Posts from ‘March, 2011’

* Sets output target to be 12 pct higher in 2014 than 2010

* Sees 2011-2014 net capital investment of $100 billion

* Targets $1 bln in downstream cost reductions in 2011-12

* Shares down 1.5 pct, sector index down 3.4 pct

By Greg Roumeliotis and Alex Lawler

AMSTERDAM/LONDON, March 15 (Reuters) – Royal Dutch Shell (RDSa.L: Quote) aims to produce 12 percent more oil by 2014 than it did last year, one of the highest growth rates in the industry, and will cut more costs at its refining business, it said on Tuesday.

The Anglo-Dutch group said it will be producing 3.7 million barrels of oil equivalent (boe) per day in 2014 after spending over $100 billion in net capital investment in 2011-14, despite the current volatility in oil prices.

The group has already invested more than $100 billion on exploration and production in the past five years.

Chief Executive Peter Voser said he saw unrest in the Middle East as a short-term issue which contributes to market volatility but does not detract from the macro-economic trends that are driving growth in Shell’s business.

“I look much more beyond the Middle East, and for that matter Japan, to the developments across the world, with a very strong rise in population and average living standards which normally demands more energy.” Voser told Reuters Insider.

Shell’s share price was down 1.5 percent at 2,089 pence in London at 1015 GMT, when the Stoxx 600 Europe oil and gas sector index was down 3.4 percent.

The firm also said it had development studies underway covering over 10 billion boe of resources, a rise of some 2 billion boe from 2009 levels, and was assessing over 30 new projects with production potential of over 1 million boe per day.

IMPROVING CASH FLOW

In its troubled downstream arm Shell set a new target for a further $1 billion in cost reductions in the next two years, having already cut more than $2.5 billion in 2009 and 2010.

But the company said on Tuesday downstream remained an important part of its business and the bulk of its 2010-12 downstream asset sales programme had been completed.

Shell also said it was on track to deliver its strategic targets by 2012 which call for a 50 to 80 percent increase in cash flow from operations between 2009 and 2012, based on a $60 to $80 a barrel oil price and an improved downstream and natural gas environment.

It added that asset sales proceeds exceeded $30 billion in the last five years and were expected to be up to $5 billion in 2011.

U.S. oil group Chevron Corp (CVX.N: Quote) said on Monday it is investing 20 percent more this year, at $26 billion, but is shrinking its refining and marketing arm, where it expects margins to stay soft this year. [ID:nN14143160]

Last week the world’s largest publicly traded oil company, Exxon Mobil Corp (XOM.N: Quote), said it planned to add 1.4 million boe of production per day by 2016. Its annual budget will range from $33 billion to $37 billion. [ID:nN09245829]

In February, BP (BP.L: Quote), still reeling from the financial fallout of the Gulf of Mexico oil spill, said it would increase significantly its investment in exploration and would seek new partnership opportunities. [ID:nLDE70U2GO]

(Editing by Alexander Smith and Greg Mahlich)

SOURCE

MARCH 15, 2011

LONDON (Dow Jones)–Oil giant Royal Dutch Shell PLC (RDSA) said Tuesday it is on track to deliver its strategic targets by 2012, namely for a 50-80% increase in cashflow from operations 2009-2012, in $60-$80 oil price and improved Downstream and natural gas environment.

MAIN FACTS:

-For the next wave of growth, to 2020 Shell has have over 30 new projects on the drawing board which will generate new options for the medium term, for the integrated energy company of the future.

-Shell continues to sell non-core positions to enhance capital efficiency, and as part of funding for future investment; asset sales proceeds have exceeded $30 billion in the last five years, and are expected to be up to $5 billion in 2011.

-Targets a further $1 billion Downstream cost reduction for 2011-12.

-Shelll has 20 new upstream projects under construction, which will add over 800,000 barrels of oil equivalent per day, or boe/d, driving the target for 3.5 million boe/d of production for 2012, a 6% increase compared to 2010.

-Sets new target for 3.7 million boe/d of upstream production for 2014, an increase of some 12% from 2010 levels.

-Shell believes that current upstream portfolio can support growth to 2020, with studies underway on over 10 billion boe of resources, an increase of 2 billion boe from 2009 levels.

-Shell is assessing over 30 new projects with production potential of over 1 million boe/d, and maturing further options, spanning activities in tight gas, deep water, LNG and traditional resources, in a world-wide, and industry-leading portfolio.

