Shell and Total

Part
01
of four
Part
01

Profile: Gretchen Watkins

Gretchen Watkins has an accumulated working experience of more than 20 years undertaking corporate leadership roles in major oil companies. The Cincinnati native has seen her career take her far and wide from Vietnam to Copenhagen and now, she resides in Houston while working as Shell's President.

Education

Work history/ experience

Work accomplishment

Statements on business philosophies

  • "I request that the Environmental Protection Agency continue the direct regulation of methane emissions. The agency is thinking about stripping out methane from the 2016 methane rule and regulating a different emission instead. I disagree." Gretchen Watkins in a Linked post
  • "Strong, targeted regulations can improve environmental performance across the industry while spurring innovation. It is an essential step on a path to a more sustainable future." says Gretchen Watkins in a LinkedIn post
  • “More renewable energy is critical for a cleaner energy future, and increasingly how people live, work, and play is going to be powered by lower-carbon electricity.” Gretchen Watkins according to a tweet by Shell US
  • "I’m very motivated by the challenge of trying to build a sustainable energy future." asserts Watkins in a Houston blog interview
  • "I think each generation of women faces the challenge of moving forward, not backward. Because the moment we take for granted that the progress we’ve made toward equality and parity is permanent, that’s when we’re at risk of losing ground. " Adds Watkins.
  • “Diversity can happen more quickly when you put targets in place,” says Watkins in an interview on CERAWeek by IHS Markit Conference.

Summary and link to recent press articles, interviews, profiles

  • In a panel on WSJ, Gretchen Watkins gave her remarks on the Green New Deal commending the deal for igniting a climate change conversation and thereby increasing awareness on the topic. On the other hand, Watkins questioned the resolve of the deal in phase out fossil fuels by 2030 as an impossible task.
  • Gretchen Watkins was quoted by a Washington post article pledging to reduce the methane leaks in Shell's global operations to less than 0.2% by 2025. The article was discussing on rollbacks by the Trump administration on fossil fuels in which Shell, amongst other major fossil fuel companies seemed to oppose.
  • Watkins' LinkedIn article on the regulation of methane has also received wide coverage by the press. In the article, Watkins urges the Environmental Protection Agency to move forward with direct regulation of methane emissions as opposed to stripping out methane from 2016 methane rule. Watkins goes ahead and lays out reasons for her stance on the regulation of methane. She reveals the harmful nature of methane as a greenhouse gas and a contributor to global warming. Watkins adds that her company felt responsible to support methane's regulation and emission reduction.
  • In an interview published on Yahoo Finance twitter page, Gretchen Watkins reveals how Shell is capitalizing on the shale boom.
  • According to an article by Bloomberg, Watkins has called for hard targets for women in oil and gas to accelerate diversity in the male dominated workplace.

Personal details

  • Watkins acknowledges Anna Catalano, a retiree of BP as a mentor and friend from their time at Amoco where she was Catalano's right-hand woman. The two shared some similarities including having young children and stay at home husbands. Watkins has admittedly consulted her when making major career decisions including joining Shell.
  • Watkins openly advocates for adversity in the workplace and is a voice and role model for women and girls in the male dominated energy field. She has also demonstrated her passion for women in energy by implementing numerical targets in her company and has constantly spoken in personal capacity of such controversial matters.

Research strategy

The research was generally straightforward. We however might have derived from the fact that Watkins regularly speaks of equality and diversity of women in the workplace and the fact that she enjoys watching female leads to mean that she has a passion for the same.
Part
02
of four
Part
02

Shell: Deep Dive

Shell's strong and substantial position in the energy sector leaves it facing similar challenges to that of its peers in the areas of properly managing and balancing the transition away from oil to non-oil energy sources, managing supply and demand in a changing market, ensuring public perception is not negatively impacted as we see new generations with changing priorities, and increased difficulty in finding and accessing untapped oil and gas energy sources. Additional information about each identified challenge/threat can be found below.

