Shell to invest $20 billion in LNG and GTL for 2012 – 15
During Investors day in London, the major Royal Dutch Shell plc ( Shell) presented last week, its vision on the gas future global market and its strategy to sustain a profitable growth and market leadership in this sector.
Since the years 2000s when Qatar and Russia were concentrating all the attention as to dominate the global natural gas sourcing, the development of the shale gas in USA turned the market upside down in converting the world largest importer country into potential exporter.
Even the decisions of large countries such as Japan and Germany to freeze or stop their nuclear facilities did not manage to restore gas market prices.
In North America the Henry Hub gas prices stabilize at lowest ever levels between $2 and 4 per mmBTU with consequences all over the world.
In that respect Shell‘s integrated gas strategy is closer to the national oil and gas companies such as Qatar Petroleum, Petronas or PTTEP working upstream and downstream than the other majors focusing on the upstream.
Shell to become world largest LNG producer
On the last five years, Shell trebled its earnings on this integrated value chain to reach $9 billion in 2011 from the liquefied Natural Gas (LNG) and Gas-To-Liquid (GTL) business, demonstrating how the money left upstream, if any, leveraged the overall profits.
With 250 years of reserves, natural gas is the cleanest fossil fuel for which Shell expects the demand to grow by 60% between 2010 and 2030 to reach 25% of the global primary energy mix and to boost the global needs for LNG.
The production of this quantity of LNG will require $700 billion capital expenditure.
– Building 7 million t/y more in Australia
– Planning 20 million t/y additional in Australia, Indonesia and North America
– Chasing new acreages in China, South Africa and Ukraine.
Shell to monetize gas through LNG, FLNG, GTL, GTC
– Gas-To-Chemicals (GTC) to optimize the entire value chain on the advantage of the shale gas competitive feedstock and flexible labor costs
– Gas-To-Liquids on the same scale as Pearl GTL, but at lower cost of $10 billion to build margin on the healthy US export of diesel fuels overseas.
In parallel, Shell is launching the first floating LNG (FLNG) vessel with Prelude to pioneer a new era in offshore gas production at low cost compared with classical set up of offshore platform, pipeline and onshore LNG plant.