-Shell expects over $100 billion of net capital investment for 2011-14, some $25 billion-$27 billion per year, in line with previous guidance, to underpin the Upstream growth profile, and Shell’s Downstream strategy.

-2011 has started well, with the start up of new LNG at Qatargas 4, and the restart of refinery catalytic crackers at the Port Arthur at end-2010 and at Pernis in February 2011.

-New projects, combined with the expected 2011 start-up of Pearl gas-to-liquids in Qatar, and new oil sands upgrading capacity in Canada, underpin Shell’s production and financial growth targets for 2012.

-Shell continues to mature new options for future growth investment, with plans to drill 25 high potential exploration wells in 2011.

-Company is planning to take final investment decision on some 10 new projects in 2011-12, including Prelude Floating LNG in Australia, debottlenecking of the AOSP project in Canada oil sands, and deep water oil & gas developments at the Cardamon discovery in the Gulf of Mexico and at Malikai in Malaysia.

-Shell in 2010 added 1,370 million boe of proved oil and gas reserves before production, of which 1,197 million boe comes from Shell subsidiaries and 173 million boe is associated with the Shell share of equity accounted investments.

-With 2010 production of 1,242 million boe, headline reserves relacement ratio was 110%; organic reserves replacement ratio, which excludes the impact of oil price movements in the year, acquisitions and divestments, was 133%.

-At end 2010, net proved reserves attributable to Shell shareholders were 14,249 million boe, an increase of 117 million boe from end-2009, after taking into account 2010 production; Shell’s reserves to production ratio was 11.5 years at the end of 2010.

-Shares at 0815 GMT down 10 pence, or 0.5%, at 2076 pence valuing the company at GBP55.91 billion.

-By Ian Walker, Dow Jones Newswires; 44-20-7842-9296; ian.walker@dowjones.com

SOURCE ARTICLE

Shell SA Country Chairman and CEO Bonang Mohale’s internal communications message to his staff.

“Dear colleagues,

It is widely recognised that natural gas has a critical and positive role to play in meeting South Africa’s and the world’s growing demand for energy.

If successfully developed, natural gas could help to provide the country with a stable, alternative energy source for power generation that is 40% more energy-efficient and emits 50-70% less CO2 than coal.

During a recent first round of public consultations for our proposed Karoo gas exploration project, interested and affected parties were invited to submit comments, questions and concerns to the independent environmental consultant Golder Associates.

This feedback has been incorporated and addressed in a draft Environmental Management Programme (EMP) report. The report is now available for public review and can be downloaded from Golder’s website at http://www.golder.com/af/en/modules.php?name=Pages&sp_id=1236 .

Stakeholders have raised many concerns about the project, particularly around the process used to bring gas to the surface, known as hydraulic fracturing. Other issues raised relate to the chemicals used for this process, as well as the availability and sourcing of water for drilling, potential noise impacts and compensation for landowners.

We take these concerns very seriously and are making a number of public commitments to the people of the Karoo and indeed the country regarding this project.

First and foremost we will be open, honest and transparent about everything we plan to do in the Karoo.

To this end, we will disclose fracturing fluids that we intend using at each drilling location, and will consult with communities as part of the development of drilling plans.

We will not to compete with the people of the Karoo for their water needs. Nobody will go short of fresh water because of our operations either in the exploration phase, or if there is any further development.

We will create collaborative approaches with stakeholders, ensuring on-going community engagement, to understand and manage challenging issues such as water, land use, and others.

Shell will also provide full compensation to any landowner with documented direct negative impact or loss on their land as a result of our activities.

It is important to note that hydraulic fracturing is a well-established and key industry technology, which is safely conducted throughout the world in thousands of oil and gas wells every year. Without it, much of the world’s oil and gas resources could not be produced.

We acknowledge that the Karoo is a special place that needs to be respected, and commit to the sustainable development of gas resources – wherever they are found – if they can be recovered economically.

On 15 March we will commence a second round of public consultations for the Karoo project, which will continue for two weeks.  Following this, a final EMP will be submitted to the Petroleum Authority of South Africa (PASA) in mid-April.

PASA will circulate the EMP among various government departments for review and consideration. This process is expected to take 120 days, after which a decision on whether to grant Shell exploration licenses will be taken.

If we are successful, we will not start any operational activity like drilling or hydraulic fracturing operations without conducting environmental impact assessments, supported by additional independent studies. In conducting these assessments, we will again consult with the people in the Karoo.

Shell has been operating in South Africa for well over a century now and we are proud of the contribution we have made to the country’s development. We have a strong brand in this market and we will not do anything to jeopardise this.

