Royal Dutch Shell is cutting its oil output by 2% as it moves to other forms of energy.
Shell, one of the multinationals that has defined the oil industry, is slowly turning away from the fossil fuel that made its fortune over the decades, but also has contributed to an urgency facing governments and companies to reduce climate-warming emissions. “Those big floating facilities will continue to be out there, but as production from existing (facilities) decline, you could see a significant drop off by 2050, especially if there are no new leases and nobody is looking for new oil fields,” said Eric Smith, associate director of Tulane University’s Energy Institute.
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Shell will still try to use there current assets but will look to diversify toward “greener” forms of energy.
Shell said in a statement its gradual reduction in oil output will include divestments and natural decline. “Still, our priority is to extend the life of our most competitive assets in our heartland basins — including in the Gulf of Mexico where our assets generate the cash to support our dividend and fund Shell’s transformation,” the company said. “The goal for our upstream business is to make it more focused, more resilient and more competitive to sustain material cash delivery into the 2030s.”
Despite the cuts which will impact Louisiana, the state is in a good position to be in as we can still benefit from this greener product.
In the long term, Louisiana is “well positioned” for a transition toward greener fuel production and carbon sequestration efforts using its existing energy infrastructure, Smith said. Existing refineries, such as the Convent facility, could be converted to produce cleaner fuel sources in the coming decades.
Shell is committed to Louisiana even as it closes its Convent oil refinery, which employs 700 company workers and 400 contractor jobs
Shell has said it is consolidating its assets into six energy and chemical parks. The survivors include the Norco refinery near New Orleans, in conjunction with Shell’s chemical complex in Geismar. The goal is for the refineries to be more integrated with the chemical complexes and produce more biofuels, hydrogen and synthetic fuels. Shell also plans to increase production of liquefied natural gas. “Our plan is to retain a meaningful presence in Louisiana by way of our integrated refining and chemicals sites at Norco and Geismar, our midstream infrastructure assets, branded retail presence, Gulf of Mexico operations and our offices in New Orleans,” Shell said in its statement.
We are moving to a more sustainable condition and this small cut is still a cut that portends more changes.
“The oil industry has carved up our protective wetlands with its pipelines and canals, exacerbated storms with its greenhouse gases, destroyed people’s property values by moving in next door and polluting relentlessly and increased the cancer risk in our state,” said Anne Rolfes, director of the Louisiana Bucket Brigade, an environmental group. “Addressing these harms has to start somewhere, so maybe these are the first steps.”
