Shell Reportedly To Slash Oil and Gas Production Costs To Focus More On Renewables (www.cbc.ca) 61
An anonymous reader quotes a report from CBC.ca: Royal Dutch Shell is looking to slash up to 40 percent off the cost of producing oil and gas in a major drive to save cash so it can overhaul its business and focus more on renewable energy and power markets, sources told Reuters. Shell's new cost-cutting review, known internally as Project Reshape and expected to be completed this year, will affect its three main divisions and any savings will come on top of a $4 billion US target set in the wake of the COVID-19 crisis. Shell now wants to focus its oil and gas production on a few key hubs, including the Gulf of Mexico, Nigeria and the North Sea, the sources said. The company's integrated gas division, which runs Shell's liquefied natural gas (LNG) operations as well as some gas production, is also looking at deep cuts, the sources said. For downstream, the review is focusing on cutting costs from Shell's network of 45,000 service stations -- the world's biggest which is seen as one its "most high-value activities" and is expected to play a pivotal role in the transition, two more sources involved with the review told Reuters.
The review, which company sources say is the largest in Shell's modern history, is expected to be completed by the end of 2020 when Shell wants to announce a major restructuring. It will hold an investor day in February 2021. Teams in Shell's three main divisions are also studying how to reshape the business by cutting thousands of jobs and removing management layers both to save money and create a nimbler company as it prepares to restructure, the sources said. Besides cutting costs at its downstream retail business, Shell is pressing ahead with plans to reduce the number of its oil refineries to 10 from 17 last year. It has already agreed to sell three. The review of refining operations also includes finding ways to sharply increase the production of low-carbon fuels such as biofuels, chemicals and lubricants. That could be done by using low-carbon raw materials such as cooking oil, one source said. "We had a great model but is it right for the future? There will be differences, this is not just about structure but culture and about the type of company we want to be," said a senior Shell source, who declined to be named.
The review, which company sources say is the largest in Shell's modern history, is expected to be completed by the end of 2020 when Shell wants to announce a major restructuring. It will hold an investor day in February 2021. Teams in Shell's three main divisions are also studying how to reshape the business by cutting thousands of jobs and removing management layers both to save money and create a nimbler company as it prepares to restructure, the sources said. Besides cutting costs at its downstream retail business, Shell is pressing ahead with plans to reduce the number of its oil refineries to 10 from 17 last year. It has already agreed to sell three. The review of refining operations also includes finding ways to sharply increase the production of low-carbon fuels such as biofuels, chemicals and lubricants. That could be done by using low-carbon raw materials such as cooking oil, one source said. "We had a great model but is it right for the future? There will be differences, this is not just about structure but culture and about the type of company we want to be," said a senior Shell source, who declined to be named.
Re:The Law of Unintended Consequences (Score:5, Insightful)
Your idea that the Trump administration and the Biden administration will do a better job of running companies than professionals with actual knowledge and experience do is entertaining.
100% absolute regulatory capture? (Score:2)
If you know anything about what went wrong at Boeing, I you've probably discovered a big part of the problem is that Boeing was allowed to drive their own regulatory inspections and reports, self-certifying that they were doing things right. That is as opposed to how it used to be done, where the government (a neutral thrd party) would definitely the inspections and certification.
Would you say it's a bad idea for an entity such as this to only be inspecting and investigating themselves, to not have a neutr
Re: The Law of Unintended Consequences (Score:1)
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and let the elected officials protect consumers/workers from unscrupulous oil magnates.
All while barrels of money flow from the oil magnates to the elected officials.
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Indeed.
These changes come in response to market conditions, not government mandates.
Re:The Law of Unintended Consequences (Score:5, Interesting)
Reducing rigs and closing refineries? The cost of gasoline, jet fuel, and heating oil go through the roof.
1) Thus resulting in a reduction in demand as people reduce their consumption.
