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Shell Wading into Deepwater Again

Shell Wading into Deepwater Again

Shell Exploration and Production (SEPCo) said it is ready to roll on development of a major new deep-water Gulf of Mexico project, good for an estimated 300 million boe, at the same time it announced another deep water discovery with potential reserves greater than 200 million boe.

The Na Kika project, which has development costs of about $1.3 billion, is expected to begin production in mid-2003. It will ultimately consist of six subsea production systems servicing satellite fields tied back to a centrally located floating production facility, an industry first for the deep-water Gulf of Mexico. The host facility will be permanently anchored in the Mississippi Canyon Area about 140 miles southeast of New Orleans, LA.

The Na Kika project initially will produce hydrocarbons from five fields: Ariel, Fourier, East Anstey, Kepler and Herschel. SEPCo will attach the sixth field, Coulomb, which it owns solely, back to the host facility as capacity becomes available. All six fields are located in water depths ranging from 5,800 to 7,600 feet. Shell expects peak daily production rates to reach 325 MMcf/d of gas and 100,000 b/d of oil.

"Developing the Na Kika project in these record-setting water depths is one of the most substantial steps forward in application of deepwater development technology since SEPCo's Auger tension leg platform was installed in 1993," said Walter van de Vijver, SEPCo's CEO.

BP and SEPCo share rights to Na Kika, and BP's project sanction is still pending. Shell will act as the pre-production operator, responsible for installation of the host facilities and subsea systems, as well as drilling and completion of the 10 development wells. BP will take over as post-production operator, which includes operation of the host facilities and surveillance of the satellite fields.

Shell also is heavily involved in the new Princess discovery, a sizeable sub-salt discovery just three miles north of the giant Ursa field, in Mississippi Canyon Block 765 in the Gulf of Mexico.

The discovery will be operated by Shell with a 45% interest, and is located in about 3,600 feet of water, about 130 miles southeast of New Orleans, LA. Other interest holders include BP with 23%, and Conoco and Exxon Mobil each with 16%.

A discovery well, and three other penetrations drilled on the discovery have encountered hydrocarbons in several areas totaling about 300 net feet of pay. Shell believes the reservoir thickness and quality of sands are very similar to the Ursa field, where production has reached 100,00 b/d of oil and 140 MMcf/d of natural gas from four wells. Potential oil and gas reserves in the new Princess field could exceed 200 million barrels of oil equivalent.

"Princess is a significant addition to Shell's growing deepwater inventory," said Vijver. "Common ownership of the neighboring infrastructure at Shell's Ursa field just three miles south of Princess allows us to consider some very cost-effective development options for this discovery."

In addition to these projects, Shell recently announced two other Gulf of Mexico deep-water subsea endeavors. Projects Serano, and Oregano are scheduled to begin production in late 2001. Teamed with the start-up of the company's Brutus tension leg platform during the third quarter of 2001, Shell's Gulf of Mexico deep water production is expected to break 500,000 boe/d during early 2002.

Alex Steis

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