Outgoing Shell Chief: Countries Hoping For Their Own American-Style Shale Boom Are Likely To Be Disappointed

Workers carry out a practice drill in case of a hydrogen sulfide leak at a natural gas appraisal well of Sinopec in Langzhong county, Sichuan province March 1, 2011. China, which has by far the world?s largest shale deposits, has just started to exploit this source of unconventional natural gas, as it tries to cut costly foreign oil and gas imports. Picture taken March 1, 2011. REUTERS/Stringer

Shell’s outgoing chief executive, Peter Voser, says any talk of other countries witnessing a U.S.-stylefuel production boom has been “hyped.”

In an interview with the FT’s Guy Chazan, Voser also said the company’s Arctic drilling plans have been derailed and may not be back up and running until 2015.

On other countries’ unconventional oil and gas production potential, Voser said China in particular could end up disappointed:

“…Mr Voser also said rhetoric about the US shale revolution being exported to other countries was “hyped”, and that the rest of the world was in an early “exploration phase” which could yield “negative surprises”.

“He singled out China, where Shell has drilled 22 wells, as one of the most prospective countries for shale gas, but warned that costs there were higher than in the US.”

On Arctic drilling, Shell has sunk $US5 billion into exploration, infrastructure, and leasing on Alaska’s North Coast, which is said to contain 22 billion barrels of oil.

Shell’s drill ship, Kulluk, was set to begin operation this spring. But the vessel ended up running aground on New Year’s Eve, and the company was subsequently fined $US1.1 million for damages incurred.

“That was a big disappointment to me personally,” Voser said. The incident forced Shell to delay its drilling plans, and Mr Voser said the company still didn’t know “if we’ll go back [into Alaskan waters] in 2014 or 2015.”

Voser also discusses why the company had to sell off holdings in Texas’ Eagle Ford shale, an epicentre of the unconventional oil boom.

He is stepping down at the end of the year.

Read the full interview on FT.com »