Shell Buys into Three Gulf of Mexico Pipelines

Shell’s subsidiary Shell Midstream Partners has acquired 10% interest in Proteus Oil Pipeline Company (Proteus), 10% interest in Endymion Oil Pipeline Company (Endymion), and a 1% interest in Cleopatra Gas Gathering Company (Cleopatra) from BP.

“This acquisition builds on our corridor pipeline strategy in the Gulf of Mexico. Our sponsor, Shell Pipeline Company is currently building the Mattox pipeline to serve the recently sanctioned Appomattox platform. Proteus and Endymion will connect the Mattox pipeline to onshore markets, creating a new corridor line, which will transport all of Appomattox’s volumes once it comes online toward the end of the decade,” said John Hollowell, CEO of Shell Midstream Partners.

“Proteus also connects to the Thunder Horse platform which is a key development field for BP and ExxonMobil. In addition to Thunder Horse, Proteus is also currently connected to the Noble Energy, Inc. operated Thunder Hawk platform. This acquisition will deepen our footprint in the Eastern Gulf of Mexico, an active area with a number of discoveries currently under appraisal.”

The acquisition price reflects an approximate 7.7 times multiple of Shell’s forecasted annual average Adjusted EBITDA attributable to the purchased interests over 2017 and 2018. The acquisition was funded with borrowings under Shell Midstream Partners’ revolving credit facilities and is expected to be immediately accretive to unitholders.

Acquired Pipeline Interest:

Proteus is a 71-mile crude oil pipeline with a 425,000 bpd capacity. The pipeline provides access to the Mississippi Canyon area of the Gulf of Mexico from the Thunder Horse and Thunder Hawk platform to the Proteus SP 89E Platform. Noble Energy’s Big Bend and Dantzler fields are tied back to the Thunder Hawk platform.

Endymion is an 89-mile crude oil pipeline with a 425,000 bpd capacity. The pipeline provides access to the Mississippi Canyon area of the Gulf of Mexico. It is connected to LOOP Clovelly storage with access to multiple markets.

Cleopatra is a 115-mile gas gathering pipeline in Southern Green Canyon, with access to Atwater Valley, Walker Ridge, and Lund areas in the Gulf of Mexico. Cleopatra is currently connected to the Holstein, Atlantis, Neptune, Shenzi and Mad Dog platforms. The system will transport new volumes from the Mad Dog 2 field once it comes online.