2) Thus additionally resulting in the adoption of competing systems, such as hydrogen and electric for cars, and LNG, propane, and electric for heating, the latter three of which are already quite common.
Start using cooking oil?
Perhaps for cars, but jets can't use it and homes already have access to plenty of alternatives that are commonplace. I had honestly never even heard of heating oil being used in modern times until about a year ago, given that I've lived my life in California, Florida, and Texas. I thought an Internet pal from Philadelphia was pulling our collective legs when she talked about oil deliveries, and based on the responses in the thread I was not alone in being confused.
The cost of KFC, potato chips, and Krispy Kreme goes through the roof.
Assuming that happens, what of it? We all get a bit healthier because it becomes too expensive to stay fat? Mind you, I say this as someone who's got plenty of pounds that need shedding. Costs go up and down for businesses. They need to adapt. The BBQ place around the corner raised prices for brisket several times in several years as the popularity of brisket exploded nationwide. It used to be a cheap cut of meat that was only popular in Texas barbecue, so you could pick it up for practically nothing because the rest of the country was treating it as scraps to send our way. Not so these days. We all adjusted.
These commodities should be produced en masse in state run refineries and sold at cost.
Why these commodities and not others? Why isn't orange juice sold at cost too? Why not pork? What about lumber from national forests?
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That reality is, no one chooses to heat their homes with oil for any reason other than cost. As in, it's the cheapest option available. The proof is in the pudding - if there was a cheaper option, people would be clamoring into it. Long-term savings don't matter either, that argument just further reflects your ignoranc
Re:The Law of Unintended Consequences (Score:4, Informative)
We're not talking a choice cut of meat here, it's the ability for people to heat their homes in the winter.
We’re also not talking about:
A) Reality. This is a hypothetical based on a scenario in which no one acts like a rational human being.
B) A likely future. Oil production may not be as profitable, but it’ll continue unabated for years to come. It will almost certainly contract over the next few decades, but there’s still plenty of demand for plastics, diesel, and other derivatives to continue driving production for the rest of our lifetimes.
C) Something that would happen without time to adapt. The reason alternatives cost more is because the infrastructure isn’t in place. A shift in the global energy supply is a protracted process, and is the exact sort of kick in the butt that leads to infrastructure overhauls, which helps brings prices within reach. Or do you have so little faith in your local leadership that you believe they’d allow you to freeze to death en masse?
You also assume quite wrongly that I’m a hippie scoffing at heating oil. I’m not. I may have been ignorant of it, but as soon as it was explained, I got it. Moreover, my last decade of professional work has been spent writing software used almost entirely by the oil and gas industry (e.g. valve sizing, embedded sensor systems, asset management, R&D projects), so you could say that I appreciate the value that big oil provides, given that they’ve been the clients putting a roof over my head and bread in my hand. I also recognize the direction things are heading and want to work towards a better, cheaper, cleaner energy future.
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How is oil cheaper then propane? Where I am, I haven't seen an oil truck delivering home heating oil in ages, but regularly see propane trucks delivering propane. It's so much cheaper. Closer to town, it's natural gas that people use for heating.
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That reality is, no one chooses to heat their homes with oil for any reason other than cost. As in, it's the cheapest option available. The proof is in the pudding - if there was a cheaper option, people would be clamoring into it.
So, after my initial response in which I just assumed you knew what you were talking about with regards to costs, I decided to look into it some more and it turns out you're full of it: natural gas has been substantially cheaper than heating oil for at least the last decade or longer. And people have been clamoring for it: natural gas is far and away the most common source of heating in the US (as a whole, but also in the Northeast specifically), whereas heating oil ranks third (behind electricity) with jus
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These commodities should be produced en masse in state run refineries and sold at cost.
You know there are plenty of state run oil companies. You often hear about them when you read up on whatever latest disaster killed someone overseas. No I'm serious, go actually look at what nationalised oil companies result in, the bodies they leave in their wake either through the fact that they are mostly in 3rd world countries, or the complete lack of expertise around optimisation, and safe handling of dangerous goods.
