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Royal Dutch Shell (RDSA) said its oil production and carbon emissions have peaked as it detailed plans to gradually wean itself off fossil fuels. Climate activists said it hadn’t gone far enough.

The Anglo-Dutch company said in a statement on Thursday that it expects its oil production to decline by between 1% and 2% each year after peaking in 2019. Its total carbon emissions likely peaked in 2018, it added.

Shell unveiled plans in September to become a net zero emissions business by 2050 (including from its own products and those that it sells), joining European rivals BP (BP) and Total (TOT) in making a shift towards clean energy.

The oil giants have written off billions of dollars of assets, spurred on by forecasts that global oil demand may never recover to levels reached before the pandemic, amid permanent changes to how people work and travel and growing concerns about the climate crisis.

Now Shell is setting out how it hopes to achieve its goals. It wants to sell more clean energy, while investing in carbon capture and forestation projects to offset emissions. It will also expand its biofuels production and distribution business.

“Whether our customers are motorists, households or businesses, we will use our global scale and trusted brand to grow in markets where demand for cleaner products and services is strongest, delivering more predictable cash flows and generating higher returns,” said CEO Ben van Beurden.

While European oil companies try to reinvent themselves, America’s ExxonMobil (XOM) and Chevron (CVX) have so far resisted major changes to their businesses. But shareholders are agitating for a shift in direction and there are signs that the pressure may be starting to have an impact.

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Shell Sued in the Netherlands for Insufficient Action On Climate Change

April 9, 2019

Shell Sued in the Netherlands for Insufficient Action On Climate Change

Seven environmental and human rights organizations in the Netherlands have filed suit against Royal Dutch Shell for failing to align its business model with the goals of the Paris Climate Agreement.

The suit, which is the first to directly challenge an oil company’s business model, was filed Friday in The Hague by Friends of the Earth Netherlands/ Milieudefensie, Greenpeace Netherlands, five other organizations and more than 17,000 Dutch citizens.

The plaintiffs are not seeking financial compensation, but are asking Shell to adjust its business model in order to keep global temperature rise below 1.5 degrees Celsius, as recommended by the United Nations Intergovernmental Panel on Climate Change (IPCC). They allege that by following a business model that it knows will not reach these goals, Shell is violating a Dutch law prohibiting “unlawful endangerment” and is violating human rights by taking insufficient action against climate change.

“If successful, the uniqueness of the case would be that Shell – as one of the largest multinational corporations in the world – would be legally obligated to change its business operations,” said Milieudefensie attorney Roger Cox, who also represented plaintiffs in the landmark Urgenda suit.

Urgenda was the first case in which a court ordered a government to reduce its emissions and the first time a court ruled that not taking sufficient action on climate change is a human rights violation.

Plaintiffs allege Shell’s current business model threatens human rights because the oil giant is knowingly undermining the world’s chances to keep warming below 1.5 degrees Celsius. They maintain that rather than guarantee emission reductions, Shell’s current plan would contribute to a much larger global temperature increase.

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Another Crucial Canadian Pipeline Runs Into Trouble

January 13, 2019

Another Crucial Canadian Pipeline Runs Into Trouble

Late last year, Royal Dutch Shell gave the greenlight to a massive LNG export terminal on Canada’s Pacific Coast, one of the largest investments in LNG in years. But like other fossil fuel projects in Canada, the plans have run into some trouble.

Shell’s LNG Canada project hinges on a crucial pipeline that will connect gas fields along the border of British Columbia and Alberta to the Pacific coast at Kitimat. The Coastal GasLink pipeline is to be constructed by TransCanada (or, rather TC Energy, as the company now wants to be known).

The Coastal GasLink pipeline was supposed to mark a departure from previous long distance pipelines in Canada – a project that would, from the start, adequately consult with First Nations. Prior pipeline projects – Enbridge’s Northern Gateway and Line 3; TransCanada’s Energy East; as well as Kinder Morgan’s Trans Mountain Expansion – ran into stiff resistance from various First Nations.

