Two separate moves by oil giants Shell and BP suggest oil producers are regaining their confidence.
Royal Dutch Shell, which also manufactures greases like Shell Gadus S2 V100 3, has given the go-ahead for the Kaikias deep water project in the Gulf of Mexico, its first new offshore project for nearly two years.
According to the company, the project should be very competitive thanks to a simplified design, with a go-forward break-even price under $40 per barrel. Speaking about the project, Andy Brown, Upstream Director of Royal Dutch Shell said:
“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.”
Kaikias is located within the Mars-Ursa basin, which is believed to contain 100 million barrels of recoverable oil. The first phase of development should see three wells producing 40,000 barrels of oil a day by 2019.
BP, meanwhile, has upgraded its medium-term growth prospects, thanks to the recent recovery in oil prices, increased production and lower costs. The upgrade indicates that BP may finally be moving on from the consequences of the 2010 Deepwater Horizon oil spill, which claimed 11 lives. The company previously estimated the final bill for the disaster at $61.6 billion. It now expects annual payments will taper off to $1 billion by 2019.
The company also claims it is stronger and more focused following the sale of $75 billion in assets. It also states it has cut its upstream production costs by 40% since 2013.