Shell adds deepwater production in U.S. Gulf

graphic schematic of Kaikias

Schematic of Shell’s Kaikias project in the U.S. Gulf of Mexico, which is an economically resilient, subsea development with an estimated peak production of 40,000 bbls. of oil equivalent per day (boe/d). Kaikias started production approximately one-year ahead of schedule. Shell graphic

Shell has reduced costs by around 30% at this deepwater project since making the investment decision in early 2017, lowering the forward-looking, break-even price to less than $30 bbl.

“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,” Andy Brown, upstream director, Royal Dutch Shell, said in a statement. “In addition to accelerating production for Kaikias, we 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 kilometres) from the Louisiana coast and is owned by Shell (80% working interest), as operator, and MOEX North America LLC (20% working interest), a wholly owned subsidiary of Mitsui Oil Exploration Co. Ltd. Shell Offshore is a subsidiary of Royal Dutch Shell.

In the first quarter, Shell deepwater produced around 731,000 bpd globally. Over the past four years, the company said its sharp focus on competitive growth has led to planned cuts of around 45% on average for both global deepwater unit development and operating costs.

Cycle time from discovery to production for Kaikias phase one is less than four-years. The Kaikias development, located in around 4,500 feet (1,372 metres) of water, sends production from its four wells to the Shell-operated (45%) Ursa hub, which is co-owned by BP (23%), Exxon Mobil (16%), and ConocoPhillips (16%). From the Ursa hub, volumes ultimately flow into the Mars oil pipeline.

About the author

David Krapf

David Krapf has been editor of WorkBoat, the nation’s leading trade magazine for the inland and coastal waterways industry, since 1999. He is responsible for overseeing the editorial direction of the publication. Krapf has been in the publishing industry since 1987, beginning as a reporter and editor with daily and weekly newspapers in the Houston area. He also was the editor of a transportation industry daily in New Orleans before joining WorkBoat as a contributing editor in 1992. He has been covering the transportation industry since 1989, and has a degree in business administration from the State University of New York at Oswego, and also studied journalism at the University of Houston.

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