Comment posted our article Shell Sells U.S. Appalachia Assets to National Fuel for $541 million

World-class investment case?

Shell apparently paid 4.7 USD billion in 2010 for the Marcellus shale and sells it now for 0.541 USD billion. 

How does this fit in with Shell’s strategy to provide a “world class investment case”? Some investors reacted sheepishly to the dividend haircut as a “sensible choice made by the Board”. Other investors see perhaps deeper underlying issues with Shell’s management choices and delivery performance, triggering calls for a Van Beurden succession plan.

Perhaps they see a longer legacy of poor choices and dud projects. (Shale, drilling in the Arctic, lacklustre exploration success, Prelude, BG acquisition, ….) read more

At a time when the oil industry is gripped by fears that demand for petrol will collapse in an era of electric vehicles, many hydrocarbon producers are betting on petrochemicals — and in particular, plastics — to fill the gap.

Michael Pooler in Paris: 12 Feb 2020

Along the banks of the Ohio River in Beaver County, Pennsylvania, giant cranes whir overhead as thousands of construction workers toil away at what will be one of the largest plastic factories in the world.

The multibillion dollar Royal Dutch Shell plant, on the site of an old zinc smelter in the American rust-belt, is the biggest investment in the state since the second world war…

At a time when the oil industry is gripped by fears that demand for petrol will collapse in an era of electric vehicles, many hydrocarbon producers are betting on petrochemicals — and in particular, plastics — to fill the gap. But doubts are emerging about the wisdom of a huge expansion in capacity that will leave the world awash in products that can take hundreds of years to decay. read more

Summary

*While Chevron, Exxon, Occidental and other oil majors are eagerly ramping up shale acquisitions and production, Shell has been more reserved in this regard.

*Shale resources may help companies improve on upstream production volumes and reserves, but profitability is questionable, leading to potentially net negative trade-off for investors.

*The ethane plant in Pennsylvania is an example of Shell wisely making use of lower natural gas prices, rather than being on the upstream side, losing money.

Much has been made lately of the deep dive into shale that the likes of oil majors such as Chevron (NYSE:CVX) and Exxon (NYSE:XOM) decided to take in the past few years. A fight over Anadarko (NYSE:APC) between Chevron and Occidental (NYSE:OXY) was perhaps the most emblematic symbol of this industry-changing trend. Analysts and investors quickly jumped to the conclusion that it is imperative for all oil majors to jump in and compete with each other on acquiring and developing shale assets. Exxon and Chevron are currently planning to increase shale production to 1 mb/d each. Shell (NYSE:RDS.A) (NYSE:RDS.B) has been more timid in this regard, and given the profitability profile of the overall shale industry, I am fully satisfied with its position in this regard. Shell’s downstream investments, such as the Pennsylvania ethane plant, meant to take advantage of low shale prices, seems to make far more sense than rushing to produce the low-priced natural gas. Nor does it seem all that wise to rush to produce shale oil, which requires extremely high capital expenses to produce. Some investors may believe that it is more important to maintain reserves and production by diving into the shale patch. I personally think that it is not worth diluting Shell’s overall profitability profile by producing shale oil and gas for the sake of maintaining the company’s overall production numbers. read more

Shell comments on deepwater vs. shale: Seeking Alpha: 18 Oct 2018

Shell bets on shale for flexibility in energy transition: Financial Times:17 Oct 2018

Shell’s $31 Billion Gamble On Canadian LNG: Seeking Alpha: 17 Oct 2018

Shell Exits Denmark’s Offshore Oil and Gas Sector: The Maritime Executive: 17 Oct 2018 read more

Printed below is an English translation of an article published today by the Dutch Financial Times, Financieele Dagblad. 

Maarten Wetselaar: ‘There has been a period of thirty years in which the industry and we also only talked about the largest oil platforms that were built and the deepest wells that were drilled.’ Photo: Michel de Groot

‘The energy transition gives power back to the customer’

Bert van Dijk: Energy: 12 Sept 2018

ShellRDSA € 27.85 + 1.05% is still an oil and gas multinational, but is sorting for a future in which it will become one of the largest electricity companies. ‘We are faced with a revolution’, says Maarten Wetselaar, member of the Executive Board of Shell in an interview with the FD. He is responsible, among other things, for the New Energies division that was established two years ago. read more

Printed below is an English translation of an article published today by the Dutch Financial Times, Financieele Dagblad. 

