Angry Dutch citizens on Thursday will ask their country’s highest court to put an immediate end to gas production in the Groningen region due to the risk of life-endangering earthquakes.
17 Jan 2019
By Bart H. Meijer
THE HAGUE, Jan 17 (Reuters) – Angry Dutch citizens on Thursday asked their country’s highest court to put an immediate end to natural gas production in the Groningen region due to the risk of earthquakes.
Once Europe’s largest gas field, decades of extraction have led to dozens of minor tremors every year, damaging thousands of homes and sparking unrest among locals and prompting authorities to impose caps on activity at Groningen.
“Seismic risks are still increasing, all we hear are promises of future improvements, but nothing’s really happening”, resident and politician Nette Kruzenga said in court.
An unusually severe magnitude 3.4 quake prompted the Dutch government last year to pledge to end production by 2030 and to lower it as quickly as possible in coming years.
Groningen is run by NAM, a 50-50 joint venture between Royal Dutch Shell and Exxon Mobil.
Output is set to drop to 19.4 billion cubic metres (bcm) in the year that began in October, down from a 2013 peak of 54 bcm.
It will be cut by another 75 percent in the next five years, the government has said.
“Production has already been lowered to the lowest possible level”, state lawyer Hans Besselink said in court on Thursday. “Further reductions would lead to shortages at companies in the Netherlands and abroad.”
But many in the region still feel their safety concerns are being ignored, as tremors are expected to continue, while numerous attempts to set up a compensation scheme for damage and repairs have failed.
The petitioners demand drilling be stopped immediately, or at least capped at 12 bcm per year, a level the Dutch gas regulator last year said would limit risks.
“We need two to three years to get at 12 bcm, it’s impossible to reach it straight away without disrupting consequences,” Besselink said .
The government expects the 12 bcm level might be reached by the end of 2020, by switching large industrial users away from Groningen gas and by building extra capacity to convert high-caloric imported gas to the low-caloric gas needed for the Dutch network.
The Netherlands still depends on Groningen gas for a significant part of its energy supply and export obligations.
The High Court in 2017 said certainty of supply should play a role in decisions on the production level, but should not outweigh safety concerns.
The court expects to deliver its verdict on Jan. 31. It will also hear 26 other complaints from local authorities and interest groups in April.
(Reporting by Bart Meijer; editing by Dale Hudson and Jason Neely)
Source
LONDON (Reuters) – Royal Dutch Shell (RDSa.L) has appointed Wael Sawan to head its oil and gas production division, replacing Andy Brown who will step down after 35 years at the Anglo-Dutch company.
Sawan, 44, a Canadian citizen of Lebanese origin, currently heads Shell’s deepwater operations, one of the company’s cash growth engines in recent years. He joined Shell in 1997.
Brown, 56, will remain a member of Shell’s executive committee until his departure on Sept. 30, Shell said in a statement.
“I am grateful to Andy for his strong leadership of the Upstream business, particularly having improved business performance during the recent years of low oil prices,” Chief Executive Officer Ben van Beurden said in a statement.
Shell, the second largest publicly-traded oil company behind Exxon Mobil (XOM.N), produced nearly 3,600 barrels per day of oil and gas equivalent in the third quarter of 2018.
Shell transformed its upstream operations following the $54 billion (£41.9 billion) acquisition of smaller rival BG Group in 2016 that gave it a leading position in Brazil’s rapidly growing deepwater production.
Since then Shell has sold many oil and gas assets in order to focus on the most competitive fields in areas such as the North Sea and the Gulf of Mexico.
Reporting by Ron Bousso; editing by Jason Neely and Susan Fenton
SOURCE
A tanker truck enters a Royal Dutch Shell Plc facility in Loving County, Texas, on Monday, Dec. 17, 2018. (Photographer: Angus Mordant/Bloomberg)© 2018 BLOOMBERG FINANCE LP
Royal Dutch Shell (NYSE: RDS.A), saw profits surge in the last quarter, as improvements to capital efficiency has meant the company reported a strong quarter. With oil prices falling into the twenty’s a couple of years ago, Shell decided to re-focus its strategy. Previously it had focused on acquiring assets, and paid little attention to quality. When the oil prices fell, it had to quickly re-strategize to keep profitability up, and the strategy has paid off. Gas and exploration income almost doubled from the previous year, and the upstream segment of the company saw significant increases. Along with the increase in income, profits almost tripled from the previous year .
We have a price estimate of $67 per share for Royal Dutch Shell, which is 10% higher than its current market price. View our interactive dashboard – Royal Dutch Shell In 2019 and modify the key drivers to visualize their impact on its valuation.
Shell has significantly tightened how it allocated capital in 2018. Capital Expenditure (capex), has remained steady through 2018, and is at similar levels from 2017. Capex is expected to continue into 2019. This means Shell will weather any major prices changes in oil, far better than previous years, where it wasn’t prepared for an oil collapse. The volatility in oil could be a reason why the stock remains muted, as investors look for consistent quarterly results before investing in the stock. But with capital expenditure tightening, we expect free cash flow to come in at $20 billion in 2019, up from ~$16 billion in 2018. The company’s average realized price for 2018 has been $65, and we are currently expecting a similar average realized price in 2019.
Currently the stock trades at a price of $60, and our price estimate is at $67, should cash flows come in strong as expected, we could see the price of the stock achieve much higher levels, with the stock reaching as high as $73 which is illustrated in in our chart labeled (share price), and our dashboard. But for the stock’s price to rise to $73, the company would have to show 2-3 quarters of consistent results. With OPEC expected to keep a tight lid on supply, we expect oil prices to remain steady. Overall, Royal Dutch Shell’s stock is well placed to go higher in 2019.
SOURCE
Greig Cameron: January 17, 2019
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