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Shell plans major drilling in Mexico but no production anytime soon

Feb. 25, 2020 5:59 PM ETShell plc (SHEL) StockSHELBy: Carl Surran, SA News Editor16 Comments
  • Royal Dutch Shell (RDS.A, RDS.B) will move ahead on its massive deepwater drilling plan in Mexico, even as it does not expect to actually start production under the current Lopez Obrador government.
  • Shell plans to drill four wells this year and four more next year, part of a drilling campaign that will include 10-13 wells and cost as much as $2.4B, the company's top Mexico executive Alberto de La Fuente tells Bloomberg.
  • "First oil, if we are successful, is unlikely to occur before the end of [Lopez Obrador's] term due to the complexity of deepwater fields, which can take anywhere from five years to a decade to start producing," de La Fuente says.
  • This month, Shell was granted approval by Mexico's National Hydrocarbons Commission to drill its second ultra-deepwater exploratory well, and it has leased a platform owned by Mexican company Grupo R SA.
  • Shell holds nearly 20K sq. km acreage nine deepwater blocks offshore Mexico, one of the company's largest operated deepwater exploration positions in the world.

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