GULF OF MEXICO
wells; and five water injection wells.
“With Appomattox, we were already well un-
der way with project design before the market
downturn,” Tallant observed. And while there have
been some unique considerations on Appomattox,
“here again, we’ve been able to standardize where
we could, and we have reduced our drilling costs
A key cost-saving feature on Appomattox was
the elimination of a platform rig, which has enabled
Shell to realize considerable space and weight sav-
ings on the host facility. Production will take place at the subsea
drill centers and wells. “Putting a platform rig on there becomes
almost too challenging. The weight and space that you need to do
that becomes difficult. The strategy there is to produce everything
back from a subsea into a single host, and to do that as efficiently as
possible,” said Tallant.
Shell has also been able to reduce some of its subsea costs as well on
Appomattox, particularly in its export systems. “In many ways, we’ve had
to revamp a few things, but we’ve made unexpected progress on reducing
costs on Appomattox, even during project execution.”
The sanctioned project includes capital for the development of 650
MMboe resources at Appomattox and Vicksburg, with start-up estimated
around the end of this decade. A tieback from the Vicksburg field to
the Appomattox platform is already planned, and a tieback from the
Gettysburg field is being reviewed. If this field is tied back to Appomat-
tox, it could bring the total estimated discovered resources in the area
to more than 800 MMboe.
With the recent completion and arrival of the hull in Texas, and construction of the host platform and fabrication of subsea infrastructure
currently under way, the Appomattox project is more than 65% complete.
Shell sanctioned that Appomattox project in 2015. Before that, Tal-
lant noted, “we were able to reduce capital by about 20%. But, since
then, we’ve reduced it by another 20%. And it’s the same thing – it’s
about being more efficient in your design, your scope, and working to
bring your drilling costs down.” Taken together, Shell has been able
to bring break-even prices on the Appomattox project down to levels
that are much more competitive in the current market.
In addition to Appomattox and Kaikias, Shell is also advancing
Coulomb Phase Two, a brownfield re-development project that has
the potential to extend the field’s productive life by at least 10 years.
Located in Mississippi Canyon blocks 657 and 613, the original Coulomb field was first placed online in July 2004.
Phase Two consists of a subsea system that will tieback to the Na
Kika production hub, a new well, and a new module on the platform’s
topsides to accommodate additional hydrocarbons. The well was drilled
in more than 7,500 ft of water, and was completed in early 2016. By
competitively re-designing the well, Shell says it was able to achieve
significant cost savings without compromising safety. This and other
measures have enabled the company to bring the project’s break-even
price below $40/bbl. First oil from Coulomb Phase T wo is expected by
the second quarter of 2018.
Looking for ward, Vito is Shell’s next project in the deepwater Gulf.
Located in more than 4,000 ft ( 1,219 m) of water in Mississippi Canyon
block 984, a study is under way to determine the floating platform
design that will best optimize field development, in a low oil price
environment. The Vito host will initially handle production from the
Vito subsea field being subsequently developed, with potential for
future tiebacks from other fields.
The study is still being reviewed, and Shell engineers are hoping
that the project will be sanctioned in 2018. Supporting that final invest-
ment decision will be the fact that company planners and engineers
will have been able to employ this new lean philosophy throughout
the project. Vito will employ a smaller host facility, Tallant explains,
as well as a single processing train system. “It will also use single lifts,
rather than lots of different modules that you have with a normal TLP
or FPS,” Tallant said. “So, it’s using a lot of things that we’ve seen
from smaller independents, and it’s bringing capital costs down quite
a bit.” Like Kaikias, Vito will have a break-even price below $40/bbl, a
remarkable feat for a major deepwater project. Like Appomattox, Vito
will feature a semisubmersible host facility. But unlike the Appomattox host facility – which was sanctioned before the downturn – the
Vito semisubmersible will be designed and optimized for the current
price environment, says Tallant.
“When it comes to staying competitive in the business climate
we’re in, it’s an all-of-the-above approach,” Rajasingam observed. “It’s
not just about technology. It’s not just about efficient execution. It’s
not just about end-to-end thinking. It’s about all of it, and how you
put it all together with a coherent understanding of what your business objectives are. You have to make sure that what you’re doing
directly links to the bottom line. This approach has really helped us
tighten up and get lean and focus on our commercial and business
objectives, and then fit all the solutions that help drive that in place.
So it’s all about being focused and integrated in the way you approach
the challenge. That approach has helped us stay competitive and get
even leaner and fitter.” •
The hull of Shell’s Appomattox production
platform onboard the M/V Xin Guang Hua.
(Courtesy COSCO Shipping Heavy Transport)
The first phase of the Kaikias project will include three wells tied back using a single flowline to the nearby Shell-operated Ursa production hub.