FINANCIAL TIMES

By Ed Crooks

For decades, America has worried about Saudi Arabia’s plans for oil production; now Saudi Arabia is starting to worry about the US.

In a reversal of roles, US oil production has begun to rise, and expectations are growing that North America (including Canada, where production is growing even faster) will become an increasingly potent force in world oil markets.

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Conservationists Ask Christy Clark to Ban Coalbed Methane Drilling in BC’s Sacred Headwaters, Once and For All

With moratorium set to expire in one year, the Sacred Headwaters offer a potential political win for BC’s Premier – or a potential PR nightmare for gas development.

VANCOUVER, BRITISH COLUMBIA, Dec 05, 2011 (MARKETWIRE via COMTEX) — There is one year remaining on the B.C. government’s moratorium on coalbed methane drilling in the Sacred Headwaters, and conservation groups ForestEthics and the Skeena Watershed Conservation Coalition are calling on Christy Clark to institute a permanent ban on drilling in the area.

The request comes as the groups are ramping up their campaign against Shell and the B.C. government, to protect the Sacred Headwaters. A lump of coal and giant greeting card were delivered this morning to Royal Dutch CEO, Peter Voser, at his office in the Hague, Netherlands, issuing a one year ultimatum for Shell to abandon its plans to drill in the headwaters, and reminding the company that 60,000 people have signed a petition opposing its plans.

“Natural gas could face the same backlash as tar sands if Shell’s destructive plans for the Sacred Headwaters are allowed to proceed,” says Karen Tam Wu, Senior Conservation Campaigner with ForestEthics. “What happens in the Sacred Headwaters will determine the image of natural gas development in B.C. Shell and Christy Clark have one year to make sure it’s the right one.”

To illustrate the risk of Shell’s plans, the groups have created a coalbed methane simulation map. Current regulations would allow the drilling and fracking of over 4000 wells, and the clearing of thousands of kilometers of roads in the Sacred Headwaters, the birthplace of three of North America’s most important salmon rivers, and numerous First Nations’ creation stories.

“Four years ago, the B.C. government listened to northwestern communities and pushed pause on drilling in the Sacred Headwaters. Now it’s up to Premier Clark to follow that path to its logical conclusion,” says Shannon McPhail, Executive Director of the Skeena Watershed Conservation Coalition. “A permanent ban would indicate to local communities, First Nations and the rest of British Columbia that the government is committed to establishing a truly responsible industry.”

Last week, the groups placed ads at Shell Canada President Lorraine Mitchelmore’s favourite ski hill in the Canadian Rockies, featuring breathtaking photos and reminding her that the Sacred Headwaters are “Out of Bounds”.

The Sacred Headwaters are located in northwest British Columbia, about 600 kilometres north of Terrace, B.C. They are home to grizzly bears, caribou and moose. In 2008, the B.C. government imposed a four-year moratorium on Shell’s activities in the area. The headwaters have been listed on the Outdoor Recreation Council’s Most Endangered Rivers List for the past two years.

Photos of today’s action at Royal Dutch Shell headquarters and copies of the coalbed methane simulation map are available upon request.

Contacts: ForestEthics Karen Tam Wu Senior Conservation Campaigner 778-846-5647

SOURCE: ForestEthics

Copyright 2011 Marketwire, Inc., All rights reserved

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Mon, 05 Dec 2011

DECEMBER 5, 2011

DOHA (Dow Jones)–Royal Dutch Shell PLC (RDSB.LN) is in the early stages of planning projects to turn natural gas into fuels like diesel in the U.S., of similar scale to its huge project in Qatar, Andy Brown, executive vice president of Shell, said in Qatar Monday.

“We are looking for places where gas is cheap and [oil] products are expensive,” he said at a press briefing at the World Petroleum Congress in Doha, Qatar. “Clearly the U.S. is something we’re looking at.”

Shell is only interested in large-scale projects similar to the $18 billion Pearl Gas To Liquids plant it has developed in Qatar, Brown said.