‘Shell close agreement for mega-investment in Canada’

Bert van Dijk • Entrepreneurship

Is it going through or not? That question keeps Canada busy these days. Is Shell about to give the final green light for one of the largest investments this year in the fossil energy sector: the construction of an immense factory to produce liquid gas (LNG)? Cost: $ 30 billion. Shell works together with three partners in the project: Petrochina, Korea Gas and Mitsubishi. read more

Reuters Staff: MARCH 13, 2018 (The opinions expressed here are those of the author, a columnist for Reuters.)

LNG IS THE FASTEST GROWING GAS SUPPLY SOURCE

(SOURCE: SHELL INTERPRETATION OF WOOD MACKENZIE Q4 2017 DATA)

By Clyde Russell

LAUNCESTON, Australia, March 13 (Reuters) – Crude oil is likely to spring to mind if one is asked to name a commodity where the United States is disrupting the market by becoming a swing producer and challenging traditional trade flows, especially in fast-growing Asian markets.

But it’s increasingly likely that the United States is about to play the same role in liquefied natural gas (LNG), as it ramps up production in an already well-supplied market. read more

Printed below is an English translation of an article published today by the Dutch Financial Times, Financieele Dagblad. It is partly about NAM Nederlandse Aardolie Maatschappij BV., a joint venture between Royal Dutch Shell and ExxonMobil each owning a 50% share in the company responsible for the earthquake blighted Groningen Gas Field and the consequential potential bill for untold billions in damages. The article discusses the similarity with recent earthquake activity in Oklahoma arising from shale oil and gas extraction.

Begins

Do the ‘shale farmers’ go after the Groningers?

Jeroen Groot • Economics & Politics

The bottom trembles and walls tear in Oklahoma. Yes, that sounds familiar, and the cause is also: oil and gas extraction. Is a ‘Groningen scenario’ taking place in the US, including shutting down the taps? Then it quickly ends with low oil prices.

The damage will be viewed in November 2011 at a St. Gregory’s University building in Shawnee, Oklahoma. Photo: Hollandse Hoogte / AP | Associated Press

On Friday it was hit again in the US state of Oklahoma: an earthquake of 3.6 on the Richter scale. As far as known, this quake did not cause any damage, but that was different on Sunday 4 March. Then the places Enid and Breckenridge, 150 kilometers north of Oklahoma City, were hit twice in rapid succession by a quake with a force of 4.2.

‘Houses with cracks in the walls, doors that can no longer open or close. People reacted quite startled, ‘Mike Honigsberg tells us by telephone from Enid. Honigsberg is director of the Garfield County Emergency Management, a kind of crisis center for calamities such as large fires and nowadays also earthquakes. These are, as in Groningen, associated with the extraction of oil and gas. read more

Emily Gosden, Energy Editor: March 9, 2018

Royal Dutch Shell is working with the private equity firm Blackstone Group on a $10 billion (£7.2 billion) bid for BHP Billiton’s US shale assets. The Anglo-Dutch oil group first expressed interest in the assets, some of which neighbour its own existing shale fields in the Permian basin, last month. It has now teamed up with the private equity giant to work on a joint offer, Sky News reported last night. Shell and Blackstone both declined to comment. Shell is seeking to expand its shale business, which it identified last year as a key growth opportunity, while BHP, the Anglo-Australian mining group, is looking to offload its underperforming shale division under pressure from the activist investor Elliott Management. BHP expects to receive initial bids in… read more

By Mark Kleinman, City Editor

Shell, the FTSE 100 oil behemoth, is plotting a $10bn (£7.3bn) joint takeover bid for the American shale division of BHP, the world’s biggest miner.

Sky News has learnt that Shell and Blackstone, the private equity firm, have agreed to work together on an offer for the assets, which were put up for sale last summer by BHP amid pressure from an activist investor.

A joint offer from Shell and Blackstone would be only one of several credible proposals that BHP is expecting to receive for the US shale operations, according to banking sources. read more

By David Messler – Mar 05, 2018, 12:00 PM CST

Shell has spent the last three years reinventing itself for the energy future it sees in the coming decades. A few years back, Shell was a company struggling to find its footing. Exploration success was declining, as was daily liquids production. From the graph below you can see that the lack of success in exploration was starting to equate to reduced production. An oil company’s life can be measured in production, and they were not replacing the oil being produced. FULL ARTICLE read more

Ron Bousso, Dmitry Zhdannikov: FEBRUARY 20,2018 LONDON (Reuters) – Royal Dutch Shell (RDSa.L) will expand deepwater output and turn a profit from its shale production in coming years as both together will help the oil major cope with a world of low crude prices, the head of its oil and gas production said on Tuesday.

