Shell Stops Alaska Program in Year of ‘Hard Choices’

Royal Dutch Shell revealed Thursday that 2014 will see the company stop its Alaska program and focus on achieving better capital efficiency by making ‘hard choices’ about new projects and reducing capital spending.

Announcing its results for 2013, Shell said that the landscape the company had expected has changed and it cited factors such as the worsening security situation in Nigeria and delays to non-operated projects in several countries. With North American natural gas prices remaining low, the company said it particularly plans to focus on restructuring and improving profitability in its North American upstream operations.

“Our ambitious growth drive in recent years has yielded a step change in Shell’s portfolio and options, with more growth to come, but at the same time we have lost some momentum in operational delivery, and we can sharpen up in a number of areas,” New Shell CEO Ben van Beurden said in a company statement.

“Our overall strategy remains robust, but 2014 will be a year where we are changing emphasis, to improve our returns and cash flow performance.”

Meanwhile, Shell said the recent Ninth Circuit Court decision against the Department of the Interior “raises substantial obstacles to Shell’s plans for drilling in offshore Alaska”. As a result, Shell has decided to stop its exploration program for Alaska in 2014.

“This is a disappointing outcome, but the lack of a clear path forward means that I am not prepared to commit further resources for drilling in Alaska in 2014,” van Beurden said. “We will look to relevant agencies and the Court to resolve their open legal issues as quickly as possible.”

Shell’s capital spending in 2014 is targeted at around $37 billion, compared with the $46 million it spent in 2013. Meanwhile, the firm plans to increase the pace of its asset sales, which are expected to be $15 billion for 2014-2015 in both its upstream and downstream segments.

“We are making hard choices in our world-wide portfolio to improve Shell’s capital efficiency,” van Beurden added.

RIGZONE

9 Comments on "Shell Stops Alaska Program in Year of ‘Hard Choices’"

meld on Thu, 30th Jan 2014 2:02 pm 



hehehe, looks like the Oil company bail out wont be too far off in the future.

I can see it now

“Governments bail out too big to fail oil companies to save progress and growth”

This is all such fun!

ghung on Thu, 30th Jan 2014 2:23 pm 



Jeez…. blame the Ninth Circuit Court rather than admit that the Northern oceans just kicked their ass.

keith on Thu, 30th Jan 2014 3:54 pm 



Didn’t the bail out begin in 2008 with QE and 0 percent interest rates? Shell’s response is probably do to the Fed’s commencement of tapering. The cheap oil dried up a decade ago, now the cheap money is drying up.

rockman on Thu, 30th Jan 2014 5:05 pm 



Actually much of the change at Shell may be due to the new top dog there. He’s a downstream guy… refining/marketing. Historically those guys hate us upstream/exploration types. I know that sounds odd since without the upstream side of the biz the downstream guys wouldn’t have a job. But that’s how it has always been. So the new head man is going to focus on maximizing profits from the downstream side while reducing expenditures on the upstream side. Which can look good on paper today but eventually without the upstream side producing new reserves the downstream side runs out of stuff to refine/market. But Mr. I’mdownstreamandproudofit will make his bonuses and retire long before that day comes so it won’t be his problem.

DC on Thu, 30th Jan 2014 7:35 pm 



Looking to raise their ‘capital efficiency’ huh? How about trying to raise their energy efficiency for a change? Naw, they want to make ‘hard’ choices, not impossible ones…..

Shaved Monkey on Thu, 30th Jan 2014 10:25 pm 



Selling their petrol stations and refinery in Australia
http://www.theage.com.au/business/mining-and-resources/shell-puts-petrol-stations-woodside-stake-on-the-block-20140131-31q70.html

Mr.Big Sinep on Fri, 31st Jan 2014 1:34 am 



Global Warming doesn’t Exist

energy investor on Fri, 31st Jan 2014 3:49 am 



They sold their New Zealand downstream operation two years ago to Z Energy – owned by the NZ Superannuation fund and Infratil. Why anyone would buy Shell’s cast-offs is beyond me. Yet Infratil then arranged an IPO and the shares gave them and the Super fund a nice profit. My complaints were ignored…

Kenz300 on Fri, 31st Jan 2014 5:44 pm 



Second generation biofuels are the future…….