Offshore at 60: Remembering the Blue Water project

Sept. 17, 2014
The Tennessee Gas-Columbia Gulf Blue Water Project was built between the 1960s and the 1970s and became one of the Gulf of Mexico's largest natural gas gathering systems. Its history offers clues about the challenges industry faced in the new offshore realm, and how companies and government agencies responded to new pressures and mandates to balance energy development with environmental protection.
Gulf of Mexico pipeline had to address new environmental regulations

Jason Theriot, Ph.D.
Jason P. Theriot Consulting, LLC

After more than three decades of toiling through the marshlands of coastal Louisiana, by the 1950s and 1960s the oil and gas industry moved its operations out into the open waters of the Gulf of Mexico.

While the offshore industry dealt with new technological challenges and the increasing demand for oil and gas, it also had to contend with the new environmental regulations promulgated in the early 1970s. This shift in values and policies influenced changes to governmental oversight of development activities and to the industry's environmental planning.

The pace of offshore development accelerated throughout the late 1950s and into the 1970s, when new technologies and vast acreages of offshore leases became available. But a series of environmental disasters and pollution concerns encouraged new regulations, forcing industry and government to implement new policies on offshore safety, spill prevention, and environmental protection. The new environmental standards impacted the way industry conducted its activities both offshore and in the coastal wetlands. Managing risk now included managing environmental impact.

Dozens of major new offshore pipeline systems emerged during this era of expansion and environmental regulation. The Tennessee Gas-Columbia Gulf Blue Water project was built between the 1960s and the 1970s and became one of the GoM's largest natural gas-gathering systems. Its history offers clues about the challenges industry faced in the new offshore realm, and how companies and government agencies responded to new pressures and mandates to balance energy development with environmental protection.

In the post-WW II era, the Blue Water pipeline became an intricate part of the gas gathering network that supplied America's growing energy needs, and enabled Tennessee Gas to become the third-largest gas producer in the Gulf.

The race for offshore gas

The 1960s proved to be an important decade for advances in offshore technology. Historic lease sales in the Gulf answered the call of growing petroleum demand, and especially for natural gas. Federal regulators pushed the industry to rapidly develop these new resources offshore. The OCS lease sales in the early 1960s opened up new tracts in undeveloped federal offshore lands. Pipeline companies then rushed to extend their pipeline systems farther offshore than ever before and also expanded the onshore pipeline network and facilities to support the development of offshore natural gas.

In the early 1960s, Tennessee Gas, one of the nation's leading natural gas companies, delivered nearly a trillion cubic feet (tcf) of natural gas a year to its customers, most of whom resided in the northeastern United States, through its Gulf Coast pipeline system. Growing demand for natural gas from that region necessitated the search for new reserves offshore. By the mid-1960s, Tennessee Gas, which became a division under the parent corporation Tenneco Inc., had acquired additional reserves offshore through federal lease sales and outright purchases of gas-in-place. These reserves, roughly 1 tcf, were located in the prolific OCS Zone 4, a federally designated boundary that extends out to 600-ft (183-m) water depth, where the OCS ends and the seafloor drops sharply into a great abyss several thousand feet deep (the modern-day deepwater). To reach these reserves, Tennessee Gas had to build a pipeline system into areas offshore where no pipeline had yet been installed. Other competing companies also had similar ambitions and imperatives to find more gas offshore to supply America's growing demand.

The reserves in this prolific offshore zone lay just beyond the limits of existing pipeline facilities. Extending these offshore pipelines and necessary gathering platforms involved innovative equipment, high costs, big risk, intensive planning, and government approval. Companies often joined forces to spread the risk and cost.

In 1965, a group of 17 oil and gas companies led by Shell Oil created the Red Snapper Pipeline Co. That year the group applied to the Federal Power Commission (FPC), the leading regulatory agency overseeing interstate gas transportation, to build a massive pipeline superhighway that stretched across Zone 4 to gather gas from nearly a hundred new fields. The proposed $127-million "Red Snapper Line" consisted of 285 mi (459 km) of 30-in. main line that ran parallel along the shelf, 50 mi (80 km) offshore in 150 ft (46 m) of water.