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Know what you mean. Tons of deaths in Norway with their state owned refineries and no deaths in Nigeria with their privately owned refineries. The air and such is also way cleaner in Nigeria along with a way higher life expectancy then Norway. Private refineries would never cut corners and in a 3rd world country, use the highest standards instead of the cheapest.
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Ironically many of those deaths in Nigeria have nothing to do with refiners cutting corners and everything to do with local problems. E.g. The biggest recent case was a Shell explosion killing a fuckton of people. Cause: smoking while attempting to steal fuel from a pipeline running through the middle of a slum. I.e. a government issue made up of criminality, and a lack of appreciation for population exclusion from hazards.
But countering your point is silly. Pulling out two examples and using it to try and
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Well, the problem is usually corruption, which can happen in countries, look at Venezuela, or it can be private companies, usually operating in jurisdictions with minimally enforced regulations. When Canada had state owned refineries, they were basically as safe or safer as the private refineries for example.
Suddenly.. (Score:1)
Re: Suddenly.. (Score:4, Interesting)
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Re: Suddenly.. (Score:4, Interesting)
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I doubt the brand can survive. The degree of hate in the future targeted at those corporations that corruptly kept pushing the destruction of our climate to maximise the bonuses of psychopathic executives, by corrupting the democratic process and even to the point of mass murdering people in oil wars to increase profits. There is no way that brand could possibly survive and a waste of money to try, even rebranded, the hate directed at the company for it's horrendous history of pollution and mass murder push
Re: Suddenly.. (Score:3)
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A lot of them are transitioning from cigarettes to vaping now. I was actually offered a job by one, paid very well.
It's a big technological change for them and they are late to the game. Going in with a premium product and DRM on the liquid.
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Re:Suddenly.. (Score:4, Insightful)
They don't give a flying fuck about climate change. This is happening because they see more money and more possibilities to make more of it in the future with renewables than with oil. Nothing more.
Or, nothing is happening at all and it's all PR to look eco-friendly, which would not surprise me one bit.
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Yes but there's rich irony in that. They're going to have to SELL IT, whether they choke on the words or not. xD
People like that have no problem selling anything as long as they get paid. If they had a shred of integrity, they would have done this in the 1980's when they already reliably knew what was coming.
They offer electricity, people buy it (Score:2)
Yes but there's rich irony in that. They're going to have to SELL IT, whether they choke on the words or not. xD
There is nothing to sell other than electricity. They offer electricity, people buy it. End of story.
The bulk of the population will not care at all that they used to be focus on oil. Shell is shifting their focus before this bulk of the population is shifting from gas and diesel to electric vehicles.
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But this is not happening because they see less demand and less profits in oil. So the cost cutting on the oil side of business.
Its possible they see more money in the renewable side of things. But they are not sure whether to buy or build renewable business. So they are not talking much about renewables other than the normal trite things without any serious meaning.
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Once the growing profits phase is done for a sector, they get sold to next level players who just keep the company alive and milk profits. They will avoid new investments, defer maintenance, stretch the installations. At some point even that is not enough to avoid bankruptcies and consolidation. It will keep getting passed down to more and more hardline "extract as much as you can and skip town" folks.
This endless reor
Oil cos have transferable knowledge and resources (Score:2)
Oil companies will be moribund like coal companies. They will follow the same trajectory
Nope. They have knowledge and resources that transfer to renewables, unlike the coal companies. For example there is a high degree of overlap in constructing and operating a drilling rig in the north seas as there is with constructing and operating wind turbines in the north seas. Oil companies started this particular transition years ago. They have been planning for such since at least the 1970s. They simply have been waiting for the crossover point to appear. Oil and gas are getting more expensive to extr
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It is happening to oil, the cleanup part that is. Alberta for example has a real problem with abandoned wells, formerly owned by now bankrupt companies.
