Shell Restructures Upstream into Conventional/Unconventional Units

On Tuesday, Royal Dutch Shell held a “Management Day” event in London (another was planned for Wednesday in New York) in which Shell announced the company is restructuring its upstream (i.e. drilling) division. The newly configured upstream division will be split into an Unconventional Resources branch to oversee development of shale, tight natural gas and oil, and oilsands, and an Upstream International branch to oversee all conventional exploration. Nowhere in the presentation, a presentation which includes Shell’s strategies for midstream and downstream too, could we find a single mention of Shell’s potential ethane cracker project in Pennsylvania. There was also no mention of Shell’s Marcellus/Utica drilling program, although we found a single slide with a brief mention on it of northeast shale (see the slide below). Shell’s overall message, in essence, was this: “The ongoing low price of oil (and gas) is changing everything, and we’re making tough decisions in light of this new reality.” Below is Shell’s full Management Day announcement, which includes a description about dividing upstream so every part of it is more accountable to the bottom line, and a description of their efforts to buy BG–which consuming a lot of Shell’s energy and attention at the moment…

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