Posts under ‘Gas’

Shell warned the government not to tax it out of the UK, as it sketched out ambitious growth plans alongside an underwhelming set of results.

Chief executive Peter Voser said the Anglo-Dutch oil company was aiming to pump 4bn barrels of oil per day (bpd) by 2017, compared to 3.2bn today.

Net spending will rise from £15bn to £19bn this year as it chases its goal, although most of the difference will come from fewer asset sales, with actual investment set to rise by a more modest £1bn to £21bn.

Fourth-quarter profits fell 4pc to £4.1bn, taking the gloss off a 54pc rise in annual income to £20bn, thanks to high oil prices. The markets were less than impressed, either by Shell’s growth plans or its recent performance, sending the stock down 3.5p to 2265p.

Voser issued a coded warning to George Osborne not to tax Shell out of investing in Britain, after the Chancellor unveiled a £10bn, five year North Sea tax grab last year. ‘We hope we’ll get enough investment incentives in terms of tax structures so that we can actually keep the oil and gas industry alive here,’ he said.

He also predicted more closures of European refining operations after Swiss firm Petroplus collapsed, threatening UK supplies from the Coryton refinery in Essex. ‘I think we’ll see just a few big refineries surviving in the long term.’

But Europe currently has 6m bpd of surplus capacity, he added. Shell’s own downstream operation – effectively refining and marketing – slumped to quarterly losses of £176m, compared to a £305m profit last year.

Shell has been retrenching from both the UK and downstream of late, selling its Stanlow refinery to India’s Essar.

Chief financial officer Simon Henry said 80pc of future investment would focus on upstream – exploration and production – with 60pc of that sum to be spent in Australia and North America.

Much of that will come from environmentally controversial ‘shale gas’, with £3.8bn earmarked for exploration.

The company will also spend 35pc more on exploring for oil and gas, as well as investing in new sources of liquefied natural gas and chemicals.

Dividends are expected to rise marginally from the first quarter of 2012, up 1 cent to $0.43.

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Oil prices could fall to $70 a barrel during 2012, from current levels above $110, as high volatility in the economy and energy markets becomes “a fact of life”, Royal Dutch Shell executives said.

By Emily Gosden: 3 February 2012

SOURCE ARTICLE (WITH COMMENTS)

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The share price of oil and gas firm Woodside dipped on Friday after oil major Shell announced it would sell its stake in the Australian company.

3rd February 2012

PERTH (miningweekly.com) – The share price of oil and gas firm Woodside dipped on Friday after oil major Shell announced it would sell its stake in the Australian company.

Royal Dutch Shell CFO Simon Henry said overnight that its 24.27% stake in Woodside no longer fitted the company’s long-term plans, and would be sold when the time and price was right.

The oil and gas major said that divestments were expected to reach between $2-billion and $3-billion in 2012.

In its upstream portfolio, Shell was expecting some 250 000 barrels of oil equivalent a day of asset sales and licence expiries over the 2012/17 timeframe, and assuming that these impacts played out, oil and gas production was expected to average some four-million barrels of oil equivalent a day in 2017/18, an increase of some 25% from the 2011 levels of 3.2-mllion barrels of oil a day.

Shell reported that during 2012, the company would invest some $30-billion in capital, of which around 60% would be spent in North America and Australia.

CEO Peter Voser said that the company’s strategy was innovative and competitive, with its improving financial position creating an opportunity to increase both its dividends and its investment levels.

“We have worked hard to generate a strong pipeline of investment opportunities for Shell, and we put the emphasis firmly on a competitive financial performance. Shell’s investment programme creates cash flow growth, which in turn funds our dividends,” said Voser.

“All of this is supported by efficiency gains from our continuous improvement programmes where the opportunity set runs to billions of dollars for Shell.”

Woodside fell to A$33.85 a share, from Thursday’s closing price of A$34.15 a share. By late afternoon, the stock traded at A$34.09 apiece.

John

An incomplete but nonetheless informative summary of historic catastrophic offshore events…might be of interest to your readers…

LINK TO FILE: NeverSayNeverAgain

February 02, 2012, 11:40 AM EST

By Bloomberg News

Feb. 3 (Bloomberg) — PetroChina Co., the country’s biggest energy producer, boosted ties with Royal Dutch Shell Plc after agreeing to buy a 20 percent stake in its Groundbirch shale-gas project in Canada.

