Shell Takes on US GOM PowerNap Project
Royal Dutch Shell plc revealed Thursday that its subsidiary, Shell Offshore Inc, has taken the final investment decision for the PowerNap deepwater project in the U.S. Gulf of Mexico (GOM).
PowerNap, which is a subsea tie-back to the Shell-operated Olympus production hub, is expected to start production in late 2021 and produce up to 35,000 barrels of oil equivalent per day at peak rates.
The project is anticipated to have a forward-looking break-even price of less than $35 per barrel and is currently estimated to contain more than 85 million barrels of oil equivalent recoverable resources.
"PowerNap further strengthens Shell’s leading position in the Gulf of Mexico,” Wael Sawan, Shell’s upstream director, said in a company statement.
“It demonstrates the depth of our portfolio of deepwater growth options and our ability to fully leverage our existing infrastructure to unlock value,” he added.
Shell discovered PowerNap in 2014. The project, which is 100 percent developed by Shell, is located in the south-central Mississippi Canyon area approximately 150 miles from New Orleans.
The Shell-operated (71.5 percent) Olympus production hub is co-owned by BP Exploration and Production Inc. (28.5 percent).
Shell operates nine production hubs and a network of subsea infrastructure in the U.S. GOM. Back in May, Shell revealed that production had begun from the first phase of its Kaikias subsea oil and gas development in the region. During the same month, Shell produced first oil from the U.S. GOM Appomattox floating production system.
Oil production in the U.S. GOM is poised to set new records in the imminent future, according to Rystad Energy. Back in June, the company forecasted that 2019 oil output from the region will average 1.95 million barrels per day, with some months “potentially touching the two million bpd ceiling”.
Last month, a large percentage of oil production in the GOM was shut in due to Tropical Storm Barry. At the end of July, the Bureau of Safety and Environmental Enforcement revealed that offshore oil and gas operators in the GOM were resuming normal operations following the storm.
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