Williams receives first production at new deepwater platform

A unit of Williams announced that it has begun receiving first deliveries of production through its new deepwater spar platform that was recently installed in the eastern Gulf of Mexico.

TULSA, Okla., May 5, 2004 -- A unit of Williams announced that it has begun receiving first deliveries of production through its new deepwater spar platform that was recently installed in the eastern Gulf of Mexico.

Williams' new spar is a floating production system initially built to serve the Devils Tower field at Mississippi Canyon block 773, approximately 150 miles south of Mobile, Ala. Located in 5,610 feet of water, it is the world's deepest dry tree spar.

Dominion Exploration & Production, Inc., a subsidiary of Dominion, is operator of Devils Tower field, with 75 percent working interest. Pioneer Natural Resources Company owns the remaining 25 percent interest in the production.

"Our deepwater business has made extraordinary strides since it was launched in the late 1990s. This platform follows a number of other large- scale, highly reliable assets that we've built in the Gulf to benefit our customers," said Steve Malcolm, Williams' chairman, president and chief executive officer.

"We have the potential to grow volumes in all of our midstream gathering and processing basins, but the deepwater growth is clearly the most dramatic," Malcolm said.

The platform, which is operated by Dominion on behalf of Williams, is capable of producing 60,000 barrels of oil per day and 110 million cubic feet of natural gas per day. From the platform, oil and gas are fed into export pipelines owned and operated by Williams. Oil is delivered onshore to a third-party terminal. Natural gas is delivered onshore to Williams' Mobile Bay plant for processing.

Under the agreement with Dominion and Pioneer, Williams receives fixed monthly payments through 2012 for providing the necessary infrastructure for the Devils Tower anchor production. Williams is recognizing its first revenue associated with the spar this month.

Alan Armstrong, senior vice president of Williams' midstream gas and liquids group, said, "Our deepwater investments are designed to serve multiple fields. We've taken the approach of building strategic hubs where we can aggregate multiple wells and fields into single facilities. This saves producers money and allows them to bring their production online at a faster pace.

"For example, we signed the papers to build the spar for Devils Tower in 2001. Since then, Dominion and Pioneer have made two other discoveries in neighboring blocks at their Triton and Goldfinger prospects. We're actively working with them to connect these discoveries to the Devils Tower spar," said Armstrong.

Williams invested approximately $500 million to develop the spar, associated pipelines and related infrastructure for the Devils Tower project. The 117-mile Mountaineer oil pipeline is a combination of 18- and 20-inch- diameter pipe. The 102-mile Canyon Chief gas line consists of 18-inch- diameter pipe. Williams also increased the condensate handling capacity at its Mobile Bay gas plant, adding a 9,000-barrel slug catcher and 3,500-barrel per-day condensate stablizer.

Since 1997, Williams has invested almost $1 billion in new midstream assets in the Gulf of Mexico. These facilities provide both onshore and offshore services through pipelines, platforms and processing plants. The new facilities also attract incremental gas volumes to Williams' Transco pipeline system in the southeastern United States.

About Williams

Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at www.williams.com.


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