As Shell moves away from fossil fuels, role of New Orleans hub grows | Economic news


Colette Hirstius, from New Orleans, took over the top local job at Shell Oil as the Anglo-Dutch energy giant contemplates the end of the fossil fuel era and how it could survive in its third century of activity.

Although Shell, like other oil companies, has long since started to reduce its presence in New Orleans, what remains here is one of the most important pieces of the global oil giant: Shell is the largest producer in the world. Gulf of Mexico, with eight deep-water offshore platforms extracting a total of around 476,000 barrels of oil per day – nearly 20% of Shell’s global oil and gas production in 2020.

Shell Oil’s Auger was the first tension leg platform in the Gulf of Mexico in 1994. The 50,000 ton structure includes giant pontoons that attach to the seabed via metal tendons, which allowed oil companies to drill beyond the continental shelf. Auger is located in 2,800 feet of water 210 miles southwest of New Orleans.

The Hirstius-supervised Shell operation is led by around 1,000 people, mostly located over nine floors at the Hancock Whitney Center in the central business district. It was known as One Shell Square when the oil company towered over the 51-story skyscraper. Despite rumors persisting over the years that this remnant of Shell’s presence in New Orleans will eventually give way to the tractor beam pull of Shell’s U.S. headquarters in Houston, the numbers have remained stable for several years.

Hirstius’ two-decade career with Shell took her from New Orleans to West Africa to the company’s headquarters in The Hague, The Netherlands, before returning her home in as a local boss. She said the New Orleans hub had more than symbolic significance.

“Our production takes place off the coast of Louisiana, so being physically here and being in contact with the communities that help support the offshore operations and the state entity that regulates it is very important to us,” she said. .

Colette Hirstius

Colette Hirstius, Shell’s new Gulf of Mexico operations manager, poses at the Shell New Orleans office on November 5, 2021.

The importance of managed operations in New Orleans became evident last year, after Shell CEO Ben van Beurden outlined the company’s new transition strategy. The Poydras Street workforce has not been affected as the company said it will cut 9,000 jobs globally, or about 10% of all employees, by the end of 2022. It was even as the United States suffered a huge blow, with nearly 3,000 jobs cut (17% of the total workforce in the United States), including 1,100 workers and contractors as a result of the shutdown. of the Shell refinery in Convent.

In September, Shell announced that it would sell its assets in the Permian Basin in Texas for $ 9.5 billion to ConocoPhillips. Oil from the Permian and similar shale basins has been largely responsible for more than doubling U.S. oil production over the past decade to 12 million barrels per day, beating the world. But it’s relatively expensive oil to extract, and the sale of Shell speaks volumes about the current dilemma facing oil companies.

Most of the proceeds from the Permian sale – $ 7 billion – will flow back to shareholders, meaning Shell executives did not immediately see a better way to invest that money.

At the same time, van Beurden said the company would continue to spend up to $ 9 billion on upstream projects, and that the money that would have been invested in the Permian would be allocated to deepwater projects, which are strongly focused on the Gulf of Mexico. .

So while Shell, like other majors, struggles to find the bets to make on future energy projects, like wind power or blue hydrogen, it remains focused on research and production of oil and gas. gas, and therefore doubles over the deep waters of the Gulf of Mexico.

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The rationale is clear: the decision to invest this year in the Whale oilfield, for example, which sits 200 miles offshore in about 8,600 feet of water, is one of the most profitable options for Shell in the world. over the next few decades. It will return more than 25% on its investment and will be, according to Shell, the best way for it to finance its transition to a future without fossil fuels.

Hirstius grew up in Gentilly and graduated from St. Mary’s Dominican High School in 1992. She describes her upbringing as the typical New Orleans scene of carnival and other festivals, and a vacation in Grand Isle and with her grandparents. in Thibodaux.

His father, Broderick Bagert, was a lawyer and city councilor in the 1970s. In 1980, he was appointed to the Louisiana Civil Service Commission and became known for his strong consumer advocacy, leading to lengthy court battles with Louisiana Power & Light (now Entergy Louisiana) to reimburse overpayments to taxpayers.

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But Hirstius said a defining moment was his father’s decision in the early 1990s to quit politics and give up his practice of law to pursue the life of a writer. Bagert, in turn, attributed his inspiration to become a children’s poet to Colette, the second eldest of his four children, for whom he wrote a poem when she couldn’t seem to find one that suited his presentation. in third grade. Bagert has sold over a million books of children’s poetry.

Hirstius, scientifically minded, said her passion was geology, which took her to Tulane University, the University of Colorado for postgraduate studies, and eventually to Shell New Orleans in late 2003. She held various jobs there for over a decade before taking on major projects in Trinidad and Tobago, as well as jobs in West Africa and at Headquarters.

“The biggest difference since leaving in 2014 is the focus on the energy transition and how it is part of our daily conversation,” she said. “Not a day goes by that I don’t have a conversation about how we’re going to optimize the margins we’re going to achieve across the business and reduce our greenhouse gas intensity.”

This is the central argument made by Shell and other majors as to why they must continue to invest huge sums of money to extract oil from places such as the Gulf of Mexico. The money is needed to fund the transition, they say, and is cheaper and creates less carbon emissions to do so here than in high carbon areas like Canada’s tar sands.

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Not everyone agrees with the argument, including the US House Oversight Committee, which examines the history of the oil industry’s darkening and, worse yet, climate change.

Indeed, the past year has seen a number of watershed moments, including activist investors forcing appointments to the boards of ExxonMobil and Shell in a bid to accelerate their transition from fossil fuels.

Another defining moment for the industry was court rulings in Texas and Louisiana to overturn tax breaks long enjoyed by oil companies. One of the driving forces behind the Louisiana effort was Hirstius’ brother Brod Bagert, lead organizer of Together Louisiana. He said the political reality of climate change had forced oil companies – at least publicly – to accept the inevitable.

“It’s very different from what it would have been five or 10 years ago. Now the vast majority of people don’t question [the need to transition away from fossil fuels] more; it’s just a matter of how we get there, ”Bagert said.

“It’s not very easy to say what the real progress is and what the PR is,” he added, noting that European-based companies such as Shell tend to be more progressive in the industry. ‘acceptance of things such as tax reform and paying for carbon emissions.

Hirstius said energy shortages and price spikes in Europe this year show the need to take a long-term view of the transition.

“This year energy prices in parts of Europe have quadrupled, there have been fuel shortages in the UK and locally in New Orleans and the southern Gulf Coast region, Hurricane Ida caused fuel shortages, ”she said. “We are working to get a lot more renewables into the mix, but it’s not something we can go through overnight. Fossil fuels will be part of the mix for decades to come.”

Bagert said they don’t always agree, but he thinks his sister’s heart is in the right place. “It would be miraculous if we took the same stance on these issues, but I’m proud as hell of my sister and I think it’s times like this that you want the people who you think care about occupying important positions.

“It is no exaggeration to say that lives will depend on the decisions we make now,” he said.

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