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Wood Mackenzie comments on Shell's decision to develop PowerNap deepwater project

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Oilfield Technology,

Following the news that Shell has decided to develop its PowerNap deepwater project in the US Gulf of Mexico, Michael Murphy, research analyst, Gulf of Mexico, Wood Mackenzie, has provided the following comment:

“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.

“Recent exploration in the region has demonstrated how Majors in the deepwater Gulf of Mexico have adapted a complimentary strategy of pursuing traditional large prospects, in addition to infrastructure-led exploration.

“With internal rate of returns above 30% and development breakeven in the low-to-mid US$30’s, the sanctioning of subsea tie-backs is proving that deepwater can compete with tight oil.”

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