Royal Dutch Shell: A bold bet to remain the world’s second-largest gas producer
Royal Dutch Shell became the world’s second-largest gas producer in 2016 after spending $70 billion to buy BG Group, which boosted Shell’s natural gas production rate by 25% while also adding a large-scale LNG business and vast gas reserves. Shell produces natural gas from several countries, with its largest supplies coming from Norway, Malaysia, Australia, the U.S., and Canada. Australia is its biggest source of gas at more than 600 BCF in 2017, which is more than double the output of its other top regions.
Shell is one of the world’s largest LNG producers
While Shell produces a significant amount of gas that flows through pipelines to end users, it’s one of the dominant forces in the global LNG market. Last year, the company manufactured 33.2 million metric tons of LNG, — good for 12% of the worldwide market — which was 7% higher than the previous year due to a contribution from assets acquired along with BG Group as well as the strong performance of its legacy facilities. One of the company’s major sources of LNG is the Chevron-operated Gorgon facility in Australia, which it also co-owns with ExxonMobil. The $54 billion facility came online in early 2016 and, despite some ups and downs, was a meaningful growth driver for Shell last year.
Shell has several other LNG export facilities under development that will help it boost gas output going forward. One of the largest is LNG Canada, which is a 40 billion Canadian dollar ($30.4 billion) development that Shell could green light later this year. That project would allow the company and other producers to increase production from the Montney and Duvernay shale plays in Western Canada.
In addition to shipping LNG produced at its liquefaction terminals, Shell is also involved in facilitating the trade of LNG on the global market. It buys LNG volumes produced by third parties at fixed prices, which it then sells at either oil-linked or spot-market (which is the going market rate) prices. Those LNG trading activities boosted Shell’s LNG sales volume to 66 million metric tons in 2017, which was 16% higher than the previous year. Shell’s LNG sales volumes should continue increasing in the future, since the company has a contract to buy all the LNG produced at Kinder Morgan’s Elba Liquefaction plant near Savanah, Georgia, which will start up over the next year.
LNG makes Shell a compelling investment option
With a vast supply of natural gas reserves, an integrated business to move this gas to market centers, and a large pipeline of expansion projects, Royal Dutch Shell is emerging as a dominant force in the rapidly growing LNG market.
One of the best ways to invest in natural gas
With natural gas demand expected to continue growing at a fast pace in the coming years, energy companies need to significantly boost their output of the cleaner-burning fuel to meet market demand. However, because they can’t ship that gas by tanker as they do with oil, the industry needs to also invest in LNG infrastructure. While there’s currently an LNG building boom underway, it might not be enough to meet the world’s needs.
That’s why investors should focus their attention on companies with a large and growing portfolio of LNG projects like Royal Dutch Shell, which is becoming a global leader in the field thanks to its acquisition of BG group. That focus on LNG could be just the fuel this energy giant needs to outperform other gas-producing companies in the decades ahead.
Matthew DiLallo owns shares of BHP Billiton and Kinder Morgan. The Motley Fool owns shares of and recommends Kinder Morgan. The Motley Fool has a disclosure policy.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
