Dec. 18, 2018 7:06 AM ET
Summary
- Enormous reductions in development costs have made new upstream oil projects in the US Gulf of Mexico quite economical.
- Royal Dutch Shell plc expects the Vito field to break even in a low pricing environment.
- Commentary on where these cost reductions are coming from, with an eye on third-party pricing deflation in the offshore space.
Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) is investing in upstream projects that are capable of earning a decent return in most oil pricing environments. The US Gulf of Mexico is one of the energy giant’s core upstream plays for this reason. In May 2018, Royal Dutch Shell plc reached first-oil at the Kaikias project in the Gulf of Mexico a year ahead of schedule. Reducing the Kaikias project’s total development costs by 30% allowed Royal Dutch Shell plc to announce that it will break even on that endeavor when realizing just $30 per barrel of oil sold. Next year, the Appomattox development in the US GoM is expected to reach first-oil and Royal Dutch Shell plc has already achieved major cost savings at that project. Farther out, the Vito development in the US GoM is expected to achieve first-oil by 2021. Let’s dig in.
Project overview
The Vito development seeks to commercialize 300 million barrels of oil equivalent in recoverable resources, mostly crude, that Shell located back in 2009. In 2010, appraisal activity helped prove the viability of the Vito oil discovery. When appraisal activity was completed in 2013, it became clear that it was worthwhile trying to figure out how to monetize the Vito field. As things stand today, the Vito field is home to 300 million barrels of recoverable barrels of oil equivalent. Most of that is represented by crude oil, and this field covers four exploration blocks in the Mississippi Canyon area of the Gulf of Mexico.
In April 2018, Shell announced that the partnership was moving forward with developing the Vito field. Shell owns 63.1% of this venture and Equinor ASA (NYSE:EQNR) owns the remaining 36.9% stake. The new production platform, a four-column semi-submersible floating production unit, that the venture is using to develop the Vito field will have the capacity to support the production of 100,000 barrels of oil per day and 100 MMcf/d of natural gas.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