The first phase of Pearl GTL is now producing at close to full capacity and the second phase started over the weekend, he said. It remains on course to reach full production by the middle of 2012.

-By James Herron, james.herron@dowjones.com, +44 207 842 9317

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LORNA SIGGINS, Western Correspondent

THE BROADCASTING Authority of Ireland has upheld complaints about RTÉ television’s reporting of an investigation by the Garda Síochána Ombudsman Commission into the Corrib tape controversy.

The authority found two RTÉ television news broadcasts on July 28th, 2011, on the findings of the interim Garda ombudsman report, were in breach of “fairness, objectivity and impartiality in current affairs” under section 48(1) of the 2009 Broadcasting Act.

The complaints against RTÉ about the news reports were lodged with the authority by Jerrie Ann Sullivan, one of the two women arrested after a Corrib gas protest on March 31st, 2011.

The ombudsman investigation was initiated in the public interest in April, after a camcorder borrowed by Ms Sullivan from NUI Maynooth, which was confiscated at the time of the arrests, was left switched on in a Garda car and recorded comments made by gardaí travelling to Belmullet.

An interim report released on July 28th confirmed that the tape had recorded gardaí joking about raping the women if they refused to give their name and address.

The report found no evidence of a criminal offence having been committed by gardaí and no evidence of a breach of discipline. A final report has yet to be issued.

The interim report noted a number of files from the camcorder were deleted, overwritten and unrecoverable. NUI Maynooth academics said they authorised deletion of material unrelated to the inquiry in line with research ethics and data protection.

In response, RTÉ said both the studio introduction and the reports were “fully accurate and there was no breach of impartiality or objectivity”. It also said it believed there was “no breach of any requirement in regard to the giving of harm or offence”.

But the authority cited “imprecise phraseology” in RTÉ 1’s Six One and 9pm news reports. This, combined with “the inaccuracy in the introduction to the news report, would have reasonably resulted in the viewer inferring that the recording of the incident investigated by the Garda ombudsman was tampered with”, the authority said. This inference was “not supported by the Garda ombudsman’s report”, it said.

Inaccurate impressions of the outcome of the investigation would have been reinforced by RTÉ’s use of part of an interview with Minister for Justice Alan Shatter and a statement by Shell to Sea, the authority said. It found both news reports caused “undue distress and harm” to the complainant and requested that RTÉ issue a statement on its findings to be read on air. RTÉ said last night it accepted the decision.

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By Onyedi Ojiabor 5 December 2011

The Senate has desrcribed as wrong reports that Shell Petroleum Development Company (SPDC) is planning to move out of the country because it ceded some of its investment to local operators.

In an interview with The Nation, Chairman, Senate Committee on Petroleum Resources (Upstream), Senator Emmanuel Paulker, shed some light on the report that some International Oil Companies (IOCs) including SPDC may have concluded arrangements to leave  the country due to increasing insecurity in Abuja.

Paulker noted that instead of divesting, Shell is investing more in the country.

The lawmaker said what Shell did was to cede some areas it felt were too small for it to local operators to own and manage.

He said: “That report was a misnomer. What happened was that through our interaction, we got the true position of Shell.

“Yes, Shell did some divestment’s of their investments in Nigeria, which implies that they wanted to cede out part of their investments to local operators; more to local operators because they feel that, maybe, a marginal field is too small for them to manage and they are going into the deep waters. So, let them divest some of their investments and allow local operators to come and own them.

“They did explain during our interactive session that that doesn’t mean they are leaving the country. In fact, they are even investing more in Nigeria. They explained to us that Shell is not ready to leave the country.”

On Petroleum Industry Bill (PIB), he noted that because it has not reached in the National Assembly does not mean the Bill is dead.

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By LISA DEMER

Published: December 4th, 2011 10:52 PM

Ask almost any environmental activist about Shell and he’ll point to Nigeria, in West Africa.