Also with some of the most expensive oil to mine, they see companies like Shell as surrendering to the ecologists rather then making a business decision based on oil staying too cheap to profitably harvest from many places.
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They don't give a flying fuck about climate change. This is happening because they see more money and more possibilities to make more of it in the future with renewables than with oil. Nothing more.
Actually that's not right. This is happening because:
a) investors are demanding action on climate.
b) not because they see more money possibilities (they see less), but rather they don't see anywhere near as low money making opportunities in renewables than they do in the future of oil.
You know all those "oil industry funded" studies on climate change and renewable energy? They exist for a reason. They exist to tell the industry of what their future holds and to allow them to come up with a suitable strategy
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Which is good, it means that efforts to make environmental responsibility the most profitable avenue have worked.
People thought we would never get to this point. It's taken too long but we are here.
Re:Suddenly.. (Score:5, Interesting)
..the oil and gas industry begins to believe in climate change. Who'd've thunk it? /s
What are you talking about. They've always believed in climate change. They just campaigned to prevent other's believing about it.
https://www.scientificamerican... [scientificamerican.com]
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Re:Suddenly.. (Score:4, Interesting)
..the oil and gas industry begins to believe in climate change. Who'd've thunk it? /s
The article says nothing about climate change. It says the company is looking to cut the cost of producing oil and gas. That sounds like very good business, especially right now when consumption is down for a variety of reasons.
The article also says they are looking to expand in the lower margin power and renewables business. Both make sense. Energy company are very focused on diversity of supply, and renewables can make a significant contribution.
Re: Suddenly.. (Score:2)
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That sounds like very good business, especially right now
You don't make long term strategic decision based on "right now". Make no mistake, climate change has played a big part in this. You should have seen their last investor day. Investors are increasingly fed up with the lack of action on climate change by Shell specifically.
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That sounds like very good business, especially right now
You don't make long term strategic decision based on "right now". Make no mistake, climate change has played a big part in this. You should have seen their last investor day. Investors are increasingly fed up with the lack of action on climate change by Shell specifically.
Lowering costs is always good business, but it is especially important when revenues are being hit. When revenues & profits are down they can justify mass layoffs.
Investor day is an opportunity for investors to talk to senior leaders but it's often just a bitching session for small investors and activists. The funniest one I ever heard was Evelyn Davis, who passed away a couple of years ago. When you are a big enough investor you don't need to wait for a special "investor day".
https://nypost.com/2018/ [nypost.com]
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Indeed, which makes you wonder why Shell has been just voluntarily not lowering costs all these years. ... There is the practice of lowering costs, and then there's investor / marketing speak. The oil industry has been in a slump for a while now, Coronavirus is nothing new. It's just an excuse to finally organise a restructure which may have otherwise been unpopular.
Investor day is an opportunity for investors to talk to senior leaders but it's often just a bitching session for small investors and activists.
Agreed. Yet watching closely the proceedings from various companies there is a very VERY distinct difference between what was going on with She
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Indeed, which makes you wonder why Shell has been just voluntarily not lowering costs all these years. ... There is the practice of lowering costs, and then there's investor / marketing speak. The oil industry has been in a slump for a while now, Coronavirus is nothing new. It's just an excuse to finally organise a restructure which may have otherwise been unpopular.
Investor day is an opportunity for investors to talk to senior leaders but it's often just a bitching session for small investors and activists.
