There was a time when drilling for gas and oil was restricted to certain terrains. But rising energy costs, combined with advances in drilling technology have meant that oil and gas exploration has ever more ambitious frontiers. Shell Appomattox is one such ambitious project – a Deepwater development project based in the Gulf of Mexico, approximately 130 kilometres from the state of Louisiana.
The Appomattox project began in July 2015, becoming Shell’s eighth floating platform in the Gulf. Moreover, when construction and installation have concluded, it will be the largest of all the floating platforms in the region. On completion in 2020, the project (which includes both the Appomattox and Vicksburg fields) will have an average peak production of approximately 175,000 barrels of oil per equivalent per day.
That statistic is impressive in itself, but a project of this scale inevitably comes with a wealth of similarly awe-inspiring numbers. For example, the two fields in the Appomattox project are together thought to hold an estimated 650 million barrels of oil equivalent. They were formed about 150 million years ago during the Jurassic period. Both are located more than 2 kilometres beneath the sea surface, giving some idea of the kind of technical expertise required to reach the fuel below.
Gone are the days when the oil industry dominated the world economy. Although the Dutch-English Shell is still a global giant, the new reality in energy is that even oil giants need to be more selective about where they invest. Appomattox fit the stringent criteria. Marvin Odum, Shell’s US Chief and head of its Unconventional Resources Unit, said of the project: “the only type of projects that are going to get funding is this type of project. You really only want to be in the best stuff because it’s the best stuff that will truly be competitive.”
Shell needs no reminding of its responsibility to sustainability, not just at Appomattox but around the world. It has established a dedicated sustainability unit, which is one of the world’s largest in terms of budget and people employed. The company’s sustainability is integrated across all of its departments on three levels: i) running a safe, efficient, responsible and profitable business, ii) sharing wider benefits in the areas that they operate, and iii) helping to shape a more sustainable energy future.
The statistics surrounding the company’s sustainability give some insight into the scale of the operations. In 2015, for example, $122 million was spent on voluntary investment worldwide. Of this, around $93 million was spent on local programmes for community development, disaster relief, education, health and biodiversity; the remainder was spent on the company’s three global strategic themes of enterprise development, road safety and energy access.
The company estimates that of the $122 million, about a third was spent in countries which are part of the UNHDP Human Development Index (meaning that they have per capita GDP of less than $15,000 per year). Shell also prioritizes buying goods and services from local suppliers, many of whom come from those same UNHDP-listed countries. In certain cases, they help local businesses with skills development to reach international standards.
Partners and Suppliers
In 2015, Shell spent more than $56.3 billion on goods and services worldwide. Its commitment to sourcing locally means that where possible, it spends in under-developed regions. Around $5.9 billion was spent on goods and services supplied by local companies in UNHDP countries
In the case of Appomattox, in addition to being able to draw on its junior partner in the project, Nexen Petroleum Offshore (who hold 21% of the project’s interests), Shell also worked with Delmar, the world leader in offshore mooring and subsea services. Delmar performed the mooring design engineering services for the floating platform, which included global mooring analysis verification.
FMC Technologies is a global market leader in subsea systems and a leading provider of technologies and services to the oil and gas industry. Their experience in complex projects like Appomattox was one of the key reasons their expertise was sought. Their scope of work on the project thus far has included: technology development subsea manifolds, PLET components, jumpers, development of topside controls and the project’s control system, and its subsea distribution system. Other contractors include Lankhorst Ropes, who supplied the mooring lines for the Appomattox development and Williams Partners who have provided Deepwater gas gather services to the Appomattox development.
Ultimately, all of Shell’s partners and suppliers need to meet key sustainability criteria, including industry-leading working conditions. It conducts ongoing assessments of its suppliers and partners across the world. In 2015, this meant 10 assessments of suppliers in Africa and the Middle East, 126 in the Americas, 129 in the Asia-Pacific Region and 119 in Europe. All the companies must meet the Shell Supplier Principles, which cover areas such as human rights, labour practices and business integrity.
2020 and beyond
Once in operation, it is estimated that the Appomattox project will run for at least 20 years. In that time, there is little doubt that the landscape for US energy will change considerably. The Paris COP 21 agreement will create more of an emphasis on renewable sources of energy. Nonetheless, the advent of new sources of oil and gas like that at Appomattox provide the US with a flexibility and domestic energy security that it has lacked in the past. At a time when the world increasingly – and belatedly – moves towards sustainability, having a company like Shell leading the oil and gas industry at least assures that the industry is being led by a company with a firm commitment to safety, local communities and the environment.
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11 March 2016