Thread: Shell approves $2.5 BILLION deep-water Gulf project

Shell approves $2.5B deep-water Gulf project

Posted on June 8, 2011 at 1:40 pm
by Brett Clanton

Shell has approved a $2.5 billion project to develop its Cardamom oil and gas field in the deep-water Gulf of Mexico, marking the latest vote of confidence in the U.S. offshore region following the BP oil spill last year.

The Cardamom field, located roughly 225 miles southwest of New Orleans, is expected to produce 50,000 barrels of oil equivalent per day at its peak and more than 140 million barrels of oil equivalent over its lifespan, Houston-based Shell Oil, the U.S. arm of European oil major Royal Dutch Shell, said in a statement today.

Rather than build a free-standing facility, Shell said it will install production equipment on the sea floor at Cardamom that extracts the oil and gas and routes it to Shell’s nearby Auger offshore platform, which will be modified to handle the additional output. A first Cardamom exploration well has been producing from Auger since late last year, Shell said.

First oil from the full Cardamom project is expected in 2014, with additional development drilling taking place at the site between now and then, said Shell spokesman Bill Tanner.

The project signals that major oil companies continue to see a future in the Gulf of Mexico despite regulatory uncertainty that still hovers over the region in the wake of last year’s deadly Deepwater Horizon disaster.

Chevron Corp. announced late last year it will develop two major deep-water fields in the Gulf, steering $4 billion to its Big Foot field and another $7.5 billion to develop its Jack and St. Malo fields, the latter marking one of the biggest investments ever in the region. Other companies including Exxon Mobil and Noble Energy have resumed deep-water drilling in the Gulf after regulators lifted a temporary ban in October on most of that activity.

In January, Shell became the first oil company to submit an offshore exploration plan for the deep-water Gulf that factored in tougher safety and environmental rules imposed after the BP oil spill. It included plans for additional drilling at Cardamom.

Shell attributed the discovery of Cardamom, which is 100 percent owned by Shell, to breakthroughs in seismic imaging technology that allowed the company to “seeâ€