Royal Dutch Shell PLC, one of the largest oil and gas companies in the world, aims to cut its carbon footprint in half by 2050, in part by increasing the amount natural gas in its portfolio, CEO Ben van Beurden said March 7 at CERAWeek by IHS Markit.
"There are plenty of questions facing our industry [but] the biggest of them is climate change," van Beurden says. "There is no other issue with the potential to disrupt our industry on such a deep and fundamental level," he said.
Shell plans to cut its carbon footprint by 20% by 2035 "in step with society" in context of the Paris Agreement on climate change goals and will review its progress every five years.
Van Beurden declined to provide a specific strategy to reach the company's emissions goals but said it would include a combination of increased investment in offshore wind, biofuels, reforestation, carbon capture and storage and by investing more heavily in natural gas projects at the expense of oil.
"That may sound like a lot of change and it is. But change is an opportunity as well and it's also the scale that's needed for the world to meet the Paris emissions [goals]. That is the reality and reality is change," he said.
Shell's current portfolio of about 3.7 million barrels of oil equivalent per day is comprised of about 50% oil and 50% natural gas; however, that mix could be closer to 25% oil and 75% natural gas by 2050, van Beurden said.
"Oil and gas will continue to be the core for Shell for many decades to come … but over time this net carbon footprint ambition will transform our company's priorities," he said.
Alongside its emissions goals, Shell remains committed to strong cash flow, lower debt and solid returns on investment by focusing on financial discipline in operational and capital expenditures, as well as a successful divestiture strategy after ending its script program and announcing plans to repurchase shares.
Shell remains focused primarily on the "cash engines" of its integrated oil and gas business but is also looking to invest in deepwater projects in the Gulf of Mexico, as well as petrochemical plants in Pennsylvania and Louisiana that will become cash engines in the next decade if not sooner. Emerging opportunities for Shell include shale oil and gas as well as new energies, van Beurden said.
Van Beurden said Shell's goal is to thrive as the world's energy system changes "by being both financially and environmentally sound." He said the company has no plans to "abandon natural gas and oil – the world will still need it." Instead "it is about making excellent returns by doing the right things."
