Shell greenlights 15th US Gulf of Mexico oil platform
Reuters
Published Dec 19, 2023 21:08
Updated Dec 20, 2023 00:16
By Sabrina Valle
HOUSTON (Reuters) -Shell PLC and Equinor ASA on Tuesday greenlit a 90,000 barrels per day (bpd) oil and gas platform in the U.S. Gulf of Mexico and said it will aggressively invest in exploration to continue production through 2050.
Called Sparta, it is the first Gulf of Mexico project launched under Shell (LON:RDSa) Chief Executive Wael Sawan, who earlier this year pulled back on the company's energy transition plans to boost profits from oil. Production is set to start in 2028.
"You will see us continuing to explore quite aggressively in the Gulf of Mexico and then develop those resources as well," Rich Howe, executive-vice president of Shell’s Global Deep Water business, told Reuters.
The investment cost was not disclosed.
Shell this year scrapped a plan to reduce oil output by 1% to 2% per year and said it would keep liquids production flat for 2030. It has not disclosed plans per basin, but it has been investing in the U.S. Gulf after reducing production elsewhere.
"We will target to do better than hold (production) flat" in the U.S. Gulf, Howe said, adding that a 10% natural decline meant the company would need new output of 40,000 bpd every year to keep production steady.
Shell holds a 51% stake in Sparta and will operate the platform, with Equinor holding the remaining share. The project originally was called North Platte and operated by TotalEnergies (LON:TTEF), which left the project in 2022.
In a prior role as director of Shell's upstream business, Sawan oversaw the U.S. Gulf 100,000 bpd Whale project, which is set to start production next year with partner Chevron Corp. (NYSE:CVX)
Before rising to CEO, Sawan oversaw Shell's divestment in the U.S. shale basin, which helped the company largely achieve a previous goal to cut oil output by 20% by 2030.
This year, Shell and Equinor started production at the 100,000 bpd Vito oil platform, the model for both the subsequent Whale and Sparta projects. Sparta will be Shell’s 15th project in the Gulf of Mexico and could reach up to 100,000 bpd.
Shell will still be producing from the basin in 2050 as it offers lower costs and reduced emissions during the production process relative to other oil assets, Howe said.
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Written By: Reuters
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