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Bloomberg: Shell Says New Gulf Leases Won’t Produce Before 2013 (Update1)

By Daniel Whitten

Oct. 5 (Bloomberg) — Royal Dutch Shell Plc won’t begin producing oil and gas from a Gulf of Mexico lease sale until 2013 at the earliest, said Marvin Odum, the company’s executive vice president in charge of North and South America.

Odum told reporters in Washington today that the company is renewing its commitment in the Gulf because of the stability of the U.S. market, though it will take a while to start production. Shell, the Gulf’s biggest oil and gas producer, was top bidder in a lease sale on Wednesday, offering $554.6 million for 69 tracts.

“From the initial stages of exploration to production might be on the order of six to seven years,” Odum said, adding that was an ambitious estimate.

The Hague-based company in July maintained its 2007 production forecast of 3.3 million to 3.5 million barrels of oil equivalent a day, which compares with 3.47 million a day last year. A decline in companywide output this year would be Shell’s fifth consecutive annual drop.

Shell’s worldwide stake in so-called unconventional oil projects will climb to 15 percent of its business, from 5 percent by 2015, Odom said.

Odum would not discuss if there was a price threshold that would justify production of unconventional projects such as Canadian oil sands. Chief Executive Officer Jeroen van der Veer said last month that unconventional assets need prices of more than $30 a barrel.

Shell aims to raise long-term production at its Athabasca Oil Sands Project in northeastern Alberta to 770,000 barrels a day from 155,000 barrels.

Alberta’s tar sands may contain the most oil after Saudi Arabia, according to the Canadian Association of Petroleum Producers.

To contact the reporter on this story: Daniel Whitten in Washington at [email protected]

Last Updated: October 5, 2007 15:02 EDT

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