Shell Starts Up 'Most Competitive' GOM Subsea Project Early

Shell Starts Up 'Most Competitive' GOM Subsea Project Early
According to Shell, the start-up occurred approximately one year ahead of schedule.

Shell Offshore, Inc. announced that production has begun from the first phase of its Kaikias subsea oil and gas development in the U.S. Gulf of Mexico (GOM). According to Shell, the start-up occurred approximately one year ahead of schedule.

“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, Shell’s upstream director, said in a written 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.”

Located in the Mars-Ursa basin approximately 130 miles offshore Louisiana, Kaikias will ultimately send production from four wells – in approximately 4,500 feet of water – to the Shell-operated (45 percent) Ursa hub. From Ursa, which is co-owned by BP (23 percent), ExxonMobil (16 percent) and ConocoPhillips (16 percent), production volumes will eventually flow into the Mars oil pipeline, Shell stated.

Shell reported that it has trimmed nearly one-third of Kaikias’ costs since taking the final investment decision in February 2017. At that time, the company stated that the deep-water development:

  • Minimized the need for new drilling by re-developing the exploration and appraisal wells for production
  • Uses a single flowline in the first phase linking three subsea wells to the Ursa production hub
  • Applies a simplified design resulting in an approximately 50-percent decrease in total costs versus initial estimates
  • Takes advantage of existing oil and gas processing equipment on Ursa, minimizing the need for extra top-side modifications and reducing operating costs

“Kaikias is an example of a competitive and capital-efficient deep-water project using infrastructure already in place,” Brown stated in the 2017 announcement.

Shell, which had initially projected a 2019 start-up of Kaikias’ first phase, noted that it anticipates a forward-looking, break-even price below $30 per barrel of oil. The initial phase incorporates three wells designed to produce up to 40,000 barrels of oil equivalent per day at peak rates. In early 2017, the company said that it estimates Kaikias holds more than 100 million barrels of oil equivalent recoverable reserves.

Shell discovered Kaikias in August 2014, and appraisal drilling the following year revealed more than 300 feet of net oil pay, according to the company’s website. It operates Kaikias and owns an 80-percent working interest. Mitsui’s MOEX North America LLC subsidiary owns the remaining 20-percent stake.


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