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Shell says deepwater drilling bouncing back, with breakeven now $30/bbl

|By: , SA News Editor

  • While the energy industry likes the flexibility of U.S. shale, sentiment has “flipped” back in favor of deepwater drilling after a dramatic fall in investment during the oil market downturn, Royal Dutch Shell’s (RDS.A, RDS.B) head of exploration and production Andy Brown tells Financial Times.
  • The economics of some projects, which once required high crude oil prices to be profitable, has seen a “transformation,” Brown believes, with cash generation surpassing that of U.S. shale “because of fundamental cost reduction… Breakeven prices in deepwater – we are now talking $30/bbl.”
  • “It’s great to have both in the portfolio and we are growing our shales business… but in terms of sheer cash flow delivery, our deepwater has significantly more cash flow potential,” Brown says.
  • The cost of drilling a well in the Appomattox, a deepwater oil and gas development that is Shell’s largest floating platform in the U.S. Gulf of Mexico, had fallen two-thirds in the past four years, Brown also says.
  • Separately, the head of Shell’s global refining operations, Lori Ryerkerk, reportedly will step down at the end of August after five years in a job, to be succeeded by Robin Mooldijk, who currently serves as VP of its Manufacturing Americas segment.

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