Shell Looks Past Peak Oil
In the face of a continuing glut of oil, assessing the reality of the current and future markets can lead to some hard truths. One of those beliefs, according to the Chief Financial Officer (CFO) of Royal Dutch Shell, is that oil demand may peak by 2021.
Ordinarily, such a forecast might be unthinkable from a company whose main business remains oil production. Yet the continuing dose of reality that’s been delivered to the oil market since mid-2014 in the form of sharply reduced prices forces such a mindset to take hold with Simon Henry, the aforementioned CFO.
During a November 1 conference call, Henry offered the five-year time frame as the earliest possible date that peak demand may happen. To offer enough flexibility with his prediction, he indicated that it will definitely take place before 2031.
Such a blunt assessment isn’t necessarily shared by others within the oil market. Companies like Exxon Mobil fully believe that with continually growing and populous countries like China and India, growth is in the forecast over the next quarter century.
Shell has already taken a number of steps to change within a marketplace that figures to have reduced need for oil. The company has stepped up its focus in the development of renewable energies, hydrogen and biofuels. Natural gas deposits also will play some role.
During the time of the collapse of the oil market, Shell purchased the BG Group, which has been a leader in the area of liquefied natural gas (LNG). They already do business in 27 different countries, offering Shell the chance to use their resources to expand operations even further.
It was 60 years ago that peak oil was predicted to occur by 2000. That forecast was off, though the day of reckoning is definitely at hand.