Shell Rounds the Corner on a Whale of a Task

Abstract

Shell had a problem. It had just spent billions to bring its Appomattox find on line in the deepwater Gulf of Mexico (GOM). That development featured the oil giant’s eighth and largest floating platform in the region. The host semisubmersible weighed 125,000 metric tons—more than the largest aircraft carrier. Shell lauded its ability to reduce project cost by 40%, based on experience gained from the development of its previous four-column production platforms in the US Gulf, including the Olympus tension-leg platform. It would transfer these learnings to its next project—the Vito find in about 4,000 ft of water, 150 miles southeast of New Orleans. The field could hold up to 300 million BOE. At the same time the plans for Vito were being laid out, shale projects leapt to the forefront in the competition for capex dollars, and due to the comparative investment, they were winning. Industry success across the nation’s shale plays helped flood the market with oil, forcing the price per barrel down. Suddenly, spending big money on megaprojects offshore had lost much of its luster. For the US Gulf to reclaim at least some of its competitive advantage, fields could no longer be developed with massive, high-dollar facilities. A management mandate dictated that a new minimal, repeatable solution be found. After several years of study, a favorite emerged. “The original concept of Vito was much larger,” said Kurt Shallenberger, Vito project manager for Shell. “The development was probably similar in size to the Appomattox project that Shell recently completed—a 40,000-ton topsides, and a 50-year field life with a sizable gas-reinjection component to it.” Shell’s method for arriving at the new development scheme was dubbed “Minimal Technical Scoping”—the company would start with the absolute minimum scope and then justify additions upward. The project mantra was “Simpler is safer.” The results were a simplified topsides design as well as streamlined mooring systems for the host facility. “The redesign took it down to what I call the sweet spot of semisubmersibles—around a 10,000-ton deck,” said Shallenberger. “You had seen examples of that with LLOG’s Delta House, Independence Hub, and others like that. That was the sweet spot to where multiple fabricators can build it, multiple yards can integrate it, multiple companies can install it—and you can generally get 100,000 bbl a day through it. Now you’re in a competitive environment for all the vendors rather than just the one guy in the world who can do this. That’s what really created the opportunity for Vito. We shrunk the size and scope down to a point where it could get to a breakeven price that is competitive with the onshore folks.” According to Shell, the breakeven price for their minimal floater design is less than $35/bbl. Shell locked up key vendors for Vito. Jacobs Engineering Group carried out the detailed engineering and front-end engineering design studies for the Vito topsides. Sembcorp would build the host and integrate the topsides and hull at its Tuas Boulevard yard in Singapore.