December 13, 2023 [Medriva]- Shell PLC recently announced its final investment decision to upscale production at the Perdido oil project, based in the U.S. Gulf of Mexico.
The ambitious project aims to add three new wells with a projected production capacity of up to 22,000 barrels of oil equivalent per day (boe/d) at peak rates. This initiative underscores Shell’s long-term commitment to the U.S. Gulf of Mexico and its broader investment strategy in the oil sector. The increased production is set to begin in April 2025.
Details of the Investment Decision
Shell Offshore Inc, a subsidiary of Shell PLC, will initiate a phased campaign to deliver three new wells within the Great White unit. The purpose of this venture is to enhance production at the Perdido spar, a Shell-operated structure in the U.S. Gulf of Mexico. The Great White unit will be the drilling location for these wells, with Shell holding operational control with a 33.34% stake. Chevron Corp and BP PLC will also participate, each holding a 33.33% stake.
Upon successful completion of this campaign by April 2025, the collective output from these wells is expected to reach 22,000 boe/d at their peak. This marks a significant increase in production capacity for Perdido, which currently stands at 125,000 boe/d at peak rates.
A Strategic Move for Shell
This development signifies a considerable investment in oil production in the U.S. Gulf of Mexico. It highlights the sustained interest of major energy companies in this region, which is critical to ensuring a reliable and secure supply of energy. Moreover, production in the U.S. Gulf of Mexico is among the global regions with the lowest greenhouse gas (GHG) intensity in oil production, further aligning with Shell’s environmental commitments.
The partnership dynamics of this project involve significant industry players. Shell operates the Perdido spar with a 35% interest on behalf of its partners. Chevron holds a substantial 37.5% stake, 3C Perdido Holdings LLC has a 26.5% share, and BP has a 1% interest. Moreover, within the Great White unit, Shell, Chevron, and BP each hold roughly a third of the interest. This collaborative effort is expected to facilitate smooth execution and successful completion of the project.
In conclusion, Shell’s decision to enhance output at the Perdido oil project is a significant development for the company and the wider oil industry. It not only boosts oil production capacity but also reflects the company’s commitment to sustainable practices with lower GHG intensity. The partnership with Chevron and BP also illustrates the strategic alliances forged within the industry to ensure operational success and energy security.
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