Shell Oil Co. said Tuesday that it plans to spend $1.2 billion to develop what it calls the largest oil discovery in the Gulf of Mexico in the last 20 years.
The discovery, called Mars, should produce more than 700 million barrels of crude oil and natural gas over at least 30 years, Shell officials said.
Production should begin in late 1996 and is expected to reach a peak daily rate of about 100,000 barrels of oil and 110 million cubic feet of gas, said Shell, part of the Anglo-Dutch giant Royal Dutch/Shell Group.
The Mars platform, with its planned 26 production wells, will allow Shell to pump oil and gas in 2,933 feet of water, the company said.
"This is another step in the evolution of being able to produce deep-water hydrocarbon reserves," Shell President Philip Carroll said.
Shell has set several deep-water drilling records for its platforms. The latest was in 1988, when it installed a platform with massive steel columns and pontoons, floating on 1,350 feet of water and attached to the sea floor by steel tendons.
About 55% of Shell's $1.2-billion outlay will be spent to build the platform. The rest will be spent for drilling and completing the wells.
The find is 71.5%-owned by Shell and 28.5%-owned by BP Exploration, a unit of British Petroleum Co.
BP said it will spend $340 million for the initial phase of development of the field, which lies in the undersea Mississippi Canyon, about 130 miles southwest of New Orleans.
The find will nearly double Shell's current Gulf of Mexico oil production.
The Gulf now provides about 31% of Shell's U.S. oil and gas production. However, the find will do little to stem the growing dependence on foreign oil. American Petroleum Institute said Tuesday that crude oil imports average 6.2 million barrels a day.
About 85% of the Mars reserves are believed to be crude oil and the rest natural gas.
The gas will be transported 55 miles through a 14-inch pipeline to be built to the South Pass 55 area, another production area in the gulf.
Shell is one of the leading leaseholders in the Gulf of Mexico, with about 4.2 million acres covered under about 765 leases. It also holds about 30% of the available gulf leases for exploration in more than 1,500 feet of water.