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Shell Reorganizes as it Plans for ‘Prolonged Downturn’

Shell reorganizes its upstream operation as it plans for a prolonged downturn due to low oil prices Royal Dutch Shell plc said Tuesday it is planning for a prolonged downturn due to low oil prices as the firm announced a reorganization of its upstream operation would increase accountability for performance and align the company to deliver on its strategy. In a statement to coincide with the firm’s ‘management day’, Shell said that both its net investment and dividend payments have been covered by operating cash flow in the year to the end of the third quarter of 2015 – a period during which oil prices averaged $60 per barrel. Shell highlighted cost cutting that has seen a 10-percent reduction in operating costs and a 20-percent reduction in capital spending during 2015, together amounting to $11 billion. The firm’s drive to reduce costs and simplify its business has led to […]

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Shell starts November with asset sales

Royal Dutch Shell announces divestment from Chinese and French markets after reporting weak results for the third quarter. File photo by Brian Kersey/UPI THE HAGUE, Netherlands, Nov. 2 (UPI) — After reporting heavy losses for the third quarter, Royal Dutch Shell said Monday it sold off stakes in Chinese and French holdings in the downstream sector. For $510 million, Shell said it sold off its liquefied petroleum gas business in France to rival DCC Energy. The divestment includes the staff from business entity Butagaz and the brand. In China, for a confidential sum, the Dutch supermajor said it sold a 75 percent stake in a lubricants division to Chinese investment firm Huo’s Group and U.S.-based multinational investor The Carlyle Group. "Both divestments are consistent with Shell’s strategy to concentrate its downstream footprint on assets and markets where it can be most competitive, and to divest its LPG businesses worldwide," […]

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Shell Steams Ahead With BG Takeover With Promise of More Savings

Royal Dutch Shell Plc said its record takeover of BG Group Plc will still deliver value to investors even in a prolonged oil-industry downturn and reshaped its business in preparation for the acquisition. Europe’s biggest oil company will save an addition $1 billion in operating costs from the combination with BG, bringing the total estimate of synergies from the deal to $3.5 billion, Shell said in a statement on Tuesday. The takeover will still add to the company’s earnings per share and cash flow from operations even after the outlook for Brent crude prices to 2018 dropped by $10 to $15 a barrel since the deal was announced in April. Oil’s renewed slump to a six-year low in August prompted some investors to question the logic of the acquisition, valued at $70 billion when it was announced. Shell expects the deal to expand its access to oil reserves in […]

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Shell acquisition of BG cleared by Europe

European Commission clears Shell acquisition of British counterpart BG Group. Photo by Christian Lagerek BRUSSELS, Sept. 2 (UPI) — Royal Dutch Shell and BG Group announced their planned merger received unconditional approval Wednesday from the European Commission. The board of directors at Shell and BG Group issued a joint statement in April saying they’ve reached an agreement for the Dutch acquisition of its rival. The deal, valued at around $70 billion, is among the largest acquisitions since the Exxon Mobil merger was completed in 1999. It also comes at a time when most energy companies are streamlining capital expenses in a weak oil market. Both companies issued statements Wednesday saying the merger was approved by the European Commission, which found the combined corporate market share would be limited in terms of exploration and production despite the acquisition. When the deal was announced Helge Lund , chairman of BG Group, […]

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Shell to ax 6,500 jobs, cut spending to cope with lower oil prices

Shell’s company logo is pictured at a gas station in Zurich April 8, 2015. Royal Dutch Shell ( RDSa.L ) is to ax 6,500 jobs this year and step up spending cuts to deal with an extended period of lower oil prices which contributed to a 37 percent drop in the oil and gas group’s second-quarter profits. The Anglo-Dutch company also said it was planning more asset disposals as it pushes ahead with its proposed $70 billion acquisition of BG Group ( BG.L ), bringing total asset sales between 2014 and 2018 to $50 billion. "We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery," Chief Executive Officer Ben van Beurden said. Shell said it anticipated 6,500 staff and direct contractor reductions in 2015 from a total of nearly 100,000 employees. And the group said it would […]

