Shell chief spells out post-North Sea oil future; shale and renewables

Ben van Beurden
Ben van Beurden

Global oil giant Shell yesterday announced its plans to focus on US shale energy, deep oil in Brazil and the Gulf of Mexico and to build a renewable energy portfolio in bio-fuels, hydrogen and smarter customer solutions.

 Outlining his ‘2020’ vision for the next 15-20 years, Ben van Beurden, Shell Chief Executive, said: ”Overall, our focus is on re-shaping the company. We will retain the most competitive and resilient positions, through targeted investment, and substantial asset sales.

“This is a value-driven, not time-driven, divestment programme; and an integral element of Shell’s portfolio improvement plan.

“As the energy transition unfolds, we intend to establish a portfolio to build on our established strengths in low-carbon biofuels, hydrogen and smart customer solutions; as well as in solar and wind. Many of these activities complement the company’s natural gas strategy today.”

Van Beurden plans to pump as much oil and gas out of existing fields in declining basins such as the North Sea – plus any new oil prospects – to act as ‘cash engines’ as Shell itself makes the transition away from fossil fuels.

Some industry observers fear N. Sea oil operations could dry up in as little as 10 years as a result of double-whammy of ‘lower for longer’ crude oil prices and the £multi-million reductions announced by major oil companies in capital expenditure and exploration.

Setting his remarks in the context of a volatile industry backdrop, van Beurden said: “I see important opportunities for Shell from the substantial and lasting changes underway in the energy sector.

“We expect to see robust demand for oil and gas for decades to come, in a global energy system in a long-term transition to lower carbon fuels. As well as low oil prices today, we are seeing higher levels of price volatility, due to geopolitical change, the speed of information flows, and the pace of innovation in our sector.

“But by capping our capital spending in the period to 2020, investing in compelling projects, driving down costs and selling non-core positions, we can reshape Shell into a more focused and more resilient company, with better returns and growing free cash flow per share.

“Brazil and the Gulf of Mexico represent the best real estate in global deep water. We are developing competitive projects here based on this advantaged acreage. Shell’s deep-water production could double, to some 900,000 barrels of oil equivalent per day (kboed) in 2020, compared with 450 kboed last year.

“In shale, Shell’s restructured portfolio is now focused on North America and Argentina, with around 12 billion barrels of oil equivalent of resources and potential.”

  • Aker Solutions has won a three-year contract extension from Total to provide maintenance and operations services at the Elgin and Franklin fields in the UK North Sea. This work is valued at more than NOK 400 million.

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