Royal Dutch Shell gave the go ahead on Wednesday to start construction on its eighth and largest floating platform in the Gulf of Mexico to develop the Appomattox deepwater project.
The Appomattox development will initially produce from the Appomattox and Vicksburg fields, with average peak production estimated to hit 175,000 barrels of oil equivalent per day, Shell said.
The platform and the Appomattox and Vicksburg fields will be owned by Shell with a 79 percent stake and Nexen Petroleum Offshore U.S.A., a wholly-owned subsidiary of China’s CNOOC, with a 21 percent stake.
“We have again delivered a globally competitive investment scope for another significant deep-water project,Appomattox opens up more production growth for us in the Gulf of Mexico, where our production last year averaged about 225,000 boe per day, and this development will be profitable for decades to come. With its competitive cost and design, Appomattox is next in our series of deep-water successes,” Shell upstream Americas director Marvin Odum said.
The Appomattox project is located 80 miles off the coast of Louisiana, in about 7,200 feet of water.
The sanctioned project includes capital for the development of 650 million boe resources at Appomattox and Vicksburg, with start-up estimated around the end of this decade.
Shell discovered Appomattox in 2010 and Vicksburg in 2013.
The development of Shell’s recent, nearby discoveries at the Gettysburg and Rydberg prospects remains under review, the company said.
The company added that those discoveries could could become additional, high-value tiebacks to Appomattox, bringing the total estimated discovered resources in the area to more than 800 million boe.
Gettysburg is owned by Shell with an 80 percent operating stake and Nexen Petroleum Offshore U.S.A. Inc. with a 20 percent stake.
Rydberg is owned by Shell with a 57.2 percent operating stake, Colombia’s Ecopetrol America Inc. with a 28.5 percent stake, and Nexen Petroleum Offshore U.S.A. Inc. with a 14.3 percent stake.
Shell Pipeline Company LP also made a final investment decision on the Mattox Pipeline, a 24-inch corridor pipeline that will move crude from the Appomattox host to an existing offshore structure in the South Pass area and then connect onshore through an existing pipeline.
Last year in the Gulf of Mexico, Shell started production from the Mars B development, through the new Olympus TLP, and from the Cardamom subsea tie-back to the Auger platform.
Shell is also currently developing the Stones project that is expected to produce about 50,000 boe per day.
The U.S. Energy Information Administration said in March that it expects production in the Gulf of Mexico to keep rising despite oil price volatility.