Royal Dutch Shell plc (ADR) (NYSE:RDS.A) and its joint venture disclosed the commencement of oil extraction from the third phase of  deep-water operation in the Campos Basin of Brazil. The British drilling firm indicated that output from the project’s final phase would add a maximum of 20,000 barrels of oil a day at peak production from the field, which has already produced over 100 million barrels since 2009.

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Royal Dutch Shell said that the final phase consisted of five producing wells in two basin fields of Massa and O-South. The company indicated that it was operated with an ownership stake of 50% while other two owners, India-based ONGC and QPI have 27% and 23% stakes respectively in the oil fields. After the merger completion last month, the British firm was a leader in deep water due to its strong pipeline development in Brazil, Nigeria, Malaysia, and the Gulf of Mexico in the United States.

The oil firm said that the subsea wells were higher than 5,900 feet and linked to a floating vessel for production, storage and offloading. The rig is located over 90-miles off shore. As far as Shell is concerned, the final phase is the big deep-water project. It is also involved in another project called the Appomattox project, which is under construction. The company is part of a consortium that explores and develops the big pre-salt Libra field in Brazil.

Management Comments

Shell’s executive vice president for Deep Water, Wael Sawan, said that the safe and early start to production was a witness to its efficient deep-water project execution. He said that the completion of the phased project demonstrated value from synergies from contractual alliance, standardization, and the tactical deployment of fresh technologies

Sawan further said that the subsea opportunities in the deep-water portfolio had development cost advantages. He said that it would contribute to the output growth that the company anticipates from offshore Brazil.