TransCanada hoped that Coastal GasLink would be different. But, it too is now meeting resistance. Members of the Wet’suwet’en nation threw up makeshift barricades to stop construction on their land in recent weeks. On January 7, the Royal Canadian Mounted Police broke through those barricades and arrested at least 14 people. RCMP said it was enforcing a court order, but the clash made national and international headlines.

The situation is complex because the Wet’suwet’en nation never signed a treaty with Canada, so their territory is neither ceded nor even formally acknowledged by Canada. “What I see is a long history of the Canadian government doing its best to avoid acknowledging the existence of other systems of government,” Gordon Christie, a scholar of indigenous law at the University of British Columbia, told The Guardian.

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Royal Dutch Shell signs deals to sell oilsands assets

March 9, 2017

Royal Dutch Shell signs deals to sell oilsands assets

Anglo-Dutch energy giant shedding interests in Athabasca, Peace River and other leases

Royal Dutch Shell CEO Ben van Beurden said the deals revealed Thursday are are a ‘significant step’ in re-shaping Shell’s portfolio in line with its long-term strategy. (AP Photo/Peter Dejong, File)

Royal Dutch Shell says it has signed two agreements to sell its undeveloped oilsands interests in Canada for a net consideration of US$7.25 billion.

Under the first agreement, the Anglo-Dutch energy giant will reduce its 60 per cent interest in the the Athabasca Oil Sands Project to 10 per cent and sell its 100 per cent interest in the Peace River Complex in-situ assets, including Carmon Creek, and a number of undeveloped oilsands leases in Alberta to a subsidiary of Canadian Natural Resources Ltd.

Shell says it would remain the operator of the project’s Scotford upgrader and Quest carbon capture and storage project. Canadian Natural would be expected to operate Athabasca’s upstream mining assets.

Shell says the deal is worth approximately US$8.5 billion ($11.1 billion Cdn), comprised of $5.4 billion in cash plus around 98 million Canadian Natural shares currently valued at $3.1 billion.

Under the second agreement, which is also subject to regulatory approvals, Shell and Canadian Natural will jointly acquire and own Marathon Oil Canada Corp., which holds a 20 per cent interest in the Athabasca Oil Sands Project, for $1.25 billion each.

The transactions are expected to close in mid-2017, subject to regulatory approvals.

“These assets are an excellent fit for Canadian Natural, a highly experienced oil sands developer,” said Shell Canada president Michael Crothers in a release.

‘Significant step’

Shell CEO Ben van Beurden said the deals are a “significant step” in re-shaping Shell’s portfolio in line with its long-term strategy.

…click on the above link to read the rest of the article…

Shell Scraps Oil-Sands Project, Points at Big Issue For Canada

October 30, 2015

Shell Scraps Oil-Sands Project, Points at Big Issue For Canada

On October 27, the Anglo-Dutch oil major announced that it was pulling the plug on its Carmon Creek oil sands project in Alberta, Canada. The project was expected to yield 80,000 barrels per day in oil sands production, which was originally greenlighted in 2013.

However, the markets have turned against Shell. In March, the company said that it would alter the design of the project to “take advantage of the market downturn to optimize design and retender certain contracts.” The logic was that low oil prices are forcing cost reductions up and down the supply chain, potentially allowing the company to lower construction costs.

Still, the company would need a rebound in oil prices to make the project viable, a rebound that never came. “After careful review of the potential design options, updated costs, and the company’s capital priorities, Shell’s view is that the project does not rank in its portfolio at this time,” the company said in a statement.

But that is not all. Shell also included a very intriguing justification for cancelling the project. They said that the decision to scrap Carmon Creek “reflects current uncertainties, including the lack of infrastructure to move Canadian crude oil to global commodity markets.”

In other words, the 80,000 barrel-per-day project will not be completed because Canada does not have enough pipelines. For years environmental groups have been protesting the Keystone XL pipeline under the premise that blocking infrastructure would force oil companies to keep their reserves in the ground. Such a strategy could also help stop greenhouse gas emissions from rising.

