Shell Outlines Capital Spending Plans in a Lower-Carbon World

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Royal Dutch Shell plc (Shell) (NYSE:RDS.A) (The Hague, Netherlands) plans to invest an average of $30 billion per year in capital expenditures over 2021-2025, with an annual ceiling of $32 billion. This compares with Shell's 2019 capital expenditure guidance of $25 billion to $30 billion.

Executives with the global energy giant outlined the company's financial outlook on Tuesday during a "management day" presentation to industry analysts, with the overall theme of moving to a "lower-carbon energy system."

Industrial Info is tracking nearly $144 billion in Shell project activity.

Click on the image at right for a graph showing Shell project activity by global region.

Shell's 2021-2025 capital spending target excludes "major inorganic opportunities," but includes "minor" acquisition spending of up to $1 billion, the company said in a press release.

Chief Executive Officer Ben van Beurden told industry analysts that rising global living standards will increase overall energy demand, but at the same time, there will be a need to reduce carbon dioxide (CO2) emissions in response to climate change.

For 2019 through 2020, Beurden said Shell will make more than 40 final investment decisions on major projects across its business segments, and plans to start more than 35 major projects in the same time frame.

As an example of Shell's commitment to its carbon reduction goals, the company's LNG Canada project will have the lowest carbon intensity of any liquefied natural gas (LNG) project of this type in the world, said Harry Brekelmans, Shell's projects and technology director. Shell made a final investment decision on the project in October. Located near Kitimat, British Columbia, the facility initially will export LNG from two processing units totaling 14 million metric tons per year, with the potential to expand to four trains. Shell, a 40% owner of the project, is targeting LNG exports to North Asia. Completion is planned for late 2023. For more information, see Industrial Info's project report.

About 35 million tons of new natural gas liquefaction capacity is expected to come on stream this year across the globe, Brekelmans said, but a supply shortfall is expected to develop in the early-to-mid-2020s as global demand grows.

The company also will maintain its strong deepwater production program, said Andy Brown, Shell's outgoing upstream director. Shell's Appomattox floating production system in the Gulf of Mexico is ramping up to 175,000 barrels of oil equivalent per day (boe/d) after being brought online months ahead of schedule and 40% under budget, he said. For more information, see Industrial Info's project report.

Brown noted other Gulf of Mexico projects such as the Vito crude oil and natural gas production platform. With a total investment value of $4 billion, Vito is expected to reach peak production of 100,000 boe/d following its planned completion in mid-2021. For more information, see Industrial Info's project report.

Shell also continues to pursue production from liquids-rich shales in the U.S., Canada and Argentina, and expects to reach production of 600,000 boe/d from those areas by 2025, said Wael Sawan, Shell's incoming upstream director.

In the downstream businesses, Shell's ethane cracker under construction in Pennsylvania will have the advantage of locally sourced feedstocks from the Marcellus and Utica regions, said Downstream Director John Abbot. The ethylene/polyethylene complex is being built in the Ohio River Valley north of Pittsburgh, and will produce 1.6 million tons of polyethylene per year following its planned completion in the first half of 2020. For more information, see Industrial Info's project report.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.