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Researched by Industrial Info Resources (Sugar Land, Texas)--Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) plans to invest roughly $25 billion this year in new oil and gas projects, following a rally in commodity prices in the first quarter. With a major acquisition now wrapped up, the energy giant is aiming to boost production in the Gulf of Mexico, Malaysia, Europe and other areas. Industrial Info is tracking more than $97 billion in active projects involving Shell.
Oil and gas production, known as upstream, increased 2% in the quarter. A number of new fields and the ramp-up of existing fields continued to increase output, particularly in Brazil, Kazakhstan and the Gulf of Mexico. In the Gulf, Shell is constructing the $3.5 billion Appomattox Oil & Gas Production Platform in the Appomattox Field, a semi-submersible platform that is expected to produce 100,000 barrels per day (BBL/d) of crude oil. The field's stated recoverable reserves are estimated to be 500 million barrels. For more information, see Industrial Info's project report.
Also in the Gulf, Shell recently received capital approval for a $125 million subsea tieback at its Ursa Platform, which will have a capacity of 125,000 BBL/d of crude oil. Technip FMC Incorporated (Houston, Texas) recently was awarded for the delivery, integration and installation of the subsea production system. For more information, see Industrial Info's project report.
To help finance last year's $52 billion merger with gas utility BG Group plc, Shell expects to sell off $30 billion in upstream assets by 2018. This includes $20 billion already sold since 2016, such as numerous properties in the North Sea and the Canadian oil sands. This means that Shell will be dramatically reducing or entirely eliminating its stake in projects, such as the long-delayed $4 billion Jackpine Oil Sands Mine expansion near Fort McMurray, Alberta, which, as designed, would increase the facility's bitumen-production capacity to 355,000 BBL/d. For more information, see Industrial Info's project report, and March 10, 2017, article - Shell Sells Bulk of Athabasca Oil Sands Project to Canadian Natural Resources.
"Following the successful integration of BG, we are pushing ahead to transform Shell rapidly at all layers through a consistent and disciplined execution of our strategy," said Jessica Uhl, the chief financial officer of Shell, in prepared remarks for a quarterly earnings call. "This includes investing some $25 billion this year and the delivery of new projects, with an expected $10 billion in cash flow from operations by 2018 from start-ups since 2014." She noted that the upstream business "saw a $300 million increase from higher production volumes, mainly from new assets but also from improved operational performance."
Earnings from refining, marketing and chemicals jumped 20%. Shell also is selling off assets in its downstream business, including refineries in Denmark and Malaysia. The company ended its partnership in its Motiva Enterprises joint venture with Saudi Aramco (Riyadh, Saudi Arabia) in the U.S., with Aramco now the full owner. As a result, refined oil products sales are expected to decrease by 200,000 barrels per day in the second quarter.
But Shell is investing in several upstream projects in Denmark and Malaysia, including Maersk Oil's (Copenhagen, Denmark) $700 million Adda Wellhead Offshore Platform in the North Sea, offshore Denmark, in which Shell is a joint-venture partner. The platform is expected to accommodate eight wells that will produce 5 billion cubic meters of gas and 2 million cubic meters of condensate during their lifetimes, which will be transported to a separate platform via a $50 million crude oil pipeline and a $50 million natural gas pipeline, each running about 12 kilometers. For more information, see Industrial Info's project reports on the platform, crude oil pipeline and natural gas pipeline.
Shell's capital spending in the first quarter stood at $4.3 billion, down from $5.3 billion in the same period last year. Like other leading oil & gas companies, such as Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) and Chevron Corporation (NYSE:CVX) (San Ramon, California), it credits the lower spending with improved net income of $3.54 billion, compared with $484 million in first-quarter 2016.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 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/.
Oil and gas production, known as upstream, increased 2% in the quarter. A number of new fields and the ramp-up of existing fields continued to increase output, particularly in Brazil, Kazakhstan and the Gulf of Mexico. In the Gulf, Shell is constructing the $3.5 billion Appomattox Oil & Gas Production Platform in the Appomattox Field, a semi-submersible platform that is expected to produce 100,000 barrels per day (BBL/d) of crude oil. The field's stated recoverable reserves are estimated to be 500 million barrels. For more information, see Industrial Info's project report.
Also in the Gulf, Shell recently received capital approval for a $125 million subsea tieback at its Ursa Platform, which will have a capacity of 125,000 BBL/d of crude oil. Technip FMC Incorporated (Houston, Texas) recently was awarded for the delivery, integration and installation of the subsea production system. For more information, see Industrial Info's project report.
To help finance last year's $52 billion merger with gas utility BG Group plc, Shell expects to sell off $30 billion in upstream assets by 2018. This includes $20 billion already sold since 2016, such as numerous properties in the North Sea and the Canadian oil sands. This means that Shell will be dramatically reducing or entirely eliminating its stake in projects, such as the long-delayed $4 billion Jackpine Oil Sands Mine expansion near Fort McMurray, Alberta, which, as designed, would increase the facility's bitumen-production capacity to 355,000 BBL/d. For more information, see Industrial Info's project report, and March 10, 2017, article - Shell Sells Bulk of Athabasca Oil Sands Project to Canadian Natural Resources.
"Following the successful integration of BG, we are pushing ahead to transform Shell rapidly at all layers through a consistent and disciplined execution of our strategy," said Jessica Uhl, the chief financial officer of Shell, in prepared remarks for a quarterly earnings call. "This includes investing some $25 billion this year and the delivery of new projects, with an expected $10 billion in cash flow from operations by 2018 from start-ups since 2014." She noted that the upstream business "saw a $300 million increase from higher production volumes, mainly from new assets but also from improved operational performance."
Earnings from refining, marketing and chemicals jumped 20%. Shell also is selling off assets in its downstream business, including refineries in Denmark and Malaysia. The company ended its partnership in its Motiva Enterprises joint venture with Saudi Aramco (Riyadh, Saudi Arabia) in the U.S., with Aramco now the full owner. As a result, refined oil products sales are expected to decrease by 200,000 barrels per day in the second quarter.
But Shell is investing in several upstream projects in Denmark and Malaysia, including Maersk Oil's (Copenhagen, Denmark) $700 million Adda Wellhead Offshore Platform in the North Sea, offshore Denmark, in which Shell is a joint-venture partner. The platform is expected to accommodate eight wells that will produce 5 billion cubic meters of gas and 2 million cubic meters of condensate during their lifetimes, which will be transported to a separate platform via a $50 million crude oil pipeline and a $50 million natural gas pipeline, each running about 12 kilometers. For more information, see Industrial Info's project reports on the platform, crude oil pipeline and natural gas pipeline.
Shell's capital spending in the first quarter stood at $4.3 billion, down from $5.3 billion in the same period last year. Like other leading oil & gas companies, such as Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) and Chevron Corporation (NYSE:CVX) (San Ramon, California), it credits the lower spending with improved net income of $3.54 billion, compared with $484 million in first-quarter 2016.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 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/.
