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USA: Oil Production

Shell Commences Early Production of Subsea Development in Gulf of Mexico

| Editor: Ahlam Rais

The firm expects the Gulf of Mexico with an estimated peak production of 40,000 barrels of oil equivalent per day.
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The firm expects the Gulf of Mexico with an estimated peak production of 40,000 barrels of oil equivalent per day. (Source: Deposit Photos)

The company has managed to reduce costs by around 30 % for the Kaikias deep-water project and is expecting the Gulf of Mexico to produce an estimated peak production of 40,000 barrels of oil equivalent per day.

USA – Shell Offshore (Shell), a subsidiary of Royal Dutch Shell, has recently announced the early start of production – around one-year ahead of schedule – at the first phase of Kaikias, an economically resilient, subsea development in the US. The firm expects the Gulf of Mexico with an estimated peak production of 40,000 barrels of oil equivalent per day (boe/d).

Shell has reduced costs by around 30 % at this deep-water project since taking the investment decision in early 2017, lowering the forward-looking, break-even price to less than 30 dollar per barrel of oil. In addition to accelerating production for Kaikias, the company also reduced costs with a simplified well design and the incorporation of existing subsea and processing equipment.

Kaikias is located in the prolific Mars-Ursa basin around 130 miles (210 kilometers) from the Louisiana coast and is owned by Shell (80 % working interest), as operator, and Moex North America (20 % working interest), a wholly owned subsidiary of Mitsui Oil Exploration.

Royal Dutch Shell pioneered the deep-water industry 40 years ago. In the first quarter of 2018, Shell deep water produced around 731,000 boe/d, globally. Over the past four years, the company’s sharp focus on competitive growth has led to planned cuts of around 45 % on average for both global deep-water unit development and operating costs.

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