Royal Dutch Shell plc .com

There is also a sense that the exploration strategy has lost direction. Huge overspend in Alaska – where the company has spent c.US$5.5 billion to date on lease acquisition and two pilot wells – and heavy spend in US unconventionals have eroded value. Shareholder returns lag peers: total shareholder returns have also failed to keep up with peers. Some say that like David Lawrence of Alaska, Voser was persuaded to jump ship?

By John Donovan

The extracts below from page 5 of a current report by industry experts (Wood Mackenzie) speak volumes about the unappetizing legacy left by Royal Dutch Shell Chief Executive Peter Voser (above right), who is about to take early retirement.

Some say that like David Lawrence of Alaska, Voser was persuaded to jump ship?

Extracts from page 5 of a 30 page Wood Mackenzie Executive Summary dated November 2013

Waves crash over Royal Dutch Shell’s conical drilling unit Kulluk, where it sits aground Jan. 1, 2013, on the southeast side of Sitkalidak Island, Alaska. A unified command, consisting of U.S. Coast Guardsmen; federal, state and local partners; and industry representatives, was established in response to the grounding.

Nations are moving to exploit the commercial potential of the region

By Kira Zalan: December 5, 2013

In late December 2012, the U.S. Coast Guard was dispatched to rescue 18 crew members from the Kulluk, a Royal Dutch Shell drilling rig that had broken free from its tow. The responders battled an Arctic storm that generated near hurricane-strength winds and 50-foot waves, but despite their efforts, the rig ran aground off of a small Alaskan island on New Year’s Eve. The oil rig’s fuel tanks were not breached, according to a Department of the Interior review, but up to 272 gallons of diesel oil may have flowed into the water from shattered lifeboats. The Kulluk incident – the culmination of the first exploratory drilling effort in the U.S. Arctic in almost two decades – demonstrated the perils posed by this remote and harsh area of the world.

Kira Zalan is an editor for U.S. News Weekly. You can reach her at kzalan@usnews.com.

FULL, HIGHLY INFORMATIVE, OVERVIEW ARTICLE

Shell started the first commercial gas-to-liquids plant in 1993, using a process developed in Germany and used to make fuels during World War II. 

By Bradley Olson – Dec 5, 2013 9:50 PM GMT

Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, halted plans to build a $20 billion gas-to-liquids plant in Louisiana, citing the potential cost and uncertainty about future crude and natural gas prices.

The project would have used natural gas to produce 140,000 barrels a day of liquid fuels and other products normally made from oil, The Hague-based company said in a statement today. Despite ample U.S. gas supplies from a boom in shale production, gas-to-liquids isn’t “a viable option for Shell in North America,” the company said.

Shell started the first commercial gas-to-liquids plant in 1993, using a process developed in Germany and used to make fuels during World War II. The company completed the $19 billion Pearl gas-to-liquids facility, the world’s largest, in Qatar in 2011. South Africa’s Sasol Ltd. (SSL), the largest producer of motor fuel from coal, announced plans last year to build a $14 billion gas-to-liquids plant in Louisiana.

“While we cannot speak to another company’s plans, we continue to view our proposed GTL facility in Louisiana as a very attractive opportunity as we advance it through the front-end engineering and design phase,” Russell Johnson, a spokesman for Johannesburg-based Sasol, said in an e-mail today.

The economic viability of turning natural gas into fuels depends on the relationship between oil and gas prices. For a gas-to-liquids plant to make money, a barrel of oil has to trade at a ratio of about 16 times the cost of a million British thermal units of natural gas, Sasol Chief Executive Officer David Constable said in an interview last year.

Louisiana had offered Shell a $112 million grant as well as tax incentives for the project, which would have created 740 direct jobs and employed as many as 10,000 construction workers during peak building activity.

To contact the reporter on this story: Bradley Olson in Houston at bradleyolson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

SOURCE

He boasted that the project showed ‘there’s no better place in the world for major business investment’. But, without warning, last night it pulled the project.

By Peter Campbell: PUBLISHED: 6 December 2013

Shell last night pulled the plug on a £12billion scheme to turn gas into jet fuel – and ruled out doing any work in the area in the whole of the US.