I will continue to update you on the project through our various internal communications channels.  You can also read more about the project on the Shell South Africa intranet site at http://sww.shell.com/southafrica/upstream/ .

Best regards,

Bonang Mohale
Country Chairman
Vice President: SOPAF South”

SOURCE

14 March 2011

Brunei Shell Petroleum (BSP) announced today a significant new oil discovery in the coastal waters of the south-east Asian sultanate. The discovery, named Geronggong, is situated in the 3rd Offshore Acreage Area, approximately 100km offshore where water depth is approximately 1000m, the deepest water depth in which BSP has discovered hydrocarbons in Bruneian acreage.

BSP drilled the discovery utilizing the deepwater drilling rig Noble Phoenix. Prior to its arrival in Brunei, the drillship has undergone refurbishment and recertification on their thrusters, riser and blow out preventer (BOP) systems, leading to full compliance with the high standards of Shell’s Health, Safety and Environment (HSE) criteria for deepwater drilling.

“I am delighted that the ongoing high success rates of near field exploration in Brunei in the last years have been augmented by this significant volume addition in the deepwater”, said Ceri Powell, Shell’s Executive Vice President of Exploration Upstream International,  “It is testament to the quality of the technical exploration analysis undertaken within Brunei Shell Petroleum, supported by the latest technologies and knowledge sharing from within Shell.”

Follow-up plans involve assessment of the full field recovery potential, including further appraisal drilling over the next two years.

Enquiries

Shell Media Relations
International, UK, European Press: +31 70 377 3600

Shell Investor Relations
The Hague – Tjerk Huysinga: + 31 70 377 3996 / +44 207 934 3856
USA – Harold Hatchett +1 713 241 1019

SOURCE

The shale revolution sweeping America is one that the rest of the world will have to start paying attention to as the battle for gas steps up.

Shell’s shale exploration in Haynesville, Louisiana. Photo: NEIL JOHNSON

By Richard Blackden, US Business Editor Houston, Texas 6:00AM GMT 14 Mar 2011

Blackpool residents are used to a mix of sand and water.

For a British seaside town, it’s the natural economic fuel. Add in some chemicals, though, and you’ve got the ingredients of a drilling technique that is radically reshaping America’s energy market and may do so for the rest of the world. It’s also drawing a growing chorus of critics concerned at its potential environmental impact.

Hydraulic fracturing, or fracking, involves blasting the mix at high pressure to unlock gas trapped in shale rock formations deep underground. And there’s a formation, known as Bowland Shale, near Blackpool in North West England, that US company Cuadrilla Resources wants to start fracking this month.

Cuadrilla’s venture into Lancashire, however, is dwarfed by the British companies that have taken their chequebooks across the Atlantic to secure a share of America’s biggest onshore drilling bonanza in at least a century.

BP paid more than $3bn (£1.9bn) for shale formations in 2008; Royal Dutch Shell beefed up its presence last year with the $4.7bn purchase of East Resources, handing it assets in the Marcellus Shale, a rock formation running down the country’s east coast that’s roughly the size of Greece. Even the FTSE-listed miner BHP-Billiton coughed up almost $5bn last month for control of shale assets in Arkansas.

“They all seem to be fighting over the acreage at the moment,” said Jason Kenney, an analyst who tracks the oil and gas industry for ING. “The US gas market is pretty weak at the moment, but the longer-term outlook is that gas will play a major role.”

From states deep in the Rocky Mountains such as Wyoming to those like Louisana on the Gulf of Mexico coast, the US Energy Department estimates that Americans are sitting on about 827 trillion cubic feet of gas. Though trapped for thousands of years, the drive to release the gas is enjoying significant tailwinds at the moment. There’s lots of it. It has about half the carbon dioxide emissions of coal and it could take the US a step closer to energy independence, an ambition of most occupants of the White House since the oil crisis of the 1970s.

Far removed from the offices where executives at Britain’s biggest energy companies inked their massive bets on shale, it’s earthier concerns that occupy drillers. One of them is Bruce Palfreyman. He manages Shell’s shale operations in Haynesville, a vast wooded area that straddles the border between Texas and Lousiana.

He’s been busy since Shell and its joint venture partner, US producer Encana, arrived here in 2007. They’ve since signed more than 3,000 leases with local landowners in a system that encourages companies to get their wells dug as quickly as possible. After paying the landowner a bonus upfront on what’s typically a three-year lease, the operator can only extend it if they’ve found and started to sell gas within three years. The landowner then enjoys royalties of between 18pc and 25pc.

