Shell Offshore and MOEX North America (MOEX NA) have made the final investment decision to begin Phase 1 of the Kaikias deepwater project in the US Gulf of Mexico.

Kaikias is claimed to be an attractive near-field opportunity with a competitive go-forward break-even price below $40 per barrel. It will produce oil and gas through a subsea tie-back to the nearby Shell-operated Ursa production hub.

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Royal Dutch Shell upstream director Andy Brown said: “Kaikias is an example of a competitive and capital-efficient deepwater project using infrastructure already in place.

“The team has done a great job to reduce the total cost by around 50% by simplifying the design and using lessons learned from previous subsea developments.”

The Kaikias project will be developed in two phases, with the first phase expected to start production in 2019.

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"In the first phase, three wells will be developed that could produce up to 40,000boe/d at peak rates."

In the first phase, three wells will be developed that could produce up to 40,000boe/d at peak rates.

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Kaikias is situated in the Mars-Ursa basin, 210km from the Louisiana coast. The project is estimated to host more than 100 million barrels of oil equivalent recoverable resources.

Shell holds an 80% interest in this property along with the operatorship. The remaining 20% stake is owned by MOEX NA.

In the final quarter of the last year, Shell’s deepwater business produced approximately 725,000boe/d. Production is expected to increase to more than 900,000boe/d by 2020.

In the Gulf of Mexico, two other Shell-operated projects are currently under development, which are Coulomb Phase 2 and Appomattox.