Shell losing $1 billion a year on U.S. Gulf drilling delays

Royal Dutch Shell Plc, Europe’s largest oil company, is losing about $1 billion a year from drilling delays in the Gulf of Mexico since the 2010 Macondo disaster.

Shell’s production in the region will be curbed by about 50,000 barrels of oil equivalent this year, similar to 2011, Chief Financial Officer Simon Henry said. The company expects to return to planned operations off the Gulf coast by 2014.

“The cash flow implications are a billion dollars or more per year relative to where we want to be,” Henry said in London today. “We are catching up.”

The company, which in March said it planned to raise output to 3.5 million barrels of oil equivalent a day in 2012, is now warning that production could be lower due to Gulf drilling delays, asset sales and oil and gas prices in the U.S.

The U.S. Interior Department issued new safety regulations after lifting the drilling moratorium in October 2010 put in place after BP Plc’s Macondo well exploded in April the same year. The blowout, which killed 11 and sank the drilling rig, led to hundreds of lawsuits against BP and its partners and contractors.

25 Comments

  1. Mike

    So what’s the problem?
    They’ll just make it up at the pump!

    #1
  2. Jackalope

    That’s $1 billion the company would be SPENDING and therefore generating JOBS directly and indirectly. Not to mention the taxes and royalties it would be paying to the government. But that money, taxes, and jobs are rounding errors to our government.

    #2
  3. Bob

    Seek restitution from BP!

    #3
  4. TransAmer99

    @Mike: clueless much? Upstream (E&P) operations are distinctly separate from downstream (refining, transporting & retailing). Losses to E&P operations are not “made up” at the pump. But go on ahead spouting your litany and propagating the public misperception that ‘the evil oil companies are out to screw us’.

    #4
  5. Toocan

    This would be hard to swallow if they owned the Gulf

    #5
  6. Tommy

    “So what’s the problem?
    They’ll just make it up at the pump!”

    Go study how integrated oil companies make their money, it’s not from the pump.

    #6
  7. Diogenes

    But I’m the cause of $4 a gallon gas? I told you that rising gas prices are all caused by O’bozo, the EPA and other wacky agencies that prevent and delay exploration, drilling and refining.

    #7
  8. Slim Chance

    Why is the biggest export item for the USA in 2011? Answer is gasoline. Why are we exporting it if we running out of oil?

    #8
  9. Oilacct

    We currently have extra capacity to make gasoline. Better to export it than just shut down the refineries. Importing oik to make product for export is a good thing, preserving American jobs, and making money for the country.

    #9
  10. CAD1936

    Shell, overall, does not seem to be hurting. Safety regulations, for them, they ask why?

    #10
  11. Frank

    So Shell…a EUROPEAN company..Is supposedly losing 1 Billion a year and its Obama’s fualt again?
    I am skeptical about Shell’s number about them “Losing” any type of money. The might have not produced as much as they wanted this qurter because the drilling permits stopped….But they are not “Losing” the oil…that is still there. There is just a delay in producing because of the delay in drilling permits…..If the Price of Oil goes to $150 when they actually start producing the oil reserves that they wanted to produce presently then they would not be “losing” anything but rather gaining, even with the deduction of the time value of money.

    #11
  12. CaptSternn

    SlimChance, we have to import the oil to refine it into gasoline and other products. The U.S. imports raw materials and then makes them into finished products and can then export those finished products. It would be better if we did not have to import the raw materials since that would mean more jobs in the U.S..

    #12
  13. TXSFRED

    Yea Obama, he’s our guy!
    Everybody I know’s wondering why…

    The man couldn’t cause a dog fight if you spotted him two starving dogs and one piece of bloody meat.

    #13
  14. Matt

    The losses Shell is suffering come from a number of factors that arent based on the oil and gas in the ground. Companies like shell, exxon, chevron, etc. Have drilling rigs under multiyear contracts. This means that they are paid regardless of whether the company drills or not. There are numerous other factors to including paying contractors under contracts, employee salaries who are currently idled but to valuable to let go, increasing prices for materials…… The petroleum industry is far more complicated thank you realize.

