Anglo-Dutch global oil and gas operator Royal Dutch Shell plc (NYSE: RDS-A) said it has agreed to sell 100 percent of its record title interest in four Gulf of Mexico Green Canyon blocks, referred to as the Brutus/Glider assets, to privately-held startup EnVen Energy Ventures LLC, for $425 million in cash. The deal is expected to close in October.
The Brutus/Glider assets include the Brutus Tension Leg Platform (TLP), the Glider subsea production system, and the oil and gas lateral pipelines used to evacuate the production from the TLP. The Brutus/Glider assets have a combined current production estimate of approximately 25,000 barrels of oil equivalent per day (boe/d).
The move comes three months after Shell temporarily shut in all wells flowing to its Brutus platform after a release of oil from a subsea infrastructure at Glider field was detected. “Shell estimates that 2100 barrels of oil were released. There are no drilling activities at Brutus, and this is not a well control incident,” the company said in May.
BSEE Responds to Shell Gulf of Mexico Brutus/Glider Oil Release
The U.S. Bureau of Safety and Environmental Enforcement (BSEE) said it was “responding to a two mile by thirteen mile sheen in the Gulf of Mexico, approximately 97 miles south of Port Fourchon, Lousiana,” after Shell Offshore reported that “a sheen was observed in the area of its Glider Field, a group of four subsea wells located in Green Canyon Block 248.”
“According to the Coast Guard, the skimming has been concluded due to no visible recoverable oil being found by either aerial or surface assets,” said Offshore Energy Today. “The joint response mobilized more than 150 people, five on-water recovery vessels for skimming, and aerial assets to respond to the sheen.”
BSEE Gulf of Mexico Regional Director Lars Herbst formally established an Investigative Panel on May 16. The seven-member panel is comprised of BSEE engineers, inspectors, and investigators. The panel will conduct a thorough investigation of the incident in order to identify the causes and any contributing issues that led to the release. The panel will make recommendations in its final report on how to strengthen existing safety and environmental management systems, and identify any reforms to existing regulations that may be needed. The focus of these recommendations is to prevent a similar incident from occurring.
“BSEE will not approve production restart of these subsea fields until all safety concerns and applicable regulations have been met,” it emphasized in May. “BSEE is committed to ensuring environmentally responsible oil and gas operations on the Outer Continental Shelf,” noted BSEE Director Brian Salerno.
The oil release came “nearly a month after the BSEE released new rules aimed at preventing loss of life and environmental harm resulting from a potential failure at an offshore well,” said UPI, adding that, “those new rules came almost six years to the day after the disaster at the Deepwater Horizon rig in the Gulf of Mexico.”
EnVen Energy Ventures, formerly known as Pisces Energy LLC, is led by Steven A. Weyel, founder, chairman and CEO. He’s an experienced operator of major oil producing basins around the world, with 35 years of global experience as an entrepreneur, executive officer and director of public and private companies. He previously served as COO at Energy XXI (Bermuda) Ltd., which he co-founded, and he also co-founded EnerVen LLC in 2001, serving as its COO and president until mid-2005. He began his career with Baker Hughes in 1976 where he rotated through a variety of assignments. EnVen was founded in 2008 and is based in Houston, Texas. The company’s affiliate EnVen Energy Corp. raised $24.5 million through a private placement managed by FBR Capital Markets & Co., according to a Form D filed with the SEC in November 2015.
Royal Dutch Shell was formed in 1907, although its history dates back to the early 19th century. The company is headquartered in The Hague, the Netherlands. The parent company of the Shell group is Royal Dutch Shell plc, which is incorporated in England and Wales.
Shell is a leading, global deep-water operator, with a strong development pipeline and production on-stream in the Gulf of Mexico, Brazil, Nigeria, and Malaysia as well as exploration and appraisal opportunities. Shell currently produces approximately 600,000 boe/d and plans to increase production to more than 900,000 boe/d by the early 2020s from already discovered, established reservoirs.
“Lower oil prices continue to be a significant challenge across the business, particularly in the Upstream. We are managing the company through the down-cycle by reducing costs, by delivering on lower and more predictable investment levels, executing our asset sales plans and starting up profitable new projects,” said Shell chief executive Ben van Beurden. “Shell is firmly on track to deliver a $40 billion underlying operating cost run rate at the end of 2016,” he added.
Shell’s second quarter 2016 CCS earnings attributable to shareholders were $0.2 billion compared with $3.4 billion for the same quarter a year ago, the company reported. BG Group plc has been consolidated within Shell’s results, following its acquisition on February 15, 2016. Second quarter 2016 CCS earnings attributable to shareholders excluding identified items were $1.0 billion compared with $3.8 billion for the second quarter 2015, a decrease of 72%.
Compared with the second quarter 2015, CCS earnings attributable to shareholders excluding identified items were impacted by the decline in oil, gas and LNG prices, the depreciation step-up resulting from the BG acquisition, weaker refining industry conditions, and increased taxation. Earnings benefited from increased production volumes from BG assets.
Shell Gulf of Mexico Green Canyon Oil Reserve, Brutus/Glider Location Map (Courtesy: Bureau of Safety and Environmental Enforcement – BSEE).