March 7, 2017 12:11 AM
Shell's Olympus platform in the deepwater Gulf of Mexico is one of three such facilities near its new Kaikias discovery.
Image courtesy Shell

Shell Offshore Inc. and its partner, MOEX North America, have made the final investment commitment to move forward on Phase 1 of the Kaikias deepwater project in the U.S. Gulf of Mexico. Kaikias is located in the prolific Mars-Ursa basin approximately 130 miles from the Louisiana coast and is estimated to contain more than 100 million barrels of oil equivalent recoverable resources.

According to a Feb. 28 press release from Shell, Kaikias’ break-even price is below $40 per barrel; oil prices are currently hovering in the $50-$55 range.

Located in about 4,575 feet of water and first discovered in mid-2014, Kaikias will produce oil and gas through a subsea tie-back to the nearby Shell-operated Ursa production hub.

“Kaikias is an example of a competitive and capital-efficient deep-water project using infrastructure already in place,” Andy Brown, upstream director of Royal Dutch Shell, says the release. He went on to say the companies — Shell Offshore, a subsidiary of Royal Dutch Shell plc, is the operator with an 80 percent working interest; MOEX NA, a subsidiary of Tokyo-based Mitsui Oil Exploration Co. Ltd., owns the remaining 20 percent — have reduced the total cost of initial estimates by around 50 percent by simplifying the design and using lessons learned from previous subsea developments.

The project will be developed in two phases with Phase 1 expected to start production in 2019. The first phase of development includes three wells, which are designed to produce up to 40,000 barrels of oil equivalent per day at peak rates.

Globally, Shell’s deepwater business is a growth priority for the company. In the last quarter of 2016 the company produced around 725,000 boe/d. Shell’s deepwater production is expected to increase to more than 900,000 boe/d by 2020 from already discovered, established reservoirs. In the Gulf of Mexico, two other Shell-operated projects are currently under construction or undergoing pre-production commissioning: Coulomb Phase 2 and Appomattox.

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