Shell plans rapid North American growth - FT

By Ed Crooks in New York

Published: September 29 2010 00:21 | Last updated: September 29 2010 00:21

Royal Dutch Shell is planning a rapid expansion of its North American business to raise production by 40 per cent to 1m barrels equivalent per day in 2014, including gas, Canadian oil sands and deepwater oil.

The strategy, announced in Canada on Tuesday, is part of Europe’s largest oil company’s plan to meet its “aspiration” of producing 3.7m barrels per day in 2014, compared with 3.15m last year.
The company had previously set an objective of producing 3.5m b/d by 2012.
BP’s Deepwater Horizon disaster and weak natural gas prices have raised concerns about the outlook for the industry in North America, but Shell intends to make the region the focus of its global expansion in the coming decade.

One of its announcements included approval for a deepwater project in the Gulf of Mexico where BP is a junior partner.
Marvin Odum, Shell’s director for its American upstream oil and gas production business, said the company planned to invest $10bn a year in North America over the next four years, sustaining the rate of spending committed since 2004.
Shell has shown the weakest production performance of all the largest international oil companies over the past decade, suffering seven consecutive years of falling output, but it now has some large long-term investment projects coming on stream.
In Canada, its 60 per cent owned Athabasca oil sands project is adding 100,000 b/d of production, and in Qatar its Pearl gas-to-liquid fuels and Qatargas 4 liquefied natural gas projects are starting up.
Future growth beyond those projects will be driven by production in the US and Canada of “tight gas”: gas held in rocks where production was previously uneconomic, but has been made viable by new techniques.
Mr Odum said Shell’s North America tight gas production could double in 2009-2015, potentially reaching 400,000 barrels of oil equivalent per day.
Peter Voser, Shell’s chief executive, has played down the prospect of further large investments in Canada’s oil sands, which have been plagued by high costs and concerns about environmental damage, once the $14bn AOSP expansion is complete.
However, the company is looking to squeeze more production out of the AOSP facilities, and at a possible investment in an 80,000 b/d project at Carmon Creek.
Shell also remains enthusiastic about the prospects for deepwater oil production in the Gulf of Mexico, in spite of the moratorium on drilling imposed by the US government following the BP spill, the world’s largest accidental offshore release of oil.
The company on Tuesday approved an investment in its Mars B deepwater project in the Gulf of Mexico, in which BP has a minority stake, which is expected to produce 100,000 barrels of oil equivalent per day (boe) when it comes on stream after 2014.
Shell believes it could raise its total production in the Gulf of Mexico to more than 250,000 boe.
Mr Voser said: “Shell’s oil and gas will be an important part of the energy mix in this region and upstream Americas will be a key growth engine for Shell in the years to come.”

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