The Challenges

  • At present time, Shell remains heavily invested in oil. Of the 24 projects listed on the major projects list on Shell’s website, 14 of them are focused on accessing and drilling for oil. That means that 58.3% of the new major projects are oil based. Data available in the Shell Energy Transition Report states that as of 2017, 32% of energy comes from oil. Balancing these numbers and ensuring these projects can remain profitable at or close to their current level with a transition to gas and other non-oil energy sources will be crucial for Shell’s long term success. The Shell Energy Transition Report addresses a shift from oil to non-oil energy sources is occurring, but managing the correct balance will continue to be a major challenge.
  • As the company transitions away from oil and invests more heavily in the natural gas market, Shell will need to stay focused on managing supply and demand. Gas is a large and crowded market for the demand projections moving forward after a large boom in the year 2018. Gas market growth is expected to slow to an average growth of just 1.6% per year through 2024. Balancing this with potential regulatory changes as governments around the globe work to address climate change will be crucial.
  • Millennial have now become the largest generation alive, meaning Shell's battle and need to manage public perception will continue to grow. Millennial now make up 75% of the workforce and 79% of millennial employees are loyal to companies that care about their effect on society. Generation Z, behind Millennial, will be focused on similar environmentally friendly practices of the businesses they support and work for. 54% of Millennial and Gen Z Republicans support increased use of offshore drilling, compared with 76% of Republicans in the Baby Boomer and older generations. This information will be important to consider from a customer, investor, and top employee recruitment standpoint. As well, a Forbes article on Gen Z trends lists alternative energy as the second most important environmental cause to Gen Z. Shell addresses climate change and the need for innovation and progress repeatedly on their website, however, public pressure in these arenas will continue to grow.
  • Moving forward, Shell could face threats of increased difficulty in finding ways to access untapped energy sources. This will also mean increased costs associated with investing in technological advancements necessary to combat these challenges. Shell is focused on technological innovation, but managing the costs associated with this challenge and the progress necessary to tackle it will continue to be a threat.

Research Process

To access the necessary information to fulfill this research request a search was first done across Shell's website and published reports to gain a strong understanding of the work that is currently being done by the company. This then led to the identifying of four major areas of challenge/threat facing Shell presently. Additional research was then conducted to identify hard data to support the changing landscape of public perception and supply and demand for natural gas.
Part
03
of four
Part
03

Profile: Patrick Gilly

Patrick Gilly is an expert executive in the Oil & Gas Industry, having 20 years of experience spanning various regions including North and South Americas, Asia Pacific and the Middle East. His background is both technical and managerial. He is a seasoned professional in engineering and management.

EDUCATION

  • From 1989 to 1993, Gilly obtained a Bachelor's Degree in Fluid Mechanics from Université de la Méditerranée (Aix-Marseille II).
  • In 1993, he went ahead to study Engineering (Fluid Mechanics & Hydraulics) at Ecole Nationale Superieure d'Hydraulique et de Mecanique de Grenoble for two years.
  • Between 1995 and 1996, he attained a Maters Degree in Chemical Engineering from Ecole Nationale Supérieure d'Ingénieurs de Génie Chimique.
  • In 2011, Gilly got an Executive Masters of Business Administration (EMBA) from the oldest Business School in the world, ESCP Europe(1819).

WORK EXPERIENCE

  • Gilly began his career as a Visiting Researcher at Stanford University between Nov 1996 and Feb 1998.
  • He moved on to become a Reservoir Engineer at Elf Exploration Production from Apr 1998 to Jan 2001.
  • In Feb 2001, he became a Senior Reservoir Engineer at SINCOR (Venezuela), where he worked until Aug 2004.
  • Gilly moved on to Total in 2004, where he served in various capacities until 2012. He served as Head of Reservoir Studies, Development Project Manager for the Middle East, and Project Director New Venture and Asset Management.
  • He spent 5 years at Maersk Oil between 2013 and 2018. Here, he served as Senior Director of Global Operations, Asset Manager Al Shaheen Field, and Managing Director of Danish Business Unit.
  • In March 2018, after Maersk was acquired by Total, Gilly became Managing Director Total E&P Denmark. He currently holds this position.

ACCOMPLISHMENTS

  • Gilly has authored/co-authored multiple research articles and conference papers.
  • Some of his works include "SPE 57601 Analysis of Pressure/Flowrate Data Using the Pressure History Recovery Method" (with Roland N. Horne), "A New Method for Analysis of Long-Term Pressure History " in June 1998, "Analysis of Pressure/Flow-Rate Data With the Pressure-History-Recovery Method" in August 1999, "Definition of a 3D Integrated Geological Model in a Complex and Extensive Heavy Oil Field, Oficina Formation, Faja de Orinoco, Venezuela" in May 2003 (with Jean-Paul Bellorini, Jhonny E. Casas, and Juan Carlos Ustariz).
  • Gilly has been trained in various courses. These courses are Accounting, Competitive Intelligence, Contract & Business Law, Corporate Finance, Corporate Planning, Corporate Strategy, Hedging and Derivatives, Macro & Microeconomics, Organizational Behavior, and Strategic Leadership.

BUSINESS PHILOSOPHY

  • Patrick Gilly has a business-oriented mindset. This is made evident by the fact that he is grounded in various aspects of business.
  • Gilly is quite keen on self-development and goal attainment. This is reflected in his passion for learning and education. He spent a total of about 10 years developing his education profile excluding the numerous courses he has taken.

