Skip to comments.Saudi Gas Development Plans Hit..
Posted on 07/07/2014 9:39:07 PM PDT by Rabin
Royal Dutch Shell is ending investments in a gas development project in Saudi Arabia. The emergence of the shale gas industry has opened up more lucrative opportunities for energy companies elsewhere. Shell has decided to end further investment in the Kidan area of the Empty Quarter, the sea of sand dunes that cover south-east Saudi Arabia. Italy's ENI, Spain's Repsol and France's Total - have already abandoned the search for commercially viable gas deposits in that part of Saudi Arabia. Kidan, rich in sour gas...
(Excerpt) Read more at rigzone.com ...
And now, you know what the U.S. involvement in the Syrian Civil War is really all about.
Without a direct pipeline link to Europe, that gas is just too expensive to tanker around, with so many other sources opening up.
Oddity in the story.
Shell has recently exited their shale holdings, so this is not about “better opportunities elsewhere in shale”.
The oil majors have invested enormous money over the past 5-10 years and seen their oil production barely creep up globally. In comparison to the 10 years prior when investment of about 1/6th the amount yielded oil output 10X higher. A lot of major programs are being shut down. They cost too much and don’t yield results. The majors are conserving cash to meet their quarterly dividends.
Scarcity. Get used to the word. It defines the future.
There are unique problems to dealing in the kingdom. There are for example, thousands of princes who demand stroking. I talked to a project manager whose project was suddenly overrun and stopped by the army. A prince told him a not-so-subtle way that he expected a bribe. The PM got a message to his price who was higher on the chain and the army hastily evacuated. So, they could have run into greed. Another issue is the gas prices are controlled. When prices are controlled manufacturers quickly get out of the business. Then there’s the return on investment. If they have x funds to invest and their return in Saudi is y but they can make 10xy in South Dakota, they go to South Dakota.
Lastly, any long term view of Saudi Arabia says it’s due for a massive civil war. I’ll wager that all oil companies are hedging their middle east bets with investment elsewhere. By the time the middle east dives back into the seventh century for good it will be irrelevant.
All of the shale holdings? Or just one or two?
The ones that matter.
“”Some of our exploration bets have simply not worked out,” Shell’s CEO said.”
Scarcity. Embrace it.
Your link says they keeping 70% of the spending and staffing in the three plays discussed.
Trimming off the lower paying areas while keeping the better is hardly the same as leaving the shale.
It says they are cutting 30%. This is not celebratory news of retaining 70%. It’s a vicious slash of 30%. That’s this round of capital controls, and it’s dry gas which deserves to be cut by anyone.
The big issue is fleeing Ethane. This suggests they don’t expect much from wet gas either.
Probably the biggest Shell news was from Dec, and the end of the GTL plant in Louisiana. $20 billion that ain’t going there.
Those are your words. They are false.
You happier with exiting vs exited? What exactly do you think GAAP requires after a write down?
Oh look, BP wrote off $521 million in the Utica. That must mean they will retain $XXX million forever.
No. Selling off lower performing areas has been normal business for them for decades. It still would be wrong to claim they are giving up on shale plays.
BP wrote off $521 million in the Utica.
Quite a few different companies believed the Utica was going to be a better oil producer than it has proved to be.