Shell’s Voser to Shift U.S. Focus to Oil Shale From Gas
February 06, 2012, 12:12 AM ESTBy Eduard Gismatullin and Brian Swint
(Adds U.S. gas prices in third paragraph.)
Feb. 2 (Bloomberg) -- Royal Dutch Shell Plc, Europe’s largest energy company, will shift its investment focus to oil- rich shale in the U.S. because of lower natural-gas prices.
“We are going to the lower end of our investment in the United States for shale gas,” Chief Executive Officer Peter Voser said today in an interview with Owen Thomas on Bloomberg Television’s “On the Move.” “But on the other side, we will increase investment in the United States for oil-rich shales” as “that is a new area for us, which we are now planning to ramp up.”
U.S. natural gas prices have dropped to a 10-year low, while oil prices gained 40 percent in the past two years. Chesapeake Energy Corp. the second-largest U.S. gas producer, said last month it will cut output, idle rigs and reduce spending on fields by 70 percent.
ConocoPhillips, Cabot Oil & Gas Corp. and EQT Corp. have also said they may curtail drilling. Natural gas futures are trading at about $2.40 per million British thermal units, down from $13.57 in July 2008.
Shell “normally” spends $3 billion to $5 billion a year on U.S. shale gas projects and expects to maintain investment at $3 billion this year, Voser said. Exxon Mobil Corp., the largest U.S. producer said yesterday it hasn’t curbed output in response to prices.
Production Forecast
Shell plans to produce about 250,000 barrels of oil equivalent a day in 2017 from liquids-rich shale, it said today in a statement.
The Anglo-Dutch company in May forecast that production of shale and tight gas in the U.S. could “easily” pass 400,000 barrels of oil equivalent a day in 2015 if investment decisions are taken.
Shell has one of the biggest exposures to tight gas in the U.S. among European companies, according to Sanford C. Bernstein & Co.
Gas in shale and other so-called tight-rock formations has turned the U.S. into the world’s largest producer. The same technology of hydraulic fracturing and horizontal drilling may also be able to unlock as much as 100 billion barrels of recoverable oil in the U.S. and Canada, ConocoPhillips CEO Jim Mulva said Jan. 18.
--With assistance from Brian Swint in London. Editors: Stephen Cunningham, Reed Landberg.
To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net;
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net
