Royal Dutch Shell and Japanese Mitsui Oil Exploration have each taken the final investment decision to execute phase one of the Kaikias deepwater project in the U.S. Gulf of Mexico.
The project is done through Shell’s subsidiary, Shell Offshore, and Mitsui’s wholly owned subsidiary, MOEX North America LLC (MOEX NA).
Shell is the operator and has an 80% working interest. MOEX NA, which owns the remaining 20% working interest, bought its stake from Shell last December.
According to Shell’s statement on Tuesday, Kaikias is an attractive near-field opportunity with a competitive go-forward break-even price below $40 per barrel. It will produce oil and gas through a subsea tie-back to the nearby Shell-operated Ursa production hub.
“Kaikias is an example of a competitive and capital efficient deep-water project using infrastructure already in place,” said Andy Brown, Upstream Director of Royal Dutch Shell.
“The team has done a great job to reduce the total cost by around 50% by simplifying the design and using lessons learned from previous subsea developments.”
The project will be developed in two phases with phase one expected to start production in 2019. The first phase of development includes three wells which are designed to produce up to 40,000 barrels of oil equivalent per day (boe/d) at peak rates.
Kaikias is located in the prolific Mars-Ursa basin approximately 210 kilometers (130 miles) from the Louisiana coast and is estimated to contain more than 100 million barrels of oil equivalent recoverable resources.