By Robert Bradley Jr.
“Major technical and economic advancements are happening within the fossil-fuel industries, not outside of it. The stock energy age–oil, natural gas, and coal age–is still young. The future belongs to the efficient, no taxpayer subsidies or government direction required.”
More than a quarter-century ago, I wrote a policy analysis for the Cato Institute, “The Increasing Sustainability of Conventional Energy.” I concluded:
A ‘reality check’ of the increasing sustainability of conventional energy, and a better appreciation of the circumscribed role of backstop technologies, can re-establish the market momentum in energy policy and propel energy entrepreneurship for the new millennium.
I was reminded of this in regard to offshore oil and gas drilling versus the hyper-expensive, ecologically suspect offshore wind turbines. In this regard, consider this full-page advertisement in the Wall Street Journal by Shell, reproduced verbatim.
“More Value, Less Emissions: How Shell Is Revolutionizing Its Deep-Water Operations”
As rivals appeared to retreat, the energy multinational reshaped its platforms to deliver capital and carbon gains. When Shell’s offshore platform Whale began producing oil in the Gulf of America last year, the super major was also sending an important signal to its investors. It not only demonstrated how the organization was continuing to draw on 50 years of deep-water expertise to deliver high-margin barrels of oil, but just as importantly, Shell’s14th deep-water platform in the Gulf was also by far its most energy efficient.
Whale, the second of Shell’s new generation of smaller, simplified floating production facilities in the Gulf, proved that the organization’s “design one, build many” approach worked, and worked profitably. With its high-margin potential, operational control and increased carbon efficiency, it underlined that the Gulf—where it is one of the largest leaseholders—continues to be a cornerstone of Shell’s upstream business. It is a key factor in the organization’s strategy to deliver more value with less emissions and its aim to sustain 1.4 million barrels a day of liquids production to 2030 with increasingly lower carbon intensity
We continue to look at how we unlock more energy for the U.S. and also for the world. And when we look
across our businesses, the Gulf of America really stands out as optimally positioned to contribute. These
deep-water platforms are multi-billion investments, so there needs to be technical excellence sitting behind every aspect of them. What we do very well is link together all those areas of technical excellence in order to translate into a highly investable proposition as a whole. – Colette Hirstius, president, Shell USA and EVP Gulf of America
A New Platform for Growth
The Whale development is owned by Shell (58.5%, operator) and Chevron U.S.A. Inc. (41.5%). It replicated 99% of the hull and 80%of the topside of its predecessor facility, Vito, the pioneer in the new streamlined, lower cost, higher-return approach, which began production in February 2023. Hirstius says: “When many others were pulling out of deep water and showing much more reservation, we accepted
that challenge and we looked at how we would run and operate our business… In this area we made a bet and that bet has continued to pay off for us.
Performance, Discipline and Simplification for a Competitive Edge
The learnings from Vito and Whale will allow the next platform, Sparta, to be even leaner and more efficient in keeping with the corporate discipline of “performance, discipline and simplification”—as Shell seeks to simplify execution, reduce variability and focus on assets that can deliver predictable, repeatable outcomes. Shell’s deep-water expertise gives it a key competitive edge, with higher-margin barrels of oil produced with a lower carbon intensity.
Once fully ramped up, Vito and Whale are expected to collectively produce up to 200,000 barrels of oil equivalent per day (boe/d)—enough to fuel the daily journeys of more than 5 million cars in the U.S.—while from 2028, Sparta is expected to deliver 90,000 boe/d at peak production.
Kimarie Michel, a senior operations manager at Shell, says: “We continue to share what we’ve learned, and we’re always focused on making our operations more streamlined and efficient. I’m excited to see how replication and our use of technology will transform how we operate—it’s not the oil field I started in—it’s better.”
Major technical and economic advancements are happening within the fossil-fuel industries, not outside of it. The stock energy age–oil, natural gas, and coal age–is still young. The future belongs to the efficient, no taxpayer subsidies or government direction required.