Supporters of the controversial pipeline, which would see Alberta oil sands travel to the U.S. Gulf Coast, argued that the project would have no effect on carbon emissions because the oil sands would be developed with or without Keystone XL. If the pipeline wasn’t built, the thinking goes, the oil sands would find another way to market.

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A New Era For Canadian Oil And Gas, For Better Or Worse

October 21, 2015

A New Era For Canadian Oil And Gas, For Better Or Worse

Canadian voters kicked out the conservative government in the October 19 election, a party that had been in power for a decade. Polls had predicted a slight lead for the Liberal Party, but in a surprise result, the Liberals actually won a majority of seats in parliament and will form a majority government. Most analysts had expected the Liberal Party would have had to form a coalition government, but many voters appeared to strategically vote for the frontrunner in order to ensure a loss for the conservatives. The new government of Prime Minister-designate Justin Trudeau will almost certainly be much less friendly to the oil and gas industry in Canada, though to what extent remains uncertain. Trudeau opposes Enbridge’s (NYSE: ENB) Northern Gateway Pipeline, but also backs TransCanada’s (NYSE: TRP) Keystone XL Pipeline – the latter of which could be blocked by the U.S. government. More will be known in the coming weeks. However, one clear promise from Trudeau was his plan to engage in deficit spending to goose the economy through higher investments in infrastructure.

The U.S. Department of Interior cancelled two lease sales for the Arctic, effectively ruling out new drilling for several years. The agency said that there was almost no interest from potential buyers for acreage in the Chukchi and Beaufort Seas, so it decided to scrap the lease sales. The move follows the decision from Royal Dutch Shell (NYSE: RDS.A) to abandon Arctic drilling, and without any other companies positioned to move forward, offshore drilling in the U.S. Arctic may not happen for years. In addition to cancelling the lease sales, the Obama administration also denied a request from Statoil (NYSE: STO) and Shell to allow an extension of their leases. They are set to expire in 2017 (Beaufort Sea) and 2020 (Chukchi Sea).

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Obama Slams The Door On Future U.S. Arctic Drilling

October 20, 2015

Obama Slams The Door On Future U.S. Arctic Drilling

The Obama administration officially shut the door on Arctic drilling, a move that could prevent any new drilling for years to come.

The U.S. Department of Interior announced on October 16 that it would cancel two lease sales for offshore acreage, which had been scheduled to take place in 2016 and 2017. Environmental groups have been doggedly criticizing the Obama administration for allowing Royal Dutch Shell to drill in the Arctic to begin with, citing the potential catastrophe if an oil spilled occurred. They had called upon the President to deny any permits to Shell.

But it wasn’t environmental protest that killed off Shell’s drilling campaign. What really forced the Anglo-Dutch company to retreat was low oil prices and disappointing drilling results.

Similarly, the Obama administration is now shutting the door on future lease sales not because of concerns over the environment, but “In light of current market conditions and low industry interest,” as Interior put it in a statement.

On its face, the move is a logical one. Few other companies were interested in drilling in the Chukchi or Beaufort Seas, despite several having purchased leases years ago. Statoil and ConocoPhillips, two other large oil companies interested in the Arctic, had previously put their Arctic ambitions on ice because of the difficulty and high costs associated with drilling in the region. With Shell announcing that it would suspend U.S. Arctic exploration for the “foreseeable future” there are now zero companies that are viably interested in drilling anytime soon.

Remarkably, however, the interest in new leases had dried up even before the downturn in oil prices. Interior said that it put a “Call for Information and Nominations” in September 2013, which is essentially a way for the government to solicit interest from the industry on which areas to auction off based on their interest.

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Michael Klare, Tipping Points and the Question of Civilizational Survival

October 9, 2015

Tipping Points and the Question of Civilizational Survival

In mid-August, TomDispatch’s Michael Klare wrote presciently of the oncoming global oil glut, the way it was driving the price of petroleum into the “energy subbasement,” and how such a financial “rout,” if extended over the next couple of years, might lead toward a new (and better) world of energy. As it happens, the first good news of the sort Klare was imagining has since come in. In a country where the price of gas at the pump now averages $2.29 a gallon (and in some places has dropped under $1.90), Big Oil has begun cutting back on its devastating plans to extract every imaginable drop of fossil fuel from the planet and burn it. Oil companies have also been laying off employees by the tens of thousands and deep-sixing, at least for now, plans to search for and exploit tar sands and other “tough oil” deposits worldwide.

