Shell Targets More Resources in Perdido 'Corridor'

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Royal Dutch Shell is drilling ahead on its latest exploration well in the US Gulf of Mexico, assessing further potential near an existing discovery as development ramps up in the prolific Perdido area in Alaminos Canyon (AC). Shell spud the Blacktip North well at the end of July located on AC Block 336, directly north of where the original Blacktip discovery and a follow-up appraisal were drilled in 2019 and 2020, respectively. Results are expected later this year. A Shell official on Monday referred to the well currently drilling as an "appraisal" of Blacktip. However, sources with knowledge of the prospect say the company is targeting a separate structure than the original discovery. Blacktip North is permitted to a depth of nearly 29,000 feet, according to one source. Growing Resource Base The well comes about a month after Shell took a final investment decision to build a new floating production platform for its Whale discovery, located southwest of Blacktip and northeast of the 100,000 barrel per day Perdido spar, which has been on line since 2010. Whale is said to be one of the industry’s biggest oil discoveries of the last decade or more (OD Jul.26'21). Along with the Leopard discovery, announced earlier this year, Shell already has multiple substantial finds that could see development in the medium to long term in a region it sees as a source for some of the lowest carbon-intensive barrels in its global portfolio (OD May11'21). Shell has disclosed little about its development plans for Blacktip or Leopard as it continues to assess the size of the fields (OD Jul.1'20). But Bill Langin, Shell’s senior vice president of deepwater exploration, told the Offshore Technology Conference in Houston on Monday that the company looks at Whale, Blacktip and Leopard as a "collective set of opportunities." "Whether that can be through Whale, as the design plateau begins to decline, or through Perdido still remains to be seen, but we need a couple more appraisal wells to make those decisions," Langin said. Further Development Other industry players appear to be positioning for further development in what Shell refers to as the "Perdido Corridor." Midstream giant Williams said this month that it has agreed to provide gathering, transportation and processing services for oil and gas produced at Whale. To do so, it will expand its current infrastructure footprint in the area with construction of a 25 mile lateral gas pipeline connecting Whale to the existing Perdido system, as well as a new 125 mile oil pipeline to a junction platform. Williams has not disclosed cost estimates for these midstream projects, but the company presumably sees many years of production potential in the area if it has decided to move forward with the build-out. Williams COO Micheal Dunn said the Whale development "create[s] future connection opportunities for producers that will capture the full value of these important deepwater resources." Equinor Sits Out Shell is partnered at Blacktip North with Spanish major Repsol, which also holds a stake in the original Blacktip discovery. Notably absent from the Blacktip North roster is Equinor, which confirmed that it will not participate in the current exploration well. Equinor held a 19.1% interest in AC 336, similar to its stake in Blacktip. Energy Intelligence understands that Equinor still plans to participate in the original Blacktip but that it will surrender its working interest in AC 336 after it "non-consented." Equinor did not comment on its decision to sit out Blacktip North, but one industry source said it was "for technical reasons, not financial." Meanwhile, federal US leasing records show that Shell recently added AC 336 to a unit that already included four other blocks associated with Blacktip: AC 380, 381, 423 and 424. Luke Johnson, Houston

Exploration, Offshore Oil and Gas, Corporate Strategy , Midstream Companies
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