Environmentalists say decades of oil production have left the Niger Delta one of the most polluted regions in the world. Shell is Nigeria’s biggest operator, with more than 50 years of oil production there, and it’s a main target of activists’ wrath.

The political and social situation there is far more complex than anything Shell will encounter in Alaska.

Shell maintains that sabotage by rebels and spills from oil thieves drilling into pipelines or opening wells are mainly to blame for the pollution. Some areas of the country are so violent it’s difficult to safely reach the infrastructure for repairs, Shell says.

Other assessments say aging and neglected equipment, substandard practices and insufficient cleanup efforts are also factors.

Rick Steiner is a former University of Alaska Fairbanks professor and marine conservation biologist who has been to Nigeria five or six times to study oil pollution there. He is a long-time oil industry watchdog who has criticized Shell’s operations and practices in Russia, Nigeria and Alaska. He resigned his UAF post in 2009 after he publicly criticized Shell sponsorship of a university forum on oil drilling and fishing in Bristol Bay, and the university cut off his federal funding.

Nigerians have seen their land, drinking water and fishing grounds ruined, but haven’t shared in the huge oil profits taken in by both the oil producers and the Nigerian government, Steiner said.

Shell’s Nigerian operations in shallow water and onshore are through Shell Petroleum Development Company. The Nigerian government owns a 55 percent stake in the joint venture, while Shell owns 30 percent and two smaller companies own the rest.

A group of conservationists, including Steiner, and the Nigerian Ministry of Environment concluded in 2006 that the equivalent of an Exxon Valdez volume of oil spilled every year in the Niger Delta. Much of it was from old, corroded and poorly maintained pipelines, according to the report for the International Union for the Conservation of Nature.

“The environmental degradation and economic mismanagement feeds the social and economic despair in the region, and thus continues to manifest in epidemic violence and social unrest,” Steiner wrote in December 2006 in a request that the United Nations lead a restoration effort.

The United Nations undertook a study of oil pollution in one troubled area, Nigeria’s Ogoniland region, that wrapped up in August.

The cost of cleanup will be at least $1 billion and will take 30 years from the time ongoing pollution is stopped, the United Nation’s new report on the effect of oil pollution in Ogoniland concludes.

EXECUTIONS IN AFRICA

Local activists drew world attention on the region in the early ’90s. One Ogoni leader, Ken Saro-Wiwa, criticized Shell for its environmental practices and the Nigerian government for failing to enforce its own laws, and organized others. He led a protest march in early 1993 that drew a crowd estimated at 300,000, according to various published reports.

That year, Shell abruptly pulled out of Ogoniland, essentially abandoning its facilities, the U.N. report says.

Two years later, Saro-Wiwa and eight others were executed in what activists called “judicial murder.” Their families sued Shell in the United States, and in 2009 Shell settled for $15.5 million. The company said the money was a compassionate payment, and it was time to move on.

“Shell leaders were as shocked as any others of the brutality around these executions. The Shell global CEO at the time even asked for clemency for the accused when we were informed that they had received death penalties,” Shell said in a written response to Daily News questions.

Some critics say Shell was not just a corporate bystander to the violence.

A new report by Platform, a London-based social and ecological justice group, contends that in the early 1990s Shell funded government attacks against peaceful protestors in the Ogoni region and that its security forces have continued to brutalize innocent citizens.

“While primary responsibility for human rights violations falls on the Nigerian government and other perpetrators, Shell has played an active role in fueling conflict and violence in a variety of forms,” the Platform report said.

Shell said the Nigerian federal government — as majority owner of the oil production facilities — oversees the military units that provide much of the security.

“Suggestions in the report that SPDC (Shell Petroleum Development Co.) directs or controls military activities are therefore completely untrue,” Shell said in response to Daily News questions.

Platform said that since the crisis in the Ogoni region, Shell has distanced itself from major military operations. But the company still funds its own private security force, its report said.

