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Shell-Led Kaikias in Deepwater GOM Ramps One Year Ahead of Schedule

The first phase of the Kaikias development in the deepwater Gulf of Mexico has ramped up nearly one year ahead of schedule with estimated peak production of 40,000 boe/d, Shell Offshore Inc. said Thursday.

The Houston-based subsidiary of Royal Dutch Shell plc said it has reduced costs for the subsea development by around 30% since making the investment decision in early 2017. The forward-looking, breakeven price is now less than $30/bbl of oil, management said.

“We believe Kaikias is the most competitive subsea development in the Gulf of Mexico and a prime example of the deepwater opportunities we’re able to advance with our technical expertise and capital discipline,” said Upstream Director Andy Brown. “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 was ballyhooed by Shell when it initially was discovered in 2015, and a final investment decision triggered full development in early 2017.

The project is in about 4,500 feet of water in the prolific Mars-Ursa Basin around 130 miles (210 kilometers) from the Louisiana coast. The project is operated and owned by Shell (80%) and MOEX North America LLC (20%), a subsidiary of Mitsui Oil Exploration Co. Ltd.

Production from the four wells at Kaikias is sent to the Shell-operated (45%) Ursa hub, which is co-owned by BP plc (23%), ExxonMobil Corp. (16%) and ConocoPhillips (16%). From the Ursa hub, volumes ultimately flow into the Mars oil pipeline.

During the first quarter, Shell’s deepwater projects worldwide produced around 731,000 boe/d. Over the past four years the producer has focused on competitive growth, which it said has led to planned cuts of around 45% on average for both global deepwater unit development and operating costs.

 

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