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Dutch Government to Cut Groningen Gas-Field Output

Production at the Groningen gas field will be slashed to 13.5 billion cubic meters in the second half of 2015, the government said, resulting in total output of 30 billion cubic meters this year, substantially lower than the previous target of 39.4 billion cubic meters. The move is the latest in a series of production cutbacks by the Dutch government in recent years after a study by The Royal Netherlands Meteorological Institute linked gas extraction to a rise in earthquakes in the northern province of Groningen, where the field is located. The tremors have damaged many homes in the area. “The safety of the people of Groningen is the most important,” said Henk Kamp, the Dutch Minister of Economic Affairs. “Gas production from Groningen will be reduced as far as feasible.” Discovered in 1959, the Groningen field is one of the world’s biggest natural gas reserves and is a […]

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Wintershall gets gas from mini-rig

Wintershall starts production in North Sea using small-scale rig it says can extract reserves economically even from smaller fields. Photo courtesy of Wintershall. KASSEL, Germany, June 16 (UPI) — German energy company Wintershall said it started gas production in the Dutch waters of the North Sea using a platform designed for economic returns. The company said it was producing gas from an unmanned platform designated as L6-B, a small-scale facility built in nine months and towed to the location in June 2014. "The advantage of this new generation of platforms is that they can be deployed in particularly shallow waters and can economically produce even from very small natural gas fields," the company said in a statement. L6-B is positioned in a restricted military zone and Wintershall said it’s the first company permitted to work in the area. No reserve potential are expected production rates were offered. The start […]

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Quakes in Gas Fields Ignored for Years, Dutch Agency Finds

Dutch gas fields The Groningen field lies under a 900 square-kilometre area in the northern part of the Netherlands. Gas field image via shutterstock . Reproduced on Resilience.org with permission. A report from the Dutch Safety Board has accused the oil and gas industry and Netherlands Ministry of Economic Affairs of willfully downplaying the risk of earthquakes caused by the rapid depletion of Europe’s largest gas field. The board’s conclusions offer lessons for other regions coping with earthquakes caused by fluid injection and hydraulic fracturing. Ever since the shale gas industry changed the seismic record of states and provinces like Oklahoma, Texas, Kansas and British Columbia, many industry lobbyists and regulators have been quick to deny and dismiss citizen’s concerns about the seismic hazards. The Groningen field, which lies under a 900 square-kilometre area in the northern part of the Netherlands, has been drained by a consortium — Nederlandse […]

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Earthquake Dangers in Dutch Gas Field Were Ignored for Years, Safety Board Says

LONDON — An independent Dutch safety panel has found that the operators of Europe’s largest natural gas field, Royal Dutch Shell and Exxon Mobil, as well as the Dutch government, for years ignored the dangers posed by earthquakes in the field. That finding could add to growing pressure to reduce production at the field, in the Dutch province of Groningen, which has long been a crucial source of fuel for northern Europe and generates billions of euros in revenue annually for the Dutch government. In a report published on Wednesday, the Dutch Safety Board, a government-financed but independent organization, concluded that “the parties concerned failed to act with due care for citizen safety in Groningen” related to the earthquakes caused by gas extraction. The government had already ordered a series of cutbacks at the field, which lies under about 350 square miles of farmland and cow pastures, after residents […]

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Another cut seen in Groningen gas output

HOUSTON, Feb. 18 02/18/2015 Production from giant Groningen natural gas field in the Netherlands might be further curtailed in response to public concern about earthquakes ( OGJ, Aug. 4, 2014, p. 32 ). On Feb. 18, Dutch Economy Minister Henk Kamp said he’ll set a new cap on Groningen output on July 1 and will act sooner “if we see good reasons,” Reuters reported. The Dutch Ministry of Economic Affairs said in January 2014 it would lower Groningen output because of seismic activity. In December it targeted a cut to 39.4 billion cu m this year from 42.5 billion cu m in 2014. The move followed a recommendation by the State Supervision of Mines, based on data about seismic activity, that gas production be trimmed by 3.1 billion cu m this year in the southern part of the field. Kamp didn’t specify how much further output might be trimmed. […]

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