News Release May 24, 2001

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NEWS RELEASE

May 24, 2001

A Study by IMA Examines the Need for

Shuttle Tankers in the Gulf of Mexico

Ultra-deepwater plays in the Gulf of Mexico offer vast potential for oil and gas production. There are now more than 1,650 active leases in the Gulf of Mexico in water depths exceeding 5,000 ft. and, with 24 drill rigs capable of drilling at this depth now working in the Gulf, activity on these leases is about to take off. In a recent study, we have identified more than 160 fields in ultra-deepwater that are likely to be explored over the next 5 to 10 years and expect at least a third of these will ultimately be developed.

Until now, pipeline has been used to transport oil from fields in the Gulf of Mexico to refineries along the Gulf. There are almost 27,000 miles of pipeline infrastructure on the Gulf seabed and field operators in the Gulf have grown very comfortable with this form of transport. But many of the ultra-deepwater fields are remote from existing infrastructure, requiring installation of new pipelines in water depths exceeding one mile. Much of the topography of the seabed beyond the shelf is rugged, presenting spanning issues and pipeline installation difficulties, and there is need for innovative and expensive techniques to assure fluid flow. Cold temperature at the sea bottom at 5,000 ft. or greater can turn viscous oil to solid mass, requiring pipeline heating and/or other aggressive procedures to keep the fluid moving. Hydrostatic pressure at this water depth also produces a requirement for thick wall pipe, which is expensive to fabricate and install. So despite the propensity until now to favor pipeline, operators are being forced to consider shuttle tankers as the transport solution for transporting oil from many of the remote ultra-deepwater fields in the Gulf of Mexico.

In the study we compare the transport cost per barrel from these sites utilizing pipeline or shuttle tanker, taking into account

distance to existing pipeline infrastructure

seabed conditions over which a new pipeline would be installed

potential discounts from connecting pipeline published tariffs

alternative routing patterns for shuttle tanker delivery to refineries, including via LOOP

high and low shuttle tanker construction capex, based on quotes to date from shipyards

The breakeven distance from existing pipeline infrastructure at which shuttle tanker becomes the low cost transport option is calculated and the 160 sites are segmented into those suited to shuttle tanker and those suited to pipeline transport.

The study provides a forecast of the number of shuttle tankers required to service future producing ultra-deepwater fields through 2010, along with the timing of the requirement based the profile of likely production start-ups. Key features of proposed shuttle tanker designs are compared, capability of the U.S. shipbuilding industry to build the ships is examined and options for financing ship construction are explored.

The study is available for $1,200. An outline of the study contents can be viewed by clicking here

For further information contact:

Jim McCaul

Tel: 202-333-8501

E-mail: imaassoc@msn.com