Shell invests in the Vito development in the Gulf of Mexico
Apr 24, 2018
Shell Offshore Inc. (Shell), a subsidiary of Royal Dutch Shell plc, today announces the final investment decision for Vito, a deep-water development in the U.S. Gulf of Mexico with a forward-looking, break-even price estimated to be less than $35 per barrel. This decision sets in motion the construction and fabrication of a new, simplified host design and subsea infrastructure.
Vito is expected to reach peak production of approximately 100,000 barrels of oil equivalent (boe) per day, which represents a significant contribution to our continued growth in the Gulf of Mexico. The development currently has an estimated, recoverable resource of 300 million boe.
“With a lower-cost developmental approach, the Vito project is a very competitive and attractive opportunity industry-wide,” said Andy Brown, Shell Upstream Director. “Our ability to advance this world-class resource is a testament to the skill and ingenuity of our development, engineering and drilling teams.”
In 2015, Shell began to redesign the Vito project, reducing cost estimates by more than 70% from the original concept. Vito’s cost savings are due to the simplified design, in addition to working collaboratively with vendors in a variety of areas including well design and completions, subsea, contracting, and topsides design.
The Vito development is owned by Shell Offshore Inc. (63.11% operator) and Statoil USA E&P Inc. (36.89%); the field is located beneath more than 4,000 feet of water, approximately 150-miles southeast of New Orleans.
With 40-years of Shell leadership in deep water, Vito will be Shell’s 11th deep-water host in the Gulf of Mexico and is currently scheduled to begin producing oil in 2021. With global production progressing to more than 900,000 boe per day, Shell has deep-water projects and opportunities in the U.S., Brazil, Nigeria, Malaysia, and Mexico.
- Located over four blocks in the Mississippi Canyon area of the Gulf of Mexico, the Vito development will consist of eight subsea wells with deep (18,000 feet) in-well gas lift.
- The forward-looking breakeven price presented above is calculated based on all forward-looking costs associated from FID. Accordingly, this typically excludes exploration and appraisal costs, lease bonuses, exploration seismic and exploration team overhead costs. The forward-looking breakeven price is calculated based on our estimate of resources volumes that are currently classified as 2p and 2c under the Society of Petroleum Engineers’ Resource Classification System. As this project is expected to be multi-decade producing, the less than $35 per barrel projection will not be reflected either in earnings or cash flow in the next five years.
- The estimated peak production and current estimated recoverable resources presented above are 100% total gross figures.
Pivotal moments in the offshore business
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Description: Pivotal moments in the offshore business.
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Melodic instrumental music featuring strings.
Vito Project Manager
In the offshore business there are pivotal moments: Cognac, Bullwinkle, Auger, Perdida. All ground-breaking moving deep water. Vito is another pivotal moment but not about going deeper but making it affordable and repeatable.
View over the sea at Sunrise. In the foreground the hook of a crane rises. Aerial views of different drilling platforms at sea. Closer shot of part of drilling platform with sign on side with AUGER in large red letters. Close up side view of Kurt Shallenberger talking. Artist’s impression of drilling platform in yellow against a vivid blue sky. Front view of Kurt Shallenberger facing camera talking about Vito.
Vice President of Venture Development
Vito is the first primary example of going for more and more competitive resilience.
Side view of Edwin Verdonk talking about Vito. Shot changes to show a coastline map with New Orleans pinned in red. An arrow moves from New Orleans to where Vito is to be sited 150 miles South East of New Orleans.
Vito plays into deep water’s future by learning how to make the possible affordable.
Front view of Kurt Shallenberger facing camera. Animated view of drilling platform being built.
Executive Vice President, Deep Water
We’re not just competing with our history, we are competing with the best that the world has to offer.
Wael Sawan sits facing camera. A bank of monitors is behind him. Shot changes to a close-up, side view of him. Animated diagram of drilling platform at sea level showing the depth the drills go beneath water. Text displays next to diagram: VITO IS MORE THAN 4000 FT BELOW SURFACE. Animated drawing showing a drilling platform being built.
Vito Business Opportunity Manager
There is the philosophy that went into constructing it. This is the minimum scope that is required, question ourselves have we added functionalities that we really don’t need, and also it is one of those core beliefs that simpler is safer.
Animated drawing showing a drilling platform being built. Side view, close-up of Eirik Sorgard talking about the construction of Vito.
I’m very proud of the Vito family we’ve created. This team has the opportunity to take their creativity and really be the pace-setters for what’s to come in deep water.
Close-up, side view of Kurt Shallenberger talking about the future of Vito.
For now we have a project that is robust, that we can execute and we can get on production by 2021.
Erik Sorgard, facing camera talking about Vito project. A shot of sun going down, reflected on surface of sea.
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