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THE WALL STREET JOURNAL: Shell To Delay Repairs To Mars Tension Leg Platform

THE WALL STREET JOURNAL: Shell To Delay Repairs To Mars Tension Leg Platform

DOW JONES NEWSWIRES

May 3, 2005

NEW YORK — Royal Dutch/Shell Group (RD,SC) unit Shell Exploration & Production Co. has for the second time delayed repairs planned for its Mars oil and gas platform in the Gulf of Mexico.

In a press release Tuesday, Shell attributed the delays to “loop currents” – water flows that can delay oil industry activity in the Gulf. Repairs are to be made to the flexijoints. Leaks in the joints forced the platform to shut down for a month a year ago.

Shell also said it will complete repairs to flexijoints at its Auger platform pending regulatory approvals. Those repairs are to begin June 1 and take 10 to 14 days. Oil and gas production will be cut by 40% for part of the period and completely shut in for the remainder.

Current production is 85,000 barrels of oil and 195 million cubic feet of gas a day.

Shell has a 100% interest in the Auger platform and a 54% share of the gross production.

Regarding Mars, Shell hopes to be able to complete the repairs in the first half of July. The repairs at Mars should take 14 days to complete, Shell said.

Mars currently produces 140,000 barrels of oil and 156 million cubic feet of gas a day. The value of Mars crude in the U.S. Gulf Coast spot market weakened after Shell announced the delay. Mars for June delivery traded at -$5.20 and -$5.30 vs U.S. benchmark crude, down from -$5.00 to -$4.80 earlier.

Shell owns 71.5% of Mars and operates the platform. BP PLC (BP) holds the remaining 28.5%.

Shell originally planned the Mars repairs for mid-March, but said it delayed them due to loop currents in the area.

According to Shell , loop currents form when a portion of the Gulf Stream enters the Gulf of Mexico through the Yucatan Straits, flow north, and turn east and south to exit the Florida Straits forming a “loop.” The loop current is a permanent oceanographic feature in the Gulf of Mexico and, at certain times of the year, can extend north far enough to impact deepwater lease blocks in the central Gulf of Mexico.

-By Andrew Dowell, Dow Jones Newswires; 201-938-4430; [email protected]

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