Shell begins laying the groundwork for recent North Sea gas discovery to become FID-ready

UK-headquartered energy giant Shell is taking steps to set the stage for a potential final investment decision (FID) to be taken in relation to its recent gas discovery in the North Sea, which is located on the UK Continental Shelf (UKCS).

Once a positive well investment decision and the green light from the North Sea Transition Authority (NSTA) were secured for the Selene exploration well in the P2437 license, Shell decided to proceed with its 2024 work program and budget, thus it hired a jack-up rig from Valaris for a two-well drilling campaign, following the geotechnical site investigation works.

While the Valaris 123 jack-up rig’s drilling operations at the exploration well 48/8b-3 in the Southern North Sea initially seemed to have encountered a 160-meter thick section of Leman Sandstone with gas present throughout, the updated post-well structural maps of the Selene prospect point towards a maximum gas column of about 100 meters, according to Shell’s partner, Deltic Energy.

The company has also confirmed the demobilization of the rig from the Selene site, which occurred on November 10, 2024. Afterward, Shell provided an updated cost estimate for the well of $48 million, which Deltic claims is within the $49 million carry cap under the farm-out arrangements made for the 2024 Selene drilling and testing costs.

As a result, the firm does not expect to have any residual cost exposure to the well drilling costs. However, it does underline that the estimate of well costs will be subject to variation once Shell receives final invoices from service providers over the coming months.

As the operator of the Selene discovery, Shell has recommended that the joint venture enter into the second term of license P2437. To this end, the UK-headquartered energy giant will now seek to agree on a low-cost work program and timeline with the NSTA to support the maturation of the Selene discovery towards a potential FID to ensure its development.

Therefore, the JV will complete the post-well analytical work and various studies required to finalize a development concept during the second term of the license, as no further drilling is required before FID. In addition, Deltic claims that work will begin on various environmental studies to support the regulatory permitting and approvals required to progress to the development stage.

The company’s preliminary reservoir modeling and updated preferred development concept, based on analysis of the data available from the 48/8b-3Z well indicate that a potential development will consist of two horizontal wells, which would be sufficient to drain the majority of the Selene structure.

Furthermore, Deltic’s base case assumption is that minimum facilities, normally unmanned, installation positioned on Selene will be tied back to the Barque field infrastructure via an approximately 20 km subsea pipeline. The Barque-Clipper-Bacton gathering system and onshore gas processing plant are said to have sufficient capacity to accept gas production from the proposed Selene development.

While the firm intends to promote this potential development scenario with its JV partners, it also highlights that the field development plan’s maturation is ultimately in Shell’s hands and subject to further review once the detailed post-well analysis is out of the way.

Shell is busy with multiple projects across continents. Recently, McDermott finished its assignment on the European oil major’s gas project off the coast of Malaysia. The UK-headquartered giant has also won the appeal against a landmark ruling in the Netherlands, overturning the decision that ordered it to step up its carbon emissions reduction game.