“We have again delivered a globally competitive investment scope for another significant deep-water project,” said Marvin Odum, Shell Upstream Americas Director. “Appomattox opens up more production growth for us in the Gulf of Mexico, where our production last year averaged about 225,000 boe per day, and this development will be profitable for decades to come.  With its competitive cost and design, Appomattox is next in our series of deep-water successes.”

During design work for Appomattox, Shell reduced the total project cost by 20% through supply chain savings, design improvements, and by reducing the number of wells required for the development. This includes advancements from previous four-column hosts, such as the Olympus tension-leg platform (TLP), as well as ensuring a high degree of design maturity before construction. With these and other cost reductions, the go-forward project breakeven price is estimated to be around $55 per barrel Brent equivalent.

Shell is currently the only operator in the Gulf of Mexico with commercial deep-water discoveries in this formation (Norphlet), which dates back 150-200 million years ago to the Jurassic period. The company continues active exploration in the area.

The sanctioned project includes capital for the development of 650 million boe resources at Appomattox and Vicksburg, with start-up estimated around the end of this decade. The development of Shell’s recent, nearby discoveries at the Gettysburg and Rydberg prospects remains under review. These could become additional, high-value tiebacks to Appomattox, bringing the total estimated discovered resources in the area to more than 800 million boe.

Shell Pipeline Company LP also made a final investment decision on the Mattox Pipeline, a 24-inch corridor pipeline that will transport crude oil from the Appomattox host to an existing offshore structure in the South Pass area and then connect onshore through an existing pipeline.

Last year in the Gulf of Mexico, Shell started production from the Mars B development, through the new Olympus TLP, and from the Cardamom subsea tie-back to the Auger platform. Shell is also currently developing the Stones project, which is expected to produce approximately 50,000 boe per day.

Notes to the editors

  • Shell discovered Appomattox in 2010 and Vicksburg in 2013.
  • The Appomattox development host will consist of a semi-submersible, four-column production host platform, a subsea system featuring six drill centres, 15 producing wells, and five water injection wells.
  • The Appomattox project is located 80 miles offshore (129 kilometres) from the nearest shoreline in Louisiana, in approximately 7,200 feet (2,195 metres) of water.
  • In addition to serving the Appomattox host, the upsized Mattox Pipeline will have pre-installed subsea connection points, which will allow for future interconnections. 
  • Gettysburg is owned by Shell (80%, operator) and Nexen Petroleum Offshore U.S.A. Inc. (20%).
  • Rydberg is owned by Shell (57.2%, operator), Ecopetrol America Inc. (28.5%), and Nexen Petroleum Offshore U.S.A. Inc. (14.3%).

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Cautionary note

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement "Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in this announcement refer to companies in which Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence.

The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this announcement, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This announcement contains forward looking statements concerning the financial condition, results of operations and businesses of Shell and the Shell Group. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell and the Shell Group to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions.

These forward looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Shell Group and could cause those results to differ materially from those expressed in the forward looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions.

All forward looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward looking statements. Additional factors that may affect future results are contained in Shell's 20-F for the year ended 31 December 2014 (available at www.shell.com/investor and www.sec.gov). These factors also should be considered by the reader.  Each forward looking statement speaks only as of the date of this announcement, 1 July 2015. Neither Shell nor any of its subsidiaries nor the Shell Group undertake any obligation to publicly update or revise any forward looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward looking statements contained in this announcement.

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