Williams to Add Infrastructure to Transport Chevron, Kerr-McGee Production

Williams has signed agreements to transport oil and gas for the life of the leases in the Blind Faith Field in the deepwater Gulf of Mexico, located in approximately 7,000 feet of water at Mississippi Canyon blocks 695 and 696.

Chevron operates the development with a 62.5 percent working interest. Kerr-McGee Oil & Gas Corp., a wholly owned affiliate of Kerr-McGee Corp., owns a 37.5 percent working interest.

Under the agreements, Chevron and Kerr-McGee are dedicating to Williams the transport of production from their current and future ownership in the area surrounding the Blind Faith discovery.

The two producers earlier this week announced they plan to invest approximately $900 million to develop the Blind Faith Field, which they estimate has a gross resource potential exceeding 100 million barrels of oil-equivalent. The producers reported this week that they expect initial production of approximately 30,000 barrels of oil per day and 30 million cubic feet of gas per day to commence during the first half of 2008.

"We welcome and appreciate the opportunity to further our relationships with Chevron and Kerr-McGee," said Alan Armstrong, senior vice president of Williams' midstream business unit. "We work hand-in-hand with producers to optimize the value of their reserves by developing critical infrastructure that brings their production online quickly and effectively."

To accommodate production from the Blind Faith acreage and the surrounding blocks, Williams has agreed to extend its Canyon Chief and Mountaineer pipelines. Both of these pipelines were placed in service in May 2004 to support production from the Devils Tower Field at Mississippi Canyon block 773.

Williams expects to have the extensions ready for service by mid-2007. The $177 million project will facilitate a 37-mile extension of each pipeline.

The agreement also creates opportunities for Williams to move natural gas from the Blind Faith discovery through its Mobile Bay, Ala., processing plant and its Transco and Gulfstream interstate pipeline systems. Recovered natural gas liquids from Blind Faith also could be fractionated at Williams' facilities in Baton Rouge or Paradis, La.

"We're committed to giving our customers reliable services by using the full extent of our deepwater experience and facilities in the Gulf. We have designed our operations to aggregate production from multiple fields into common infrastructure, like we've done here," Armstrong said.