Shell at the end of 2004, and as a result became a key player in Gulf of Mexico energy production. We were entirely focused on natural gas at the time, and these assets were viewed as very well positioned, with access to promising new plays in deep and ultra-deep waters.
Over the past 10 years, Enbridge’s Offshore Pipelines unit has seen considerable growth – through multiple opportunities to serve both gas and oil transport needs. What started with the connection of deepwater fields developed or owned by Shell, a pioneer in the space, has since expanded to include numerous world-class developments.
“Enbridge acquired a business that was already serving prominent fields such as Bullwinkle, Mars, Auger, and Thunderhorse, which had pushed the limits of technology at the time and required pipe-lays at depths that were challenging as well,” recalls Doug Krenz, Senior Vice President of Interstate Pipelines at Enbridge.
“After Enbridge bought the business, we continued to step out further and deeper, connecting new fields like Shenzi, Atlantis, Neptune, and most recently the Jack St. Malo complex. But what is most exciting is that it doesn’t stop there – we have a strong slate of projects lined up for the future that will continue to bolster our growth.”
In addition to Enbridge’s recently completed initial phase of the Walker Ridge Gas Gathering System, serving Jack St. Malo, the Big Foot, Heidelberg Lateral, and the just-announced Stampede Lateral crude oil pipelines are expected to enter service over the next several years.
“Importantly, since most of the new deep-water projects are associated oil or gas reservoirs, and development is primarily based on the oil reserve potential, we are now securing oil transportation projects as a direct result of our targeted strategy,” says Krenz. “By 2020, we expect our net capital employed, based on known projects alone, to be approximately $2 billion – about three times what it was at the time of the acquisition.
“The producing community has a high regard for Enbridge – our record of reliability, technical competence, and the values we stand for,” he adds. “Those things, together with an aggressive commercial effort, have led to a good run of success in bringing these new projects home.”
Of course, anyone who has been close to the business the past 10 years knows that not all has been smooth sailing. Hurricane Rita, Hurricane Katrina, and Tropical Storm Eduardo left many Gulf of Mexico players with unexpected repair costs and outage periods. The entire industry had to overcome fallout from the Macondo incident in 2010. Meanwhile, in recent years, gas prices have reduced the volumes available for transport.
While caution, prudence, and efficiency are the watchwords in light of the current oil-price environment, Enbridge’s Offshore Pipelines unit sees a bright future ahead.
“The long development period for major deepwater projects makes them less susceptible to short-term changes in price,” says Krenz. “Clearly, Enbridge acquired this business with a long-term perspective in mind, a perspective shared by many of the large producers. We have more good projects in the queue that put us on a very positive trajectory.”
Enbridge currently handles about 35 per cent of total offshore gas production, and 45 per cent of deepwater gas production, in the Gulf of Mexico – spearheaded by a dedicated workforce.
“Working in the offshore industry, and especially working offshore in the field, is not for the faint of heart. Many things require special planning and consideration, whether it’s laying pipe in water that’s a mile deep or taking a helicopter to get out to your workplace,” says Krenz.
“We are fortunate to have some of the best in the business, in terms of experience and dedication. Our team members, including many who have remained with us since the time of the acquisition, have allowed us to overcome the challenges – and make the business what it is today.”