U.S. Department of Energy Provides $480 Million Loan to Arena Energy to Upgrade 22 Platforms in the Gulf of Mexico

en.Wedoany.com Reported - On November 10, offshore Louisiana, Elkhorn Offshore, a wholly owned subsidiary of Arena Energy, completed the financial close of a $480 million loan from the U.S. Department of Energy to fund Project Elkhorn, an offshore oil and gas facility renovation project. The project covers 22 existing offshore platforms in the South Eugene Island area of the Gulf of Mexico and will involve platform repairs, equipment replacement, power system upgrades, and production capacity expansion, as well as the construction of a new natural gas pipeline connecting future development wells to the existing pipeline network.

This project is a brownfield redevelopment of mature oil and gas fields, focusing on utilizing existing offshore production facilities to restore idle capacity and expand the processing capacity of producing platforms. Specific work includes reconfiguring, refurbishing, and upgrading the power systems of the platforms, with platform replacement and relocation where necessary; upgrading existing oil and gas processing and compression systems, expanding crude oil production and produced water treatment capacity, and returning some shut-in platforms to production. The project will also build a new subsea natural gas pipeline to connect future development wells to the existing gas transmission network.

The U.S. Department of Energy estimates that, once fully ramped up, the project could add up to 38,600 barrels of crude oil and 77 million cubic feet of natural gas per day. On a full-life-cycle basis, the renovation work is expected to add a cumulative total of approximately 125 million barrels of crude oil and 250 billion cubic feet of natural gas. Arena Energy currently produces approximately 30,000 barrels of crude oil per day in the shallow waters and continental shelf of the Gulf of Mexico, and this renovation will center on its South Eugene Island production facilities.

Project implementation is managed by Elkhorn Offshore, a subsidiary of Arena Energy, with long-term partners White Fleet Drilling and Rosefield Pipeline participating in project execution. Offshore drilling and platform operations will involve White Fleet Drilling, while Rosefield Pipeline will handle the related pipeline business. Project construction and subsequent operations are expected to support 2,800 jobs, including 2,400 construction-related jobs and 400 operational jobs. The U.S. Department of Energy also estimates that the project's incremental oil and gas production will generate approximately $1.6 billion in additional federal royalty revenue over the project life.

The $480 million loan is provided by the U.S. Department of Energy's Office of Energy Dominance Financing and is the first loan financing completed by the department in support of U.S. domestic oil and natural gas production. The financing has reached financial close, and the funds will be used for offshore facility renovation and related infrastructure construction in accordance with the project schedule. The loan funds will be arranged in up to five tranches, with the financing implementation period extending through 2030.