UPDATE 1-Shell goes ahead with giant Gulf of Mexico field after cost cuts

miércoles 1 de julio de 2015 12:00 GYT

* Appomattox project set to start production by end of decade

* Will be Shell's largest platform in the region (Adds details, quotes, share price)

By Ron Bousso

LONDON, July 1 (Reuters) - Royal Dutch Shell has given the green light for the development of its largest platform in the Gulf of Mexico after making steep cost cuts which made the deep water project economical despite low oil prices.

The decision to pour billions of dollars into the Appomattox project comes as companies have scrapped around $200 billion of mega-projects in the wake of the sharp decline in oil prices over the past year.

Shell has operated in the Gulf of Mexico for over 60 years. The region contributes about 17 percent of total U.S. crude oil production according to the Energy Information Administration and was the location in 2010 of the worst offshore oil spill in U.S. history, involving BP's Deepwater Horizon well.

Shell's investment decision shows the energy giant's bet on deep water as it seeks to finalise by early 2016 the $70 billion acquisition of Britain's BG Group, which holds large stakes in Brazil's offshore oil production.

The project, some 80 miles (130 km) off the coast of Louisiana, is expected to start production by the end of this decade and reach peak output of around 175,000 barrels of oil equivalent (boe) per day, Shell said on Wednesday.

Shell, which operates 7 platforms in the Gulf of Mexico, said it had reduced the project's cost by 20 percent through design improvement and lower contractor and supplies costs, bringing its breakeven price to around $55 per barrel of oil equivalent.   Continuación...