Royal Dutch Shell plc (Shell) has reconfirmed strong momentum in its businesses in the Americas. Shell’s oil & gas production in the region could reach one million barrels of oil equivalent per day in 2014, an increase of 40% on current levels, subject to the pace of investment, which could be $40 billion for the 2011-14 period.
“We are delivering on Shell’s three key strategic themes in Upstream Americas and world-wide: performance focus, production growth and maturing new project options,” said Shell’s CEO Peter Voser.
The “Transition 2009” reorganization, now completed, created the Upstream Americas division, simplifying Shell’s businesses, and underpinning about $1 billion of Upstream cost reduction achievement. Upstream Americas is now organized along four strategic lines, namely heavy oil, onshore gas, deep water and exploration. This has created a strong platform for new performance focus, capital efficiency, and faster implementation of strategy.
Shell has invested more than $60 billion in Upstream Americas since 2004, including development of new fields, new exploration leases, and acquisitions of undeveloped resources positions.
Development and rationalization of this portfolio continues, with an emphasis on asset quality, profitable growth and capital efficiency. Upstream Americas asset sales proceeds are expected to exceed $2 billion in 2010-11, part of Shell’s world-wide plans for $7 billion to $8 billion of disposals.
In heavy oil, the recent start-up of the Jackpine Mine takes the Athabasca Oil Sands Project (AOSP), (Shell 60%) to a total capacity of 255,000 barrels per day (bbl/d), developing over three billion barrels of resources.
After a period of rapid growth in the last decade, AOSP’s next focus is on delivering operating synergies and debottlenecking these facilities, while retaining longer-term options for additional expansion. Shell has a strong track record in cold production and enhanced oil recovery in California, and growth potential in Canada, where studies are underway for an 80,000 bbl/d in-situ project at Carmon Creek.
Shell is set for strong growth in tight gas, with North America resources potential of around 40 tcfe, following a series of acquisitions and acreage deals. Shell now has an opportunity to deploy technology and drilling know-how at a large scale, to grow production and to reduce unit costs. Shell’s North America tight gas production could double from 2009-2015, with the potential to reach over 400,000 barrels of oil equivalent per day (boe/d), subject to the pace of investment.
The outlook for deep water remains positive, despite the current drilling moratorium in the Gulf of Mexico. Shell has announced the final investment decision on a 100,000 boe/d tension leg platform in the Gulf, called Mars B (Shell 71.5%), part of Shell’s post-2014 growth potential.
Exploration performance continues, with Gulf of Mexico drilling activities in 2009 and 2010 adding more than 500 million boe for Shell, including the 2010 Appomattox discovery, which has total resources in excess of 250 million boe, where Shell has an 80% share. These finds are part of a portfolio with >250,000 boe/d of production potential for Shell in the Gulf of Mexico. The exploration outlook is positive, with a substantial inventory of new prospects, including plans to drill in Alaska in 2011.
“Our portfolio development over recent years has built a strong platform for the future, and Upstream Americas is entering a phase of strong and profitable growth,” said Marvin Odum, Shell’s director of Upstream Americas. We expect to invest around $10 billion per year in this region to 2014, when oil & gas production could reach one million boe/d. This growth potential underpins Shell’s 2014 world-wide aspiration for 3.7 million boe/d of production.”
“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,” Voser added.