The 2017 Offshore Europe Conference & Exhibition, one of the largest oil & gas conferences in the world, began last week in Aberdeen. Shell C.E.O. Ben Van Beurden and BP C.E.O. Bob Dudley opened the event by commenting on their commitment to drilling in the North Sea and the increasing impact of renewable energy.
Dudley stated that the North Sea is “…significant for us in our global plans in a world that is changing fast,” adding “renewables are knocking at the door in terms of cost competitiveness.” He assured the audience that BP intends to keep in front of the world’s transitioning energy needs with investments in biofuels and other renewable sources. This being part of BP’s slow transition from producing mostly oil to natural gas.
Dudley went on to announce that BP will drill six new exploration wells in the North Sea by the end of 2017. He expects that by 2020 they will be able to bring costs in the region down to $12 per barrel.
Van Beurden also laid out Shell’s view of a world where both standard hydrocarbons and renewables coexist for many decades. Commenting on the need for both forms of energy production as the population grows, he commented that a complete transition to a low-carbon economy “will take generations to happen.”
Furthermore, Van Beurden explained that as far as North Sea goes they remain committed. This despite Shell divesting nearly $3.8 billion from operations in the area. “Yes, we are divesting some of our assets and that will generate short-term cash, but it will also focus Shell’s UK portfolio and ensure it brings in serious returns over the long term.”
The North Sea, known for harsh weather and high costs, is believed be hiding an additional 20 billion barrels, according to the British government. Operating costs in the area have been cut in half since 2014 to an average of $15 per barrel. “The margin on the barrel in the North Sea is so strong it asks for you to come to invest in the basin to maintain production levels” said Steve Phimister, director of Shell’s UK oil and gas production.
Article written by HEI contributor Kevin Abbott.