Royal Dutch Shell Plans to Invest More on Oil-Rich Shale

Royal Dutch Shell, the biggest energy company in Europe, will focus more of its U.S. investment in oil-rich shale due to lower prices of natural gas.

Peter Voser, the company’s CEO, expressed in a Bloomberg interview that it is moving its U.S. investment to shale. However, he said that it will grow its U.S. investment for shales that are rich in oil since the company considers this ¬†an unexplored sector that they are planning to strengthen.

Natural gas prices in the US have decreased to its lowest in ten years while oil prices saw a two-year price growth of 40%. Meanwhile, Chesapeake Energy, the number two producer of gas in the United States, previously expressed that it will reduce its output and spending by 70%.

According to Voser, Shell usually spends around $3-5 billion annually on United States’ shale projects. The company further expects to keep its investment this year to $3 billion. Exxon Mobile Corp, the biggest producer in the U.S., recently said that it has not restrained its produce in response to oil prices.

In its recent statement, Shell said that is thinking of producing around 250,000 oil barrels daily by 2017 with liquid-rich shale.

In May, the company predicts shale and nat-gas production in the United States can easily reach 400,000 oil barrels daily in 2015 if decisions on investment are made.

Sanford C. Bernstein showed that Shell is heavily exposed to the United States natural gas industry compared all the countries in Europe.

Shale and other tight-rock gas have made the United States the largest producer in the world. According to Jim Mulya, CEO of Conoco Phillips, a similar horizontal drilling and hydraulic fracturing technology may also help unlock recoverable oil amounting to a maximum of 100 billion in the United States.

By Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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