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Shell (RDS.A) Begins Production at UK's Arran Offshore Project

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Royal Dutch Shell plc (RDS.A) announced the commencement of natural gas production from the Arran gas and condensate field in the U.K. portion of the North Sea.

The Arran field is part of the Shearwater gas hub, which remains among the biggest producing fields in the North Sea. Arran, which is developed and operated by the company, is a 60-kilometer subsea tie-back to the Shearwater platform.

The commencement of production from the Arran field, which is connected to Scottish petrochemical facilities, is aimed at restoring the Shearwater hub. Shell plans to deliver the Shearwater gas through the Fulmar pipeline to a St. Fergus terminal on the Scottish coast. From there, the company can supply petrochemical facilities to Mossmorran in Fife instead of going to Bacton in eastern England as earlier.

In October 2018, Shell announced a final investment decision for the Arran field development. The company became the operator of the project, which included the drilling of four development wells. Production from the Arran field is expected to reach 100 million standard cubic feet per day of gas and 4,000 barrels per day of condensate. Natural gas and liquids will be carried through a newly installed subsea pipeline to the Shearwater platform.

Another development related to the Arran startup is the Columbus development project, which is operated by British upstream company Serica Energy. The gas field is expected to become operational immediately after Arran. The Arran pipeline will also be used for production from the Columbus development.

However, Shell recently had several setbacks in the U.K. after an environmental regulator rejected its plans to develop the Jackdaw gas field, another development in the Shearwater area. The government also rejected the company’s Acorn CCS project, which was expected to decarbonize the Fife petrochemical facilities by taking carbon dioxide for storage under the North Sea.

In times of rapid global transition to renewable energy, environmental groups raised concerns about the Cambo oil project West of Shetland as it would produce a massive amount of carbon dioxide emissions over the life of the field. This is another Shell-backed project awaiting a final investment decision.

Company Profile & Price Performance

Shell is one of the primary oil majors — a group of big energy multinationals based in the United States and Europe. The company is fully integrated, as it participates in every aspect related to energy from oil production to refining and marketing.

Shares of the company have outperformed the industry in the past six months. The stock has gained 30% compared with the industry’s 23% growth.

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Zacks Rank & Other Stock to Consider

The company currently flaunts a Zack Rank #1 (Strong Buy).

Some other top-ranked players in the energy space are Targa Resources, Inc. TRGP, Antero Resources Corporation AR and SM Energy Company SM, each currently sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Targa’s earnings for 2021 are expected to rise 45.5% year over year.

Antero Resources’ earnings for 2021 are expected to increase 33.7% year over year.

SM Energy’s earnings for 2021 are expected to surge 838.4% year over year.


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Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report

SM Energy Company (SM) : Free Stock Analysis Report

Antero Resources Corporation (AR) : Free Stock Analysis Report

Targa Resources, Inc. (TRGP) : Free Stock Analysis Report

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