2 Sep 2014, 10.33 pm GMT
Houston, 2 September (Argus) — Shell is not giving up on North American oil and gas shales, despite a spate of costly write-downs and asset sales, chief executive Ben van Beurden said today.
Speaking at Columbia University’s Center on Global Energy Policy in New York, van Beurden said the company was slow to recognize the shale boom last decade before it began spending heavily to acquire acreage. This included paying $4.7bn for 650,000 acres in the Marcellus shale in 2010 and more than $1bn for leases in Texas’ Eagle Ford shale.
But the purchases required additional spending on drilling and development in short order, costs that led Shell to reassess its US shale holdings completely last year. This lead to a $2bn write-down in North American shale and plans to sells hundreds of thousands of US acres.
“The speed at which we had done it and the volume has been giving us a bit of indigestion to be quite honest,” van Beurden said of the company’s shale build up. “You can be too greedy and too hungry when it comes to looking at opportunities.”
Asset sales have helped the company narrow its focus on fewer projects where Shell can better compete with the smaller oil and gas companies that have dominated US shale development, he said.
“It’s a different type of game but it’s not best left to the independents. We can play and win at it as well,” he said.
Van Beurden said he was not optimistic that shale gas development will be booming in regions outside of the US anytime soon, despite the company trying “very, very hard in China.”
“There are much less advanced systems, less advanced supply chains, market mechanisms,” in China, he said, but there is still long term potential for shale there and in Russia, Algeria and Argentina.
Van Beurden was also skeptical that the pending LNG exports from the US will have much impact on Europe’s dependence on Russian gas for many years, despite the hopes of many European countries as the Ukrainian conflict continues. “It will take at least 5, 10 years to make significant impact,” he said.
He reiterated the company’s support for a loosening of the de facto ban on US oil exports, saying it “would be a sensible thing to do” that was unlikely to have much impact on US gasoline prices since global markets are already a major factor in local prices.
Van Beurden also repeated calls for a price on carbon and development of carbon capture and storage technologies as ways to meet the dual challenges of climate change and growing global energy demand.
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