Shell sanctions Kaikias waterflood project in US Gulf

Shell (SHEL) announced on December 16 that its Shell Offshore subsidiary had taken a final investment decision (FID) on a waterflood project at its offshore Kaikias field in the US Gulf of Mexico.

Waterflood is a secondary oil recovery method whereby water is injected into a reservoir and used to displace oil, moving it into adjacent production wells, while also re-pressurising the reservoir. First injection at Kaikias is targeted for 2028.

Kaikias is located in the Mars-Ursa Basin roughly 130 miles (209 km) off the coast of Louisiana, in more than 4,000 feet (1,219 metres) of water. The field was developed as a subsea tieback to Shell’s Ursa platform and has been in production since 2018. When the field first came online, Shell estimated it to have peak production of 40,000 barrels of oil equivalent per day (boepd).

This week, Shell said that the waterflood project was expected to increase recoverable resource volumes at Kaikias by roughly 60mn metric barrels of oil equivalent, extending the production lifecycle of Ursa by several years. The resources are currently classified as proven and probable (2P) under the Society of Petroleum Engineers’ Resource Classification System, according to the supermajor.

The FID comes after Shell Offshore and Shell Pipeline increased their stake in the Ursa platform from 45.3884% to 61.3484% earlier this year. The additional working interest was acquired from ConocoPhillips, with Shell also upping its stake in the Ursa pipeline from 45.39% to 57.20%. That agreement was completed in May.

BP Exploration & Production holds a 22.6916% interest in Ursa, while ECP GOM III owns the remaining 15.96%.

“Following our decision to increase our stake in Ursa earlier this year, this additional investment continues to maximise the value of the asset,” stated Shell’s upstream president, Peter Costello, in reference to the Kaikias waterflood project. “It also contributes to our aim of maximising high-margin production and longevity in a core basin to maintain liquids production.”

Shell says it is the leading deepwater operator in the Gulf and is aiming to sustain its liquids production at around 1.4mn boepd between now and 2030.