Shell looks to energy growth in future

Shell is continuing to invest in bringing new oil and gas online, reflecting the company’s view that energy demand will climb in the long term despite the current economic problems, company executives said March 17 when introducing Shell’s annual business strategy update. The company is treading carefully through a situation in which, although long-term prospects look good, a downturn in energy prices is occurring during a period when operating costs are high, the executives said.

“These are testing times in the oil and gas industry,” said Shell Chief Executive Jeroen van der Veer. “Whilst short-term measures are important, we keep our long-term perspective, and continue to believe that energy needs over the long term provide a positive context for Shell’s investment programs today.”

Faced with declining production from its existing fields, Shell needs to find and produce new oil and gas, while in the downstream end of the company’s business Shell needs to balance the demand for cleaner products with supply cost challenges, van der Veer said.

The company anticipates investments already under way in new oil and gas production to generate 2 to 3 percent annual production growth early in the next decade, he said. And development options where the company has not yet made final investment decisions could add more than 1 million barrels of oil equivalent per day to Shell’s production capacity, from resources that could sustain growth until at least 2020.

“The economic slowdown creates opportunities for Shell to reduce supply-chain costs, as spare capacity in the services industry comes into play,” van der Veer said. “We don’t have a crystal ball on oil prices, so we are planning on the basis that the downturn could last more than a year.”

—Alan Bailey