    #14
  15. Matt

    @Frank

    The losses Shell is suffering come from a number of factors that aren’t based on the oil and gas reserves in the ground. Companies like shell, exxon, chevron, etc. Have drilling rigs under multiyear contracts. This means that they are paid regardless of whether the company drills or not. There are numerous other factors to including paying contractors under contracts, employee salaries who are currently idled but to valuable to let go, increasing prices for materials…… The petroleum industry is far more complicated thank you realize. So is it Obamas fault for the losses in a way the answer is absolutely “YES”. This is because the Obama Admin has deliberately held up and slowed downed the permits issued for drilling.

    #15
  16. Evolutionist

    Superficial or absolute reality? You don’t lose what you don’t have. You don’t pay for what you don’t get.

    #16
  17. CAD1936

    Considering the damages, injuries, and deaths to its the industries’ own employees and others, caused by a lack of safety measures and funding, isn’t it made necessary for the administration to deliberately hold up and slow down permits issued for drilling till it is made sure it is done in a proper and safe manner?

    Of course some of those here have been trained to think like their corporate big brother would think, but haven’t those “big brothers” PROVEN themselves to be untrustworthy? They consider their quest of profits over everything else. The welfare of this country, its environment, its people, its employees be damed.

    #17
  18. SPENDMONEY

    How can you lose money on something you are not doing. The headline should be “Shell could be making money”. I can see the hurt though, every barrel of oil pulled from the Gulf is routed via the Mid East where it picks up that nasty $100 a barrel price tag. Then it is refined in the USA and sold at a big markup at the gas pump. Yep,,,,they are losing that mark up money. Anybody hear of any oil company promising low fuel pump prices or just “we need our independence from foreign oil” meaning …..they need the cheap(?) free spigot from the Gulf.

    #18
  19. Trail_Tramp

    That’s $1B, for just one company for just one year. The bigger impact will come in years to come, because of the decrease today in seismic re-processing and prospect generation. Obama’s jerk-knee politically motivated action will cost this country billions and billions of dollars for years to come. The Community Organizer is in over his head.

    #19
  20. Royal_Rabbit

    Thank you, soon-to-be former President Obama.

    #20
  21. Ricky Forrest

    I am a Democrat. Of course anyone can whine about imaginary losses. Doesn’t make it so. I notice right wing posts are not even thinking about the 5 trillion dollars America is losing because corps like SHELL follow the Bush (daddy and son) corp Dick Cheney plan to fight inflation (inflation = workers wages are too high) by firing Americans from the work force and hiring only illegal aliens, with special teams from government and business nationwide, to legally advise and guide “how to fill out w2′s and I-9′s and keep the corp policy from being established or proven”. Bottom Line, USA has lost and is losing Trillions of dollars in tax income because of SHELL and its Fortune 500 corps practices of financial WAR against the American Worker.

    #21
  22. almostdallas

    @CAD1936 – Should airlines be held to the same standard every time a plane crashes? If so, we’d better get used to Amtrak. Oh, wait, trains crash, too. Hm. Guess I’m staying home.

    #22
  23. txloanguy

    This garbage that Obama is spouting is malicious if not outright lies. He wants exploration and production? What a crock!

    #23
  24. ntangle

    It sounds as though Mr. Henry is attributing the 50 MBPD domestic production shortfall (and hence the billion dollar shortfall) to three factors rather than just the deep water drilling moratorium. It was also due to asset sales and low domestic prices.

    #24
  25. Moo

    CAD1936;

    Considering that the worst damage EVER perpetrated on the environment was done by a not-for-profit government (Chernobyl), considering that the most heinous crimes EVER committed against the citizens of any nation were done by not-for-profit socialist folks (20 million slaughtered by Stalin, at least 40 million in China), I’d say you haven’t proven a thing. History, on the other hand, has proven otherwise.

    #25