Shell US Gulf Vito deepwater development comes online, 14 years after discovery

Fourteen years after its discovery, Shell subsidiary Shell Offshore's long-awaited Vito deepwater field has started producing what will eventually be a peak output of 100,000 barrels of oil equivalent a day into its new production hub in the US Gulf of Mexico, the company said Feb. 16.

Discovered in 2009 and sited in the Mississippi Canyon area roughly 150 miles southeast of New Orleans, the Vito field stretches across four blocks at a depth of more than 4,000 feet of water, Shell said in a statement.

Current recoverable resources from Vito are projected at about 290 million boe.

Vito is a four-column semi-submersible production host facility, containing eight subsea wells 31,000 feet deep with well, gas lift, and associated subsea flowlines and equipment, Shell said.

The field will produce into Shell Midstream's Mars Pipeline system, located 10 miles north of the Vito production hub facility.

Vito is Shell's first US Gulf deepwater platform to embody a cost-efficient host design that was rescoped and simplified from an earlier design in 2015 when an industry downturn forced operators of large, expensive long-lead offshore stand-alone production projects to rethink their costly, bulky concept designs.

Big project design cost savings

The result, for Shell and other big US Gulf operators such as BP, was that billions of dollars were able to be shaved off projects and get output faster to market.

For Shell, the result was that Vito's cost dropped 70% from the original design, while the reduction in CO2 emissions over the facility's lifetime will be about 80%.

Shell Offshore operates the development with a 63.11% stake, while Norway's Equinor is a 36.89% partner.

Vito is also the design standard for Shell's Whale project, at the other end of the US Gulf in its far southwestern area, which will showcase a 99% duplication of Vito's hull and 80% of its topsides, Shell said. Whale is targeted to start up in 2024.

"Vito is an excellent example of how we are approaching our projects to meet the energy demands of today and tomorrow while remaining resilient as we work toward achieving net-zero emissions by 2050," Shell's Upstream Director Zoe Yujnovich said.

"Building on more than 40 years of deepwater expertise, projects like Vito enable us to generate greater value from the Gulf of Mexico where our production has among the lowest greenhouse gas intensity in the world for producing oil," Yujnovich said.

Shell made its final investment decision to develop Vito, the company's 13th US Gulf deepwater host, in April 2018.

Mars price discounts tighten

Mars price discounts have tightened since late November, along with other US Gulf grades, on steady export demand. Mars was assessed at a $1.55/b discount to Cushing WTI Feb. 15, up from a $5.80/b discount Dec. 7, Platts assessments show. Likewise, the Western Canadian Select at Nederland, Texas was assessed at a discount of $10.70/b to Cushing WTI Feb. 15, up from a $20.50/b discount Nov. 30.

Platts is a unit of S&P Global Commodity Insights.

Kpler vessel tracking software shows an increase in US crude exports to Europe since the Russian invasion of Ukraine in February 2022. January exports to Europe totaled 46.7 million barrels, up 8.4 million barrels on the year, Kpler data shows.

According to traders, a record level was expected(opens in a new tab) to be exported to Europe in March. Increasing volumes of US crude exports to both Asia and to Europe have been booked on VLCCs(opens in a new tab), as larger vessel sizes can often lead to lower per-barrel costs to move barrels from one region to another than on smaller vessel sizes.