Shell To Spend $32 Billion On Upstream/Downstream Capacity

May 2009 Vol. 236 No. 5

Shell said it is continuing with plans to build new upstream and downstream capacity, while managing the near-term challenges of the global economic slowdown. In 2009, the company says it will invest $31-32 billion to create its portfolio.

Jeroen van der Veer, Royal Dutch Shell’s chief executive, commented: “These are testing times in the oil and gas industry. While short-term measures are important, we keep our long-term perspective, and continue to believe that energy needs over the long term provide a positive context for Shell’s investment programs today.

“The challenge in upstream is to produce new barrels to offset natural field decline, and to create new growth. In downstream, we need to balance the continued demand from customers and governments for cleaner products, with the challenges to the industry from the cost of supply,” he said.

Shell launched very few new projects in 2007-08 to avoid the peak in the cost cycle. This pause, combined with Shell’s global scale, gives new opportunities to reduce supply chain costs ahead of launching new projects.

Major investments currently under way include:

  1. Oil and gas fields with 1 million boe/d of capacity which will generate 2-3% annual production growth early in the next decade, to 2012.
  2. 6.5 million tons per year of new LNG capacity, an increase of 40% over 2008 levels.
  3. New refining and downstream GTL assets, totaling 300,000 bpd of downstream capacity, a 7% increase for 2011-12 compared to end-2008.
  4. 800,000 ton per year of ethylene and 750,000 ton per year of mono-ethylene glycol. This is a 13% increase in Shell’s ethylene capacity and 60% increase in its mono-ethylene glycol capacity.
  5. Pre-FID options upstream that could add more than 1 million boe/d of additional capacity from a resources base that can support growth to at least 2020.