Shell keen on its shale potential worldwide

Royal Dutch Shell PLC considers its shale holdings a growth priority for 2020 and beyond now that the major divested roughly half its US and Canada unconventional properties in recent years, executives told reporters during a June 20 media event at its West Houston offices.

Greg Guidry, executive vice-president of unconventionals, noted Shell is concentrating its shale business in the Permian basin, Haynesville, the Marcellus and Utica in Appalachia, the Montney and Duvernay in Western Canada, and the Vaca Muerta in Argentina.

“We have one-half the footprint that we did in 2013 but have a larger resource volume,” Guidry said. His division has emphasized cost reduction and improved capital efficiency, cutting its direct overhead costs 76% as of the first quarter compared with 2013.

Capital spending on shales is about $2-2.5 billion/year, he said. Shell reported 240,000 boe/d of shale production in the first quarter, up 39% from 2013. Shell estimates it holds an estimated 12 billion boe in shale reserves worldwide.

“We are much leaner, much simpler, and much more nimble,” Guidry said, adding that Shell specifically worked to become more competitive with major independents on its unconventional strategy.

“We have substantial choices in the post-BG world,” for shale reserves, Guidry said. Last year Shell acquired BG Group PLC in a $70.1-billion transaction (OGJ Online, Apr. 8, 2015).

Shell’s unconventional business currently is focused on liquids-rich shales rather than on its gas plays, he said. The Permian in West Texas and the Duvernay in Canada are the most promising for light, sweet oil.

Laurens Gaarenstroom, Shell’s general manager of emerging basins, US and Latin America, said he is very optimistic about the quality of source rock in Vaca Muerta, where he believes Shell has some of the top estimated ultimate recovery rates.

“The rocks are probably among the best in the world, but of course the costs are still way too high compared with North America,” Gaarenstroom said. Argentina still needs more service providers to make costs more competitive, he said.

Industry has drilled about 600 wells in the Vaca Muerta with 500 of them being vertical wells, Gaarenstroom said. He noted that Shell has drilled only horizontal wells in the play, and he sees others shifting to horizontal wells there.

Contact Paula Dittrick at

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