Some of the case studies in the Platform report are inaccurate or unsubstantiated, and the report obscures the company’s good work, Shell said.

“However, we will carefully examine its recommendations and look forward to continuing a constructive dialogue with the Nigerian government and other stakeholders to find solutions to these issues,” Shell said.

MASSIVE THEFTS OF CRUDE

By Shell’s calculation, interference by rebels and pirates accounts for 70 percent of all oil spilled in the last five years. Sometimes thieves haul crude to makeshift refineries in open boats that look like overloaded, oversized canoes trailing a rainbow sheen.

Shell says its oil production elsewhere in Nigeria has generated $35 billion over the last five years in taxes, royalties and direct revenue to the government, an onshore oil field partner. It has put millions more into health care, agriculture, education and micro-business programs.

But people remain poor and are upset with the government over their situation, Shell says.

“The unrest has turned into a worrying criminal movement, which feeds on massive thefts of crude oil,” Shell said.

Pipelines carrying oil produced elsewhere in Nigeria still run through Ogoniland and aren’t adequately maintained by Shell, the 262-page U.N. Environment Programme report said. The company didn’t properly decommission all its oil infrastructure when it bailed out, the report said.

Some wellheads can be easily accessed by thieves. Formation pressure, corrosion and illegal tapping can cause wells to blow out. The U.N. team witnessed a raging fire at a blown-out well that burned for a month.

Oil pollution in Ogoniland is widespread and creating numerous hazards to human health, the report concluded. Spills were happening regularly, they weren’t immediately addressed, and cleanup equipment too often was in poor condition and ineffective, the report said.

The U.N. says the $10 million study was paid for by a venture that includes Shell and the government of Nigeria, among others.

The study did not attempt to quantify how much oil spilled, and seemed to put more blame on theft and sabotage than on poor oil company practices, Steiner said.

The U.N. team didn’t favor Shell, said Nairobi-based U.N. spokesman Nick Nuttall.

Whether anyone could come up with an accurate figure of spills over 50 years is questionable, he said. Researchers tried to identify hot spots where urgent attention is needed and create a “balanced, scientific baseline upon which the communities, authorities and government can build a response for the sake of the people of Ogoniland.”

Shell said it’s working to address the issues identified by the U.N.

LAWSUITS

Shell acknowledges it was responsible for two 2008 spills from a major pipeline, one from corrosion and the other from a defective weld. Steiner, who is working as an expert witness for the local community suing Shell in London over those spills, traveled to the region this past summer and said much of the oil has yet to be cleaned up. He said oil seeped for five months.

Shell says security concerns delayed its response but that it didn’t take five months. In the case of the second spill, discovered in December 2008, a joint investigative team that included Shell, security forces and representatives of various government agencies reached the site in February 2009, Shell said.

The primary cleanup was done by December 2009, Shell said, but before that could be verified, there were additional spills, not related to pipeline operational issues.

In October, the U.S. Supreme Court agreed to hear a case against Royal Dutch Shell brought by another group from Ogoniland who allege Shell was complicit in human rights abuses from 1992 to 1995. The issue before the court is whether corporations can be held liable under a 1789 U.S. law for human rights abuses overseas.

Shell’s pipeline maintenance practices fall far short of international best practices and Nigerian law, Steiner said.

Shell disputes Steiner’s characterization. The company says it suspends production when leaks are discovered and works to contain spills. Tides in mangrove swamps can quickly spread even small amounts of oil, Shell said.

If oil production cannot be done safely, it shouldn’t be done at all, Steiner responded. Shell should be doing better surveillance in areas where thieves are known to regularly siphon oil and should be using the latest leak detection technology, he said.

Reach Lisa Demer at ldemer@adn.com or 257-4390.

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By JENNIFER A. DLOUHY, WASHINGTON BUREAU

Published 12:25 a.m., Saturday, December 3, 2011

WASHINGTON – When Michael Bromwich took over the helm of the agency overseeing offshore drilling 17 months ago, oil was still gushing into the Gulf of Mexico and a handful of ethical lapses had shattered public confidence in the ability of federal regulators to police the industry.

