While some may sell sea shells by the sea shore, Shell Exploration & Production Company (SEPCo) drills oil wells far from the gulf shore. The company, a unit of Shell Oil, (itself a unit of Royal Dutch Shell) explores for and develops and produces oil and natural gas primarily in the deepwater fields of the Gulf of Mexico, although it also has holdings in Alabama, Colorado, Texas, and Wyoming. SEPCo holds 600 federal offshore leases in the Gulf of Mexico, with about a third of them producing. The company is the largest of the Shell E&P operating businesses, and traditionally accounts for some 15% of Shell's oil and gas production worldwide.
A major player in the Gulf of Mexico, SEPCo operates the Perdido Development, the deepest floating drilling and production platform in the world, sitting on top of a 555-foot cylindrical spar floating in about 8,000 ft. of water some 200 miles from Houston. SEPCo commenced operating the platform in 2010. The Gulf of Mexico accounts for some 50% of Shell's oil and gas production in the US.
Looking to exploit the growing number of shale play opportunities in the US, SEPCo is also developing a system of heating rock underground to separate hydrocarbons in shale for easier extraction.
In 2012 the company expanded its Gulf of Mexico portfolio as it bid on a total of 35 blocks for about $500 million. SEPCo was the high bidder on 24 blocks with bids totaling $406 million. This bid supports its intent to establish a deep and robust portfolio it was has been a core area throughout SEPCo's history.
The BP oil rig disaster in the Gulf of Mexico led to a government-imposed six-month moratorium on deepwater drilling, forcing the Perdido rig to shut down operations in April, 2010. Six other Shell rigs were forced to be idled, cutting Shell's 2010 output by 8,000 barrels a day and forcing the parent company to take a $56 million charge in the second quarter. Brought back online in late 2010, the Perdido rig reached full production in 2012.
In 2011 its Shell Offshore unit became the first company to get a permit for new deepwater drilling activities in the Gulf of Mexico after the moratorium ended. – less