Williams Cos. Inc. reached an agreement on Aug. 4 with Shell Offshore Inc. and Chevron U.S.A. Inc. to provide services for the deepwater Whale project located in the U.S. Gulf of Mexico.
Shell recently unveiled plans to develop the new deepwater project, first discovered in 2017 in the Gulf of Mexico’s Alaminos Canyon Block 773. With an estimated, recoverable resource volume of 490 million boe, Shell and partner, Chevron, expect Whale to begin production in 2024.
“The development of Whale expands Williams’ footprint in the Gulf by contracting one of the largest discoveries in the past decade and creating future connection opportunities for producers that will capture the full value of these important deepwater resources,” commented Williams COO Micheal Dunn in a company release on Aug. 4.
Whale, Shell’s 12th deepwater project in the Gulf of Mexico, marks the first major oil and gas project announced by Shell since a Dutch court in May ordered the Anglo-Dutch company to accelerate its carbon emissions reduction targets. In a release on July 26 announcing the project’s final investment decision, Shell said production from Whale will be among the lowest greenhouse-gas intensity in the world for producing oil with plans to employ the “simplified, cost-efficient host design” currently being used at Vito, an existing nearby Shell-operated field.
As part of the agreement announced Aug. 4, Williams will provide offshore natural gas gathering and crude oil transportation services as well as onshore natural gas processing services for the Whale development located approximately 10 miles from the Shell-operated Perdido host facility.
Williams plans to expand its existing Gulf of Mexico offshore infrastructure via a 25-mile gas lateral pipeline build from the Whale platform to the existing Perdido gas pipeline and a new 125-mile oil pipeline to the existing Williams-owned GA-A244 junction platform. The natural gas will be transported to Williams’ Markham gas processing plant located in Matagorda, Texas.
“Our asset synergies in the Gulf of Mexico are second to none, and we are pleased to strengthen our existing onshore and offshore infrastructure to further serve the growing needs of deepwater producers,” Dunn added in the release.
Williams currently owns and operates 3,500 miles of natural gas and oil gathering and transmission pipeline, along with 1.8 Bcf/d of cryogenic processing capacity and 60,000 bbl/d of fractionation capacity that span the Gulf of Mexico. The company also has ownership in two floating production platforms, multiple fixed leg utility platforms and numerous other related facilities in the region.
In June, Williams agreed to provide a range of midstream services for the Shenandoah development offshore Louisiana in the central U.S. Gulf of Mexico with Beacon Offshore Energy Development LLC and its co-owner ShenHai LLC, a subsidiary of Navitas Petroleum, through Williams’ Discovery infrastructure.
Shell’s decision sends a negative signal to other companies, investors and bankers who are thinking about putting money into the aging basin, including by buying assets from majors, industry sources told Reuters.
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