Energy transition or no, Shell has given the go-ahead of its Whale deepwater project in the Gulf of Mexico, according to a Shell press release on Monday.
It would be the first greenlighted project since its defeat in a Dutch court last month that ordered Shell to reduce its emissions targets at a pace quicker than it had planned.
Royal Dutch Shell owns 60% of the Whale project, while Chevron owns the remaining 40%. The expected production-set for 2024-is estimated at 100,000 bpd, with an estimated recoverable resource volume of 490 million boe.
Shell said that Whale would be Shell's 12 deepwater project in the Gulf of Mexico.
Whale is located next to Shell's Silvertip field, about 10 miles from its Perdido platform.
Shell is a leading deepwater oil and gas producer in the Gulf of Mexico, producing 150 million barrels of oil equivalent per year-which is about half of Shell's total U.S. oil and gas production.
With the climate pressure now on full tilt, Shell is now focusing its efforts on going after high rate of return projects and those that are more efficient.
For this project, Shell expects an internal rate of return of more than 25%--significantly higher than the industry standard, according to Reuters.
"Whale is the latest demonstration of our focus on simplification, replication and capital projects with shorter cycle times to drive greater value from our advantaged positions," Wael Sawan, Shell Upstream Director said in Monday's release. "We are building on more than 40 years of deep-water expertise to deliver competitive projects that yield high-margin barrels so that we are able to meet the energy demands of today while generating the cash required to help fund the development of the energy of the future."
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More