American Oil and Gas Reporter - June 2015 - 95

significant portion of the future payments. At Delta House, neither LLOG nor its partners were investment grade. However,
LLOG sought an infrastructure transaction with the reserves as
the ultimate source of value for the infrastructure owner. LLOG
recognized that the infrastructure owner also might perceive value in the potential of hosting yet-undiscovered third-party production, or eventually relocating the FPS.
LLOG began negotiations with ArcLight Capital Partners in
May 2012 to ascertain the feasibility of an infrastructure transaction for Delta House. One of the keys to making the transaction successful was a tiered processing fee so that ArcLight could
be assured a reasonable return at the low end of the reserve range,
and the producers would not have to pay an inordinate amount
of processing fees if the high end of the reserve spectrum materialized.
Although the transaction was not yet fully executed, LLOG
was confident enough that the deal would be closed that it began purchasing long-lead-time items for the project in July. The
ArcLight transaction closed in December 2012, and the remaining construction contracts were executed quickly, allowing
FPS construction to begin that same month. Without the ArcLight
transaction, the project likely would have been delayed a year to
allow further delineation drilling.
Export Lines And Topsides

LLOG reviewed landing point options for both the oil and gas
exports for overall flow assurance, capacity assurance, connection cost, counterparty reliability of performance, agreement
terms, and overall revenue ($/unit) net back, including transportation and market effects. Most of the options required about 35
miles of new pipe, so connection cost was not necessarily the
largest factor.
For oil export, since Delta House oil is sweet, the Shell-operated Odyssey Pipeline system represented the best overall fit.
LLOG determined that the optimum oil export system would be
a departing oil pipeline rated for a maximum allowable operating pressure (MAOP) of 3,705 psi (ANSI 1,500). An above-water specification break was necessary downstream since the connection to Odyssey had to match its MAOP of 1,440 psi.
The final oil export system had 31 miles of new 123⁄4-inch pipe
from the Delta House FPS to Enterprise Products Partners' Viosca
Knoll 817 platform in 673 feet of water, and a second five-mile
leg of new 123⁄4-inch pipe departing from Viosca Knoll 817 and
terminating in a hot tap to Odyssey's line in about 300 feet of water.
For gas export, the BP Pipeline (North America)-operated Destin Pipeline Company's system was determined the best fit. Gas
from Delta House is delivered through 31 miles of new 16-inch
line that links the FPS to the 24-inch Destin system.
As the laboratory reports became available on fluids from the
Delta House wells, it was apparent that the one of the fields had
unusually high propane and butane. Both are difficult to manage
in an offshore environment, since they can cause oil export lines
to exceed their Reid vapor pressure or cause slugging in gas export lines. LLOG decided to install a crude stabilization unit to

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American Oil and Gas Reporter - June 2015

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