Shell has announced that it has taken the final investment decision (FID) for the PowerNap deep-water project in the U.S. Gulf of Mexico.
PowerNap is located in the south-central Mississippi Canyon area 240 kilometres from New Orleans in about 4,200 feet of water. It is a subsea tie-back to the Shell-operated Olympus production hub.
The project is expected to start production in late 2021 and produce up to 35,000 barrels of oil equivalent per day (boe/d) at peak rates. It is anticipated to have a forward-looking break-even price of less than $35 per barrel and is currently estimated to contain more than 85 million barrels of oil equivalent recoverable resources.
"PowerNap further strengthens Shell’s leading position in the Gulf of Mexico,” said Wael Sawan, Shell’s upstream director. “It demonstrates the depth of our portfolio of Deep Water growth options, and our ability to fully leverage our existing infrastructure to unlock value,” he added.
Michael Murphy, research analyst, Gulf of Mexico, said: “Shell’s final investment decision regarding the PowerNap field reflects a broader trend of Majors embracing subsea tie-backs that offer quicker paths to first oil and attractive returns. We estimate the PowerNap field to have a development breakeven in the low US$30’s per barrel (bbl).”
“This comes on the heel of Shell bringing the Kaikias subsea tie-back online in 2018, with an estimated development breakeven in the low US$30’s/bbl, and BP entering into the Nearly Headless Nick tie-back expected to come online by the end of 2019, just a year after discovery.