In that context, as September ended, after a disappointing six weeks of drilling, Royal Dutch Shell cancelled “for the foreseeable future” its search for oil and natural gas in the tempestuous but melting waters of the Alaskan Arctic. This was no small thing and a great victory for an environmental movement that had long fought to put obstacles in the way of Shell’s exploration plans. Green-lighted by the Obama administration to drill in the Chukchi Sea this summer, Shell has over the last nine years sunk more than $7 billion into its Arctic drilling project, so the decision to close up shop was no small thing and offers a tiny ray of hope for what activism can do when reality offers a modest helping hand.

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With Shell’s Failure, U.S. Arctic Drilling Is Dead

September 30, 2015

With Shell’s Failure, U.S. Arctic Drilling Is Dead

Arctic Drilling in the U.S. is dead.

After more than eight years of planning and drilling, costing more than $7 billion, Royal Dutch Shell announced that it is shutting down its plans to drill for oil in the Arctic. The bombshell announcement dooms any chance of offshore oil development in the U.S. Arctic for years.

Shell said that it had completed its exploration well that it was drilling this summer, a well drilled at 6,800 feet of depth called the Burger J. Shell was focusing on the Burger prospect, located off the northwest coast of Alaska in the Chukchi Sea, which it thought could hold a massive volume of oil.

On September 28, the company announced that it had “found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the Burger prospect. The well will be sealed and abandoned in accordance with U.S. regulations.”

After the disappointing results, Shell will not try again. “Shell will now cease further exploration activity in offshore Alaska for the foreseeable future.” The company cited both the poor results from its highly touted Burger J well, but also the extraordinarily high costs of Arctic drilling, as well as the “unpredictable federal regulatory environment in offshore Alaska.”

Shell will have to take a big write-down, with charges of at least $3 billion, plus another $1.1 billion in contracts it had with rigs and supplies.

Shell’s Arctic campaign was an utter failure. It spent $7 billion over the better part of a decade, including an initial $2.1 billion just to purchase the leases from the U.S. government back in 2008. The campaign was riddled with mishaps, equipment failures, permit violations, and stiff opposition from environmental groups, including the blockading of their icebreaker in a port in Portland, OR this past summer. The FT reports that Shell executives privately admit that the environmental protests damaged the company’s reputation and had a larger impact than they had anticipated.

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U.S. allows Shell to drill for oil in Arctic Ocean off Alaska

August 18, 2015

U.S. allows Shell to drill for oil in Arctic Ocean off Alaska

Company hopes to drill 2 wells in the Chukchi Sea by late September

The U.S. government on Monday gave Royal Dutch Shell the final permit it needs to drill for oil in the Arctic Ocean off Alaska’s northwest coast for the first time in more than two decades.

The Bureau of Safety and Environmental Enforcement announced that it approved the permit to drill below the ocean floor after the oil giant brought in a required piece of equipment to stop a possible well blowout.

The agency previously allowed Shell to begin drilling only the top sections of two wells in the Chukchi Sea because the key equipment, called a capping stack, was stuck on a vessel that needed repair in Portland, Ore.

Since the vessel arrived last week, Shell is free to drill into oil-bearing rock, estimated at 2,400 metres below the ocean floor, for the first time since its last exploratory well was drilled in 1991.

“Activities conducted offshore Alaska are being held to the highest safety, environmental protection, and emergency response standards,” agency Director Brian Salerno said in a statement Monday. “We will continue to monitor their work around the clock to ensure the utmost safety and environmental stewardship.”

