DEBTOR NATION

VIDEOS

Wolf Richter On The Keiser Report
"Debtonomics and the NSA"

Wolf Richter on the Keiser Report
"Where Is The Fear"

Wolf Richter on Max Keiser's "On The Edge" 
"The Pauperization of America"

Wolf Richter on the Keiser Report
"Where the Money Goes to Die"

Clarke and Dawe: European Debt Crisis
Two favorite Australian Comedians

Clarke and Dawe: Quantitative Easing
Big industrial-strength printers, all facing the window

The Fastest Drive Ever Through San Francisco
Don't try to do this yourself
 

humanERROR - by "Frying Dutchman"
Powerful, lyrical appeal to the Japanese. Slams nuke industry, MSM, bureaucrats, and politicians.

« Will The Last Bear Please Turn Out The Lights | Main | Banker Farce: Spanish Bank CEO Launches Moral Crusade Against Political Corruption »
Monday
Mar172014

Shell Oil: US Fracking “Revolution” A Money Loser

By Daniel J. Graeber, Oilprice.com:

Shell's new boss, Ben van Beurden, said bets on U.S. shale plays haven't worked out for his company. Its North American performance was already hit by pessimism over offshore Alaska, but its latest move shows Big Oil hasn't quite mastered how best to capitalize on the U.S. oil boom.

"Some of our exploration bets have simply not worked out," Shell’s Chief Executive Officer Ben van Beurden said. It was bad management policy to commit close to $80 billion in capital on its North American portfolio and still lose money. Now, he said, it's time to cut the loss and slash exploration and production investments by 20 percent for 2014.

Shell's new boss made big waves earlier this year when he said he wasn't ready to commit any more capital to drilling in the arctic waters off the coast of Alaska. Now, the company said its profitability has been impacted by losses in U.S. shale basins in the Lower 48.

In January, he warned things weren't going as he expected. Fourth quarter upstream earnings, he said, were hit by high exploration costs and lower production volumes. Its upstream business in the Americas, Shell warned, was expected to incur a substantial loss this year.

His disappointment comes as the U.S. Energy Information Administration said strong growth was expected from the Bakken, Eagle Ford and Permian basins in the country. By the end of this year, EIA said crude oil production should reach 8.4 million bpd and hit 9.2 million bpd in 2015 thanks in part to shale.

Shell, however, said it may have to unload its stake in the Eagle Ford shale play in Texas to keep its corporate checkbook balanced. 

Related Article: Is the U.K. Ready for a Shale Revolution?

The tendency would be to blame Shell for its poor management team. While Marvin Odum, the boss of Shell's U.S. division, wasn't discussing how the cut backs would hurt business at his Houston office, he still has a job, however.

Onshore North America is different from offshore North America. Offshore, there are no private landowners to negotiate with, though from an engineering standpoint, onshore is much easier. BP last week acknowledged the challenge and decided to spin off its onshore business to better focus on the "unique characteristics" of U.S. shale.

Shell, by its own admission, said it hasn't quite figured out the do's and don'ts of the shale boom. While credited with exponential growth in U.S. oil and natural gas production, Shell's problems say more about the difficulties of shale exploration than they do about the company itself. The shale boom, for all its glory, has yet to spread much outside North American borders. BP said its new spin off "will be designed to adapt" to onshore problems, where shale still proves to be a tough thing to crack. By Daniel J. Graeber, Oilprice.com

ExxonMobil had a rotten week: a string of bad news from seething hotspots around the world, just as rising costs and flat output raise questions about the firm’s trajectory. Read.... Turmoil Takes Its Toll on ExxonMobil

Wolf here.  I would love to hear from you. You can send me an email to:

testosteronepit [at] gmail.com

I will post some of the comments, articles, corrections, points of contention, etc. under the tab “Readers Speak Up,” if I find them relevant, interesting, awesome, civilized, etc. Funny is always good.

- Include the title or link of the article you’re responding to.

- Let me know the name (alias is ok) under which you want me to publish your writing.

- If you have a blog, include a link (self-promotion is ok)

- I’ll try to send you confirmation once it’s published.

- If you DON’T want me to post your writing, if you want me to keep it private, please let me know!

- I will NEVER publish your email address!!!

- Spam, nonsense, hateful stuff, etc. will be deleted.

EmailEmail Article to Friend