Shell will remain the operator of the project, Mao Zefeng, the Beijing-based senior assistant secretary to PetroChina’s board, said by telephone yesterday. He declined to give the value of the transaction.

PetroChina plans to pay more than $1 billion for a stake in the Groundbirch property, Hong Kong-based FinanceAsia reported on its website, without saying where it got the information. Shell and PetroChina’s parent agreed in June 2011 to increase cooperation in energy exploration in China, estimated to hold the world’s largest reserves of shale gas.

“Although PetroChina will gain just a minority stake, the firm can re-deploy any advanced technologies acquired overseas back home to better exploit China’s vast shale-gas reserves,” Gordon Kwan, head of energy research at Mirae Asset Securities Ltd. in Hong Kong, said by e-mail.

The deal with Europe’s biggest oil company is an extension of the companies’ cooperation in China, Mao said. Shell and China National Petroleum Corp., PetroChina’s parent, completed the country’s first horizontal shale-gas well in March.

LNG Exports

“The shale-gas project will continue to supply Shell’s customers in North America,” Mao said. “In the long term, we will explore the possibility of exporting it to Asia in the form of liquefied natural gas.”

PetroChina won’t release detailed “numbers” on the deal with Shell as the size of the transaction isn’t big, he said.

“I can confirm that CNPC will join us in Canada,” Shell’s Chief Executive Officer Peter Voser said in London yesterday. “It’s part of our global partnership to optimize our business working environment inside and outside China.” He declined to give the value of the deal.

The unit of CNPC has gained 4.1 percent in Hong Kong trading in the past year, compared with the 13 percent slump in the benchmark Hang Seng Index. The stock rose 1.9 percent to close at HK$11.62.

PetroChina expects to surpass its target of producing 1 billion cubic meters of shale gas in 2015, Mao said in an interview in Beijing. Commercial output of “a few hundred million” cubic meters is possible by 2013, according to Mao.

“We’re making good progress in drilling,” he said. “The question is now not whether China has shale gas, but how we can streamline the production process and deliver the scale.”

Chinese Shale Gas

PetroChina and domestic rivals are seeking technology to tap China’s shale gas resources through partnerships and acquisitions. Cnooc Ltd. acquired stakes in U.S. shale-gas acreage from Chesapeake Energy Corp. for a total of $1.65 billion in February 2011 and November 2010.

China, which has yet to produce shale gas commercially, may hold 1,275 trillion cubic feet (36 trillion cubic meters) of the fuel, almost 50 percent more than the U.S., according to the Energy Information Administration. The Chinese government held its first auction of shale-gas exploration rights last year.

“The overall environment is good for commercialization of unconventional gases, as tough carbon emissions guidelines have made natural gas the cleaner energy resource compared with oil and coal,” Mao said.

China plans to ease price controls and allow domestic fuel suppliers to earn a profit. Gas importers are losing money as they typically buy at overseas rates that are higher than the fixed domestic prices they are allowed to charge customers.

“The reform on the natural-gas price mechanism makes the commercial production of shale gas more likely, as a higher price will certainly provide more incentive for energy companies to speed up production,” Mao said.

–Guo Aibing and Chua Baizhen. Editors: Stephen Cunningham, Randall Hackley.

To contact the Bloomberg staff on this story: Aibing Guo in Hong Kong at aguo10@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

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FEBRUARY 2, 2012

– Shell aiming to exploit difference in price between U.S. gas and LNG, GTL

– Investment in U.S. gas exploration to be at lower end of planned spending

– Company to make further moves into oil-rich shales

By Alexis Flynn

Of DOW JONES NEWSWIRES

LONDON (Dow Jones)–Royal Dutch Shell PLC (RDSA) is actively looking at ways to improve the profits it gets from U.S. natural gas, including seeking out land for a potential gas-to-diesel plant, the company said Thursday.