The oil supermajor had previously trumpeted a new facility in Louisiana that it said would create almost 5,000 permanent jobs in the area.

The State’s Governor Bobby Jindal had even promised tax incentives of £70million to help the company make the project work.

He boasted that the project showed ‘there’s no better place in the world for major business investment’.

But, without warning, last night it pulled the project.

In a late announcement made after the stock market closed, the group said it ‘will not move forward and will suspend any further work on the project’.

Using a highly expensive technique, it had been planning to turn natural gas into a series of other fuels, from solid fuel to jet fuel and diesel.

The proposed gas-to-liquids (GTL) site would have produced 140,000 barrels per day.

But it blamed costs and uncertainty over the future of the oil price for cancelling the work.

The group was last night unable to say how much it had spent on the venture.

It said: ‘Despite the ample supplies of natural gas in the area, the company has taken the decision that GTL is not a viable option for Shell in North America, at this time, due to the likely development cost of such a project, uncertainties on long-term oil and gas prices and differentials, and Shell’s strict capital discipline.’ Chief executive Peter Voser said it was a ‘tough choice’.

Shell already owns a GTL plant in Qatar, which cost it £11.6billion and – the company said – offered better economic returns.

A major difference between the projects was that Shell produces and owns all of the natural gas it uses at the Pearl facility in Qatar, but would have had to buy natural gas from the US grid in order to supply the Gulf Coast project.

In September local Louisiana media reported that up to 10,000 jobs could have been created during construction of the plant.

At the time Governor Jindal said it was a ‘historic new opportunity for Shell to potentially expand its manufacturing operations onshore in a world-class, gas-to-liquids facility in Ascension Parish on the Mississippi River.’

He added: ‘Here in the heart of Louisiana’s world-scale petrochemical industries, the Gulf Coast GTL project would give thousands more of our people an opportunity for a rewarding career right here at home.’ The project was also due to bring an extra £20million in extra investment in roads and infrastructure with it in order to accommodate construction vehicles and extra traffic.

Shares in Shell, which have fallen more than 3 per cent over the last year and finished trading before yesterday’s announcement, fell 2p to 2013.5p.

The company said the announcement, which came out at 6pm, had to be made at that time because it was issued by the group’s office in Houston, Texas.

SOURCE

“We are making tough choices here, focusing our efforts and capital on the most attractive opportunities in our worldwide portfolio,” Peter Voser, Shell’s chief executive, said in a statement. The decision would appear to be a blow to Shell’s ambitions both in natural gas technology and in the United States, where it is a major investor.

By STANLEY REED: December 5, 2013

Royal Dutch Shell said on Thursday that it would not build an immense gas-to-liquids plant on the Gulf Coast because of concerns over its cost. Shell had been studying the possibility of building a plant to take advantage of cheap shale gas in the United States for at least two years.

December 5, 2013

LONDON–Oil giant Royal Dutch Shell PLC (RDSA.LN) said Thursday that it will not proceed with a proposed gas-to-liquids project in Louisiana due to the likely development costs and uncertainties over long-term oil and gas prices.

FULL ARTICLE

ExxonMobil, ConocoPhillips, Chevron, BP and Shell, all major contributors to the Republican party…

Shell, a co-owner of the Motiva oil refinery in Port Arthur, Tex., has added climate-related carbon taxes to its long-term budgets. Michael Stravato for The New York Times

By CORAL DAVENPORT:  A version of this article appears in print on December 5, 2013, on page A1 of the New York edition

WASHINGTON — More than two dozen of the nation’s biggest corporations, including the five major oil companies, are planning their future growth on the expectation that the government will force them to pay a price for carbon pollution as a way to control global warming.

The development is a striking departure from conservative orthodoxy and a reflection of growing divisions between the Republican Party and its business supporters.

A new report by the environmental data company CDP has found that at least 29 companies, some with close ties to Republicans, including ExxonMobil, Walmart and American Electric Power, are incorporating a price on carbon into their long-term financial plans.

Both supporters and opponents of action to fight global warming say the development is significant because businesses that chart a financial course to make money in a carbon-constrained future could be more inclined to support policies that address climate change.

