Shell, Mitsui take FID on Kaikias project in deepwater gulf

Shell Offshore Inc., a subsidiary of Royal Dutch Shell PLC, and MOEX North America LLC, a wholly owned subsidiary of Japan’s Mitsui Oil Exploration Co. Ltd., have each taken the final investment decision on Phase 1 of the Kaikias deepwater project in the US Gulf of Mexico.

Content Dam Ogj Online Articles 2017 02 Shell Kaikias Subsea

Shell Offshore Inc., a subsidiary of Royal Dutch Shell PLC, and MOEX North America LLC, a wholly owned subsidiary of Japan’s Mitsui Oil Exploration Co. Ltd., have each taken the final investment decision on Phase 1 of the Kaikias deepwater project in the US Gulf of Mexico.

The project will produce oil and natural gas through a subsea tieback to the nearby Shell-operated Ursa production hub and will be developed in two phases. The first phase, expected to start production in 2019, includes three wells designed to produce as much as 40,000 boe/d at peak rates.

Kaikias is in the Mars-Ursa basin 130 miles offshore Louisiana and is estimated to hold more than 100 million boe of recoverable resources. Shell discovered Kaikias in August 2014, and appraisal drilling revealed more than 300 ft of net oil pay in August 2015.

Content Dam Ogj Online Articles 2017 02 Shell Kaikias Subsea

Shell says redeveloping exploration and appraisal wells for production minimized new drilling at Kaikias, and existing oil and gas processing equipment on Ursa reduces the need for additional topside modifications, cutting overall operating costs.

Kaikias’ simplified design is resulting in a 50% reduction in total costs vs. initial estimates, Shell says, adding the project has a go-forward breakeven price of less than $40/bbl.

Shell is operator of Kaikias with 80% working interest, and MOEX owns the remaining 20%. Mitsui agreed to acquire its interest in December 2016 (OGJ Online, Dec. 6, 2016).

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