You can be sure about shale – and Shell

sea-shell-300x200Reuters report about Shell and shale is among the most important shale stories of not only this year, but of the entire shale era.  Shell’s late embrace of shale actually makes a lot of sense. They are getting into shale at exactly the right time. ExxonMobil’s foray into XTO was stunning at the time, but in retrospect was too soon.  BP, Total and Chevron have made various, if often  tenuous, efforts. Statoil made the wisest and earliest investment in the Marcellus back in 2009 of any major, although ENI’s smaller US investment of the same year was also smart in timing and money.  BHP Billiton seemed to have bought at the height of the market in 2011, but even that will ultimately be in the money, even at these prices.

Having turned round its North American shale business, Royal Dutch Shell (RDSa.L) is putting so-called unconventional energy at the heart of its long-term growth plans, and believes lessons from the revamp can be applied across the company.

The executive committee charged us to be a catalyst for change within the broader Shell,” Guidry said in an interview.

He also said Shell planned to make small acquisitions near its existing North American shale areas, notably from producers struggling in the current industry downturn, and hoped to launch an early production well this year in Argentina’s Vaca Muerta, considered the world’s No.2 shale resource after North America.

That’s quite a change in fortunes.

As recently as late last year, Shell Chief Executive Ben van Beurden was considering jettisoning the unconventionals business over concerns it would drag down group profitability after the group’s $54 billion (£36.7 billion) acquisition of BG Group in February

Shell is significant for three reasons

  1. Shell is one of the original “supermajors” and is either just behind Exxon Mobil in size, or now ahead of it since their BG merger – itself a sign that Shell, like BP and Total see gas as the future. Shell’s reputational halo will, quite simply, kill whatever residual doubts there were, in finance especially, that shale is somehow “unconventional” or “controversial”. Shell is the seventh largest company in the world – thus anyone with a pension has a part of it in Shell.  It’s now almost impossible to physically extricate investment from shale -divestment-  from any investment at all. The #KeepItInTheGround movement is buried.
  2. Shell is a global company. This will finally get shale moving internationally, first in Argentina but also many other places, most especially, China.
  3. Thirdly, and more importantly, Shell will energise, excuse the pun, the shale debate, worldwide and even in Little England

Shell doesn’t need to stand up to the gnats/nuts of the anti-fracking movement. They can and will simply ignore them. Shell is too big, they are too small. Antis in Europe have a history of exaggeration not only of any dangers, but most especially of their size. One thing they exaggerate is one of their favourite mottos, bought to you originally by French antis: Shale Gas, Not Here, Not Anywhere.  It’s such a rousing, all- encompassing meme that fits snappily into only a tweet, if not common sense. Here’s the original French :

Gaz de schiste PG

 

An example of the English translation

foenothere

But here are somethings else:

UK

shellusa

 

I’m sure Shell have assured themselves that the numbers of demonstrators will be far outnumbered by the number of Shell customers.  There will be the occassional idiot gluing themselves to a pump, but there certainly won’t be weekend warriors demonstrating one minute and filling up the SUV the next – “and at such low prices too”.

I leave it to geologists to see the final irony. Many fossil fuels come of course from billions of little critters and their shells of 250 million years ago give or take. You can be sure of Shell. And now, finally, we can be sure about shale

 

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