Shell delays several major projects

FOLLOWING a decision last month to reduce capital spending by 20%, Shell has postponed a number of projects, including a natural gas development in the North Sea estimated to have a value of around US$1bn.

In response to the falling oil prices and the effect that the coronavirus has had on the industry, Shell has cut spending and has had to delay certain projects. According to The Wall Street Journal, Shell has postponed the Jackdaw natural gas development in the North Sea, which analysts estimated to have a value of around US$1bn. Along with project partner Siccar Point, it postponed an investment decision to 2021 regarding developing the Cambo field, also in the North Sea. Shell owns a 30% stake in the Cambo field.

According to S&P Global, Shell is delaying the start-up of its Shearwater gas infrastructure hub, a project that will redirect gas and condensate to the St Fergus terminal from the Shearwater and other fields.

Shell announced that it would no longer proceed with the proposed Lake Charles LNG project in Louisiana, US. However it would continue to support partner Energy Transfer with the bidding process and phased handover. The project aims to convert Energy Transfer’s existing import terminal to an LNG export facility.

“This decision is consistent with the initiatives we announced last week to preserve cash and reinforce the resilience of our business,” said Maarten Wetselaar, Director, Integrated Gas and New Energies, Shell. “Whilst we continue to believe in the long-term viability and advantages of the project, the time is not right for Shell to invest. Through the transition, we will work closely with Energy Transfer.”

According to Reuters, Shell has delayed a final investment decision on the Whale project in the Gulf of Mexico. Shell owns a 60% stake in the project, and Chevron owns 40%. The discovery of the Whale field was announced in 2018 as one of Shell’s largest Gulf finds in the last decade.

Reuters also reported that a final investment decision on the Crux gas project in Australia will also be delayed. Crux is a gas field awaiting development in offshore Australia  and is owned by Shell, Osaka Gas, and a unit of Seven Group Holdings.

Despite these cutbacks and delays, Shell and partner PetroChina have given the go ahead for a A$10bn (US$6.3bn) Australian gas project.