Royal Dutch Shell’s recent Dover discovery in the Norphlet play in the deepwater U.S. Gulf of Mexico is a further indication that market conditions offshore may finally be improving.
The discovery is located approximately 13 miles from the Appomattox host platform in the Gulf and is considered an attractive potential tieback. It is expected to start production before the end of 2019. “Dover showcases our expertise in discovering new, commercial resources in a heartland helping deliver our deepwater growth priority,” Andy Brown, upstream director for Royal Dutch Shell, said in a statement. “By focusing on near-field exploration opportunities in the Norphlet, we are adding to our resource base in a prolific basin that will be anchored by the Appomattox development.” The Dover discovery is Shell’s sixth in the Norphlet.
Shell’s major, deepwater hubs are well positioned for production expansion through near-field exploration and additional subsea tiebacks. The company expects its global, deepwater production to exceed 900,000 bbls. of oil equivalent per day by 2020, from already discovered, established areas.
The Dover discovery is, to some extent, a response to improving oil prices. If the recent UK offshore leasing round is an indication, continued higher oil prices, plus discoveries like Dover, may drive a significant offshore recovery.
After the late May North Sea lease sale, UK regulators declared that oil and gas exploration is “very much alive” following the award of 123 offshore licenses in the UK Continental Shelf, according to the BBC.
In the U.S. Gulf, the recovery could begin in earnest with the August lease sale. The sale, scheduled to be live streamed from New Orleans, will be the third offshore sale under the federal offshore leasing program for 2017-2022. Lease Sale 251 will include approximately 14,474 blocks, located from three to 231 miles offshore, in the Gulf’s Western, Central and Eastern planning areas in water depths ranging from nine to more than 11,115 feet. Unless oil prices falter, look for the August lease sale to be a harbinger of good things to come in the Gulf of Mexico.