Comments by retired Shell Group Chief Petroleum Engineer Iain Percival and retired Shell International Group Auditor, Bill Campbell

The comments below, which we are truly honoured to receive from such eminent and vastly experienced senior people at Shell, both now retired, were made in relation to the recent article:

The Times: Despite the profits, you can’t be totally sure of Shell shares

Comments by Iain Percival

I am a relatively recently retired Shell EP professional and although no longer in service wish to make some points.

– there is still huge misunderstanding about hydrocarbon reserves “out there” and in particular amongst the pundits contributing to newspaper and media reports.

– the myopic focus on Proved Reserves as dictated by the US SEC misses the point; oil companies plan and invest on what they expect to produce. They do not plan and invest on proved reserves. If they did, every production facility and infrastructure would be undersized.

– Yes, the future for companies such as Shell is becoming more complicated as the NOCs throw their weight around, but the easy oil will soon be a feature of history.

– The future of energy supplies from infinitely more complicated sources will depend on leading edge technology and first class minds both of which Shell (and some of its peer group) have or is developing.

– The performance of some of the NOCs in finding, developing and producing hydrocarbons is derisory and will require the assistance of Shell and peer group to make good the promises made. Yes, there will have to be alternative commercial arrangements – but everything is possible.

– Do not derive so much pleasure in rubbishing the future of “Big Oil”. All of us will require a significant contribution from such for many, many years to come.

– Do not write off the future prospects of Shell. A long game is being played and with the technological and intellectual capital owned by the company, the game will be won.

– Most of the commentators writing in the media (and on this site) on oil companies and associated reserves related issues should take the trouble to first develop a modicum of understanding of the subject.

Iain Percival

Comments by Bill Campbell

My regards to Ian Percival and his points are balanced and well made. However you cannot help but look at the disparities in what Shell does and says.

In better times I was employed in RTS at Rijswijk and worked with some of the best minds in any Industry (so called Gamechangers) never mind the oil industry. Shell had a leading edge certainly in the analysis of the natural assets they either owned or operated and as exampled by expanding tubulars et al were not bad at the development of practical tools as well.

Shell also spend a lot of $’s in rightly publishing its added value, the obsure sucking at straws advert might not be the best example but in general in the oil village of the World Shell is recognised for its innovation and the quality of its Engineers. 

I thus find it difficult to imagine that the (I make this comment as a generalism always a hazardous thing to do) leading oil Company in the world with some of the best people and best applied technology are finding it too difficult to safely and profitably extract oil and gas from the peripheries of it very expensive to install and strategically placed North Sea assets.

Indecent haste in the transfer of the intrinsic risks of operating these assets to others seems the prognosis for the future. If Shell cannot operate some of the most complex and inherently risky installations in the World safely, if they cannot do this, then how can, with all due respect, this be done better by some Mammy and Pappa outfit from Canada or elswhere?

Perhaps it says more for the quality of its current EP managers both in Aberdeen and Den Haag, perhaps a lack of imagination and drive and what the old Shell used to have in abundance, pioneering spirit. There is no doubt that brownfield management is tough, needs special skills, especially when the brown is due to various shades of corrosion by products on the surface of pipework, primary and secondary structure.

But remind me – what is the saying on the street about when the going gets tough?

Bill Campbell

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