Shell Offshore Inc. is pleased to announce today that it will develop the Great White, Tobago and Silvertip Fields via a Perdido Regional Development host, located in Alaminos Canyon, offshore Gulf of Mexico, approximately 200 miles south of Freeport, TX. Moored in about 8,000 feet of water, the regional DVA (direct vertical access) spar will be the deepest spar production facility in the world. First production from Perdido is expected around the turn of the decade, with the facility capable of handling 130,000 boe/d.

The concept for regional development includes a common processing hub in Alaminos Canyon Block 857 near the Great White discovery that incorporates drilling capability and functionality to gather, process and export production within a 30-mile radius of the facility. This concept will provide regional synergies, reduced cost and lower risk. This regional concept will also reduce the number and size of the facilities and operations in this challenging frontier area, resulting in a lower environmental impact than would otherwise be achieved.

“The Perdido Foldbelt is remote and is located in ultradeep waters from about 7,500 - 10,000 feet, with rugged seafloor terrain,” explained 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. Shell has been a leader in the opening of this play, starting with exploration in the 1990's, and is proud to be at the leading edge of development and production. To accomplish this record-breaking feat, we will apply cutting-edge technology, engineering expertise and industry leadership."

Some of the technology firsts on this project include the first application of full host scale subsea separation and boosting and the first application of wet tree direct vertical access wells from a spar.

“The targeted application of select new and extended technology at Perdido is a critical enabler providing Shell and partners the confidence to go after new resources in challenging areas. The use of subsea separation and boosting provides improved recovery by removing about 2000 psi of back pressure from the wells,” said Russ Ford, VP Technical, EP Americas. “The use of the wet tree direct vertical access concept enables significant savings by using a compact six slot spar with capability to drill, complete and sidetrack up to 19 wells from a platform drilling rig.”

Shell was at the forefront of opening up the Lower Tertiary play in the western deepwater Gulf of Mexico with the Great White discovery in Alaminos Canyon and will be the first to bring production from this area to market. Shell, as operator, commenced exploratory drilling operations on March 6, 2002, in 8,009 feet of water. The well reached its final total depth on May 18, 2002. The original well was drilled to a true vertical depth of 14,405 feet. An appraisal well was 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.

“This announcement is a significant milestone for Shell, the Perdido Development Team and for all those who have worked tirelessly for over four years to enable a viable development in the Perdido area. Proceeding with this development concept demonstrates that Shell is prepared to tackle the increasing challenges that face us in a maturing Deepwater Gulf of Mexico arena,” said Bill Henry, Perdido Venture Leader. “It’s important we recognize the exploration folks who had the foresight to bid on these frontier leases a decade ago and subsequently prove the potential of the area with the Great White discovery in 2002. The cross-organizational execution team, led by Dale Snyder and Rome Gonzalez from the projects and wells organizations, respectively, are ready to safely construct and install the development system and initiate development drilling leading to a flawless 1st oil start up lead by Chris Smith and his growing EPW-RPD team.”

Shell will operate the Perdido Regional Host. It will be jointly owned by Shell (35%), Chevron (37.5%) and BP (27.5%). Great White is located in Alaminos Canyon 812, 813, 814, 857, 900 and 901 and is owned by Shell (operator) with 33.34%, Chevron with 33.33% and BP with 33.33%.

Tobago is located in Alaminos Canyon 859 in approximately 9,600 feet of water. It is operated by Shell with 32.5%, Chevron with 57.5%, and Nexen with 10%. The discovery well was drilled in 2004 to a total depth of 18,510 feet. A sidetrack well was drilled to 18,425 feet.

Silvertip, in Alaminos Canyon 815, is operated by Shell with 40% interest. Chevron holds the remaining 60%. Chevron drilled the AC 815 #1 discovery well in August 2004 in approximately 9,200 feet of water, to a total depth of 14,778 feet.