Shenandoah (WR051) - Beacon

Shenandoah (WR051) - Beacon Oil and Gas Asset Profile

Location

The Shenandoah (WR051) oil and gas asset is located in the Federal offshore area of the United States, specifically in the Walker Ridge Blocks 51, 52, and 53, approximately 160 miles off the coast of Louisiana. The water depth in this area is around 5,900 feet.

Project Details

• Status: The project is currently in the development stage, with the first phase of the project sanctioned in 2021.
• Operator: Beacon Offshore Energy is the operator of the Shenandoah project.
• Ownership:
  • ShenHai: 49.0%
  • Beacon Offshore Energy: 20.05%
  • BOE II Exploration: 10.95%
  • HEQ Deepwater: 20.0%.

Discovery and Development

• Discovery Year: The Shenandoah field was discovered in 2009.
• Final Investment Decision (FID) Year: The FID was made in 2021.
• Expected Production Start Year: Commercial production is expected to begin in late 2024 or early 2025.

Reserves and Production

• Reserves:
  • Gross resources: 281 million boe (as of 2019)
  • Reserves: 176 million boe (as of 2023)
  • Total reserves: Approximately 388 million boe (as of 2022).
• Production Design Capacity:
  • Oil production design capacity: 29.2 million bbl/y.
• Estimated Production: The field is expected to produce between 100-400 million barrels of oil, targeting the Upper and Lower Wilcox reservoirs.

Drilling and Completion

• Drilling Program: The initial drilling program involved the use of Transocean's ultra-deepwater drillship, the Deepwater Atlas, which began operations in the third quarter of 2022. The program includes two phases: an initial drilling phase and a subsequent well completion phase.
• Well Details: The project involves the drilling of approximately eight wells, including four producing wells in Phase 1. Completions operations for these wells are ongoing and expected to be concluded by Q1 2025.

Infrastructure

• Facility: The project will be developed via a two-well, 17-mile subsea tieback to the Shenandoah FPS (Floating Production System) facility. Dedicated production equipment for the Monument development, which is part of the same complex, will also be installed on the Shenandoah FPS.

Contractors and Technology

• Contractors:
  • Transocean Ltd. for drilling services
  • John Wood Group, SBM Offshore, Wood Group Mustang, and TechnipFMC for design/FEED engineering
  • Subsea 7 for main EPC
  • Other contractors include Schlumberger, Koil Energy Solutions, Gate, Powerking Pump, and Hunting Subsea Technologies.
• Technology: The project utilizes 20-kpsi technology, which is a significant advancement in ultra-high-pressure drilling in the US Gulf of Mexico.

Economic and Strategic Impact

• Investment: The first phase of the development secured funds of approximately $900 million, highlighting the continued value seen in high-return, low-emission oil and gas projects despite net-zero goals.
• Growth Opportunities: The development of Shenandoah is expected to be transformational for Beacon Offshore Energy, potentially elevating the company from the 20th-largest producer in the US Gulf of Mexico to the 10th spot once the project is online.

Challenges and Future Developments

• Challenges: Developing Shenandoah involves deploying new technology, which carries higher risks. Although Beacon has successfully drilled sub-salt Miocene-aged wells, it has not drilled any Paleogene-aged wells, which adds to the complexity.
• Future Developments: The success of Shenandoah is expected to enhance the commercial viability of other discoveries in the area, such as Yucatan, Coronado, and Monument. Beacon also plans to leverage the Shenandoah FPS for the Monument development, with first production at Monument expected by Q3 2026.