Royal Dutch Shell news: Royal Dutch Shell plc (ADR) (NYSE:RDS.A) continues to reduce its presence in the US. The company announced that operations at its experimental location in Colorado will stop in order to reassign resources to a new location. Activities come to a sudden stop after 31-years of poor results. The shale is rumored to hold some 800 billion BOE, and with shale exploration at its boom, the decision has come under some heat from analysts.
Company representatives commented about the particularities of the old site. The shale had to be heated for 3 years before extraction could start, way over the average utilized at other sites in the US. The extended heating period translated into high energy bills when compared to production levels, turning the project unprofitable at least.
Another issue for the project has been water supply. Since the region has seen important urban developments, securing a reliable and steady source has become troublesome.
Royal Dutch Shell Corp. (NYSE:RDS.A) has also placed its share on the South Texas Eagle Ford up for sale. The company entered the gas boom at a later stage, and is suffering the consequences. With depressed prices, investments do not add up to profits and the decision is well understood.
While contraction has been observed in the US, expansion has been seen in Brazil. Royal Dutch Shell Corp. (NYSE:RDS.A) continues moving forward on the Parque Das Conchas project. The project is a partnership with Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) and Oil & Natural Gas Corporation Limited (NSE:ONGC).
The project is located about 110 kilometers (70 miles) off the southern coast of Brazil. And, Royal Dutch Shell Corp. (NYSE:RDS.A) holds a 50% share of the heavy-oil block.
Output for the first phase declined as expected, from 90,000 BOE per day in 2009, to 35,000 BOE per day in 2013. The second phase of the project is expected to add 35,000 BOE to daily production. Meanwhile, the third phase continues under construction, and is expected to contribute with an additional 28,000 BOE per day.
Disclosure: Jodor Jalit holds no position in any of the mentioned stocks.
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