Shenzi development gets owner nod; first production expected in 2009

Owners have approved the proposed $4.4 billion development of the Shenzi oil and gas field, located in the Gulf of Mexico’s prolific Green Canyon area.

The Shenzi facility will have a design capacity to produce up to 100,000 barrels of oil and 50 million cubic feet of gas per day, Shenzi operator BHP Billiton said June 7, adding that first production is expected by mid-year 2009.

Australia’s BHP holds a 44 percent stake in the field, with partners BP and Hess each holding a 28 percent interest in Shenzi.

BHP said recoverable reserves in the portion of the field covered by current expenditures will be assessed further during development drilling, but are currently estimated to be 350-to 400 million barrels of oil equivalent. Additional potential reserves will be targeted for follow-up development, the company said.

Shenzi, in roughly 4,300 feet of water, is about 120 miles from the Louisiana coast. The field consists of Green Canyon blocks 609, 610, 653 and 654.

Initial field development will consist of seven producing wells, and the full field development is expected to have up to 15 producing wells and possible water injection, BHP said. Total costs for the full field development through 2015 are estimated at $4.4 billion with BHP’s share amounting to $1.94 billion.

“This project further demonstrates our transition to becoming a significant operator and producer in the deepwater Gulf of Mexico,” said J. Michael Yeager, BHP’s group president of energy.

Shenzi joins the development of the Neptune field as a BHP-operated project, and together with BHP’s interests in the Atlantis and Mad Dog fields, significantly expands the company’s production base in the region.

A standalone, tension leg platform was selected for the production facility. The proposed facilities, wells and completions are proven designs that have been successfully used in other deepwater Gulf of Mexico projects, BHP said, noting that all major contracts are in place to launch the project. The seven initial pre-drilled sub-sea production wells will be tied back to the tension leg platform. Shenzi oil will be exported via a new-build pipeline to Ship Shoal block 332, with the gas going via a new-build lateral into a connection in the Cleopatra trunk lines, and then on to Ship Shoal 332, BHP said.

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