TEXACO'S FIRST SUBSEA PROSPECT IN GULF OF MEXICO BRINGS AN ARRAY OF TECHNOLOGY TO THE OCEAN FLOOR "Shasta"; Ushers In Era Of Subsea Development For Deepwater.

natural gas from two recently completed subsea wells in the Gulf of Mexico, a project successfully demonstrating an assortment of emerging technology and innovation in subsea developments.

The Shasta prospect is located approximately 220 miles southwest of New Orleans, in water depths ranging from 850-1,040 feet. It is the first subsea development in the Gulf of Mexico for Texaco Exploration & Production Inc. (TEPI) and its partners Hardy Oil & Gas USA Inc. and Samedan Oil Corporation, a wholly owned subsidiary of Noble Affiliates, Inc. The Shasta prospect consists of Green Canyon Blocks 92, 136 and 137.

In addition to the production rates of 58 million cubic feet (MMCF) of natural gas per day and 800 barrels of condensate from its two current subsea wells, Shasta is a milestone because the project provides a "virtual laboratory" for the application of deepwater technology.

"These subsea wells mark important steps in the overall strategic business development plans of TEPI's substantial Gulf operations," said TEPI President Clarence P. Cazalot. "Shasta will provide an operational stepping stone to similar projects planned in even deeper water in the Gulf of Mexico."

In addition to utilizing 3-D seismic imaging, geoscientists and engineers from a cross-company, cross-functional project team have brought proven subsea technology from the North Sea and elsewhere in the Gulf of Mexico, along with emerging subsea technology, to the Shasta development.

One of these new technologies is the utilization of "horizontal trees" with the two subsea wells in lieu of conventional vertical dual-trees which are historically used for deepwater subsea production. Horizontal trees allow for lower cost plus ease of installation, maintenance and workover activities. These two trees represent Texaco's first worldwide use of this technology, according to Dr. Bruce S. Appelbaum, Manager of TEPI's Offshore Division in New Orleans.

In the past, production from a well typically flowed to the surface at the production platform. With the advent of subsea production, natural gas and crude oil will not be brought to the surface at the site of the well head. In some instances, as in the case with the Shasta prospect, it will be sent via pipeline to an existing production platform.

Production from the two subsea wells at the Shasta prospect is flowing under reservoir pressure to an existing Texaco oil and gas platform located 9.5 miles to the northeast in Green Canyon Block 6. This host platform, known as "Kileaua," has its own unique processing facilities designed for the Shasta prospect and is operated by TEPI personnel who received special training on the multiplexed, electrohydraulic control system. Subsea technology was used to develop these isolated reservoirs which did not warrant a fixed platform.

"Shasta has been planned and executed by an integrated team of professionals from several companies," said Dr. Appelbaum. "The results and experiences on the Shasta prospect have proved invaluable in planning our future growth in deepwater projects in the Gulf of Mexico."

In 1995 alone, Texaco made three significant discoveries from its deepwater rank wildcat drilling program. The three discoveries are the Fuji, Gemini and Petronius prospects. As these prospects are developed, it will be important to have deepwater technology ready for use in deepwater production. The activity at Shasta is a precursor to these more technically challenging applications.

Shasta is being developed by a partnership with TEPI, as current operator, holding a 50 percent interest. Other partners include Houston-based Hardy Oil & Gas USA Inc. and Samedan Oil Corporation with a 25 percent interest each. Hardy acted as development operator and project manager, drilling and completing the wells and installing subsea hardware to the Kileaua platform. Cross-functional teams of Texaco, Hardy and contractor personnel participated in a fast track program to initiate production.

Shasta's first subsea well, in 850 feet of water, was completed in late November, 1995, and is currently flowing 31 MMCF of natural gas per day on a 94/64 inch choke. Flowing tubing pressure is 3,102 pounds per square inch (PSI).

The second subsea well is located 1.5 miles southeast of the first well in 1,040 feet of water and is connected by a four-inch pipeline and control umbilical. Completed in mid-December, 1995, the second well is flowing 27 MMCF of natural gas per day on a 38/64 inch choke and 3,326 PSI of flowing tubing pressure. It also is producing 800 barrels of condensate on a daily basis.

NOTE TO EDITORS: Graphic available upon request.

CONTACT: James J. Swords

TEXACO INC.

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Pierre DeGruy 504-593-4159