By Kristen Hays
HOUSTON, Feb 4 (Reuters) - Royal Dutch Shell saidon Tuesday it is ramping up production at its newest Gulf ofMexico oil and gas platform, its first to start up after BPPlc's 2010 Macondo oil spill fouled the basin and stoppeddrilling for months.
Shell's Olympus platform, towed out to sea last summer, isthe first of seven new state-of-the-art platforms slated tostart pumping Gulf crude to shore through 2016, reversing adecline in output and supplementing the U.S. onshore shale oilboom.
"2014's a big year for us in terms of starting up newproduction," John Hollowell, Shell's executive vice presidentfor deepwater in the Americas, told Reuters in an interview.
Shell's Olympus sits about a mile (1.6 km) from its Marsplatform around 130 miles (210 km) south of New Orleans, and isthe company's seventh operated platform in the Gulf. Oil beganflowing from its first completed well on Monday.
Shell said Olympus will help push the Mars oilfield'sproduction to 100,000 barrels of oil equivalent per day (boepd)by 2016. In 2013, the field produced an average of 60,000 boepd,the company said.
Other major Gulf producers with projects slated to startcumulatively pumping more than 700,000 barrels per day in thenext two years include Chevron Corp, Anadarko PetroleumCorp and Hess Corp.
Growth in Gulf output will bolster the United States'emerging role as the world's top oil and gas producer, a trendhelped by improved deepwater technology and advances inhydraulic fracturing and horizontal drilling that unlockhydrocarbons from tight rock reservoirs in places like NorthDakota's Bakken and the Permian of West Texas.
The platform startup, as well as other projects to increaseGulf oil output, was a sharp contrast to cost issues facing theAnglo-Dutch oil company, including its decision to suspend itscontroversial Arctic drilling program as a wider effort to cutspending and streamline operations.
Shell Chief Executive Ben van Beurden told investors lastweek that improving profitability in North American upstream"will be a particular priority for us."
Recent signs of such streamlining include Shell seeking tosell a stake in its newly reversed 300,000 bpd Houston-to-Houmacrude oil pipeline, and shelving a proposed gas-to-liquids (GTL)plant in Louisiana because of rising costs.
But Shell's commitment to the Gulf, where the company is thetop oil producer, as a growth area remains. Hollowell said theproduction startup of up to 50,000 boepd from its Cardamom field- which will be hooked up to Shell's Auger platform - is ontrack for this year.
Shell also aims to start pumping in 2016 from its Stonesfield in the Gulf, using the basin's second floating production,storage and offloading (FPSO) vessel rather than a mooredplatform like Olympus.
DELAYS ELSEWHERE
While Olympus started earlier than planned, startup for oneof Chevron's new platforms has been pushed to 2015. Chevron hadplanned to start both its 170,000 bpd Jack/St Malo and 75,000bpd Big Foot platforms later this year, but Big Foot will beshipped out to sea in the third quarter with startup slated for2015, the company said.
Both platforms figure heavily in Chevron's production growthplans.
Also, BP last year put the brakes on its second Mad Dogplatform project because costs had risen sharply.
A BP spokesman said on Tuesday that the company remainscommitted to the project, albeit retooled as it evaluatesdifferent design and development options.
One other deepwater platform started up after the BP spill.LLOG Exploration in December 2011 began producing from its WhoDat field at a platform with capacity to handle up to 60,000barrels per day of oil and 150 million cubic feet per day ofnatural gas. LLOG aims to start up its Delta House platform nextyear.
Hollowell said the startup of Olympus came six months aheadof schedule on efficiencies in design, construction andcommissioning. Shell had expected the platform to start pumpingin the second half of 2014, he said.
The quicker startup is partly due to a new onshore controlroom in New Orleans for Olympus, from which the companycommissioned its seabed production equipment.
"We are creating these operations centers for all ourplatforms. Olympus just happens to be the first one," Hollowellsaid.
