CERAWeek by IHS Markit

Shell CEO's plan for a smaller carbon footprint

Royal Dutch Shell's announcement of the sale of $7.25 billion in Canadian oil sands assets Thursday is an important step to turning itself into a company of the future — with a broader mix of energy assets and a smaller carbon footprint.

Shell CEO Ben van Beurden said the company is committed to reshaping itself and believes that renewables and new energy will play a bigger role. The company is retaining just 10 percent of its Canadian sands assets.

"We are right in the middle of transforming the company into the company of the future," he said at the CERAWeek conference in Houston, sponsored by IHS Markit.

Ben van Beurden, chief executive officer of Royal Dutch Shell Plc.
Chris Ratcliffe | Bloomberg | Getty Images

He spoke on the same morning that Scott Pruitt, the new administrator of the U.S. Environmental Protection Agency, told CNBC's "Squawk Box" that he does not believe carbon dioxide is a primary contributor to global warming.

New EPA Chief Pruitt told CNBC, "I think that measuring with precision human activity on the climate is something very challenging to do, and there's tremendous disagreement about the degree of impact, so no, I would not agree that it's a primary contributor to the global warming that we see. ... But we don't know that yet. ... We need to continue the debate and continue the review and the analysis."

Trust has been eroded to the point where it is an issue for our long-term future.
Ben van Beurden
Royal Dutch Shell CEO

In his remarks, Van Beurden said Shell has supported implementation of the Paris accord — Pruitt called it a "bad deal" on Thursday, even though Secretary of State Rex Tillerson has defended it. While some governments are moving faster than others, the Shell CEO believes governments should speed up regulation of carbon emissions and put a price on carbon.

Carbon was a regular topic of conversation among other oil companies attending the CERAWeek conference, but perhaps none were as vocal on the topic as Shell's CEO. Van Beurden said the commitment is important since he views public support as going away from the energy industry, and that will be a long-term problem.

"Trust has been eroded to the point where it is an issue for our long-term future," he said.

Van Beurden said an important part of the Shell bet on a future defined by a broader mix is liquefied natural gas, which he says was an important factor in reducing the carbon impact from U.S. power generation, as it replaced coal. He is optimistic about the market for LNG , which he says is the fastest-growing energy resource, growing four times faster than oil. Demand for it is expected to double in 15 years, he said.

Shell is also increasing spending in shale drilling, making it a bigger part of its spending plan. The company is able to break even at $40 per barrel crude in the Permian Basin, currently the hottest U.S. shale play.

Van Beurden said the company is not abandoning megaprojects but just "taking a breather." He said Shell has a big project in the Gulf of Mexico, and it has a new major petrochemical plant coming in Pennsylvania.

Shell is selling its oil sands interests to Canadian Natural Resources. Shell will continue to operate the Scotford upgrader, which converts heavy oil for transport, as well as the Quest carbon capture and storage project.