Aug 12, 2018

Shell hails bounceback towards deepwater drilling

Royal Dutch Shell is doubling down on drilling for oil far beneath the oceans, as the energy group eyes a cash bonanza from traditional deepwater projects despite a growing focus on new US shale investments. Y Brown, Shell's head of exploration and production, said the industry was seeing a "Bounceback" towards deepwater after a dramatic fall in investment during the market downturn. Mr Brown said that while the energy industry liked the flexibility that US shale offered, sentiment had "Flipped" back in favour of deepwater - defined as a depth greater than 300m. The economics of some projects, which once required high crude prices to be profitable, had seen a "Transformation", with cash generation far surpassing that of US shale. "It's great to have both in the portfolio and we are growing our shales business . . . but in terms of sheer cash flow delivery our deepwater has significantly more cash flow potential," said Mr Brown. The cost of drilling a well in the Appomattox, a deepwater oil and gas development that is Shell's largest floating platform in the US Gulf of Mexico, had fallen two-thirds in the past four years, said Mr Brown.

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