“You see a tremendous amount of activity as operators secure their leases,” explains Palfreyman. It’s hard to dispute that it’s proved a boon to the local economy. A study for the Louisiana Oil and Gas Association, a trade body for the operators, claims drilling in Haynesville has created more than 50,000 jobs.

Once the leases are signed, it’s Dave Carpenter’s job to deliver the wells as soon as possible for fracking. A chart inside a hut at one of the wells in Haynesville tracks his team’s progress in meeting a target of completing the 18,000 foot well within 38 days, which compares to about 60 days a few years ago.

With the natural gas trading below $4 per million British thermal units, the standard volume measure for the industry, there’s pressure to drive costs lower. The company currently spends between $8m and $11m on a well that should provide gas for about 30 years.

“The most time-honoured way to reduce your drilling costs is to reduce your cycle time,” Carpenter says. Shell doesn’t disclose whether it’s currently making money from its North American shale operations. But like rivals that are gambling on shale, Shell will be hoping that new regulations force the closure of more coal-fired power stations, lifting both demand and prices for natural gas. The US Energy Department forecasts that shale will account for 45pc of all natural gas production in the US by 2035 compared with 14pc in 2009.

Fracking, meanwhile, typically takes three to six days. The site where Shell was in the midst of fracking a well was marked by a huge container of sands and 20 pumping trucks. Shell says it recovers about 15pc-20pc of the water it pumps soon after fracking is completed and expects to get the rest back overwell’s lifetime. But some may be left underground.

And the real action over the role shale gas has to play in America is increasingly taking place above ground. The Gulf of Mexico oil spill has helped to get the voices heard of those anxious about the environmental impact of fracking, particularly on drinking water.

Reports of contaminated water, an Oscar-nominated documentary called Gasland and the spread of shale drilling into areas with higher populations have all prompted greater scrutiny of an industry that’s still regulated at the state, rather than the national level.

The oil and gas industry contends that the fracking takes place so far below the acquifers that hold drinking water that there’s no chance of contamination, and that water that does come to the surface is safely treated. But the Environmental Protection Agency (EPA) is re-examining whether fracking poses a threat to drinking water having last looked at the issue in 2004. Should the EPA’s report find it does, then the pressure will grow for the industry to be regulated at a federal level. Like the rest of the industry, Shell insists the industry is better regulated at state level.

Paul Goodfellow, who heads up Shell’s shale operations in North America, says that “clearly the conversation at a national level needs to become more serious about the place gas has in an energy future.”

It’s a conversation that will force America to examine whether shale gas has the ability to be a cheap and cleaner source of energy over the next half century without compromising the environment. The conclusion will be listened to not just in Blackpool but in countries stretching from Algeria to Poland, where the hunt for shale has spread.

SOURCE ARTICLE

RELATED ARTICLES

• Oil drops sharply after West reassures on supply

  10 Mar 2011

• BP chief apologises for Gulf of Mexico oil spill

  09 Mar 2011

• BHP moves into US shale gas with $4.75bn deal

  22 Feb 2011

• Shell expands US shale gas reserves with takeover

  28 May 2010

THE push by petroleum giant Royal Dutch Shell to drill for oil and gas 50km off Western Australia’s spectacular Ningaloo Reef could jeopardise efforts to have the area listed on the World Heritage register.

With a decision likely by June, West Australian Premier Colin Barnett admits he is worried.

“If there was drilling anywhere in the vicinity of the stunning Ningaloo Reef, that would certainly compromise any application for World Heritage listing,” Mr Barnett said.

The federal government nominated Ningaloo for World Heritage in January last year, and Shell’s plan to drill in the iconic marine area for 60 days from about September sparked a public outcry when it was revealed by The Australian. last week.

Sites granted World Heritage status are deemed to have a universal value “that transcends the value they hold for a particular nation”.

Federal Environment Minister Tony Burke, who is considering the application, said he was concerned “about just how close this is to a magnificent, pristine area designated for protection”.

SOURCE ARTICLE

…the Group’s leadership is working very hard to promote open and honest communication within Shell, as well as with our external stakeholders. We genuinely do welcome all comments, positive and negative. We also believe that employees must be able to speak out without fear of rebuke or retribution.

John Hofmeister

By John Donovan

I have printed below a posting made in June 1999 by John Hofmeister on the “Tell Shell” forum for lively and open debate on the Internet.

Hofmeister at that time was Shell Director of Human Resources. He later became President of Shell Oil Company and is now happily retired from Shell.

