Shell Exec: We Are Committed to North Sea Operations
In February, Royal Dutch Shell (NYSE:RDSA)(NYSE:RDSB) announced it had “decided to reassess the development plan for the Fram oil and gas field in the North Sea, due to unexpected initial drilling results.”
The development plan originally estimated that the field, located just west of the halfway point between the United Kingdom and Norway, would produce 35,000 barrels of oil equivalent per day, but the “unexpected well results” proved the company needed to create an alternative development plan for production. The discovery was a disappointment because it also proved that Shell’s large investment in what it calls “competitive IT” was not an infallible technique to recover unconventional resources like deepwater oil or gas locked in hard-to-access rock formations.
Shell began to use competitive IT — complex algorithms, visualization tools, and other technologies — several years ago when the company’s management started having a hard time gaining access to conventional oil and gas reserves because many governments had become reluctant to share them with Western companies.
That meant Shell had to depend on unconventional resources. Extracting oil and gas in those circumstances required the company to utilize complex engineering while betting technological strategies could make unconventional oil and gas reserves profitable.