Sparta on the horizon: Shell sanctions deepwater oil development in US Gulf of Mexico

Shell Offshore Inc., a subsidiary of the UK-headquartered energy giant Shell, has made a final investment decision (FID) for a deepwater development in the U.S. Gulf of Mexico. Sparta will be the first of the oil major’s replicable projects to feature all-electric topside compression equipment. This is expected to significantly curb greenhouse gas intensity and emissions from the firm’s operations.

The Sparta project, previously known as North Platte, is a deepwater development in the U.S. Gulf of Mexico, located approximately 170 miles off the Louisiana coast measuring 4,300 square feet (1,310 meters). The field was discovered in 2012 by Cobalt International Energy, which at the time held 60% interest, while Total (now TotalEnergies) held the remaining 40%.

Come March 2018, Equinor joined as a partner by acquiring Cobalt’s 40% interest, while TotalEnergies became the operator of this project with a 60% interest, following the acquisition of a 20% stake for $339 million during Cobalt’s bankruptcy auction sale.

Previously, TotalEnergies started the front-end engineering and design for the North Platte discovery in December 2019 and Worley was working on the FEED for the development under a contract awarded in early 2020.

The final investment decision was expected in 2021, however, TotalEnergies withdrew from the project in February 2022 releasing all its equity to Equinor, which agreed to sell 51% of its interest in the project to Shell. Currently, the Sparta field is operated by Shell Offshore (51%) with Equinor Gulf of Mexico LLC (49%) as the oil major’s partner.

With the FID now out of the way, the project is expected to reach peak production of approximately 90,000 barrels of oil equivalent per day (boe/d) and has an estimated, discovered recoverable resource volume of 244 million boe.

Zoë Yujnovich, Shell’s Integrated Gas & Upstream Director, commented: “Shell’s latest deepwater development demonstrates the power of replication, driving greater value from our advantaged positions. This investment decision is aligned with our commitment to pursue the most energy-efficient and competitive projects while supplying safe, secure energy supplies today and for decades to come.”

Sparta, which will be Shell’s 15th deepwater host in the Gulf of Mexico, marks the firm’s first development in the Gulf of Mexico to produce from reservoirs with pressures up to 20,000 pounds per square inch.

According to the oil major, this development showcases its cost-efficient development approach through standardized, simplified host designs, first utilized at the Vito development and later replicated at the Whale development.

Shell picked Seatrium for the construction of the Sparta FPU, which comprises a single topside module supported by a four-column semi-submersible floating hull. Sparta will replicate about 95% of the Whale’s hull and 85% of its topsides.

Philippe Mathieu, executive vice president for Exploration and Production International, remarked: “We are pleased to reach this important milestone and advance the Sparta development together with Shell.

“Sparta marks the third final investment decision in our international upstream business this year, underlining our commitment to invest in long-term reliable energy supply. The U.S. is a core area for our international business, where we continue to create significant value with good carbon efficiency.”

With a designed capacity of 100,000 barrels of oil equivalent per day at peak, Sparta is expected to begin production in 2028. The development plan encompasses eight production wells tied back to a semi-submersible floating production unit.

Moreover, the platform will feature all-electric compression equipment, allowing for significantly reduced emissions intensity from production. Sparta straddles four blocks of the Garden Banks area – GB blocks 915, 916, 958, and 959 – and the reservoir depth is around 30,000 feet (9,100 meters).

Shell has been very busy recently not just in the Gulf of Mexico but elsewhere as well. The firm disclosed an acquisition of the remaining stake in an asset in the U.S. Gulf of Mexico a few days ago, consolidating its ownership in a deepwater field, which has been developed as a subsea tie-back to the nearby Ursa production hub.

The oil major is actively pursuing more hydrocarbons. To this end, the company greenlighted a phased offshore drilling program to bolster production at a development project in the U.S. Gulf of Mexico and took a FID for a 2024 two-well drilling campaign in the North Sea.