December 26, 2023 [PR Newswire]- Shell Offshore Inc., a subsidiary of Shell plc, today announced the Final Investment Decision (FID) for Sparta, a deep-water development in the U.S. Gulf of Mexico that represents our competitive approach to simplifying and replicating projects.

Owned by Shell Offshore Inc. (51% operator) and Equinor Gulf of Mexico LLC (49%), Sparta is expected to reach a peak production of approximately 90,000 barrels of oil equivalent per day (boe/d) and currently has an estimated, discovered recoverable resource volume of 244 million boe. Sparta will be Shell’s 15th deep-water host in the Gulf of Mexico and is currently scheduled to begin production in 2028.

Sparta showcases Shell’s cost-efficient development approach through standardized, simplified host designs, first utilized at the Vito development and later replicated at the Whale development.  An enhanced replication of Vito and Whale, Sparta replicates about 95% of Whale’s hull and 85% of Whale’s topsides.

“Shell’s latest deep-water development demonstrates the power of replication, driving greater value from our advantaged positions,” said Zoë Yujnovich, Shell’s Integrated Gas & Upstream Director. “This investment decision is aligned with our commitment to pursue the most energy-efficient and competitive projects while supplying safe, secure energy supplies today and for decades to come.”

Building on more than 40 years of deep-water expertise, Sparta also marks Shell’s first development in the Gulf of Mexico to produce from reservoirs with pressures up to 20,000 pounds per square inch.

The Sparta development will be the first of Shell’s replicable projects to feature all-electric topside compression equipment, significantly reducing greenhouse gas intensity and emissions from our own operations.

Notes to editors

• The Sparta development spans four Outer Continental Shelf (OCS) blocks in the Garden Banks area of the U.S. Gulf of Mexico.
• Sparta will feature a semi-submersible production host in a depth of more than 1,400m/4,700ft of water, initially with eight oil and gas producing wells.
• Sparta’s design closely replicates the 100,000 barrel per day Vito and Whale designs, both of which are four-column semi-submersible host facilities. Vito is located in the greater Mars Corridor and began production in February 2023. Whale will be located in the Perdido corridor and is scheduled to come online in 2024.
• Current estimated recoverable resource volumes of the primary Sparta development are 244 million boe. The estimate of resource volumes is currently classified as 2P under the Society of Petroleum Engineers’ Resource Classification System.
• The estimated peak production and current estimated recoverable resources presented above are 100% total gross figures.
• Shell is the leading operator in the U.S. Gulf of Mexico.

Cautionary note

The companies in which Shell plc directly and indirectly owns investments are separate legal entities. In this announcement, “Shell”, “Shell Group” and “Group” are sometimes used for convenience where references are made to Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. ”Subsidiaries”, “Shell subsidiaries” and “Shell companies” as used in this announcement refer to entities over which Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively. “Joint ventures” and “joint operations” are collectively referred to as “joint arrangements”.  Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest.

Forward-Looking Statements

This announcement contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “aim”, “ambition”, ”anticipate”, ”believe”, ”could”, ”estimate”, ”expect”, ”goals”, ”intend”, ”may”, “milestones”, ”objectives”, ”outlook”, ”plan”, ”probably”, ”project”, ”risks”, “schedule”, ”seek”, ”should”, ”target”, ”will” and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, judicial, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; (m) risks associated with the impact of pandemics, such as the COVID-19 (coronavirus) outbreak; and (n) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Shell plc’s Form 20-F for the year ended December 31, 2022. These risk factors also expressly qualify all forward-looking statements contained in this announcement and should be considered by the reader.  Each forward-looking statement speaks only as of the date of this announcement, December 19, 2023. Neither Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement.

Shell’s net carbon intensity

Also, in this announcement we may refer to Shell’s “Net Carbon Intensity”, which includes Shell’s carbon emissions from the production of our energy products, our suppliers’ carbon emissions in supplying energy for that production and our customers’ carbon emissions associated with their use of the energy products we sell. Shell only controls its own emissions. The use of the term Shell’s “Net Carbon Intensity” is for convenience only and not intended to suggest these emissions are those of Shell plc or its subsidiaries.

Shell’s net-Zero Emissions Target

Shell’s operating plan, outlook and budgets are forecasted for a ten-year period and are updated every year.  They reflect the current economic environment and what we can reasonably expect to see over the next ten years. Accordingly, they reflect our Scope 1, Scope 2 and Net Carbon Intensity (NCI) targets over the next ten years.  However, Shell’s operating plans cannot reflect our 2050 net-zero emissions target and 2035 NCI target, as these targets are currently outside our planning period. In the future, as society moves towards net-zero emissions, we expect Shell’s operating plans to reflect this movement. However, if society is not net zero in 2050, as of today, there would be significant risk that Shell may not meet this target.

Forward Looking Non-GAAP measures

This announcement may contain certain forward-looking non-GAAP measures such as [cash capital expenditure] and [divestments]. We are unable to provide a reconciliation of these forward-looking Non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcile those Non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside the control of Shell, such as oil and gas prices, interest rates and exchange rates. Moreover, estimating such GAAP measures with the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort. Non-GAAP measures in respect of future periods which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied in Shell plc’s consolidated financial statements.

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