Tennessee Gas, which owned reserves in various sectors throughout Zone 4, sought to build its version of a main pipeline extension to its offshore properties ahead of the Red Snapper Line. The $31.8-million project consisted of a 26-in. mainline system that stretched 80 mi (129 km) out into the Gulf, "like a finger," farther than any other pipeline at the time. For two years, Tennessee Gas and the Red Snapper group battled for the right to build this first major offshore pipeline system to reach the edge of the OCS. Meanwhile, the emergence of an environmental consciousness throughout parts of the country laid the groundwork for major environmental reform that would ultimately change the rules for new energy projects, particularly those in coastal and offshore waters.

Tennessee Gas capitalized on its leading position in the Gulf and looked beyond the "finger" line to lay the groundwork for a much larger system – the Blue Water project. This major joint venture of Tennessee Gas and Columbia Gulf, which ultimately beat out the Shell Oil-led Red Snapper project, evolved into one of the largest natural gas-gathering systems ever constructed offshore Louisiana, transporting more than 1 bcf/d of gas for American consumers over several decades.

The planning and construction phases of the Blue Water project spanned several years. Tennessee Gas completed the first leg of the system in 1968, and finished the second phase in the early 1970s during the early era of environmental regulation. In those intervening years, a series of environmental events and new laws changed the course of the industry's history and created new challenges for pipeline and E&P companies.

In the post-World War II era, as demand for energy increased, the need to increase domestic petroleum supplies spurred the technological push for expansion offshore. By the late 1960s, the Blue Water project had reached farther out into the Gulf than any other pipeline system. Tennessee Gas and others moved quickly from the coastal marshes to the OCS with few regulatory requirements regarding environmental impacts onshore or offshore. The pace of development did not slow under new environmental reforms of the 1970s; however, the traditional attitudes and "old way" of planning projects and building pipelines in sensitive coastal areas had to change.

Blue Water expansion

In addition to the emergence of the environmental age in the 1970s, Americans grappled with the problems of the nation's first great energy crisis in the postwar era. The Arab oil embargo of 1973, energy price spikes, and energy supply shortages created a panic in America's petroleum-driven society. Severe natural gas shortages in the northeast and long lines at gasoline stations across the nation provided the impetus to increase domestic production offshore Louisiana.

In response, Tennessee Gas and Columbia Gulf redoubled efforts to develop and expand the Blue Water system. These expansion plans included completion of the main lines offshore, plus central processing facilities onshore at Pecan Island to the west and at Cocodrie to the east. Meeting environmental compliance and assessing environmental impacts had to be factored into project design and implementation. The Blue Water system expanded throughout the early 1970s, connecting to new reserves farther offshore at the Eugene Island, East Cameron, and West Cameron areas.

In the mid-1970s, Tennessee Gas and Columbia Gulf signed several contracts and negotiated multiple deals with other companies to expand the system's gas-gathering capabilities. Under the requirements of the National Environmental Policy Act (NEPA) of 1970, the companies and the FPC had to provide an environmental assessment of the potential damages resulting from the new construction. In reference to possible negative impacts on the environment, the FPC's order granting approval for this project recommended that the company restrict construction to a period from Sept. 15 to early November in order to "avoid any interference with the brown and white shrimp migration into the area involved."

Shrimping had long been the primary driver of the local economy in southern Terrebonne Parish, even during the rise of oil and gas. The recommendation and subsequent compliance suggests that the industry and the agency recognized the needs of other resource users in the area, and determined that canal dredging in the wetlands during a particular season might negatively impact the shrimping industry.

