Conoco, Maritrans To Develop Gulf of Mexico Shuttle Tanker Technology

Conoco Inc. and Maritrans Inc. are jointly developing advanced shuttle tanker technologies to safely transport newly discovered deepwater Gulf of Mexico crude oil reserves to U.S. refineries more economically than current pipeline alternatives. Technologies being evaluated have the potential to greatly reduce the time between discovery and production of deepwater crude reserves.

"The industry is actively exploring for the 10 billion barrels of crude oil reserves that are estimated to be contained in the deepwater Gulf of Mexico," said Rob McKee, Conoco executive vice president for exploration production. "Operations in deepwater are expensive, and we are continuously seeking ways to improve the economics of our deepwater program. Reducing the time between investment and the return on that investment makes deepwater exploration even more attractive than it is today," he emphasized. The companies said they had decided to proceed with development plans as the Minerals Management Service (MMS) continues to evaluate the use of shuttle tankers to transport crude oil production in the Gulf of Mexico. The MMS is expected to make a final decision next year.

"We are hopeful the safety and performance records of shuttle tankers used in other parts of the world will help convince the MMS the concept is suitable for use in the Gulf of Mexico," said Eric L. (Rick) Oshlo, Conoco vice president and general manager of supply and trading. "If the MMS does approve the concept for use in the Gulf, Conoco and Maritrans will have state-of-the-art technologies ready for deployment," he said. "If they don't, we will have some very innovative ideas that would be applicable to help other nations develop their deepwater reserves, quickly, safely and economically," Oshlo added.

Oshlo said the companies were evaluating variations of shuttle tankers and deepwater loading systems successfully used elsewhere in the world to transport remote crude oil reserves to determine their applicability in the Gulf of Mexico.

Conoco's worldwide fleet of double-hulled ships includes the "Rangrid," a specially designed, state-of-technology shuttle tanker used to transport crude oil from the Heidrun field in the Norwegian Sea to European markets. The Heidrun field, located north of the Arctic Circle and in some of the world's stormiest seas, could not have been economically developed without the use of shuttle tankers and proprietary loading systems. Direct shuttle loading from Heidrun to the "Rangrid" and other shuttle tankers boasts an unprecedented 100 percent uptime since first oil was produced in 1995.

Over 25 years ago, Maritrans pioneered the lightering system that supplies almost 100 million barrels of crude oil each year to eight refineries in the Northeast United States. Maritrans' sophisticated vessel allocation process is designed to reduce on shore crude storage and keep deliveries on a consistent, reliable schedule. Maritrans' multi-vessel system for unloading cargo directly from large oil tankers situated offshore and in the Delaware Bay remains the most cost-effective alternative for delivering foreign crudes.

"Conoco and Maritrans are working as quickly as possible to finalize our approach for Gulf of Mexico shuttling before we begin talking with prospective third-party customers for the system," said Stephen A. Van Dyck, chairman and chief executive officer of Maritrans. "Our first concern will be to ensure an environmentally sound operation," he emphasized.