The Anglo-Dutch energy giant has invested heavily in U.S. shale gas assets, but new extraction techniques have led to abundant supply. Prices have fallen to a decade low and risk driving up the costs of Shell’s recent shale acquisitions. By contrast, the oil price has risen some 40% in the last two years.

“We have been looking for ways to leverage Shell’s strong resource position in North America,” said Chief Executive Peter Voser.

Chief Financial Officer Simon Henry said Shell was examining plans to develop the gas into products that are more closely linked to oil prices, such as liquefied natural gas for export and gas-to-liquids technology that turns gas into a transport fuel.

He said Shell was even seeking out land to build possible sites to build the types of facilities needed but cautioned that at a cost of “around $5 billion to $10 billion a project, we have to be selective.” Shell completed a giant gas-to-diesel project in Qatar last year, but its final cost was in the region of around $18 billion, rather than the $5 billion initially estimated in 2003.

Voser also said Thursday the company would broaden its focus to include oil-rich shale, with the company planning to spend $1 billion on liquid-rich shales alone in 2012, with production from the source expected to account for as much as 250,000 barrels of oil equivalent a day by 2017. By contrast, Voser said Shell’s expected outlay on U.S. gas exploration would be at the low end of its spending range given the weak pricing environment.

“Spending could be in the range of $5 billion and $6 billion per year on a worldwide basis over the next few years, including exploration, of which $3 billion to $5 billion could be North American gas plays,” said Voser.

The depressed U.S. natural gas price has compelled some U.S. firms to cut back on drilling. However, Exxon Mobil Corp. (XOM), the country’s largest natural-gas producer, said Wednesday it had no intention of curtailing its output.

-By Alexis Flynn, Dow Jones Newswires; +44 207842 9471, alexis.flynn@dowjones.com

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* Shell says global refining surplus of 6 million barrels

* Predicts more refinery closures in Europe

* Shell made Q4 loss from oil refining and marketing

By Alex Lawler

LONDON, Feb 2 (Reuters) – Royal Dutch Shell said on Thursday the global oil refining industry is facing about 6 million barrels per day (bpd) of surplus capacity, and predicted more plants would close in Europe.

Refining crude oil into fuels such as gasoline and diesel, traditionally the second-largest business for global oil firms such as Shell and rivals like BP Plc, has come under pressure from weak profit margins.

Shell, Europe’s largest oil company by market value, made a loss of $278 million from oil refining and marketing in the fourth quarter. The collapse of Swiss-based refiner Petroplus has raised the prospect of more plant closures in Europe.

“Globally, the world has about 7 million barrels a day too much capacity. Recent events whether Petroplus or otherwise have seen about a million barrels affected globally, so that’s only 6 million barrels,” Shell’s chief financial officer, Simon Henry, said at a news conference.

“Two million barrels of new capacity came on stream last year and probably another one and a half this year. So actually, the world is still building more capacity than is going out.”

Seven million barrels a day is more than the entire demand of Japan, the world’s third-largest consumer, and amounts to almost 8 percent of the 90 million bpd the International Energy expects the world will need in 2012.

The challenges of the refining industry in Europe, a mature oil market where demand is no longer growing, were illustrated by the difficulties of Petroplus, which has closed three of its refineries after lenders froze credit lines.

Shell Chief Executive Peter Voser said in Europe there were too many small refineries that are not very profitable, a legacy of an era when every country wanted its own plants.

“Shell has reduced its European portfolio significantly over the last few years. We have done it from our side but some others have not done the same steps like close refineries and that shake out is still to happen,” he said.

“I think we will just see a few big refineries surviving in the long term and hopefully that the current slowdown will actually help to make this shakeout finally now, so that we can have the right refining industry in Europe.”

Despite the loss from refining, Shell reported net income of $6.46 billion in the fourth quarter earlier on Thursday. Most of the company’s profit comes from producing oil and gas.

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• Terry Macalister
• guardian.co.uk, Thursday 2 February 2012 17.44 GMT

Shell has been accused of “moral bankruptcy” by unions after unveiling a 54% rise in full-year profits less than a month after shutting its final salary pension scheme to new employees in Britain.