NEWS/PROFILE

  • Patrick Gilly recently resigned from his position as the Managing Director Total E&P Denmark. He will be leaving Total completely effective by the end of March 2020. Total has defined his exit from the company as "undramatic" and will be replacing him internally with Philippe Groueix, the general manager of Total E&P Bolivia.
  • Research has proven that Gilly has no Facebook, Twitter or Instagram account.
  • The following are Gilly's contact emails: PatrickGillly@gmail.com, PatrickGillly@maerskoil.com, and PatrickGillly@total.com.

PERSONAL DETAILS


Part
04
of four
Part
04

Total: Deep Dive

Some challenges/threats facing Total include the global coronavirus outbreak, the disappointing appraisal results from its Glendronach project, and the disruption of a deal between Brunei and Malaysia that impacts a deal the company has with Shell.

The Coronavirus Outbreak

Description

  • One potential challenge/threat facing Total is the global coronavirus outbreak or COVID-19, which causes kidney failure, severe respiratory problems, and even death for those it infects.
  • Since the outbreak began, it has infected approximately 85,000 people globally, killing nearly 3,000 of them. As of March 2, 2020, the virus has infected 70 people within the United States.
  • The outbreak has also led to restrictive border checks and other affects on international travel.

Why It's a Challenge/Threat

  • The outbreak has significantly impacted the oil and gas industry, which Total operates in. Towards the end of February 2020, the outbreak caused the largest weekly stock market decline since the year 2008. Particularly, the oil and gas sector tumbled by around 15% during this period, which could have a direct effect on Total's financial results.
  • Moreover, the China National Offshore Oil Corp. issued a force majeure on the cargoes it receives from suppliers, including Total, due to the outbreak. In China, the China National Offshore Oil Corp. purchases around 40% of the nation's liquefied natural gas (LNG).
  • Additionally, several events featuring executives and leaders from Total have been canceled, including the CERAWeek energy conference.
  • This current outbreak could hinder plans and progress for the Oil and Gas Climate Initiative (OGCI) enacted by Total and other member companies around the world, for which a more than $1 billion fund (OGCI Climate Investments) has been set up. The other 12 member companies include Shell, ExxonMobil, BP, Eni, CNPC, Saudi Aramco, Petrobras, Chevron, Occidental Pemex, Repsol, and Equinor, all of which are a part of the oil and gas industry.
  • The OGCI's purpose is to bolster the "reduction of greenhouse gas emissions and support the goals of the Paris Agreement." Total could focus their attention on responding to the effects of the outbreak as opposed to implementing the initiative.

What They're Doing to Address It

  • After scouring through company reports, news and media reports and articles, etc., it appears that Total has not yet disclosed its plans to address this particular challenge/threat. However, in February 2020, the company rejected the force majeure notice issued by an unnamed Chinese LNG buyer, possibly the China National Offshore Oil Corp.
  • A force majeure is invoked when a business is unable to fulfill any contractual responsibilities due to "circumstances beyond their control." In this case, it is due to the coronavirus outbreak.

Disappointing Appraisal Results

Description

  • Another challenge/threat facing Total is the disappointing appraisal results from its Glendronach venture. In 2018, Total encountered a remarkable gas discovery within the Glendronach prospect, which was situated offshore West of Shetland, after they unearthed 42-meter gas column in a Lower Cretaceous reservoir.
  • This particular discovery was operated by Total E&P UK, which maintained a 60% interest, and SSE E&P UK Limited and Ineos E&P UK Limited. The latter two each had a 20% interest in the project. The company stated that "the discovery can be developed quickly with the existing infrastructure around the Edradour field and the Laggan-Tormore facilities of the Shetland Gas Plant," with the potential to generate around 175 million barrels of oil (1 trillion cubic feet worth of gas).
  • However, the company later discovered considerable mercury levels at Glendronach. Total had plans to develop the Glendronach discovery through current infrastructure located at Edradour field, but the discovery of high mercury levels resulted in the employment of a Gas Mercury Removal Unit (GMRU), which can be extremely costly. Total drilled an appraisal well to justify the expenses and improve estimates, but that was not the case as the company had to pursue "a single well development opportunity" through the initial exploration well.

Why It's a Challenge/Threat

  • It is a challenge/threat because Total was forced to revamp the design by revisiting the GMRU, along with administering further technical and subsurface operations, likely costing the company more resources. The challenge facing this project is classified by the operator as "economic in nature."
  • Glendronach is a significant segment of Total's strategy for the West of Shetland area.
  • Also, the project's recoverable resources were slashed by about 40% nearly a month after the appraisal and plans to rid fluids from the mercury is causing Total to endure expensive modifications. In total, the appraisal drilling has resulted in resources being decreased down to c. 100 mmboe for Total.

