As many energy giants seek to shift to low-carbon power, Royal Dutch Shell said on Nov. 11 that it will begin reducing oil production and will end a decades-long strategy centered on producing more hydrocarbons.
The move symbolizes a historic shift for Shell. Shell said its oil production has peaked and it expects oil production to fall by 1 to 2 percent a year, reducing the company’s exposure to commodity prices in the long term.
Shell plans to reduce production of conventional fuels, including diesel and gasoline, by 55 percent over the next decade, and will double the amount of electricity it sells and install thousands of charging stations for new electric vehicles.
Before Shell announced this new strategy, BP and Total had similar plans to reduce their reliance on fossil fuels and expand their renewable energy businesses such as wind and solar power, partly in response to increasing regulatory and investor pressure.
By contrast, Exxon Mobil and Chevron do not plan to invest heavily in electricity, and both companies say the world will need a lot of fossil fuels in the coming decades. But Exxon Mobil does plan to invest in technology to reduce carbon emissions.
But analysts say the shift to low-carbon energy is challenging because it requires investments in areas where big oil companies may not have a competitive advantage and where payouts are lower. In addition, renewable energy programs typically pay about 10 percent, compared with 15 percent for traditional oil and gas programs.
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