Now, Bromwich is leaving the Interior Department after leading a major overhaul of the government’s offshore drilling oversight programs and imposing a swath of new regulations designed to boost the safety of coastal oil and gas exploration.

But he is not confident that all of the changes imposed since last year’s Deepwater Horizon disaster will stick.

“People have short memories,” Bromwich said. “We have done everything we possibly can to institutionalize these reforms (and) to create new substantive rules. But there are a lot of people who have amnesia, who make believe that Deepwater Horizon never happened” or think it was “a total anomaly.”

Bromwich warns that major challenges remain for the offshore drilling industry and the regulators who monitor it, especially as federal agencies struggle to compete with oil companies to recruit top-notch petroleum engineers. Some industry leaders and their allies in Congress also are pushing to roll back new regulations imposed since last year’s oil spill.

Bromwich also is campaigning for extra dollars for the two federal bureaus that were created to replace the former Minerals Management Service.

“This agency for 28 years fought a losing battle for resources,” he said. “We have now started to make up for lost ground over the last year and a half,” but possible across-the-board budget cuts and planned congressional spending “make me quite concerned about whether the agency will have the resources and tools it needs to do the job that the public expects it to do.”

Bromwich formally stepped down as head of the Bureau of Safety and Environmental Enforcement on Dec. 1, but he will serve as a special adviser to Interior Secretary Ken Salazar through the end of the year. His plans beyond that aren’t known.

His successor is retired Coast Guard Rear Adm. James Watson, who led the government’s response to the Deepwater Horizon disaster after June last year.

Watson’s arrival could signal a new tone in the often chilly relations between industry representatives and drilling regulators since that spill.

Bromwich became a lightning rod for criticism from industry leaders and some lawmakers who said the government’s approval rate of offshore drilling projects slowed unnecessarily under his watch.

Hoping for faster pace

Jim Noe, director of the Shallow Water Energy Security Coalition that has pushed for swifter government approvals of coastal exploration, is hopeful that the pace will pick up.

“Adm. Watson comes into this job with a strong understanding of the industry and a reputation for reliability and efficiency – precisely the qualities needed to improve the offshore permitting process,” Noe said.

Rep. Jeff Landry, R-La., one of Bromwich’s toughest Capitol Hill critics, said he was “very optimistic.” Although Watson doesn’t enter the Interior Department with a deep background in the offshore oil and gas industry, Landry noted that his Coast Guard experience put him in touch with related issues.

Bromwich, by contrast, was brought in not for his oil and gas know-how, but rather to overhaul the agency and drive changes across the offshore drilling industry in the wake of last year’s spill.

His résumé is full of jobs cleaning up troubled organizations, including two years investigating the Houston Police Department crime lab roughly a decade ago about allegations of bad management, under-trained staff and inaccurate work.

Many industry officials instantly viewed Bromwich as an adversary in June 2010 after he was sworn in. And they were skeptical of his lack of experience with oil and gas drilling.

Energy companies are shifting their focus away from the Middle East and toward the West—with profound implications for the companies, global politics and consumers

DECEMBER 5, 2011

By GUY CHAZAN

Big Oil is redrawing the energy map.

For decades, its main stomping grounds were in the developing world—exotic locales like the Persian Gulf and the desert sands of North Africa, the Niger Delta and the Caspian Sea. But in recent years, that geographical focus has undergone a radical change. Western energy giants are increasingly hunting for supplies in rich, developed countries—a shift that could have profound implications for the industry, global politics and consumers.

Driving the change is the boom in unconventionals—the tough kinds of hydrocarbons like shale gas and oil sands that were once considered too difficult and expensive to extract and are now being exploited on an unprecedented scale from Australia to Canada.

