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Shell authorizes go-ahead for Appomattox deepwater development in GOM

Royal Dutch Shell announced the final investment decision to advance the Appomattox deepwater development in the Gulf of Mexico (GOM). This decision authorizes the construction and installation of Shell’s eighth and largest floating platform in the GOM. The Appomattox development will initially produce from the Appomattox and Vicksburg fields, with average peak production estimated to reach approximately 175,000 BOED. The platform and the Appomattox and Vicksburg fields will be owned by Shell (79%) and Nexen Petroleum Offshore USA (21%), a wholly owned subsidiary of CNOOC.

“We have again delivered a globally competitive investment scope for another significant deepwater project,” Marvin Odum, Shell Upstream Americas Director, said. “Appomattox opens up more production growth for us in the Gulf of Mexico, where our production last year averaged about 225,000 BOED, 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.”

During design work for Appomattox, Shell reduced the total project cost by 20% through supply chain savings and design improvements, and by reducing the number of wells required for the development. This includes advancements from previous four-column hosts, such as the Olympus tension-leg platform (TLP), as well as ensuring a high degree of design maturity before construction. With these and other cost reductions, the go-forward project breakeven price is estimated to be around $55/ bbl Brent equivalent.

Shell is currently the only operator in the GOM with commercial deepwater discoveries in this formation (Norphlet), which dates back 150-200 million years ago to the Jurassic period. The company continues active exploration in the area.

The sanctioned project includes capital for the development of 650 million BOE resources at Appomattox and Vicksburg, with start-up estimated around the end of this decade. The development of Shell’s recent, nearby discoveries at the Gettysburg and Rydberg prospects remains under review. These could become additional, high-value tiebacks to Appomattox, bringing the total estimated discovered resources in the area to more than 800 million BOE.

Shell Pipeline Company also made a final investment decision on the Mattox Pipeline, a 24-in. corridor pipeline that will 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.

Last year in the GOM, Shell started production from the Mars B development through the new Olympus TLP, and from the Cardamom subsea tieback to the Auger platform. Shell is also currently developing the Stones project, which is expected to produce approximately 50,000 BOED.

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