Shell’s icebreaker Fennica, shown here in Portland, Ore., earlier this summer, arrived in Alaska Aug. 11 carrying vital equipment to use in the event of a blowout. Final permits for drilling hinged on its arrival. (AP Photo/Don Ryan)

Environmental groups oppose Arctic offshore drilling, saying industrial activity will harm polar bears, Pacific walrus, ice seals and threatened whales already vulnerable from climate warming and shrinking summer sea ice. They say oil companies have not demonstrated that they can clean up a spill in water choked by ice.

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Global Oil Supply More Fragile Than You Think

August 6, 2015

Global Oil Supply More Fragile Than You Think

Many oil companies had trimmed their budgets heading into 2015 to deal with lower oil prices. But the rebound in April and May to $60 per barrel from the mid-$40s suggested that the severe drop was merely temporary.

But the collapse of prices in July – owing to the Iran nuclear deal, an ongoing production surplus, and economic and financial concerns in Greece and China – have darkened the mood. Now a prevailing sense that oil prices may stay lower for longer has hit the markets.

Oil futures for delivery in December 2020 are currently trading $8 lower than they were at the beginning of this year even while immediate spot prices are $4 higher today. In other words, oil traders are now feeling much gloomier about oil prices several years out than they were at the beginning of 2015.

The growing acceptance that oil prices could stay lower for longer will kick off a fresh round of cuts in spending and workforces for the oil industry.

“It’s a monumental challenge to offset the impact of a 50% drop in oil price,” Fadel Gheit, an analyst with Oppenheimer & Co., told the WSJ. “The priorities have shifted completely. The priority now is to discontinue budget spending. The priority is to live within your means. Forget about growth. They are now in survival mode.”

And many companies are also recalculating the oil price needed for new drilling projects to make financial sense. For example, according to the Wall Street Journal, BP is assuming an oil price of $60 per barrel moving forward. Royal Dutch Shell is a little more pessimistic, using $50 per barrel as their projection. For now, projects that need $100+ per barrel will be put on ice indefinitely. The oil majors have cancelled or delayed a combined $200 billion in new projects as they seek to rein in costs, according to Wood Mackenzie.

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6 Warning Signs That the Economy Is in Trouble

August 5, 2015

6 Warning Signs That the Economy Is in Trouble

On July 14, I wrote about the danger developing in the transportation sector, and things are looking even worse today. Here’s what I mean:

Look Out Below #1: Royal Dutch Shell reported its quarterly results last week—$3.4 billion, down from $5.1 billion for the same quarter a year ago—and warned that “today’s oil price downturn could last for several years.”

In anticipation of tough times, Shell slashed its 2015 capital expenditure budget by 20% and is going to lay off 6,500 high-paying jobs (not Burger King-type jobs) this year.

Look Out Below #2: UPS is a very good barometer of the consumer end of our economy: It’s the largest component of the Dow Jones Transportation Average both by sales and market valuation.

And UPS isn’t very confident about the US economy. Here is what UPS CEO David Abney said in a recent conference call with analysts:

If you just look at in [sic] January, the GDP forecast we thought was going to be about 3.1%. Now the thinking in July is about 2.3%, so let’s say a pretty significant decrease.

Why so glum?

The continued strength of the US dollar and I think this impending rate hike by the Fed appears to be holding back some US growth.

Abney has good reason to complain: UPS’s revenue fell 1.2% over the last 12 months. Not good.

Look Out Below #3: Rolls Royce may be best known for its luxury limousines, but the heart of its business is making engines for jet airplanes. Along with General Electric, the company dominates the aerospace engine business.

Business isn’t so good. Rolls Royce just issued its fourth profit warning in the last year and a half and is shutting down its $1.56 billion share buyback, introduced a year ago, to conserve cash.

…click on the above link to read the rest of the article…

Layoffs Surge As Oil Price Outlook Remains Sober

August 3, 2015

Layoffs Surge As Oil Price Outlook Remains Sober

Lately the leaders of some of the world’s biggest energy companies have been saying oil prices will remain depressed for some time – perhaps for the next five years – and now they’ve decided to cut their costs in the most painful way possible: massive job cuts.

