New episodes of makin' energy are live. Subscribe and Listen Today.

Shell, Mitsui to start deepwater projects in the Gulf of Mexico

Shell, Mitsui subsidiaries to start Kaikias deepwater project in the Gulf of Mexico

Via The Advocate | Advocate staff report

Subsidiaries of Royal Dutch Shell and Mitsui Oil Exploration Co. are going forward with the development of the Kaikias deepwater project in the Gulf of Mexico off the Louisiana coast.

Shell Offshore Inc. and MOEX North America LLC said the project will be developed in two phases. The first phase is expected to start production in 2019, with the development of three wells designed to produce up to 40,000 barrels of oil equivalent per day at peak rates. A price tag was not disclosed.

Kaikias is located in the prolific Mars-Ursa basin about 130 miles from the Louisiana coast and is estimated to contain more than 100 million barrels of recoverable oil equivalents.

Shell is the operator and has an 80 percent working interest. MOEX NA owns the remaining 20 percent.

The companies said the break-even price on the project is below $40 per barrel. Prices are hovering above $50. It will produce oil and natural gas, tied into the nearby Shell-operated Ursa production hub.

“Kaikias is an example of a competitive and capital-efficient deepwater project using infrastructure already in place,” said Andy Brown, upstream director of Royal Dutch Shell. “The team has done a great job to reduce the total cost by around 50 percent by simplifying the design and using lessons learned from previous subsea developments.”

Globally, Shell said its deepwater business is a growth priority for the company, producing about 725,000 barrels of oil equivalents in the fourth quarter. Shell’s deepwater production is expected to increase to more than 900,000 barrels by 2020 from already discovered, established reservoirs. In the Gulf of Mexico, two other Shell-operated projects are under construction or undergoing pre-production commissioning: Coulomb Phase 2 and Appomattox.

Shell has seven production hubs and an established network of subsea infrastructure in the Gulf.

Shell said it held down costs for Kaikias by redeveloping the exploration and appraisal wells for production; making use of a simplified design resulting in approximately 50 percent reduction in total costs versus initial estimates; and by taking advantage of existing oil and gas processing equipment on Ursa, minimizing the need for additional top-side modifications.

Read this article on The Advocate

Share