Shell Announces FID for Silvertip Phase 3 in US GOM

(Energy Analytics Institute, 12.Dec.2024) — Shell plc subsidiary Shell Offshore Inc. announced a final investment decision (FID) on the Phase 3 Silvertip project in the US Gulf of Mexico (GOM).

The project will deliver two wells to boost production at the Shell-operated Perdido spar, Shell announced 12 Dec. 2024 in an official statement.

The development concept for Phase 3 Silvertip includes two wells, tied into existing subsea infrastructure. Both wells, located in the Silvertip Frio reservoir, are expected to collectively produce up to 6,000 barrels of oil equivalent per day (boe/d) at peak rates. First production is expected in 2026.

Shell operates Silvertip with a 40% interest. Shell’s partner in Phase 3, Chevron, holds the majority 60% interest in the project. 

“This investment at Perdido is another example of our focus on high margin, lower carbon intensity barrels,” Shell’s Executive Vice President for Deep Water Rich Howe said in the statement. “As the largest operator in the US Gulf of Mexico, we prioritize opportunities nearby our existing assets in these advantaged corridors, where we are well-positioned to develop shorter-cycle, high value tieback opportunities.”

The Phase 3 Silvertip project reinforces Shell’s long-term commitment to the US, in particular to the GOM, where production is essential to ensuring a reliable and secure supply of energy. Additionally, production in the US Gulf of Mexico has among the lowest greenhouse gas (GHG) intensity in the world for producing oil, Shell said.

Silvertip highlights:

— Perdido is a production spar in the US GOM, located within Alaminos Canyon, approximately 200 miles offshore south of Galveston, Texas in about 8,000ft of water.

— Shell is operator of the Perdido Regional Host (PRH) and has 35% working interest, with Chevron U.S.A. Inc. (37.5% WI), 3C Perdido Holdings (26.5% WI) and BP (1% WI).

— Current estimated recoverable resource volumes of Phase 3 Silvertip are 17 MMboe. The estimate of resource volumes is currently classified as 2P under the Society of Petroleum Engineers‘ Resource Classification System.

— The estimated peak production and current estimated recoverable resources presented above are 100% total gross figures.

— The investment in Phase 3 Silvertip is expected to generate an internal rate of return (IRR) in excess of the hurdle rate for Shell’s Upstream business.

____________________

By Pietro Stewart reporting from Houston. © Energy Analytics Institute (EAI). All Rights Reserved.