Shell’s deepwater production in Brazil, Nigeria, the Gulf of Mexico is much bigger and more profitable, but the firm sees the nimble, fast-returns U.S. onshore shale as an engine for growth.

“We can see strong (shale) production growth, strong cash surpluses that gives us a balance in our portfolio where you can ramp investment up and down, you can moderate that, very unlike deepwater which is quite chunky,” Andy Brown told Reuters in an interview on the sidelines of the IP Week conference. read more

Communities like Fox Creek, Alberta, are feeling the economic benefits of the shale boom, along with fracking-linked earthquakes. 

Drilling has been so intense near Fox Creek, Alberta that it’s been linked to a series of earthquakes.Brennan Linsley/AP Photo

Bloomberg News: Robert Tuttle: February 9, 2018: 12:59 PM EST

In the Western Alberta town of Fox Creek, roughnecks shuffle through hotel lobbies, freight trucks choke slushy streets and, every once in a while, tremors shake the earth.

Welcome to Canada’s biggest shale boom. Chevron Corp., Royal Dutch Shell Plc, Encana Corp., Murphy Oil Corp. and XTO Energy Inc. are among those flocking to Fox Creek to stake their claim in the oil-rich Duvernay shale formation. 

Here, the prize is condensate, an ultra-light oil that’s perfect for diluting the heavy tar-sands crude for which Alberta is known. More locally produced diluent would be a plus for Canadian companies that now depend on the U.S. — and for communities like Fox Creek that are feeling the economic benefits along with fracking-linked earthquakes. More of both may be in the offing as drillers flock in Chevron’s wake into the Duvernay region. read more

A pump jack in a Permian Basin oil field in West Texas. The area has been a focus of the shale drilling boom. Credit Spencer Platt/Getty Images North America

By CLIFFORD KRAUSS: JAN. 28, 2018

HOUSTON — A substantial rise in oil prices in recent months has led to a resurgence in American oil production, enabling the country to challenge the dominance of Saudi Arabia and dampen price pressures at the pump. The success has come in the face of efforts by Saudi Arabia and its oil allies to undercut the shale drilling spree in the United States. Those strategies backfired and ultimately ended up benefiting the oil industry. Overcoming three years of slumping prices proved the resiliency of the shale boom. Energy companies and their financial backers were able to weather market turmoil — and the maneuvers of the global oil cartel — by adjusting exploration and extraction techniques. FULL ARTICLE read more

Liz Hampton: 16 JAN 2018

HOUSTON (Reuters) – Surging shale production is poised to push U.S. oil output to more than 10 million barrels per day – toppling a record set in 1970 and crossing a threshold few could have imagined even a decade ago. And this new record, expected within days, likely won’t last long. The U.S. government forecasts that the nation’s production will climb to 11 million barrels a day by late 2019, a level that would rival Russia, the world’s top producer. FULL ARTICLE read more

Once good for 20% of the government revenue and extra influence in Europe, now a national blight: the natural gas extraction in Groningen. The crane is getting closer and closer. But when the earth stops shaking, nobody knows.

€ 265 billion: Total revenue from Dutch natural gas revenues in the period 1960-2013 amounted to approximately € 265 billion.

The Groningen field was a jewel in the Shell portfolio.

Printed below is an English translation of an article published today by the Dutch equivalent of the Financial Times, Financieele Dagblad under the headline: 

If you produce gas, you do not actually have to do anything

By Carel Grol

Harry Klevering (68) can still remember the arrival of the gas. About eight years old, he was the youngest of a family of thirteen from the Groningen village of Spijk, when the gas bubble was discovered in Slochteren in the late 1950s. Soon after, the Dutch Petroleum Company (NAM) visited his house, the company that still lives a life later on gas. To install free gas pipes. Tightly over the plinth, even though the tubes were plastic.

This Tuesday afternoon Klevering is in the office of Centrum Veilig Wonen in Loppersum. He just reported damage. He has lived in the same house for 24 years. Red bricks with a pointed roof, on the water. It is the second time that he has suffered damage. On Tuesday there were two explosions and then it felt like the house was falling. read more