Adapting to the new standards

To bring the new 36-in. diameter line ashore and tie it into the Cocodrie facility, contractors enlarged the existing flotation canal across the Terrebonne marshes to accommodate the heavy lay barges. Contractors laid the new line within 25 ft (7.6 m) of the original 26-in.diameter line and installed several bulkheads or plugs all along the canal, about one for every mile, to limit salt water intrusion from the Gulf and bank erosion from boat traffic. From the 1970s forward, use of existing pipeline corridors became an industry-preferred practice, which eliminated the need to build a new canal and thus reduced the footprint on the landscape. Using existing canals was viewed as a benefit to the environment; however, widening these canals allowed greater volumes of salt intrusion to enter into upper reaches of the wetland system, further altering habitat, particularly during storm surges. The FPC did not include a review of the environmental evaluation of the enlargement of this canal in its final opinion granting project approval. Apparently, companies did not need to submit additional information for areas "where construction will be on or immediately adjacent to an applicant's currently used right-of-way," unless landowners deemed otherwise.

The role of the US Army Corps of Engineers also changed significantly with the enactment of the 1972 Clean Water Act. Section 404 of the act required the agency to regulate all dredging and filling operations in wetland areas. Prior to the act, the Corps' main statutory function in coastal Louisiana waters was to regulate navigation and flood control. Up until that point, building pipelines through wetlands only required a Corps permit if the pipeline crossed navigable waterways.

With the new law, companies now had to contend with additional regulatory requirements for digging canals and laying pipeline across marshes, swamps, and barrier islands. The extensive permit review process added to the new constraints oil and gas companies faced in the wetlands in the 1970s and delayed project timelines. Imposing additional federal restrictions on wetland operations, particularly the dredging of canals for pipeline placement, could diminish and slow down oil and gas development activities offshore.

In addition, the local economy depended on oil and gas revenue from production sites throughout the coastal areas. Gaining access to these sites required dredging and filling operations in the wetlands. The state of Louisiana ultimately responded to the threats of additional federal regulations for environmental protection by establishing its own coastal use guidelines and permitting system in the early 1980s.

In a study of changes within governmental agencies in the early 1970s, authors Daniel A. Mazmanian and Jeanne Nienaber recognized that although new environmental reforms had changed the language of project proposals, agencies "were still bent on accomplishing their missions as prescribed decades ago." The mission of the Corps, for example, to maintain commercial interests along the Mississippi River through navigation and flood control policies and levee projects, conflicted with its new mandate to protect wetlands. The fact that wetlands were disappearing in part due to the Corps activities later became a major conflict of interest with the coastal restoration movement of the 1980s and 1990s. New governmental agencies specifically charged with environmental protection, such as the EPA and NOAA, had stronger incentives to push for protecting sensitive coastal areas, but they did not become fully invested in Louisiana coastal activities until the 1980s, when the emergence of land loss became a critical issue in the Gulf and eventually the nation.

Blue Water legacy

Over the years, the Blue Water pipeline became an intricate part of the gas-gathering network that supplied America's growing energy needs. "Your main gas supply for the whole United States was coming off of the Blue Water system at one point in time," said George Benoit, a pipeline manager for Tennessee Gas. "This pipeline system, the remarkable part of it is its operating flexibility. . . . If there's a break in any one of the lines, you can move the gas back another way." This flexibility became increasing vital as the system aged, as various structural problems arose, and as the impact from hurricanes increased.

In the late 1970s, the most prolific natural gas production platform in Tennessee Gas's history, South Marsh Island block 61-C, began delivering gas into the Blue Water system. This single platform had an estimated production of about 90 bcf of gas annually—enough gas to feed the city of Boston for a year. The Blue Water system helped Tennessee Gas become the third-largest gas producer in the Gulf. The company produced 332 bcf of gas/year, more than the annual gas consumption of all of New England, one of the major markets for its gas.

By the end of the 1970s, the pipeline gathering systems along the Gulf Coast had evolved into a central part of America's energy supplies. The oil and gas produced offshore flowed through a massive pipeline network that was buried under thousands of miles of canals dug through the wetlands. Facilities onshore processed, refined, and moved these supplies to market outlets across America. Coastal Louisiana's wetlands absorbed the environmental impacts of developing this important economic system for the nation. The issue of coastal land loss that would envelop in the ensuing decades not only threatened the critical wetland ecosystems, but also made the pipeline network increasingly vulnerable to environmental changes.