Agreed. Yet watching closely the proceedings from various companies there is a very VERY distinct difference between what was going on with Shell's shareholders and what was going on with BP, Total, and Exxon (I suspect others as well, but these are the 4 I pay most attention to). Mostly the bitching session is ignored, in Shells case they instead have made some very drastic changes as a direct result of investor pressure. 2018's AGM was outright funny. Shell's position on climate change went down so well that they literally changed it 2 weeks later helped in part by an institutional investor pulling out. Comparatively at Exxon's AGM of the same year some investors expressed minor dissatisfaction is the only polite way to describe it, and Exxon's results was "lol wut". BP also changed it's stance this year (more to do with a completely new leadership than investors), but in 2019 during the yearly energy review their chef statistician responded to an investor asking about the continued oil expansion with "would you stake your retirement savings on it?" and when the investor responded with yes Bob Dudley basically responded with "I wouldn't" which is the most polite way of saying "fuck off" I've ever heard :-)
Again, make no mistake, the pressure on climate change is very real. Companies have just needed a major excuse for a restructure, such as leadership change or a wakeup call from the world showing that it keeps functioning without consuming oil.
I guess where I maybe differ is in the motivations behind Shell's actions. I was responding to a poster who wrote "the oil and gas industry begins to believe in climate change. Who'd've thunk it?"
I don't think Shell is responding to climate change, not like "oh my, the climate is changing, best we produce less oil to save the earth". Rather, they are responding to oil demand and price projections. According to https://alternativeenergy.proc... [procon.org] , 45% of oil consumption in the US is for gasoline, and 20% m
They don't have to believe in anything (Score:1)
The oil and gas industry was always going to be where the profits are. Since that is shifting to renewables as costs come down, there they are. It was inevitable and really they've been moving that way for a while to some degree.
They are energy distribution companies, and do not care where the energy comes from.
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Ps -
The Crime Bill, the law designed to put a lot more people in prison for a lot longer, was written buy a guy named Joe Biden, who bragged that it would have more criminals locked up, for longer terms.
If you want more "law and order", if you want the country to be run by a career prosecutor and by Crime Bill guy, vote Biden-Harris.
I guess vote for Trump if you want someone weird / different from the career politicians.
For me, maybe I'll vote for a third-party candidate, who has no chance of winning, but a
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The oil and gas industry has reliably known about climate change for a few decades and from their own (!) research. They just chose to be greedy and delay the reaction because that would have been bad for business. Now, when it is pretty much too late to prevent a real, lasting, big global catastrophe (not something tiny in comparison like Covid-19...), they did not find their ethics or any such thing. They just found that their old business model is not quite bringing in as much money as they would like (r
Was expected in 1970s, got to crossover point (Score:2)
..the oil and gas industry begins to believe in climate change. Who'd've thunk it? /s
Its not necessarily climate change but also the finite resource of oil and gas being more difficult to extract.
"Oil companies" were recognized as really being "energy companies" at least as early as the 1970s. Pollution, climate change, and running out of oil and gas were all cites are reasons for an eventual conversion to what we refer to now as renewables. It was recognized as being tied to profitability. While oil and gas were cheaper the focus would remain on those. As oil and gas became more diffic
Sweet! (Score:1)
Strip mining the Amazon for lithium is much more eco-friendly.
Re:Sweet! (Score:5, Interesting)
Actually, Tesla battery day going on right now. They just stated that there is enough Lithium in Nevada to make enough batteries to electrify the entire US fleet. Also, they have a new method to "mine" it. Just scoop up the dirt, add common salt NaCl, Lithium precipitates, put dirt back in the ground.
No Lithium in the Amazon.
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Question 2: Who is supplying the salt? Is there a stock ticker for that?
Re:Sweet! (Score:4, Interesting)
Lithium salt replaced with sodium salt. Nothing grows in either.
It's salt. The ocean is full of it. NaCl.
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What does Google's Native Client have to do with any of this?
Born Again (Score:3)
The Revolution of Lowered Expectations (Score:1)
Amazing conclusion by execs at Shell.
We are losing our shirts as out dividends fall because people are not burning enough dinosaur.
Even with the layoffs we still want our bonuses but don't want to look like the greedos that we are so lets paint it with the Green brush.
We'll say we are cutting production to invest in Green stuff which will drive prices on dinosaur juice up and give us dividends and bonuses while we try to look like the good guys as the planet melts.