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Houston Chronicle: A first: Shell plans to produce at 8,000 feet in Gulf

Oct. 26, 2006, 1:31PM
By BRETT CLANTON
Copyright 2006 Houston Chronicle

Shell said today it will be the first oil company to begin producing oil and natural gas in water that’s 8,000 feet deep, trumping competitors in the Gulf of Mexico who have made discoveries or announced intentions to drill in the region but not started to develop them.

The European oil giant, whose U.S. arm is based in Houston, said it will take the lead on the so-called Perdido project, which it will co-develop with Chevron and BP, and expects to begin tapping three fields near the site “around the turn of the decade.”

Shell will anchor Perdido at a new high-tech floating “spar” rig that will be moored in 8,000 feet of water in an area known as Alaminos Canyon, which sits roughly 200 miles south of Freeport.

From there, Shell and its partners will be able to access three deepwater oilfields in the Gulf — Great White, Tobago and Silvertip.

While Shell would not estimate the cost or production volumes at Perdido, executives said the facility is capable of handling the equivalent of 130,000 barrels of oil a day.

“This is a major development even by Shell’s historical standards,” said Russ Ford, vice president of Shell Exploration and Production Co. in a conference call with the news media, placing it among the company’s top 70 richest projects worldwide.

The Perdido announcement comes as global energy demands are rising and other major oil companies are pushing farther into the the Gulf of Mexico to find oil and gas.

This follows a high-profile announcement in September by Chevron and Devon Energy that they discovered the Jack field in the Gulf, which is located 270 miles southwest of New Orleans. Jack is hailed as the nation’s bigest new domestic oil discovery since Alaska’s North Slope decades ago.

Yet the Perdido project is notable because they putting an ultra-deepwater find into production.

“They’ve been working on this for a long time,” said Zoe Sutherland, industry analyst with Wood Mackenzie. “This is a big step.”

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