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Shell takes final investment decision for the Appomattox ultra-deepwater development in Gulf of Mexico

Royal Dutch Shell plc (Shell) made final investment decision (FID) to advance the Appomattox deep-water development in the ultra-deepwater Gulf of Mexico. The Appomattox project is located 80 miles offshore (129 kilometers) from the nearest shoreline in Louisiana, in approximately 7,200 feet (2,195 meters) of water.

This decision authorizes the construction and installation of Shell’s eighth and largest floating platform in the Gulf of Mexico. The Appomattox development will initially produce from the Appomattox and Vicksburg fields, with average peak production estimated to reach approximately 175,000 barrels of oil equivalent (boe) per day.

The platform and the Appomattox and Vicksburg fields will be owned by Shell (79%) and Nexen Petroleum Offshore U.S.A. Inc. (21%), a wholly-owned subsidiary of China’s CNOOC Limited.

During design work for Appomattox, Shell reduced the total project cost by 20% through supply chain savings, 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 per barrel Brent equivalent.

Shell is currently the only operator in the Gulf of Mexico with commercial deep-water 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 LP also made a final investment decision on the Mattox Pipeline, a 24-inch 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 Gulf of Mexico, Shell started production from the Mars B development, through the new Olympus TLP, and from the Cardamom subsea tie-back to the Auger platform. Shell is also currently developing the Stones project, which is expected to produce approximately 50,000 boe per day.

Shell discovered Appomattox in 2010 and Vicksburg in 2013. The Appomattox development host will 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.

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