Shell's 13-year journey from discovery to first oil shows why U.S. output remains flat

Paul Takahashi 4/8/2022

(Bloomberg) Questioned by U.S. lawmakers this week, chief executives from the nations biggest oil companies took great pains to explain why they havent raised production fast enough to tame skyrocketing energy prices.

For Shell Plcs highest-ranking U.S. manager, Gretchen Watkins, the answer was 1,600 miles (2,600 kilometers) southwest of Capitol Hill, floating in a shipyard near Corpus Christi, Texas. As Democratic lawmakers grilled Watkins and other executives about high gasoline prices, hundreds of workers in red and tan coveralls were putting the finishing touches on the Vito offshore oil platform. The 20-story production facility that weighs as much as a battleship is expected to begin pumping the equivalent of up to 100,000 barrels daily from beneath the Gulf of Mexico later this year.

By then, the multibillion-dollar project will have taken 13 years to evolve from the initial discovery of the Vito oilfield to production, underscoring the challenges of bringing offshore crude to market. 

Unlike shale wells that cost $10 million or $15 million to drill and mere months to yield oil, offshore projects cost billions and rarely come online in less than a decade. This difference in business models explains why its so difficult for oil giants such as Shell to quickly ramp up production when geopolitical disruptions like Russias war in Ukraine upend markets. With crude fetching more than $100 a barrel, and retail gasoline prices soari....

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