By Kristen Hays
HOUSTON Feb 4 Royal Dutch Shell said
on Tuesday it is ramping up production at its newest Gulf of
Mexico oil and gas platform, its first to start up after BP
Plc's 2010 Macondo oil spill fouled the basin and stopped
drilling for months.
Shell's Olympus platform, towed out to sea last summer, is
the first of seven new state-of-the-art platforms slated to
start pumping Gulf crude to shore through 2016, reversing a
decline in output and supplementing the U.S. onshore shale oil
"2014's a big year for us in terms of starting up new
production," John Hollowell, Shell's executive vice president
for deepwater in the Americas, told Reuters in an interview.
Shell's Olympus sits about a mile (1.6 km) from its Mars
platform around 130 miles (210 km) south of New Orleans, and is
the company's seventh operated platform in the Gulf. Oil began
flowing from its first completed well on Monday.
Shell said Olympus will help push the Mars oilfield's
production to 100,000 barrels of oil equivalent per day (boepd)
by 2016. In 2013, the field produced an average of 60,000 boepd,
the company said.
Other major Gulf producers with projects slated to start
cumulatively pumping more than 700,000 barrels per day in the
next two years include Chevron Corp, Anadarko Petroleum
Corp and Hess Corp.
Growth in Gulf output will bolster the United States'
emerging role as the world's top oil and gas producer, a trend
helped by improved deepwater technology and advances in
hydraulic fracturing and horizontal drilling that unlock
hydrocarbons from tight rock reservoirs in places like North
Dakota's Bakken and the Permian of West Texas.
The platform startup, as well as other projects to increase
Gulf oil output, was a sharp contrast to cost issues facing the
Anglo-Dutch oil company, including its decision to suspend its
controversial Arctic drilling program as a wider effort to cut
spending and streamline operations.
Shell Chief Executive Ben van Beurden told investors last
week that improving profitability in North American upstream
"will be a particular priority for us."
Recent signs of such streamlining include Shell seeking to
sell a stake in its newly reversed 300,000 bpd Houston-to-Houma
crude oil pipeline, and shelving a proposed gas-to-liquids (GTL)
plant in Louisiana because of rising costs.
But Shell's commitment to the Gulf, where the company is the
top oil producer, as a growth area remains. Hollowell said the
production startup of up to 50,000 boepd from its Cardamom field
- which will be hooked up to Shell's Auger platform - is on
track for this year.
Shell also aims to start pumping in 2016 from its Stones
field in the Gulf, using the basin's second floating production,
storage and offloading (FPSO) vessel rather than a moored
platform like Olympus.
While Olympus started earlier than planned, startup for one
of Chevron's new platforms has been pushed to 2015. Chevron had
planned to start both its 170,000 bpd Jack/St Malo and 75,000
bpd Big Foot platforms later this year, but Big Foot will be
shipped out to sea in the third quarter with startup slated for
2015, the company said.
Both platforms figure heavily in Chevron's production growth
Also, BP last year put the brakes on its second Mad Dog
platform project because costs had risen sharply.
A BP spokesman said on Tuesday that the company remains
committed to the project, albeit retooled as it evaluates
different design and development options.
One other deepwater platform started up after the BP spill.
LLOG Exploration in December 2011 began producing from its Who
Dat field at a platform with capacity to handle up to 60,000
barrels per day of oil and 150 million cubic feet per day of
natural gas. LLOG aims to start up its Delta House platform next
Hollowell said the startup of Olympus came six months ahead
of schedule on efficiencies in design, construction and
commissioning. Shell had expected the platform to start pumping
in the second half of 2014, he said.
The quicker startup is partly due to a new onshore control
room in New Orleans for Olympus, from which the company
commissioned its seabed production equipment.
"We are creating these operations centers for all our
platforms. Olympus just happens to be the first one," Hollowell