What They're Doing to Address It


Brunei-Malaysia Relations

Description

  • The relations between the nations of Brunei and Malaysia serve as another challenge/threat facing Total.
  • In October 2019, Total agreed to sell Total E&P Deep Offshore Borneo, one of its subsidiaries in Brunei, to Shell. Included in the deal was Total E&P Deep Offshore Borneo's stake of 86.95% in Block CA-1, which Total currently operates. Block CA1 is positioned off Brunei's coast and covers a 5,850 square km area.
  • In February 2020, Malaysia invalidated a cross-border deal with Brunei. This deal involved both nations developing fields located throughout the established Malaysian-Brunei maritime boundary. Petronas, a Malaysian state-owned oil company that owned a 5% stake in Block CA1, stopped discussions concerning a multitude of drilling projects across the maritime boundary in early February.

Why It's a Challenge/Threat

  • It is a challenge/threat to Total's operations as it delays the company's intended sale of Block CA-1 to another oil and gas company, Shell, a deal that with an estimated worth of $300 million.
  • Total wanted to use this transaction as part of its strategy to dispose of approximately $5 billion worth of non-core assets. The breakdown in relations between Brunei and Malaysia effectively disrupts the deal.

What They're Doing to Address It

  • After scouring through company reports, news and media reports and articles, etc., it appears that Total has not yet disclosed its plans to address this particular challenge/threat. Considering that this is a recent development (news broke on Feb. 28, 2020), it is possible that leaders at Total are considering their options.

Research Strategy

During our research, we were unable to locate any plans of action by Total to respond to some of the challenges/threats we identified. The reason for this is primarily because most of them are recent and the company may be contemplating decisions and possible strategies to respond to the challenges/threats or have yet to release information to the public.

We tried to find this information through reports and press releases issued by the company through its official website. These sources typically offer a company's response to certain events or developments, which is why we leveraged this strategy. However, none of the reports or press releases from Total detailed its intentions to manage the specific challenges/threats. Also, the latest press releases from the company website were not centered on the challenges/threats we identified.

We also explored Total's social media channels, including Twitter, to see if the company issued a response to some challenges/threats or made any announcements regarding them. Often, a company's social media account is used to provide information on occurrences impacting the company, including action plans, or it may provide links to related articles, reports, press releases. Again, none of its posts contained detailed information regarding its plans to address some of them.

Finally, we searched for any shifts in the company's operations or original plans that would signal a response to a challenge or threat. For this, we observed news and media sources such as the Business Times, Wall Street Journal, etc., along with industry related sources like Offshore-Technology and Energy Voice. Though we were able to find the company's plans to combat the challenge it is facing due to the well appraisals, there was no information available regarding its response to the other challenges/threats.
Sources
Sources

From Part 02
Quotes
  • "It describes our ambition to halve the Net Carbon Footprint of the energy products we sell by 2050. This will mean reducing emissions from our operations, but most of the reductions will come from changing the portfolio of products we sell. We outline the ways we could achieve this ambition. These include selling more natural gas compared to oil, selling more biofuels, selling more electricity, developing more carbon capture and storage (CCS) capacity and employing nature-based solutions, such as planting forests or restoring wetlands to act as carbon sinks."
  • "32% of energy comes from oil"
Quotes
  • "IEA says that extraordinary growth rate is not sustainable and expects growth to average 1.6% per year through 2024."
From Part 03
Quotes
  • "Oil & Gas executive with 20 years of worldwide experience in the industry: North and South Americas, Asia-Pacific, Middle-East. Business-oriented mindset combined with an all-around technical background... At ease when it comes to lead and decide, whatever the environment and the stakes. Strong communication skills and a curious listener."
  • "Specialties: Well Testing, Reservoir Simulation and Reserves Assessment, Field Development, Technical and Economical Evaluation of Oil & Gas Assets, New Ventures and Asset Management, Strategy and Risk Assessment, Negotiations, Technical and Business Leadership, Relations with Third Parties, Staff Development. "
Quotes
  • "Patrick Gilly, managing director of E&P Denmark at oil group Total will leave his position by the end of March, writes Danish newspaper JydskeVestkysten, and Total confirms the information in a response to ShippingWatch. The company declines to elaborate upon Gilly's reason for resigning, but the firm calls his departure "undramatic"... His replacement was found internally: Philippe Groueix, who is currently general manager of Total E&P Bolivia."
  • "The statement does not reveal where Gilly will go from here but informs that he will leave the Total group entirely."