In Focus: Kaikias

In early 2017, Shell announced the decision to execute phase one of the Kaikias deep-water project in the US Gulf of Mexico. Kaikias is a financially attractive near-field discovery with a 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 designed to be a safe, competitive and capital-efficient deep-water project using infrastructure already in place. By simplifying the design and using lessons learned from previous subsea developments, Shell reduced the total cost by around 50% compared to the initial estimate.

New production from Kaikias will flow to our Ursa platform (photo)

New production from Kaikias will flow to our Ursa platform

Shell minimized the need for new drilling at Kaikias by safely re-developing the exploration and appraisal wells for production. The 50% reduction in total costs versus initial estimates further comes as a result of supply chain savings, simplifying our subsea architecture and competitively designing the new wells. By taking advantage of existing oil and gas processing equipment on Ursa, Shell minimised the need for additional top-side modifications and will reduce unit operating costs at the asset.

Globally, Shell’s deep-water business is a growth priority for the company, producing 725,000 at the end of 2016. Shell’s deep-water production is expected to increase to more than 900,000 boe/d by 2020 from already discovered, established reservoirs. In the Gulf of Mexico, Shell is a leading operator with significant acreage, seven production hubs, and an established network of subsea infrastructure.

Kaikias provides an affordable and capital-efficient growth opportunity in Shell’s core and most abundant heartland in the Gulf of Mexico — the Mars-Ursa basin. It is a world-class development that will deliver cash flow and robust returns.

Kaikias is an example of what an empowered and integrated team can do. It was on the drawing board just as the oil price decline was setting in. We proved just how competitive we can be in deep water. Every discipline and function rallied around the target to halve project costs, and to do that in a very tight timeline.

We are now shifting our focus to safely delivering our promises on the path to first oil.

Fast Facts

  • Kaikias is located in the abundant Mars-Ursa basin approximately 200 km from the Louisiana coast.
  • Shell discovered the field in 2014 and it is estimated to contain more than 100 million boe recoverable resources.
  • Shell, the operator, owns 80% of the venture; MOEX North America, a wholly-owned subsidiary of Mitsui Oil Exploration Co., owns 20%.
  • The Kaikias project will be developed in two phases. The first phase includes three wells, which are designed to produce up to 40,000 boe/d.
  • Production will flow to the Ursa platform using a single flowline.
  • Kaikias phase one is expected to start production in 2019.
  • Two other Shell-operated projects in the Gulf of Mexico are currently under construction or undergoing pre-production commissioning: Coulomb Phase 2 and Appomattox.

barrels of oil equivalent (per day); natural gas volumes are converted to oil equivalent using a factor of 5,800 scf per barrel
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