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Shell, Partners Plan Ultra-Deepwater Hub for Lower Tertiary

Shell Offshore Inc. on Thursday unveiled plans to develop an ultra-deepwater production hub in the Gulf of Mexico (GOM) to produce and pipe oil and natural gas from three huge discoveries: the Great White, Tobago and Silvertip fields in the Alaminos Canyon of the promising Lower Tertiary trend. Shell, as operator, envisions using a spar facility moored in 8,000 feet of water that would be capable of pumping 200 MMcf/d of gas and 100,000 bbl/d of oil, or about 130,000 boe/d.

In a conference call on Thursday, Russ Ford, vice president of Shell Exploration and Production Co., called the planned Perdido Regional Hub "a major development, even by Shell's historical standards." It easily falls near the top of Shell's "70 richest projects" worldwide, he said.

Wood Mackenzie analyst Zoe Sutherland, who has been following deepwater developments in the GOM, said the proposed facility "is a big step...They've been working on this a long time."

The hub, slated to begin operations around 2011, would gather, process and export production within a 30-mile radius. The facility would be moored in Alaminos Canyon Block 857 near the Great White discovery. Jointly owned by Shell (35%), Chevron Corp. (37.5%) and BP plc (27.5%), the hub's direct vertical access spar would be the deepest in the world, and it would reduce the number and size of facilities and operations required to explore the deepwater frontier. Shell said it was too early to provide any cost estimates.

"The Perdido Foldbelt is remote and is located in ultra-deep waters from about 7,500-10,000 feet, with rugged sea floor terrain," said Shell's Marvin Odum, executive vice president, EP Americas. "This geologic setting is different from what has previously been produced in the Gulf of Mexico and will establish the first production from the Lower Tertiary (Paleogene) play in the Gulf of Mexico... To accomplish this record-breaking feat, we will apply cutting-edge technology, engineering expertise and industry leadership."

Shell, as operator, began exploratory drilling operations on the Great White play in March 2002 in 8,009 feet of water (see Daily GPI, Oct. 4, 2002). The original well reached its final total depth two months later, drilled to a true vertical depth of 14,405 feet. An appraisal well also drilled to a true vertical depth of 15,035 feet in 2002. Shell has drilled a total of five wells at Great White, with the most recent spud occurring in March 2004. Great White, located on Alaminos Canyon Blocks 812, 813, 814, 857, 900 and 901, is jointly owned by Shell (33.34%), Chevron (33.33%) and BP (33.33%).

The Tobago prospect is located in Alaminos Canyon 859 in 9,600 feet of water. Shell is operator and the field is jointly owned by Shell (32.5%), Chevron (57.5%), and Nexen (10%). The discovery well was drilled in 2004 to a total depth of 18,510 feet, and a sidetrack well was drilled to 18,425 feet. Silvertip, in Alaminos Canyon 815, is operated by Shell (40%) and jointly owned with Chevron (60%). Chevron drilled the AC 815 No.1 discovery well in August 2004 in 9,200 feet of water to a total depth of 14,778 feet.

The three fields are located in the Perdido Foldbelt in the northwestern ultra-deepwater, located off the tip of Texas about 200 miles south of Freeport, TX. There are several ultra-deepwater foldbelts in U.S. waters comprised of large northeast-southwest trending compressional "box folds." Researchers believe each of these box folds could hold 1-2 billion boe in reserves potential.

Perdido is the largest box fold, about the size of Washington, DC. It covers more than 14,000 feet of stratigraphic closer spread over more than 50,000 acres. Additional folds are believed to exist under the Sigsbee salt sheet that bounds the Perdido, Walker Ridge and Mississippi Fan foldbelts on three sides (see Daily GPI, March 19, 2003).

With new technologies leading the way, the ultra-deepwater GOM is considered more accessible today, and energy companies have begun banding together in an effort to bring new energy supplies to U.S. markets. In September, Chevron, Devon Energy Corp. and Statoil ASA completed the deepest extended drill stem test in history, successfully testing the Jack No. 2 well at Walker Ridge Block 758 in 7,000 feet of water and more than 20,000 feet under the sea floor in the Lower Tertiary (see Daily GPI, Sept. 6).

Nearby, the deepwater Independence Hub is less than a year from ramping up to bring up to 1 Bcf/d of gas to U.S. markets (see Daily GPI, Oct. 25; Oct. 23). The collaboration by midstream operator Enterprise Products Partners LP, offshore production contractor Helix and four producers, Anadarko Petroleum Corp., Hydro Gulf of Mexico LLC, Devon and Dominion Exploration & Production Inc., will use a single platform and export pipe to serve several large natural gas fields in the Eastern GOM deepwater.

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