But unlike the five big oil companies — ExxonMobil, ConocoPhillips, Chevron, BP and Shell, all major contributors to the Republican party — Koch Industries, a conglomerate that has played a major role in pushing Republicans away from action on climate change, is ramping up an already-aggressive campaign against climate policy — specifically against any tax or price on carbon. Owned by the billionaire brothers Charles and David Koch, the company includes oil refiners and the paper-goods company Georgia-Pacific.

The divide, between conservative groups that are fighting against government regulation and oil companies that are planning for it as a practical business decision, echoes a deeper rift in the party, as business-friendly establishment Republicans clash with the Tea Party.

Tom Carnac, North American president of CDP, said that the five big oil companies seemed to have determined that a carbon price was an inevitable part of their financial future.

“It’s climate change as a line item,” Mr. Carnac said. “They’re looking at it from a rational perspective, making a profit. It drives internal decision-making.”

Companies do not know what form a future carbon price would take. Congress could one day vote to directly tax emissions. President Obama is moving forward with plans to regulate carbon pollution from coal plants, with or without action from Congress — and states could carry out those regulations by taxing carbon polluters. At climate change talks at the United Nations, State Department negotiators have pledged that the United States will cut its carbon emissions 17 percent below 2005 levels by 2020, and 80 percent by 2050.

Mr. Carnac said: “Companies see that the trend is inevitable. What you see here is a hardening of that understanding.”

Other companies that are incorporating a carbon price into their strategic planning include Microsoft, General Electric, Walt Disney, ConAgra Foods, Wells Fargo, DuPont, Duke Energy, Google and Delta Air Lines.

During the 2012 election, every Republican presidential candidate but one, Jon Huntsman, questioned or denied the science of climate change and rejected policies to deal with global warming. Opponents of carbon-pricing policies consider them an energy tax that will hurt business and consumers.

Mainstream economists have long agreed that putting a price on carbon pollution is the most effective way to fight global warming. The idea is fairly simple: if industry must pay to spew the carbon pollution that scientists say is the chief cause of global warming, the costs will be passed on to consumers in higher prices for gasoline and electricity. Those high prices are expected to drive the market away from fossil fuels like oil and coal, and toward low-carbon renewable sources of energy.

Past efforts to enact a carbon price in Washington have failed largely because powerful fossil-fuel groups financed campaigns against lawmakers who supported a carbon tax.

In 1994, dozens of Democratic lawmakers lost their jobs after Al Gore, who was vice president at the time, urged them to vote for a climate change bill that would have effectively taxed carbon pollution. In 2009, President Obama urged House Democrats to vote for a cap-and-trade bill that would have required companies whose carbon-dioxide emissions exceeded set levels to buy emissions rights from those who emitted less. The next year, Tea Party groups spent millions to successfully unseat members who voted for the bill.

But ExxonMobil, which last year was ranked by the Fortune 500 as the nation’s most profitable company, is representative of Big Oil’s slow evolution on climate change policy. A decade ago, the company was known for contributing to research organizations that questioned the science of climate change. In 2010, ExxonMobil purchased a company that produces natural gas, which creates less carbon pollution than oil or coal.

ExxonMobil is now the nation’s biggest natural gas producer, meaning that it will stand to profit in a future in which a price is placed on carbon emissions. Coal, which produces twice the carbon pollution of natural gas, would be a loser. Today, ExxonMobil openly acknowledges that carbon pollution from fossil fuels contributes to climate change.

“Ultimately, we think the government will take action through a myriad of policies that will raise the prices and reduce demand” of carbon-polluting fossil fuels, said Alan Jeffers, an ExxonMobil spokesman.

Internally, ExxonMobil now plans its financial future with the expectation that eventually carbon pollution will be priced at about $60 a ton, which Mr. Jeffers acknowledged was at odds with some of the company’s Republican friends.

“We’re going to say and do what’s in the best interest of our shareholders,” he said. “We won’t always be on the same page.”

It remains unlikely that any climate policy will move in today’s deadlocked Congress, but if Congress does take up climate change legislation in the future, Mr. Jeffers said ExxonMobil would support a carbon tax if it was paired with an equal cut elsewhere in the tax code — the same policy that Mr. Gore has endorsed. “ExxonMobil and many other large companies understand that climate change poses a direct economic threat to their businesses,” said Dan Weiss, director for climate policy at the Center for American Progress, a liberal research group with close ties to the Obama administration. “They need to convince their political allies to act before it’s too late.”

