The global demand for oil could peak as soon as the late 2020s as the world continues to rely more on natural gas and renewable energy sources, Royal Dutch Shell CEO Ben van Beurden said Thursday at the CERAWeek by IHS Markit conference in Houston.
Van Beurden acknowledged he disagrees with many of his energy CEO counterparts who contend oil demand will grow for several decades to come.
That’s partly why Shell said Thursday it’s divesting from most of its Canadian oil sands position by selling its acreage in an $8.5 billion deal to Canadian Natural Resources — $5.4 billion in cash and $3.1 billion in Canadian Natural shares. In a separate deal, Shell is paying $1.25 billion to Houston’s Marathon Oil to maintain a smaller oil sands stake.
Van Beurden said the world must dramatically reduce its carbon dioxide emissions to meet Paris climate accord goals. But he emphasized that doesn’t mean eliminating the use of fossil fuels.
“The largest contribution Shell can make to reducing emissions globally in the near term is to continue to grow the role of natural gas,” van Beurden said, noting that gas burns cleaner than crude and coal.
About half of Shell’s portfolio is now natural gas.
Shell also will continue to invest in wind, biofuel, hydropower and carbon capture projects, he said. But it will do so when and where it’s economically advantaged, admitting that Shell has in the past invested too early in renewables that couldn’t yet turn a profit. Van Beurden also argued that other industries must reduce carbon emissions; it cannot be left to the energy sector alone.
He said governments worldwide must do more to enact the right policies, including doing more to put a price, or tax, on carbon emissions. Such proposals have proven dead on arrival in the U.S. Congress.
Shell has supported carbon pricing since the late 1990s, he said. “We haven’t been very successful.”
“The world needs more energy,” van Beurden said. “But we also need to produce all that energy while emitting much less carbon dioxide. This is of course a key driver behind the energy transition.”
He called the effort a “multi-decade transition program,” noting it will also take decades to finally get all of the right policies in place with some countries moving much faster than others.
Shell isn’t done with oil either. Shell is continuing to invest more in the deepwater Gulf of Mexico, as well as in Argentinian shale plays like the Vaca Muerta. He said Shell recently drilled the cheapest well in the Vaca Muerta yet using the assistance of a drilling team working remotely from Calgary in Canada.