Shell Makes Large Deepwater Discovery In Gulf Of Mexico

Shell has made a large deepwater exploration discovery in the U.S. Gulf of Mexico, just 13 miles from its Appomattox project that is expected to start production by the end of 2019, the oil major said on Thursday.

The Dover discovery is Shell’s sixth in the Norphlet geologic play in the U.S. Gulf of Mexico, and is considered an attractive potential tieback due to its proximity to Appomattox.

“Dover showcases our expertise in discovering new, commercial resources in a heartland helping deliver our deep water growth priority,” said Andy Brown, Upstream Director for Royal Dutch Shell. “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,” Brown added.

The Appomattox project, in which the operator Shell holds 79 percent and Nexen Petroleum Offshore USA owns the other 21 percent, is planned to have peak annual production of 175,000 barrels of oil equivalent per day (boe/d).

Shell expects its global deepwater production from already discovered and established areas to exceed 900,000 boe/d by 2020.

In the U.S. Gulf of Mexico, Shell announced last month the final investment decision for the Vito deepwater development, with a forward-looking, break-even price estimated to be less than $35 per barrel. Vito, which will be Shell’s 11th deepwater host in the Gulf of Mexico, is currently scheduled to start producing oil in 2021, with peak production of around 100,000 boe/d.

Earlier this month, Harry Brekelmans, Shell Projects and Technology Director, said that the oil major is targeting deepwater projects to break even at $40 or preferably below that threshold.

In a speech at the Offshore Technology Conference (OTC) in Houston, Brekelmans said at the end of April:

“It is fair to say that the industry is moving away from big, bespoke projects and towards a future that is all about detail. A future that is about being more scrupulous with the scoping and execution of projects.”

By Tsvetana Paraskova for Oilprice.com