Koch Industries maintains ties to the Tea Party group Americans for Prosperity, which last year campaigned against Republicans who acknowledged the science of climate change. The company also contributes money to the American Energy Alliance, a Washington-based advocacy group that campaigns against lawmakers that it claims support a carbon price. This year, the American Energy Alliance says it has spent about $1.2 million in ads and campaign activities attacking candidates who it says support a carbon price.

Robert Murphy, senior economist at the American Energy Alliance, said his group was not concerned that it had taken a different position from the major oil companies. “We’re not taking marching orders from Big Oil,” he said.

In fact, Koch has a longtime resentment of the biggest oil companies.

According to company history, Koch’s founder, Fred Koch, the father of Charles and David, invented a chemical process to more efficiently refine oil but was blocked from bringing it to the market by John D. Rockefeller, the owner of Standard Oil — the company that was later broken up to make some of the major oil companies of today, including ExxonMobil.

People at Koch say sore feelings remain to this day.

SOURCE

By Stephan Nielsen and Lucia Kassai December 04, 2013

Raizen Energia SA, Brazil’s biggest ethanol exporter, is the sugar-cane processor most at risk from a U.S. plan to cut biofuel mandates, threatening the South American country’s $6.4 billion export market.

The joint venture between oil producer Royal Dutch Shell Plc (RDSA) and Cosan SA Industria & Comercio produced 2.32 billion liters (612.1 million gallons) of ethanol in the 12 months through March. More than half was exported and most of that was shipped to the U.S., according to Salim Morsy, a New York-based analyst with Bloomberg New Energy Finance.

FULL ARTICLE

4 December 2013

Iranian Oil Minister seeks talks with oil giants to return Iran to help tap world’s fourth-largest oil reserves after sanctions are lifted

Iran on Wednesday named seven Western oil companies it wants back in its vast oil and gas fields once international sanctions are lifted and said it would offer contract terms in April next year.

December 4, 2013

LONDON–Oil company Royal Dutch Shell PLC (RDSA.LN) Wednesday said it has completed a $7.48 billion credit facility with a group of banks, replacing a $5.1 billion facility that was originally due to expire in August 2015.

FULL ARTICLE

Wood Mackenzie Executive Summary of Shell (dated November 2013): “Market confidence in Shell’s ability to deliver has eroded in recent years with the company gaining a reputation for over- promising and under-delivering. Market confidence in Shell’s ability to deliver has eroded in recent years with the company gaining a reputation for over- promising and under-delivering.”

By John Donovan

The above slide appeared in a 62 page Royal Dutch Shell PowerPoint presentation prepared in June 2000: “Excom Early Look Business Plan 2000″.

It is clear from the content of the presentation that Shell was well aware of the potential dangers ahead.

Unfortunately is is equally clear from the following extracts from page 4 of a current 30 page Wood Mackenzie Executive Summary of Shell (dated November 2013) that Shell failed to take heed of  the internal alarm bells rung in 2000.

EXTRACT

EXTRACT ENDS

RELATED: Shell struggling to capture investors’ imagination

By Callum Turcan | December 3, 2013

The U.S. has undergone a major energy boom as a result of shale drilling, but it isn’t the only nation with expansive shale gas reserves. The U.S. Energy Information Administration estimates that China could be sitting on top of 1,275 trillion cubic feet of natural gas, 50% more than America. That would make China the largest shale gas play in the world.

While North American natural gas prices are low, Asia is a very lucrative market for dry-gas producers. Royal Dutch Shell (NYSE: RDS-A  ) has teamed up with PetroChina  (NYSE: PTR  ) to try to tap into China’s colossal reserves.

Up and up

Shell signed a deal with PetroChina back in 2012 to develop a block in Sichuan. Shell and PetroChina plan on ramping-up drilling activity in 2014 once all of the appraisal wells are completed.

Shell and PetroChina are drilling appraisal wells in the Fushun-Yongchuan part of the Sichuan, with commercial production planned for beyond 2014.

FULL ARTICLE