Exploration is a key part of Shell’s integrated global energy business. It delivers valuable resources in support of the Company’s strategic objectives for Conventional Oil and Gas, Deep Water and Integrated Gas. Exploration will remain a fundamental part of Shell’s activities as we deliver our strategic goals through the energy transition, providing more and cleaner energy.
We have a value-focused exploration strategy where our investments are balanced between:
- exploration near our existing assets, which can be brought on-stream to generate value quickly;
- testing new geological concepts, for example using artificial intelligence, and finding new oil and gas resources within our existing heartlands; and
- focusing on emerging basins where hydrocarbons have been discovered by us or others without yet becoming major producing regions, making them safer propositions with a higher chance of success than true frontier positions.
Through our discoveries we expect to reduce unit finding costs to $2-3 per barrel. This means that while our investment levels remain the same, the yield on our spend is improving.
In December 2019, we announced a significant gas and condensate discovery in the Browse Basin off the north-west coast of Western Australia. Bratwurst is located 160 km north-east of the Shell-operated Prelude FLNG facility and presents an opportunity for a future tie-back to Prelude. Another significant discovery was made at the Blacktip prospect in the Perdido Corridor within the deep-water US Gulf of Mexico. The discovery is located in the Alaminos Canyon Block 380, approximately 30 miles (48 km) from the Perdido platform and the Whale discovery. The well, which is operated by Shell (Shell interest 52.375%), encountered more than 400 feet (122 metres) of net oil pay.
In total, the net undeveloped acreage in our exploration portfolio increased by around 9 million acres in 2019 compared with 2018. The largest contributions were licence entries in South Africa, Oman, Argentina, Egypt, Colombia, São Tomé and Príncipe and Albania, partly offset by relinquishments and divestments in Australia, Myanmar, Gabon, Bulgaria, Mexico and Greenland.
- In the US Gulf of Mexico, we acquired 77 blocks across multiple plays. This included significant acquisitions close to the Blacktip discovery.
- In Argentina, we won two exploration blocks in the deep-water bid round. Shell will operate both blocks (Shell interest 60%).
- In Oman, we signed an Exploration & Production Sharing Agreement for Block 55 in the south-east of the Sultanate of Oman. Oman Shell now has a 100% working interest in and operatorship of Block 55, which covers a total area of 7,564 square kilometres.
- In Brazil, we won two deep-water exploration blocks in the Campos Basin (Shell interest 40% and operator).
- In São Tomé and Príncipe, we completed a farm-in transaction with Kosmos Energy, acquiring participating interests in offshore Block 6 (Shell interest 20%) and Block 11 (Shell interest 30%), together comprising around 14 thousand square kilometres.
- In the Red Sea off Egypt, we were awarded Block 4 (Shell interest 70%) and Block 3 (Shell interest 100%). These blocks cover an area of 6,141 square kilometres in an underexplored region of Egypt.