Shell Offshore and MOEX North America, a wholly owned subsidiary of Mitsui Oil Exploration, have each taken the final investment decision to execute phase one of the Kaikias deepwater project in the U.S. Gulf of Mexico.
Kaikias has a break-even price below $40 per barrel which will produce oil and gas through a subsea tie-back to the nearby Shell-operated Ursa production hub using a single flowline. Costs have been reduced by around 50 percent from initial estimates by simplifying the design and using lessons learned from previous subsea developments. Additionally, Shell minimized the need for new drilling at Kaikias by safely re-developing the exploration and appraisal wells for production.
The project will be developed in two phases with phase one expected to start production in 2019. The first phase of development includes three wells, which are designed to produce up to 40,000 barrels of oil equivalent per day (boe/d) at peak rates.
Kaikias is located in the prolific Mars-Ursa basin approximately 210 kilometers (130 miles) from the Louisiana coast and is estimated to contain more than 100 million barrels of oil equivalent recoverable resources.
Shell is the operator and has an 80 percent working interest. MOEX North America owns the remaining 20 percent working interest.
Globally, Shell’s deepwater business is a growth priority for the company and in the fourth quarter of 2016 it produced around 725,000 boe/d. Shell’s deepwater production is expected to increase to more than 900,000 boe/d by 2020 from already discovered, established reservoirs.
In the Gulf of Mexico, two other Shell-operated projects are currently under construction or undergoing pre-production commissioning: Coulomb Phase 2 and Appomattox.