The oil company reported global annual earnings of $28.6bn (£18bn) – more than £2m an hour – while paying out $10.5bn to shareholders during 2011 and promising to raise dividend levels further in the coming months.

Peter Voser, Shell’s chief executive, said “there is more [good profit] to come” as he outlined a new programme of increased global investment as well as cuts that he said would provide even better returns for investors.

“We have worked hard to generate a strong pipeline of investment opportunities for Shell … All of this is supported by efficiency gains from our continuous improvement programmes,” Voser said.

But Europe’s largest oil group was attacked for displaying “predatory capitalism” by Len McCluskey, leader of the Unite union. “Shell reminds us of the moral bankruptcy of the corporate elite. The company is needlessly closing its final salary scheme while posting colossal profits,” he said. “Rather than provide security to its future staff and still make a profit, it has chosen greed. Shell is not alone: Unilever is needlessly slashing its employees’ pension benefits when there is no financial reason for doing so.”

Shell, which has also upset staff by unveiling plans to shut its major research and development centre at Stanlow in Cheshire after disposing of its refinery there, said it was surprised by the attack.

A spokesman pointed out that most government and private pension schemes paid in Britain were supported by Shell, which provides 12% of all dividends from the FTSE 100 index of leading firms.

The Anglo-Dutch group is riding high on the back of surging oil prices – which were more than $30 per barrel higher last year than in 2010 – and booming demand for gas, but says it is making most of its money outside Britain and makes barely 1p per litre out of petrol sales.

Voser pointed out that two thirds of the UK pump price went straight to the government as tax. He blamed near record prices for forecourt diesel on global crude market conditions and said Shell’s UK retail operations continued to come under “very heavy competitive pressures”.

Shell would continue to invest in the North Sea in oil projects such as those it has west of Shetland, but said there was a need for the right “tax structures to keep the oil and gas industry alive here”.

The company was doing “our bit for balancing the books” of the Treasury through paying a heavy tax burden, it said, while denying that its recent sale of the Stanlow refinery to an Indian group had any impact on the wider refining and distribution problems that have recently hit the south-east of England.

Shares in Shell rose 11% last year while arch-rivals such as BP saw no growth at all but on Thursday the Anglo-Dutch group’s stock market valuation fell slightly as the City was disappointed by the financial performance in the last quarter of the year.

Shell reported three-monthly earnings of $6.5bn, which was up on the same period last year but down quite heavily on the third quarter.

Total oil and gas production in the fourth quarter was lower, at 3.3m barrels of oil equivalent per day compared with 3.49m barrels a year ago. Shell said it would increase annual production to 3.7m barrels by 2014, helped by a $100bn investment plan which started in 2010.

The company said it would put much of its drilling efforts into the US and it now claims to have become the biggest driller – but not producer – in the deepwater Gulf of Mexico where BP used to reign supreme. Since the government moratorium on drilling in the Gulf, imposed following BP’s Deepwater Horizon spill, was lifted, Shell has obtained permission to drill five wells during 2012.

The company said it was treading carefully, meanwhile, in the Middle East in the wake of the Arab spring, but hopes to reveal soon how its exploration programme has been going in Saudi Arabia and when it plans to get back to similar work in Libya.

Shale hopes

Shell is hoping to turn the “shale gas revolution” sweeping north America into an export earner but also expects to see the controversial new energy source taking off in Europe once an “emotional” debate dies down.

The Anglo Dutch oil company is looking at possible plans to ship surplus quantities of the fuel, as liquefied natural gas or “gas-to-liquid” processed fuel, from the US.

Natural gas prices in north America have fallen to a 10-year low due to the discovery that gas can be extracted from shale rock using a technique known as hydraulic fracturing or “fracking”. It uses an assortment of chemicals to release gas with tiny explosions and has upset environmentalists and some politicians.

Peter Voser, chief executive of Shell, said $6bn would be spent worldwide on different kinds of shale gas operation, half of this in the US. The heavily populated nature of Europe versus the US made it more difficult to “frack” this side of the Atlantic, Voser conceded, but he said governments should “not take fast and emotional decisions” to restrict shale extraction. Shell expects Poland and even Germany to proceed with shale gas exploitation but it is also looking at operations in Ukraine and China.

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