HOUSTON, Nov. 19 (UPI) -- Shell said it confirmed what it considers a high-value and significant discovery of oil in the deep U.S. waters of the Gulf of Mexico.
"Kaikias is a high-value opportunity in the deep-water Gulf of Mexico, development potential could exceed 100 million barrels of oil equivalent recoverable," the company declared.
U.S. and international reports indicate inland shale oil basins will decline in part because of financial pressure from lower crude oil prices. In its latest monthly market report, the Organization of Petroleum Exporting Countries said production declines from the Lower 48 may be offset by "strong growth" from the Gulf of Mexico, where year-on-year production increased 14.5 percent.
Shell said the Kaikias prospect is near its existing infrastructure in the Gulf of Mexico, suggesting production would be more competitive at a time when companies are forced to spend less on exploration and production.
"In fact, Shell completed the drilling and appraisal of Kaikias ahead of schedule and under budget allowing the company to achieve more than 20 percent in cost savings," the company said.
A dozen new projects expected online in the Gulf of Mexico by next year should boost offshore U.S. production from an estimated 1.4 million bpd in the fourth quarter to more than 1.6 million bpd in fourth quarter 2016.
Shell made a preliminary discovery with an appraisal well in Kaikias in 2015. The field is located in deep waters about 60 miles south of the Louisiana coast.
