May 23, 2019 / 2:32 PM / 7 months ago

Shell starts production at giant Appomattox field in Gulf of Mexico

FILE PHOTO: Filled oil drums are seen at Royal Dutch Shell Plc's lubricants blending plant in the town of Torzhok, north-west of Tver, Russia, November 7, 2014. REUTERS/Sergei Karpukhin/File Photo

LONDON (Reuters) - Royal Dutch Shell has started producing oil and gas at its Appomattox deep water platform in the Gulf of Mexico, one of the largest projects launched in the basin in recent years.

The Anglo-Dutch company said the floating production system will produce around 175,000 barrels of oil and gas equivalent per day (boed).

Appomattox, which is located in U.S. waters, was completed ahead of its expected startup in the third quarter of 2019 and at around 40% below its initial planned cost in 2015, Shell said. It is the first producing field in the Norphlet area and “just the beginning” of activity there, Shell said.

Shell holds 79% of the project while Chinese state oil and gas producer CNOOC Ltd holds the remaining 21%.

Shell is one of the world’s largest deepwater producers and its offshore production is on track to reach 900,000 boed by 2020, it said.

In February, Shell and its partners started production at the Lula North field offshore Brazil.

The start of production at Appomattox, Lula North and the Prelude liquefied natural gas (LNG) vessel off Australia earlier this year is expected to add $5 billion to Shell’s cash flow by 2020, analysts at Jefferies said.

For a graphic on Shell's cash flow Q1, see: tmsnrt.rs/2WilbiX

For a graphic on Shell 2018 reserves, see: tmsnrt.rs/2SkUWta

Reporting by Ron Bousso; Editing by Susan Fenton

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