Big sale of Shell’s oil and gas stakes is bait and climate change

Royal Dutch Shell said on Monday it was selling all of its oil and gas assets in the Permian Basin of Texas for $ 9.5 billion in cash to ConocoPhillips, one of the industry’s largest recent deals.

The sale represents 225,000 net acres of Permian land that produces 175,000 barrels of fuel per day, the companies said in a statement. Release; a shell frame told the Wall Street Journal that his Permian employees would join ConocoPhillips. Once the sale is closed, Shell will no longer have a presence in onshore production in the Permian, one of the largest oil and gas fields in the world.

Although Shell’s announcement makes no mention of its climate or energy plans, the sale comes as Shell and other oil companies increasingly come under scrutiny by climate activists and the general public for their reduction plans. shows. Shell, in particular, faces a historic legal challenge for its business: in May, a amazing decision a Dutch court ordered Shell to reduce its emissions by 45% by 2030, in line with the Paris Agreement. (The company has said he would challenge the decision, with CEO Ben van Beurden writes a post on LinkedIn explain the reasoning.)

Shell has also faced a host of other legal challenges in the Netherlands and the United States over its climate commitments. Earlier this month, another Dutch court (the Dutch legal system really does weigh in here) ruled that Shell need to stop using ads who claim that customers can make their purchases “carbon neutral” if they buy offsets at the pump. (TThis is a campaign that Shell also has hired Instagram influencers to promote.) And last week, the U.S. House of Representatives said it was launching an investigation into Big Oil’s use of disinformation, calling representatives from big oil companies to testify, including Shell.

The sale could be interpreted as a sign that the industry is slowly recognizing that fossil fuels may not be a cash cow forever. The Shell executive told the Journal that the decision to sell came after the company considered to acquire new assets in the Permian, but ultimately decided that the most profitable move for shareholders would be to sell. Shell has indicated that it appears to recognize the writing on the wall regarding fossil fuels: Eearlier this year the company said in a press release that it had reached peak oil production in 2019, peak emissions in 2018, and its fossil fuel production would gradually begin to decline (albeit at a much, much slower pace than the Dutch court decided and what science dictates). Van Beurden too said in may that the business is “absolutely necessary” for the energy transition and that people will see Shell “doing the right thing”. Alright, Ben!

The Permian chord also shows this oil and gas executives are concerned on climate respectability in the business world. (To be determined on the actual climate.)

“Shell does not want to sell to someone who will give it a bad image of its ESG indicators, even after the sale” Ohe and gas analyst Subash Chandra says the Journal. “Previously, ‘Just show me the money.'”

The press release notes that Shell’s Permian assets have, over the past four years, “reduced greenhouse gas and methane intensity by 80% through investments in infrastructure and technology.” . Chandra Noted to the Journal that as part of the sale, ConocoPhillips has agreed to increase its goal of reducing emissions intensity by 2030, even as they acquire all of this new dirty fuel production. It looks good, but ethe intensity of the missions is essentially a bin metric which allows companies to continue to increase their emissions while appearing to be doing well on paper.

What is really happening is that Shell is offload a huge amount of fossil fuel production to another company that will just keep drilling. Shell Books May Look Cleaner, this Permian sale is, in terms of net total world emissions… a shell game. (Editor-in-chief of Earth Brian Kahn would like credit for this amazing pun, so please write to him directly with your feelings on it at [email protected].)

It illustrates one of the main problems with relying only on market forces to raise the bar on climate change: Pencourage companies to clean up their emissions can only go so far. Without other forces acting to restrict all production and use of fossil fuels, a company facing pressures to cut emissions may simply sell certain assets to the highest bidder, some of whom will not care about world opinion as long as oil and gas continue to make money. The Saudi government, for its part, has indicated that it really doesn’t care on other countries turn away from fossil fuels or the climate risks, and plan to break through, baby, to break through for decades to come.

Nonetheless, it is encouraging to see a company as large as Shell scared, and it illustrates that the market and the law the pressure is good for something. This is not the whole, at the end of the day solution to end the production of fossil fuels, but it’s still a step forward in forcing some of the biggest historical polluters to consider different futures for themselves if they are to remain relevant. Keep bullying the fossil fuel companies, let’s see what else happens.