US$40-million pipeline fabrication spoolbase from Subsea 7 Inc., has begun unrolling its valuable thread into the Gulf of Mexico from Port Isabel, Texas, a community in the Brownsville-Matamoros region that's known more for its beaches than its industry.
      The $2.3-billion Norwegian company announced in May 2008 it had chosen the 58-acre (24-hectare) site for the fabrication and storage of oil and gas pipelines of up to 20 inches in diameter (16-inch steel plus 4-inch insulation coatings) in lengths of up to three quarters of a mile (1.2 km.) for spooling onto reeled pipelay vessels. Three months later, despite the fall in oil prices, the gambit was rewarded with a $45-million contract to supply 36 miles (58 km.) of pipeline for Marathon's Droshky exploration project in the Gulf, to be delivered by the company's flagship The Seven Oceans, a vessel designed and built for deepwater pipelay and heavy construction works, with a main reel capable of carrying 3,500 tons of rigid steel pipe and a 400-ton tensioner system allowing installation of that pipeline in deep waters.
      "This is a very significant contract for Subsea 7," said Mel Fitzgerald, CEO of Subsea 7.  "It justifies our investment in our new pipelay fabrication and spoolbase facility in Port Isabel and strengthens our position as the Subsea partner of choice for our customers in the Gulf of Mexico."
      As of early June, much of that pipe had arrived at the site, coming in via as many as 20 truckloads a day, and the facility was nearing completion. It will be equipped to weld any steel line pipe material from traditional carbon steel to exotic materials. The base also will be able to complete the fabrication of plastic-lined pipelines, pipe-in-pipe systems and steel catenary risers.
      The base joins a strategically positioned portfolio of four other spoolbase sites in Wick, Scotland; Vigra, Norway; Luanda, Angola; and Ubu, Brazil. The company maintains a fleet of 22 ships, with eight more due to join by 2010 as part of a $1-billion investment program in new assets and equipment.
      "With the major investment we've made in the Port Isabel spoolbase, we are building upon our vision to become the Subsea Partner of Choice in our sector and are fully committed to the Gulf of Mexico and the entire North America region," said Ian Cobban, vice president - North America for Subsea 7, in an official statement in early May 2009.       The news couldn't be better for a port that once was home to the largest shrimp fleet in the world, but has seen those 500 trawlers steadily dwindle in number. Subsea 7 officials were unavailable for an interview, but Bob Cornelison, port director for the Port Isabel San Benito Navigation District, says the company told him that it had been looking for a site somewhere on the Gulf for a couple years, with one other finalist in contention.
      "It was kind of a daunting task to put together a very, very long and skinny piece of property," he says. "It's essentially a three-quarter-mile-long pipe rack and a 1,000-ft.-long building, which has to line up with access to a deepwater harbor so they can bring in their ships."
      The project will create 90 high-caliber welding positions.
      "They need a few very good automated welding machine operators, and they need very high quality work," says Cornelison. "There's only one chance to do it right – there's no way to repair a leaking crude oil line in 7,000 feet of water. They have very stringent quality control, and they're willing to pay to attract the best."
      Separate leasing agreements were signed with Subsea 7 by the navigation district, the City of Port Isabel and the Laguna Madre Water District, which is extending a water line to the facility. Cornelison says the high priority Subsea 7 places on environmental awareness was attractive to the Port Isabel team.
      "We are a community surrounded by wildlife refuge, located on one of three hypersaline lagoons in the world – Laguna Madre – so there are not a lot of industrial projects that are a good fit," he says. "This plant is virtually zero emission."
      It also will put to use some property that had little to recommend it.
      "Part of the property was the old City of Port Isabel landfill, which was sealed and abandoned two decades ago," says Cornelison. "Another part was an old sewer lagoon, which was for primary treatment for sewers in the 1940s and 1950s. Another piece is a brownfield from an old refinery that closed in 1958. And the rest is reclaimed dredge spoil disposal site. So I think we put the parcels to highest and best use, considering there was really no other use for them."
      He says the landfill and sewer lagoon property went for $1 a year. He says the company did not request incentive pricing on other land, nor any other incentives.
      "There's no financing, no state enterprise, no sales tax or tax abatements," he says. "It's a very straightforward acquisition and lease. The company didn't come here with hat in hand. They came because it was a good location for them."
      The process was helped by some straightforward dealings when it came to permitting by the Corps of Engineers, including a $12-million dock that was permitted in about five months, during which Hurricanes Dolly and Ike visited the region.
      Subsea 7, despite turbulence in the skies and in the oil markets, has remained steadfast in its commitment to the project. Cornelison describes the negotiations, which primarily involved company personnel from Aberdeenshire, Scotland, as "fascinating and honorable."
      Jill Francisco, Port Isabel EDC administrator, says Texas State Technical College in Harlingen will provide some of the specialized training for Subsea 7, much of it on site. She says the community hopes to recruit businesses that will service Subsea 7's needs, such as housing and retail. Among the city's aims in its strategic plan is to forge more connection with higher education in the region, including exploration of the possibility of a business incubator or school of hospitality in partnership with the University of Texas-Brownsville.
      Among the benefits to the area economy is the regular calling of the Seven Oceans vessel, an 18,000-ton ship with a crew of 120.
      "We are her home port," says Cornelison. "That is one of the very strong incentives for us. She will spend in excess of $1 million every time she comes into the port – food, hard hats, gloves, fuel, lubricants, repairs – because this is the only port she comes to."
      Indeed, the 90 high-caliber welding jobs Subsea 7 is creating are just the beginning, as other companies attracted to offshore oil begin to gather in the area.
      "There's no doubt that over time we're going to participate in the oil developments in the western Gulf," says Cornelison, confirming that offshore oil service companies have either optioned or outright leased "virtually every square foot we have."