Royal Dutch Shell announced July 30 that it expects to eliminate 6,500 positions. The announcement came the same day it reported that earnings in the second quarter were $3.4 billion, 33 percent lower than the $5.1 billion it made during the same period of 2014.

The same day, the British utility Centrica said it plans to cut fully 6,000 jobs and reduce the size of its division for producing oil and gas. The day before, Chevron Corp. of the United States expected to eliminate 1,500 positions.

And as oil producers struggle to rein in spending elsewhere in their operations, the pain is being shared by the oil service companies they rely on. The Italian energy contractor Saipem, for example, says it plans to cut 8,800 jobs in two years.

“We have to be resilient in a world where oil prices remain low for some time,” Shell CEO Ben van Beurden said in the statement. “These are challenging times for the industry, and we are responding with urgency and determination.”

It may be too early to determine whether the price of oil, which began falling a year ago, was now forcing the energy industry to go beyond cutting fat and is now gouging into the very sinew of its operations, but it’s clear that they’re convinced that other economies simply weren’t enough to keep themselves afloat.

…click on the above link to read the rest of the article…

Canadian Economy More Damaged By Oil Prices Than Expected

June 12, 2015

Canadian Economy More Damaged By Oil Prices Than Expected

Canada’s oil industry has had a rough couple of months with production and exports taking a hit.

Low oil prices are cutting into the profits of major producers. Producing from Alberta’s oil sands is costly and requires a high oil price to justify the expense.

In fact, the fall in prices could significantly impact production levels decades from now. Oil companies are shelving large investments because they no longer look profitable. For example, earlier this year Royal Dutch Shell abandoned a potential 200,000 barrel-per-day oil sands mine. Overall, Canada’s oil patch could see a $23 billion cut in investment in 2015, a decline of almost a third from last year. Unless oil prices bounce back, a lot of projects may not move forward.

Lack of investment now translates to lower oil production in the future. Canada may only produce 5.3 million barrels per day in 2030, according to the Canadian Association of Petroleum Producers (CAPP), much lower than the 6.4 million barrels per day the group predicted last year.

But again, a lot depends on what happens with oil prices. The decision by OPEC to play for market share doesn’t bode well.

“It really depends on how long OPEC decides they want to keep pricing at this level with their quotas that they’ve established,” Greg Stringham, CAPP vice-president of markets and oil sands, told the Financial Post.

The contraction underway in Canada’s oil sands has been hugely damaging to the broader Canadian economy. First quarter GDP declined by the most in over six years, falling 0.6 percent on an annualized basis. The figures stunned most economists who had expected modest growth, and it indicates that Canada’s economy is feeling the pain of low oil prices much worse than previously expected.

…click on the above link to read the rest of the article…

We May Not See Arctic Oil For Decades

May 28, 2015

We May Not See Arctic Oil For Decades

Shell’s Arctic campaign this year will be pivotal. If the company cannot find large reserves of oil, it will likely set back Arctic oil development for a generation.

The Financial Times reported that Royal Dutch Shell will not see Arctic oil come online anytime soon, even in the best of scenarios. Even Shell officials think that the oil major will not be able to see Arctic oil hit the market until sometime in the 2030s.

There are a few reasons for this. Finding and developing offshore oil can typically take around a decade. First there is a long lead time before any drills hit the waters – analyzing data, purchasing acreage, planning, doing seismic surveys, getting permits, moving equipment into place, and finally deploying rigs. Shell first started buying up Arctic leases in 2007. After years of preparation (and huge setbacks), Shell has done most of this pre-drilling work.

Even then, once the rigs ply the icy waters, there are many years ahead before oil begins flowing. Shell has to drill test wells, analyze data, and drill more wells.

But the Arctic also presents some unique challenges not found anywhere else. First is the short drilling season. Shell wouldn’t be able to operate year round, and could only make headway a few months out of the year during the summer. Perhaps more importantly is the remote location. Without adequate infrastructure Shell would have to do a lot of building to make Arctic oil viable. That would include pipelines, processing facilities, roads, and more. The Gulf of Mexico has all of this stuff in place, which reduces the cost and risk of drilling, but the Arctic is uncharted territory.

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