The U.S. is at the forefront of the unconventionals revolution. By 2020, shale sources will make up about a third of total U.S. oil and gas production, according to PFC Energy, a Washington-based consultancy. By that time, the U.S. will be the top global oil and gas producer, surpassing Russia and Saudi Arabia, PFC predicts.

That could have far-reaching ramifications for the politics of oil, potentially shifting power away from the Organization of Petroleum Exporting Countries toward the Western hemisphere. With more crude being produced in North America, there’s less likelihood of Middle Eastern politics causing supply shocks that drive up gasoline prices. Consumers could also benefit from lower electricity prices, as power plants switch from coal to cheap and plentiful natural gas.

And the change is reshaping the oil companies themselves, as they reallocate their vast resources to new areas and new kinds of fuel. Working in the rich world—with its more predictable taxes and investor-friendly policies—removes some of the risks about the big oil companies that worry investors, making them less vulnerable to the resource nationalism of petrostates like Russia and Venezuela.

“A company like Exxon Mobil can eliminate the technological risk” of developing unconventionals, says Amy Myers Jaffe, senior energy adviser at Rice University’s Baker Institute. “But it can’t eliminate the risk of a Vladimir Putin or a Hugo Chavez.”

This new way of looking at risk is at the heart of the transformation. International oil companies traditionally face a choice: They can either invest in oil that is easy to produce but located in politically volatile countries. Or they can seek opportunities in stable countries where the oil is hard to extract, requiring complex and expensive production techniques.

Now, in a sense, the choice has been made for them. Big onshore fields in the world’s most prolific hydrocarbon provinces are increasingly the preserve of national oil companies, state-owned behemoths like Saudi Aramco and Russia’s OAO Rosneft and OAO Gazprom. For foreign majors like Royal Dutch Shell PLC and BP PLC, their former heartlands in the Gulf sands are now largely off-limits.

Shut out of the Middle East, they have responded with a huge push into new areas, both geographic and technological. Over the past few decades, they have built vast plants to produce liquefied natural gas, or LNG. They have drilled for oil in ever-deeper waters, ever farther offshore. They have worked out how to squeeze oil from the tar sands of Alberta. And they have deployed technologies like hydraulic fracturing, or fracking, and horizontal drilling to produce gas from shale rock.

Wood Mackenzie, an oil consultancy in Edinburgh, says that more than half of the international oil companies’ long-term capital investments are now going into these four “resource themes”—a huge shift, considering how marginal the companies once considered them.

There are also drawbacks to the new focus on nontraditional kinds of hydrocarbons. Environmentalists strongly oppose shale-gas extraction due to fears that fracking may contaminate water supplies, the oil-sands industry because it is energy-intensive and dirty, and deep-water drilling because of the risk of oil spills like last year’s Gulf of Mexico disaster.

There are financial considerations, too. While conventional assets are relatively easy to develop and historically have offered good returns, projects in some more technically difficult sectors—like deep-water and LNG—typically take longer to bring on-stream, and are higher cost, meaning returns are lower.

But there is an upside for the majors. “The silver lining is the shape of the profile of these projects, which is different than conventional ones,” says Simon Flowers, head of corporate analysis at Wood Mackenzie. LNG ventures, for example, can deliver contract levels of gas at a steady rate over 20 years. “So the returns may be lower, but overall you have a more dependable cash-flow stream,” he says.

By pursuing these nontraditional fuels, the oil companies are committing themselves ever more deeply to the wealthy nations of the Organization for Economic Cooperation and Development. Wood Mackenzie says $1.7 trillion of future value for all the world’s oil companies—52% of the total—is in North America, Europe and Australia. The consultancy has identified a “significant westward shift” in oil-industry investment, away from traditional areas like North Africa and the Middle East “towards the Brazilian offshore, deepwater oil in the Gulf of Mexico and West Africa and unconventional oil and gas in North America.” And then there’s Australia, far out east, “which is in the early stages of a spectacular growth phase.”

