We have mineral leases mainly in Alberta and British Columbia. We produce and market natural gas, natural gas liquids, synthetic crude oil and bitumen.
We have approximately 1.4 million net mineral acres. Our position is primarily in the Duvernay play in Alberta and the Montney play in British Columbia. Activity includes drill-to-fill of our existing infrastructure and an investment focus on our liquids-rich shale acreage. Our Groundbirch asset has the potential to be an integral part of the LNG Canada value chain.
In 2019, we drilled and brought 30 wells on-stream. We have interests in 748 productive wells. In October 2019, we sold our Foothills assets comprising approximately 400 thousand net acres at Waterton, Jumping Pound, West Central and Caroline, with associated gas processing facilities.
After selling our Foothills assets, we operate one natural gas processing facility in Alberta and four natural gas processing facilities in British Columbia.
Bitumen and synthetic crude oil
Synthetic crude oil is produced by mining bitumen-saturated sands, extracting the bitumen from the sands and transporting it to a processing facility where hydrogen is added to produce a wide range of feedstocks for refineries. We have a 50% interest in 1745844 Alberta Ltd. (formerly known as Marathon Oil Canada Corporation), which holds a 20% interest in the Athabasca Oil Sands Project. With effect from January 1, 2020, our interest in bitumen and synthetic crude oil will be reported in the Oil Products segment. Comparative information will not be restated.
Carbon capture and storage (CCS)
We produce oil and gas in deep water in the Gulf of Mexico, heavy oil in California and oil and gas from shale in Pennsylvania and Texas. The majority of our oil and gas production interests are acquired under leases granted by the owner of the minerals underlying the relevant acreage, including many leases for federal onshore and offshore tracts. Such leases usually run on an initial fixed term that is automatically extended by the establishment of production for as long as production continues, subject to compliance with the terms of the lease (including, in the case of federal leases, extensive regulations imposed by federal law). Our share of production in the USA was in total 653 thousand boe/d in 2019.
In December 2019, we recognised an impairment, mainly associated with the US Appalachia unconventional gas assets. We will continue to regularly review the economic attractiveness of our Shales investments in light of the macroeconomic environment, which could result in changes to development plans in the future.
Gulf of Mexico
The Gulf of Mexico is our major production area in the USA and accounts for around 54% of our oil and gas production in the country. We have an interest in approximately 320 federal offshore leases and our share of production averaged 359 thousand boe/d in 2019.
In May 2019, we signed an agreement to sell our 22.45% non-operated interest in the Caesar-Tonga asset in the US Gulf of Mexico to Equinor. The total consideration for this deal was $965 million in cash. This was completed on July 1, 2019.
In April 2019, we announced a significant discovery at the Blacktip prospect in the deep-water US Gulf of Mexico. Blacktip is a Wilcox discovery in the Perdido thrust belt and was discovered in the Alaminos Canyon Block 380, approximately 30 miles from the Perdido platform and Whale discovery. Evaluation is ongoing and appraisal planning is under way to further delineate the discovery and define development options.
In May 2019, production started at the Shell-operated Appomattox floating production system months ahead of schedule. Appomattox (Shell interest 79%) currently has an expected peak production of 175 thousand boe/d and is the first commercial discovery now brought into production in the deep-water Gulf of Mexico Norphlet formation. In August 2019, we took the FID for the PowerNap deep-water project in the US Gulf of Mexico. PowerNap (Shell interest 100%), discovered in 2014, is a subsea tie-back to the Shell-operated Olympus production hub. The project is expected to start production in late 2021 and expected to produce up to 35 thousand boe/d at peak rates. In August 2019, the Whale project moved into the Define phase. The project is 60% Shell and 40% Chevron, with the exception of the AC815 lease area which is 40% Shell and 60% Chevron.
We are the operator of eight production hubs – Mars A, Mars B, Auger, Perdido, Ursa, Enchilada/Salsa, Appomattox and Stones – as well as the West Delta 143 Processing Facilities (Shell interests ranging from 38% to 100%). We also have non-operating interests in Nakika (Shell interest 50%) and we continue to produce from Coulomb (Shell interest 100%) which ties into the Nakika non-operated platform. Our production in the US Gulf of Mexico assets was adversely impacted by operational constraints.
We have approximately 1.0 million net mineral acres. Our activity is focused in the Permian Basin in West Texas and the Marcellus and Utica plays in Pennsylvania.
In 2019, we drilled and brought 271 wells on-stream. We have interests in more than 1,952 productive wells and operate seven central processing facilities. The USA represents 61% of our shales proved reserves and 80% of our shales liquids proved reserves. In the Permian Basin, we increased our production in 2019 by around 40% compared with 2018. In December 2019, the first integrated iShale® facilities came on-stream in East Slash Ranch of our Permian asset. Comprising two pads with eight wells in total and a central processing facility, this shale ’field of the future’ brings together more than a dozen iShale technologies, including full wireless surveillance and controls, low GHG emissions technology, multiphase metering, artificial intelligence technologies and solar-powered facilities.
In February 2019, we sold approximately 27 thousand non-core net acres, with 61 wells and associated facilities in the Marshlands area of Pennsylvania.
In February 2019, we also sold 695 non-producing non-core net acres in the Permian Basin.
In December 2019, we sold our non-Shell-operated interest in the Haynesville shale gas formation in Northern Louisiana.
We have a 51.8% interest in Aera Energy LLC which operates around 15,000 wells in the San Joaquin Valley in California, mostly producing heavy oil and associated gas.
Shell retains two exploration acreage positions in the long-established North Slope area of Alaska. One is a non-operating interest of 50% in 13 federal leases, operated by ENI. An exploratory drilling operation for this joint venture is under way after being permitted by ENI. We continue to evaluate our 18 state leases at nearby Western Harrison Bay, which have geologic affinity with recent discoveries announced by other North Slope operators.
Rest of North America
We also have interests in Mexico.