Oil and gas major Shell appears undecided about the viability of developing gas from the Browse fields which operator Woodside hopes will provide feedstock for the North West Shelf project it operates and which Shell has a stake in, helping extend the life of the LNG export facility out to 2070.
Speaking during the group's annual general meeting yesterday at which he outlined the group's route to achieving net zero across its supply chain by 2050, Shell CEO Ben van Beurden said that any plan to develop Browse would have to be measured against its long-term target.
"When we and if we take an investment decision on the project, we will have to make sure that it is fully aligned with plans that we have all the way to 2050 and probably beyond, otherwise we will not sanction the investment," the CEO said.
No mention was made of the group's US$17 billion, 3.6 million tonne per annum Prelude floating LNG production facility which lies north-north east of Broome offshore Western Australia and shipped its first gas in mid-2019. Prelude was shut in for almost a year as the company battled mechanical faults and other issues.
As outlined during its AGM, Shell's strategy includes "no new frontier exploration entries after 2025" and an anticipation that all of the group's current reserves will be entirely used up before 2050.
This is in line with Shell's aspiration to gradually reduce its carbon intensity - and ultimately its absolute emissions - by shrinking its upstream operations while growing its downstream business in the decades ahead, providing energy with a low carbon intensity.
As part of this, Shell "will not enter into new basins and new areas where we don't currently have a position," Van Beurden said.
"This doesn't mean we won't be drilling wells anymore…. Will continue to find ways of keeping our production full, fulfilling the need for oil and gas that the world still needs.… It means our reserves will reduce over time but we will find new business models to invest in. We will move from one form of energy product to another form of energy product," he added.
In response to questions about how Shell plans to amend its strategy in light of the IEA net zero report yesterday that said all new coal, oil and gas development must stop if the world is to reach net-zero emissions by 2050, outgoing non-executive chair Charles Holliday commented: "We have not had time to study IEA report in depth. But we will in due course".
The Browse JV is composed of operator Woodside (30.6%), Shell Australia (27%), BP Developments Australia (17.33%), Japan Australia LNG/MIMI Browse (14.4%) and PetroChina (10.67%).
Under current unsanctioned plans, Woodside wants to bring high-CO2 content gas from the Brecknock, Calliance and Torosa fields to extend the life of the NWS LNG export facility to 2070. This is well past Shell's net zero deadline of 2050 and in stark contrast to the IEA's assertion that all new gas field developments must cease from this year if the world is to halt dramatic global warming.
Woodside has delayed the Browse sanction for this particular development concept - previous iterations involved James Price Point or floating LNG -- several times and the sanction date is currently "from 2023".
Prior to the pandemic the main issues were around partner alignment given two of the six equal partners in the Shelf did not have a stake in Browse and purportedly held out in hopes gas from their own fields could act as backfill.
Hydrocarbon resources contained in the three Browse fields are predominantly gas, with contingent resources of 13.9 trillion cubic feet of dry gas, and approximately 390 million barrels of condensate.
