Williams today announced plans to expand its deepwater Gulf of Mexico business to provide gathering and processing infrastructure for production dedicated by units of Shell, Chevron and BP in the Perdido Foldbelt.

Williams has agreements with the named producers to provide gathering, processing and transportation services over the life of the reserves for expected oil and natural gas production from leases in the Perdido Foldbelt.

Williams plans to invest approximately $480 million in its Perdido Norte Project, which the company will own and operate. The infrastructure investment includes a total of 184 miles of pipeline and expanded natural gas processing capacity. Williams plans to begin pipeline construction in January 2008; the expected date for the pipelines and additional processing capacity to be ready to receive production is around the turn of the decade.

With the Perdido Norte Project, Williams will have invested approximately $1.7 billion in deepwater Gulf of Mexico gathering and processing infrastructure since 1997. The company’s previously disclosed capital-spending guidance includes the 2007 and 2008 portion of Williams’ planned expenditures for the Perdido Norte Project; the planned source of capital is general operating funds.

Williams’ new infrastructure will originate at a floating production facility the producers plan to construct in approximately 8,000 feet of water about 220 miles south of Galveston, Texas.

Under Williams' agreements with the producers, the company will begin collecting volume-based fees for services it provides when production commences. The Great White, Silvertip and Tobago fields are expected to be the source of initial production. By design, Williams’ facilities will have capacity to accommodate future production from other Perdido Foldbelt prospects and from potential tie-ins along the new pipeline route.

"Building critical infrastructure for producers in strategic hubs is central to our plans for creating value in the deepwater Gulf of Mexico," said Alan Armstrong, president of Williams' midstream gas gathering and processing business. "Once again, Williams’ deep-water experience and our reputation for highly reliable service are key to our ability to win this strategic position in an exciting new area for substantial natural gas and oil production."