The “Tell Shell” forum, buried within shell.com, was later suspended then closed down when the debate got rather more lively and open than Shell had anticipated and Shell no longer wanted to hear what employees and external stakeholders had to say.

The Hofmeister posting was brought to our attention by former Shell Production Geologist Dr John Huong, after EIGHT Royal Dutch Shell companies collectively sued him for alleged defamation when he spoke out about Shell. Further retribution came in the form of multiple injunctions from Royal Dutch Shell companies in the UK, the Netherlands, Malaysia and elsewhere, all seeking his imprisonment.

Date: June 07, 1999 03:49 PM
Author: John Hofmeister, Director of Human Resources
Subject: Communications within Shell

This message is in reply to ‘Anon’ on the subject of ‘Communications within Shell’:

First, I would like to thank you for sharing your thoughts and for your honest feedback. You clearly feel strongly about this issue and I appreciate the opportunity to hear what you have to say and to respond.

Let me say straightaway that in such matters personal experience counts for much, and I would not wish to dispute or contradict the evidence of your own experience in Shell.

However, let me say that I strongly believe the people in Shell have an enormously valuable contribution to make to the key debates, and that the Group’s leadership is working very hard to promote open and honest communication within Shell, as well as with our external stakeholders. We genuinely do welcome all comments, positive and negative. We also believe that employees must be able to speak out without fear of rebuke or retribution. We are realistic enough to understand that for some people -- leaders and staff -this could yet mean a change in attitude, but it is a change we are determined to work for.

This website is in itself evidence that we are interested in seeking your views and willing to listen and respond. You will note that to overcome any reservations people may have about contributing, we have deliberately designed it so that you remain completely anonymous.

You will recollect also that responses to the recent Shell People Survey were also anonymous. Here again is evidence that we are anxious to hear what people have to say. We were delighted that so many responded. We expressly asked people to give us feedback on levels of respect, involvement, and communication within the organisation. I quote from personal feed back by the Chairman to all staff “relative to benchmarks, there are very positive messages about your feeling able to question conventional ways of working, being encouraged to come up with innovative solutions and being open with each other. You say that leaders trust the judgement of people like you and you feel that you have sufficient involvement in decisions affecting your work. You also feel that there is respect for people where you work.”

People are now being given the opportunity to review and discuss the Survey results for their particular operating unit, with a view to identifying issues and developing action plans appropriate to their local circumstances. It is through the understanding of the results and dialogue with staff at this level that we expect the main benefits of the survey to be reaped.

In conclusion, I can only emphasise that I do support you in making your views known, and that I and my colleagues are working to create an environment where you feel comfortable and encouraged to do so. Please continue to let us know how we are doing.

ENDS

Further interesting postings from “Tell Shell” will be published shortly.

Sunday, 13 March 2011

Oil giant Royal Dutch Shell will announce a strategic review on Tuesday.

The market will be looking for news on upcoming projects, cash flow targets and potential disposals. Analysts at Credit Suisse said that 2011 is a “transition year”, with a slew of mega-projects due to start in 2012. The City will also seek clarification over why capital expenditure has been higher than forecast. There are fears that this may signal high cost inflation in the sector.

SOURCE ARTICLE

By John Donovan

In September 2009, we published an article headlined: BAE Systems whistleblower accuses Shell & BP of money laundering Al-Yamamah proceeds

Al-Yamamah was the Saudi/UK corruption scandal investigated by the UK Serious Fraud Office until the investigation was stopped in its tracks by the then PM, Tony Blair, a man not known for being incorruptible or honest. Blair gave in to threats from the repressive Saudi regime. In my lifetime, this was a low point in the UK’s international reputation, along with the Suez fiasco.

The scandal involved bartering oil for arms. The proceeds were laundered through Shell and BP.

Our story came from a Saudi BAE Systems insider. I met the individual a number of times. He said that he had already been interviewed in the USA by the US Justice Department, who were carrying out their own investigation after the UK investigation was terminated in the dubious and shameful circumstances I have mentioned.

I spoke to a source in Washington who confirmed the basics of the information the BAE whistleblower had supplied to me about his contact with the US authorities.

In our article, we named Prince Turki Bin Nasir as being a key player/beneficiary in the corruption scandal, along with Shell and BP.

The scandal is now beginning to unravel because of WikiLeaks. See:

Revelations in BAE Saudi case prompt inquiry call: The Telegraph 12 March 2011

Leaked US diplomatic cable disclosed the full case against BAE Systems, the defence contractor: The Telegraph 12 March 2011