Consider Shell. Seven years ago, the oil giant, synonymous with turbulent hot spots like Nigeria, decided to shift resources to more-developed nations that offered a friendly environment for investors and predictable tax regimes. Shell used to split spending on the upstream—the basic business of exploring for and producing oil and gas—roughly 50/50 between nations in the OECD and those outside of it. It’s now 70/30 in favor of the OECD, with the bulk going to Canada, Australia and the U.S.

“The risks in OECD are technical, but they’re easier to manage than political risk,” says Simon Henry, Shell’s chief financial officer. “In the OECD, you have more control of your operations.”

With the new turf comes a new focus: Shell will soon be producing more natural gas than oil. That might have scared investors a decade or two ago. But with gas demand set to grow strongly, especially in Asia, the future for gas-focused companies is looking increasingly rosy—especially after the Fukushima disaster, which prompted a rethinking of nuclear power in Japan and elsewhere.

Entrenching Its Position

Like Shell, Exxon Mobil Corp. is entrenching its position in the Americas, home to just over half its resource base. Its unconventional resources have grown by almost 90% over the past five years to 35 billion oil-equivalent barrels—partly thanks to its 2010 acquisition of XTO Energy, a big shale-gas player. Exxon’s U.S. unconventional production alone is expected to double over the next decade.

Some giants are looking further afield. Chevron Corp.’s three focus areas—the parts of the world that account for the bulk of its exploration budget—are the U.S. Gulf of Mexico, offshore West Africa and the waters off western Australia.

In particular, the company has staked out a huge position in Australian natural gas; its Gorgon LNG project in Australia is one of the world’s largest. The push is based on expectations of surging demand for the fuel in Asia, largely in China, which wants to improve air quality in its heavily polluted cities by switching from coal to gas in power generation and running more commercial vehicles and buses on natural gas.

It “wasn’t a conscious decision” to move into the OECD, says Jay Pryor, head of business development at Chevron. The company doesn’t decide what projects to pursue based on where they are in the world, but on the quality of the resource, the commercial terms and the geopolitical risk. “The best rocks with the best terms are going to get the quickest investment,” he says. Money has flowed into the U.S. and Australia because they offer the best incentives to oil companies, he says.

In recent years, Chevron has also expanded into another promising part of the OECD—Europe, which some estimates suggest has shale-gas reserves comparable to those in the U.S. Chevron has picked up millions of acres of land in Poland and Romania, where it will soon be drilling for shale gas. That’s part of a wider trend: Dozens of companies are now exporting to Europe technologies used to open up shale deposits in the U.S.

Holding Back

Not all oil companies have piled into unconventionals the way Shell and Chevron have. BP, for one, has far fewer investments in tar sands and shale gas than its peers, though it has an unrivaled position in deep-water oil. That means it has less of a presence in the OECD than Shell: Its biggest projects are in poorer countries like Angola, Azerbaijan and Russia, and in recent years it has won a string of licenses and contracts in India, Iraq, Egypt and Jordan.

Yet even BP has been bolstering its position in the OECD. It said recently it was pressing ahead with a £4.5 billion ($7 billion) investment in the North Sea’s Clair oil field, part of a five-year, £10 billion program.

Still, being in the OECD doesn’t guarantee oil companies an easy ride. Operators in the North Sea were shocked earlier this year when the U.K. government suddenly increased taxes on oil producers. In France, authorities recently banned hydraulic fracturing. And in the U.S., the drilling moratorium in the Gulf of Mexico, imposed after the Deepwater Horizon blowout, threw many of the majors’ plans into disarray.

But still, for the most part, the risks are much greater in the non-OECD. “The majors went to Venezuela and lost their property,” says Ms. Myers Jaffe of the Baker Institute. “They went to Russia and had to whisk their CEO off to a safe house. They went to the Caspian and realized they couldn’t get the oil out. I for one would much rather invest in a company that had 70% of its spending in the OECD.”

Mr. Chazan is a staff reporter in The Wall Street Journal’s London bureau. He can be reached at guy.chazan@wsj.com.

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