* Shell announces start-up of Perdido platform
* Shell's Odum says project pushes technology boundaries
* Company expects project to produce for 20 years
(Adds detail throughout, adds byline)
By Kristen Hays
HOUSTON, March 31 Royal Dutch Shell (RDSa.L) on
Wednesday fired up its newest Gulf of Mexico oil and gas
platform in water as deep as five Empire State Buildings, the
the world's deepest offshore drilling and production facility.
"We continue to push the boundaries in terms of what's
possible to bring reliable energy to this country," said Marvin
Odum, president of Shell Oil Co, Shell's U.S. arm.
Perdido can produce up to 100,000 barrels a day of oil and
20 million cubic feet per day of natural gas, with a projected
lifespan of over 20 years. It is designed to gather oil and gas
from the nearby Great White, Tobago and Silvertip fields near
the Gulf's U.S. border with Mexico.
It joins the prolific network of energy infrastructure in
the Gulf that provides 27 percent of oil and 15 percent of
natural gas production in the U.S.
For a FACTBOX of other US deepwater projects please click
Shell's announcement came hours after President Barack
Obama unveiled a plan to expand domestic offshore oil and gas
exploration and drilling. [ID:nN31367614]
The plan calls for consideration of new areas for drilling
in the mid and south Atlantic and the eastern Gulf of Mexico as
well as the Arctic off the north shores of Alaska where
companies, including Shell, already have leases.
"I think this is a significant and important step forward,"
Odum said of the plan, adding that more U.S.-produced energy
will generate jobs and improve energy security.
Shell is the operator with a 35 percent interest in the
project. Partners Chevron Corp (CVX.N) and BP Plc (BP.L) have
37.5 percent and 27.5 percent interests, respectively.
The $3 billion Perdido floats in 8,000 feet (2,438 meters)
of water above a thick 300-square-mile ancient layer of rock
and salt known as the Lower Tertiary. Geologists estimate the
entire trend could hold up to 15 billion barrels of oil.
There have been 18 discoveries in the frontier area, but
Perdido is the first platform to pump oil and gas there.
Brazil's Petrobras (PETR4.SA) (PBR.N) aims to be the
second, with plans to start up its Cascade and Chinook project
about 250 miles south of New Orleans this summer.
Perdido also includes 184 miles of new oil and gas
pipelines, constructed by Williams Cos., to gather, process and
transport oil and gas. to existing structures because the
current pipelines didn't stretch that far from shore.
Shell bought the lease 220 miles south of Galveston in 1996
and discovered oil there in 2002. But technology to extract oil
from a reservoir of such extreme temperatures and pressures did
not yet exist.
Odum said technological breakthroughs will allow Shell to
recover 30 percent to 50 percent of the oil in a reservoir
considered unreachable just a few years ago.
"We were buying leases in 8,000 feet of water when industry
technology was at 3,000 feet," Odum said. "We believed we had
the engineering creativity to solve this problem."
The Lower Tertiary gained much attention in 2006 when
Chevron successfully drilled an exploration well more than five
miles deep in its Jack field about 270 miles south of New
Chevron aims to decide late this year whether to move
forward with building a platform that can produce up to 150,000
barrels of oil equivalent per day from the Jack and St. Malo
fields, the company said.
Odum and Bill Townsley, Perdido's development venture
manager, said on Wednesday that the platform's performance will
boost confidence for Shell and other frontier operators.
"It opens the door to the industry," Townsley said.
(Editing by Rene Pastor)