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.

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.

"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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By GlobalData

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.