Shell sets its sights on a leading role in fracking

Oil giant posts profit slide, reveals $90m Arctic rig hit and confirms its interest in UK shale gas deal

Shell has Britain's nascent shale gas industry in its sights after its chief executive, Peter Voser, declared plans to be a "leading player" in the fast-growing global fracking business.

Fresh from signing a £6bn shale gas deal with the Ukraine at Davos last week, Mr Voser said he was looking at a number of fracking opportunities across Europe, including the UK and Germany. Shell disclosed its interest in UK fracking after revealing a disappointing 6 per cent slump in profits to $27bn (£17bn) for 2012, as its US oil and gas business was hit by rising costs and falling prices. The shares fell nearly 3 per cent to 2,294p.

The company also revealed a $90m hit from the grounding of its Arctic drilling rig, the Kulluk, near the Alaskan coast on New Year's Eve, after it ran into a storm on the way to Seattle for routine maintenance. It said the Kulluk was not yet repaired, and it was "too early" to say whether its Arctic setbacks would be resolved in time for the drilling season, which runs from July to October. However, Mr Voser pledged his allegiance to the Arctic despite a series of setbacks over the years in the region, where Shell has invested $5bn but has yet to discover commercial quantities of oil.

Fracking, or hydraulic fracturing, is used to release oil and shale gas from rocks by blasting sand, chemicals and water into them. The practice is controversial because it has been linked to earthquakes and water pollution, but it has also enabled an energy revolution in the US, where new techniques have unleashed a wave of rock-based oil and gas. Shell already has significant fracking operations in the US and has secured contracts to produce shale gas in China.

The practice was temporarily banned in the UK after the country's first exploratory shale gas drilling site, near Blackpool, was linked to earth tremors. However, it was given the green light in December after an investigation concluded it should proceed under close supervision.

Mr Voser said he was "very excited" about the opportunities for fracking, but cautioned that there was no certainty of a deal being done in the UK, where he saw no prospect of any significant shale gas production for at least 10 years.

In comments echoing recent statements from British Gas owner Centrica and BP, Mr Voser said: "Given the population density, we see less development in European shale [than the US] and that also applies to the UK. I don't see the impact of shale as a major driver over the next 10 years although it might be after that."

Whether the UK could develop a successful shale gas industry depends primarily on whether it has the right geology, as well as the right regulation and tax structures, Mr Voser added.

He played down, without denying outright, reports that Shell is considering buying a stake in Cuadrilla, a company chaired by the former BP chief executive Lord Browne that caused the tremors near Blackpool and is leading the fracking charge in the UK.

"We are on the high level so don't link us to anything which is ongoing at this stage. That would be too early," he said.

The $90m Kulluk charge, to be spread over the fourth quarter of 2012 and the current quarter, covers salvage and other costs but no repair work, meaning that the eventual cost to Shell could be considerably higher.

PROMOTED VIDEO
Life and Style
food + drink
Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
News
peopleAt least it's for a worthwhile cause
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
News
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
News
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
tech
Arts and Entertainment
Ben Affleck stars as prime suspect Nick Dunne in the film adaptation of Gone Girl
filmBen Affleck and Rosamund Pike excel in David Fincher's film, says Geoffrey Macnab
Life and Style
fashion
News
news
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments