Gulf Of Mexico playing key role in Shell’s plan to reach net-zero emissions by 2050
Royal Dutch Shell has a deep relationship in the U.S. Gulf of Mexico. The European oil major is the largest offshore producer in the Gulf, which accounts for half of the oil giant’s U.S. business and revenue.
Bill Langin, Shell’s senior vice president of deep water exploration, spoke to the Houston Chronicle about the Offshore
Technology Conference taking place this week, the offshore sector’s recovery from the pandemic and the company’s plans for a low-carbon future.
Q: What does OTC mean to Shell, the offshore industry and Houston?
A: OTC is always a great opportunity for the industry to come together as a whole and share best practices on key priorities such as safety and the reduction of methane emissions. But what makes OTC particularly poignant this year is that, while we’re not yet out of the pandemic, it’s the first time we’re gathering with enough hindsight to share some thoughtful and constructive reflections.
Although the pandemic is a unique situation which challenged us in new ways, ours is
an industry that is no stranger to extreme ups and downs. While I’ve definitely seen my share of change in my 18-year career with Shell, I’ve seen the industry emerge stronger on the other side by coming together at events like OTC.
Q: What are Shell’s plans for the Gulf of Mexico as its leading producer?
A: Of course, we want to stay the leading producer. But our ambitions go far beyond simply being the largest producer. It is also to be the leading explorer. The Gulf of Mexico is a core position in Shell’s portfolio, and we think it has the potential to deliver the highest-value barrels with the lowest carbon footprint in the world.
We feel it’s critical to evolve in the Gulf of Mexico in a responsible way, but also in a way that
maintains, and grows, the confidence of our investors. . Take the Leopard prospect. In May, we announced this significant discovery in the Alaminos Canyon. Leopard is a great example of how we are expanding our core Gulf of Mexico portfolio near existing infrastructure. Leopard is located near other discoveries in the Perdido Corridor and will help increase production alongside the likes of the Great White, Silvertip and Tobago fields.
This example also shows how being the leading producer also means being the leading explorer, but with the caveat that you need to do it in a way that is responsible and makes business sense.
Q: How does Shell view the offshore sector’s recovery from the pandemic?
A: Throughout the pandemic, offshore workers, onshore support staff and the federal government have all done a remarkable job maintaining safety and environmental
protection on the Outer Continental Shelf . We learned a lot about focusing on the most critical work, operating with minimum manning, utilizing robotics and remote monitoring, as well as improving reliability that results in fewer corrective interventions.
And while commodity prices have recovered, I am not sure if I’d say that the industry has returned to its previous state. Overall rig rates and Outer Continental Shelf production dropped significantly and neither have returned to pre-pandemic levels.
While some of that is due to a still evolving COVID-19 situation, some is also probably due to the overall uncertainty around what might be contained in the Interior
Department’s impending report on the federal fossil fuel program.
Q: How does offshore oil production, particularly in the Gulf, fit in with Shell’s energy transition plans?
A: Shell’s offshore production and exploration play a vital role in Shell’s energy transition. Our production in the Gulf of Mexico — which accounts for more than 50 percent of Shell’s U.S. business and revenues — has among the lowest greenhouse gas intensity in the world.
I’d also like to point out that Shell’s climate goals to achieve net-zero emissions by 2050, are aligned with the Paris Agreement and the Biden administration’s goal to be net-zero by 2050. At OTC, one of the areas of focus will be on production technology that can help us to further reduce greenhouse gas.
So, our Gulf of Mexico oil and gas business contributes — must contribute — to our net-zero emissions objective. While demand for oil and gas exists, we think we can supply some of the best, lowest net-carbon-footprint molecules in service of our shared climate ambitions. This is why we believe strongly that the administration should reinstate competitive lease sales in the Gulf of Mexico.
Q: Is there anything else you would like to add about the offshore sector?
A: At Shell, we say that care for people is at the forefront of everything we do, and I have to say that it could not have been truer during the last 18 months. We had to take safety to a whole new level, adopting new ways of working to reduce the risk of exposure to COVID.We’ve had to learn to operate in a more efficient way without compromising safety and the wellbeing of our Shell family.