Shell and Chevron Sanction GOM Deepwater Project

Shell (NYSE: RDS.A) on Monday reported the final investment decision (FID) for Whale, a deepwater U.S. Gulf of Mexico (GOM) development featuring a 99% replicated hull and an 80% replication of the topsides from its Vito project.

“Whale is the latest demonstration of our focus on simplification, replication, and capital projects with shorter cycle times to drive greater value from our advantaged positions,” remarked Shell Upstream Director Wael Sawan in a written statement emailed to Rigzone. “We are building on more than 40 years of deepwater expertise to deliver competitive projects that yield high-margin barrels so that we are able to meet the energy demands of today while generating the cash required to help fund the development of the energy of the future.”

Owning a 60% interest, Shell Offshore Inc. will operate Whale. Chevron U.S.A. Inc. (NYSE: CVX) holds the remaining 40% stake in the project, which Shell stated will be its second operated deepwater GOM development to apply a simplified, cost-efficient host design.

According to Shell, Whale should yield an estimated internal rate of return greater than 25%. The company added the development will use energy-efficient gas turbines and compression systems.

Shell’s 12^th deepwater GOM host, Whale’s projected peak production will be approximately 100,000 barrels of oil equivalent (boe) per day, Shell stated. The company also noted the development, slated to begin production in 2024, currently boasts an estimated recoverable resource volume of 490 million boe.

Discovered in 2017, Whale will use a semi-submersible production host in more than 8,600 feet (2,621 meters) of water with 15 oil-producing wells, Shell noted. The field’s production facility – in Alaminos Canyon Block 773 and adjacent to the Shell-operated Silvertip field – closely replicates the four-column semi-submersible host facility for Vito, which is scheduled to start production next year, the company added.

An artist’s conception of the Whale floating production unit from contractor Sembcorp Marine Rigs & Floaters Pte., Ltd. appears in this November 2019 Rigzone article. The article also points out the similar Vito project assumes a break-even oil price below $35 per barrel.

To contact the author, email mveazey@rigzone.com.