Growth of the Gulf network

Three decades after the end of World War II, the offshore industry in the GoM had evolved into a mature enterprise with sophisticated drilling, production, and transportation technologies, and a vast network of interconnecting pipelines. The Gulf produced abundant natural gas that helped fuel America's economy. From 1956 to 1971, gas production from the southern Louisiana region increased more than five-fold, and reserves more than doubled.

Pipelines became the key to expanding this offshore gas gathering system. Twenty-six interstate gas pipeline companies had lines running into Louisiana to carry gas to homes and businesses across the nation. By 1980, the Louisiana Gulf Coast produced approximately a third of the nation's gas supplies. Oil pipelines also expanded during this period. More than 20% of oil produced in the Gulf had been transported by barge in 1966. By the early 1970s that number had declined to 3%, meaning pipelines accounted for the transportation of almost all of the oil and gas produced in the Gulf. All told, the industry had by the 1970s built approximately 145 major pipelines and countless feeder lines through the wetlands of coastal Louisiana to support the booming offshore industry.

The emergence of the environmental movement and three specific offshore oil spills raised serious environmental questions about expanding the offshore oil and gas industry and energy production near sensitive marine habitats. These spills included the Santa Barbara oil spill off California in 1969 and two in the GoM – at Main Pass and at Bay Marchand – in 1970.

Operating in the new era

Growing concerns over the health of coastal resources, wetlands, and wildlife prompted changes in regulations, business practices, technologies, and values. Scientific assessment of environmental impacts gradually became normal industry practice. According to Ray Galvin, who spent many years offshore Louisiana as a senior manager for Gulf Oil Corp. and Chevron U.S.A. Production Co., the two big oil spills in the GoM coupled with the blowout in the Santa Barbara Channel "led, I believe, [the federal government] to impose some of the quality standards and quality of process checking and process testing and equipment qualifications that came out of the space program . . . we dug in our heels and fought that quite a bit as an industry. And actually, overall, it ended up being very good for us."

With new national environmental policies and an emphasis on protecting environmental quality, industry began to recognize the need to better manage its environmental affairs. It sought to improve existing practices and methods – and its public image. As Dr. Casey Westell, Jr., Tenneco chief ecologist, and one of the first environmental scientists to work for the oil and gas industry, stated at the dawn of the environmental movement: "It's a different ball game now. Our methods of operating will continue to change . . . and concern for our environment – the air, water, and land we use – will always be in the forefront." The transition did not occur overnight, nor did the new laws strike an immediate balance between energy and the environment. Companies that produced oil and gas in the GoM realized the need to implement environmental management programs and early forms of nontechnical risk assessment into their business models and asset development portfolios.

New attitudes of the 1970s represented a transition for energy development in the Gulf. For several decades, industrial activities focused on maximizing the energy production potential in the offshore arena to build a nationally important energy system. Damages to the physical environment in the process were assumed to be an appropriate trade-off given the context of the postwar era and benefits of industry expansion to the larger national economy. New incentives, new laws, and a changing perspective on protecting wetlands and marine habitats encouraged stakeholders, including industry, to consider the ecological benefits as well as the economic benefits that these coastal systems provided. It would take some time for real innovations in wetland protection and ecological restoration to take shape, but the seeds were planted in the wake of the environmental age and the boom of the offshore expansion in the 1970s.

The author

Jason P. Theriot, Ph.D., is an energy and environmental historian and consultant and a former Energy Policy Fellow at Harvard University's Kennedy School of Government. His research focuses primarily on the historical dynamics of oil and gas development, environmental policies, legacy litigation, and restoration activities in the Gulf Coast. He is the author of numerous publications on these topics, including the recently published American Energy, Imperiled Coast: Oil and Gas Development in Louisiana's Wetlands (LSU Press, 2014). More information is available