Shell starts new production in Gulf of Mexico

HOUSTON, Sept. 6 (UPI) -- After taking a partial cash offer for assets in the region, Royal Dutch Shell said it started production at its deepest project yet in the Gulf of Mexico.

Shell said it started production from the Stones development in the Gulf of Mexico using a floating production, storage and offloading vessel, the 13th such facility in its portfolio and, tapping a basin beneath 1.8 miles of water, the world's deepest such development.

"Our growing expertise in using such technologies in innovative ways will help us unlock more deep-water resources around the world," Andy Brown, the director for exploration and product projects for Shell, said in a statement.

By the end of next year, the company said Stones should be producing around 50,000 barrels of oil equivalent per day.

The Gulf of Mexico accounts for about 16 percent of the total oil and 4.5 percent of the total natural gas produced in the United States.

The start of production at Stones follows a late August decision to sell off its holdings in part of a regional basin called Brutus/Glider in a deal that included $425 million in cash. After unveiling a strategy that called for "significant and lasting" changes to its business model, the company said the sale was in line with ongoing divestment efforts.

Shell this year has moved away from other North American projects apart from the Gulf of Mexico saying in July that capital constraints were in part behind a decision to delay a final investment on a Canadian gas project.

This year, the company said it was leaving oil and gas operations in as many as 10 countries. For the Stone development, the company said it was a cost-effective option that built on its existing portfolio in the Gulf of Mexico.