Shell reveals profits decline, agrees to sell $3.8 billion North Sea assets
Royal Dutch Shell is to sell off $3.8 billion of North Sea assets to Chrysaor, the announcement coming shortly before the company revealed a decline in profits for 2016.
One of the world’s largest oil companies, Shell saw 2016 profits fall by $0.3 billion, partly driven by poor oil price performance and the record breaking acquisition of BG Group.
The package of North Sea assets being sold consists of Shell’s interests in Buzzard, Beryl, Bressay, Elgin-Franklin, J-Block, the Greater Armada cluster, Everest, Lomond and Erskine, plus a 10 percent stake in Schiehallion.
Based on the initial consideration received, Shell expects to record an accounting gain on sale against the values of both the Shell and former BG assets included in the package.
The decommissioning costs associated with the package are currently expected to be $3.9bn, of which Shell will retain a fixed liability of $1bn and Chrysaor will assume the remaining liability.
The deal is subject to partner and regulatory approvals, with completion expected in the second half of 2017. The transaction’s effective date is 1 July 2016.
The package represents total production of some 115kboe/d (Shell share) in 2016. Shell’s total UK North Sea production during 2016 was around 211kboe/d. Following completion, Shell will retain a significant, more focused and strengthened presence in the UK North Sea, with production from the Schiehallion redevelopment and Clair Ridge project expected to come onstream.
On completion, around 400 staff are expected to transfer to Chrysaor, subject to a detailed scoping exercise and staff consultation, on their existing terms and conditions of employment.
Andy Brown, Shell’s Upstream Director, said: “Shell has a long and proud history in the UK North Sea, to which we remain committed. This deal complements the great strides we have made over the last two years in improving the competitiveness of our UK upstream business.
“We believe this deal is a vote of confidence in the UK North Sea and offers proof that the industry’s increasing competitiveness, and improvements to the fiscal and regulatory regime, are starting to produce positive results. It will deliver value to Shell, Chrysaor and the UK as a whole, enabling us to continue to strengthen and optimise our UK portfolio and providing a springboard for Chrysaor to bring new investment and growth into the basin.
“It also contributes to the UK’s goal of maximising economic recovery of oil and gas from the UK North Sea, which will continue to be a source of energy, and revenue, for the country for many years to come.”
Simon Henry, Shell’s Chief Financial Officer, said: “This deal shows the clear momentum behind Shell’s global, value-driven $30bn divestment programme. It builds on recent upstream divestments in the Gulf of Mexico and Canada. It is also consistent with Shell’s strategy to high-grade and simplify our portfolio following the acquisition of BG, to ensure the company represents a world-class investment case.
“Importantly, the value here represents a profit against the book values of the assets, and a breakeven oil price above that for the BG acquisition.”
Shell, the UK's biggest oil company, saw 2016 profits fall by $0.3 billion, partly driven by poor oil price performance and the record breaking acquisition of BG Group.
Protium Green Solutions targets Scotland hydrogen potential
Protium Green Solutions (Protium), a leading UK-based green hydrogen energy services company, has expanded its UK footprint with the opening of Protium Scotland, led by newly appointed Jon Clipsham as Chief Commercial Officer.
Following a year of "significant growth" for the London-based firm, Protium’s activity across the green hydrogen space continues to demonstrate the viability of green hydrogen for businesses accelerating their net zero strategies and its CAPEX totals more than £1 billion for projects across aviation, road transport, alcoholic manufacturing and food & beverage sectors.
Protium’s Scotland presence has been established to support its growing projects in the region, with three clients currently based in Scotland and additional projects in the pipeline. Clipsham will lead Protium’s client engagement team across all UK regions, further supporting existing clients’ decarbonisation efforts across its accelerating projects.
Clipsham has been hired to spearhead the Scotland-based office, bringing with him over 30 years’ experience having spent more than 25 years in the chemicals industry and more than five years in the green hydrogen space.
Previously he developed and led many of the projects which have driven the growth of the green hydrogen eco-system in Orkney, and he also plays an influential role in shaping Scotland’s hydrogen policies and regulation, as a Board member of the Scottish Hydrogen and Fuel Cell Association (SHFCA). He also holds various lecturing positions at notable Scottish universities and educational institutes (covering hydrogen and renewable energy).
Clipsham said he is fully aligned with Protium’s mission of taking action and delivering change while policy and industry catches up. "I look forward to working with the team and its clients in supporting the national energy transition and am proud to be joining forces with other experts in the field who share the same vision," he said.
Chris Jackson, CEO of Protium, said: “We can see first-hand how the appetite for green hydrogen is increasing so leveraging Jon’s expertise and technical capabilities will be instrumental in delivering the best result for our clients - I am confident we’ll be able to demonstrate how green hydrogen is an exciting solution for these organisations overhauling their decarbonisation efforts.
“As we approach the second year of the business this milestone marks an important step for Protium as our client portfolio continues to grow, government support steadily increases and as UK-brands explore sustainable energy alternatives.”
With Protium’s senior leadership team holding external decision-making roles in relevant hydrogen Associations and Institutions, together Clipsham with Jackson, and Head of Policy and Innovation, Jen Baxter, the team will play an influential role in championing hydrogen and its place in the green economy. Jackson is currently the Chairman of the UK’s Hydrogen & Fuel Cell Association and Baxter is on the Board of Industry Wales.
The Hydrogen Map lists the following projects in Scotland: Big Hit (phase 2); Acorn Aberdeenshire (Blue Hydrogen); Hydrogen Bus Project (Aberdeen); Aberdeen Exhibition and Conference Centre; and Levenmouth Community Energy project.