Shell Farms Out Decrease Tertiary Acreage to Repsol

Shell has farmed out 20% of at the very least eight blocks within the Walker Ridge space of the US Gulf of Mexico to Repsol, laying additional groundwork for what seems to be to be an rising space of focus for the supermajor within the area.

Shell confirmed the farm-out and stated it retains an 80% operated curiosity within the deepwater blocks, which it acquired in the newest US Gulf lease sale. The UK agency declined to remark when requested about phrases of the settlement.

The deal follows earlier current strikes by Shell to each consolidate and de-risk acreage in an rising a part of the US Gulf that’s potential for the high-pressure Decrease Tertiary play, also referred to as the Paleogene.

Only a handful of miles east of the newest Shell farm-out lies the Beacon Offshore-operated Shenandoah mission, which is due on line in 2024. That mission — which Shell just isn’t at present concerned in — includes a brand new 80,000 barrel of oil equal per day facility and related pipeline that would be the solely manufacturing infrastructure in that zip code of the US Gulf, which is residence to quite a few current discoveries and loads of exploration to return, a lot of it led by Shell.

Beacon was fashioned by non-public fairness group Blackstone Vitality Companions in 2016. Guardian Blackstone reportedly pledged earlier this 12 months to finish investments in upstream oil and gasoline, making its long-term dedication to portfolio firms like Beacon an space to look at for a possible exit.

Focusing on the Paleogene

Shell has but to drill a profitable effectively within the Decrease Tertiary play however has quietly constructed up a place within the development that might make it a recent supply of future progress.

Its greatest splash within the Decrease Tertiary got here this summer time when it agreed to farm in and take operatorship from Equinor of the mission as soon as referred to as North Platte, since renamed Sparta. That improvement might see a ultimate funding choice within the coming months.

Final month, Shell struck a separate deal with Equinor masking a number of exploration prospects that the London-based main will function within the so-called Shenandoah “mini basin.” The primary of these wells, Abilene, began drilling late final month. Repsol is a companion in various these prospects, together with Abilene.

This month’s Repsol deal — masking Walker Ridge blocks 4, 5, 48, 90, 91, 92, 134 and 135 — includes acreage that sits straight between Shenandoah and Sparta, though nearer to the previous. Profitable drilling on these blocks might probably give Shell and its companions extra improvement choices by way of subsea tiebacks.

Returning to the Neighborhood

Shell acquired the eight Walker Ridge leases in 2021 in Lease Sale 257, which was vacated by a federal choose till this 12 months’s Inflation Discount Act reinstated the outcomes of the sale. Shell was formally awarded the leases final month, federal information present.

Shell truly held many of those blocks in its portfolio for years, till late final decade when every of the leases both expired resulting from a scarcity of exploration actions or have been relinquished.

The corporate didn’t touch upon its future plans for these leases or a timeline for drilling. The leases are legitimate till at the very least 2032.

Repsol didn’t instantly reply to a request for touch upon Monday.