Royal Dutch Shell plc on Wednesday pulled the trigger to advance the Appomattox deepwater project in the Gulf of Mexico, its eighth and largest floating platform in the U.S. offshore. The final investment decision (FID) authorizes the platform to be constructed and installed.

Appomattox initially would produce from the Appomattox and Vicksburg fields, with average peak production estimated to reach 175,000 boe/d. The sanctioned project includes capital to develop 650 million boe resources at Appomattox and Vicksburg, with start-up estimated around 2020. The fields, 80 miles offshore Louisiana, are  in 7,200 feet (2,195 meters) of water. The project would be owned by Shell (79%) and CNOOC Ltd.'s Nexen Petroleum Offshore U.S.A. Inc. (21%).

"We have again delivered a globally competitive investment scope for another significant deepwater project," said Shell Upstream Americas Director Marvin Odum. "Appomattox opens up more production growth for us in the Gulf of Mexico, where our production last year averaged about 225,000 boe/d, and this development will be profitable for decades to come.  With its competitive cost and design, Appomattox is next in our series of deepwater successes."Shell discovered Appomattox in 2010 and Vicksburg in 2013. The Appomattox development host is to consist of a semi-submersible, four-column production host platform, a subsea system featuring six drill centres, 15 producing wells and five water injection wells.

During design work for Appomattox, Shell engineers reduced the total project cost by 20% through supply chain savings, design improvements and by reducing the number of wells required. The revamp followed advancements from the operator's previous four-column hosts, including as the Olympus tension-leg platform that serves the Mars B development in the GOM. Olympus was Shell's seventh -- and formerly largest -- floating platform (see Daily GPIFeb. 4, 2014). With the cost reductions, the go-forward project breakeven price is estimated to be around $55/bbl Brent equivalent.

Shell currently is the only operator in the GOM with commercial deepwater discoveries in the Norphlet formation, which dates back 150-200 million years ago to the Jurassic period, management noted. Active exploration in the area also is continuing.

Development of the nearby discoveries at the Gettysburg and Rydberg prospects remains under review (see Daily GPIJuly 15, 2014). Gettysburg is owned by Shell (80%, operator) and Nexen (20%). Rydberg is owned by Shell (57.2%, operator), Ecopetrol America Inc. (28.5%) and Nexen (14.3%).

"These could become additional, high-value tiebacks to Appomattox, bringing the total estimated discovered resources in the area to more than 800 million boe," said management. The GOM accounts for nearly half of Shell's production in the United States.

Shell Pipeline Co. LP also made an FID on the Mattox Pipeline, a 24-inch diameter corridor pipeline that would transport crude oil from the Appomattox host to an existing offshore structure in the South Pass area and then connect onshore through an existing pipeline. In addition to serving Appomattox, the pipeline would have pre-installed subsea connection points to allow for future interconnections.

Last year in the GOM, in addition to starting up production from Mars B, Shell also ramped up from the Cardamom subsea tie-back to the Auger platform (see Daily GPI,Sept. 8, 2014). The Stones project development in the GOM, also underway, is expected to produce 50,000 boe/d.