Shell begins new deep-water development off Louisiana coast

Nearly a year ahead of schedule, production began today on the first phase of Shell’s newest subsea development off the Louisiana coast, which has an estimated peak production of 40,000 barrels of oil per day, according to the company.

The company says the Kaikias development is located about 130 miles off the Louisiana coast in waters about 4,500 feet deep. Shell has an 80% ownership stake in the development, which is situated in an area known as the Mars-Ursa basin. MOEX North America LLC, a subsidiary of Mitsui Oil Exploration Co. Ltd., owns the other 20%.

Oil from the four wells at Kaikias will ultimately flow into the Mars oil pipeline, running through Port Fourchon.

Since deciding to invest in the deep-water project in 2017, Shell reduced it costs by 30%, lowering the projected break-even cost to less than $30 per barrel of oil. Shell is not disclosing how much it has spent on the development.

“We believe Kaikias is the most competitive subsea development in the Gulf of Mexico and a prime example of the deep-water opportunities we’re able to advance with our technical expertise and capital discipline,” says Andy Brown, upstream director at Royal Dutch Shell.

In the first quarter of 2018, Shell says its deep-water projects produced around 731,000 barrels of oil per day globally.