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Last Updated: January 30, 2019
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U.S. energy-related carbon dioxide emissions by fuel

Source: U.S. Energy Information Administration, Annual Energy Outlook 2019

EIA projects that, for the first time since the 1950s, the United States will export more energy than it imports by 2020 as increases in crude oil, natural gas, and natural gas plant liquids production outpace growth in U.S. energy consumption. Different assumptions about crude oil prices and resource extraction affect how long EIA projects that the United States will export more energy than it imports. The United States has been a net exporter of coal and coke for decades, began exporting more natural gas than it imports in 2017, and is projected to export more petroleum and other liquids than it imports within the decade.

U.S. population-weighted heating and cooling degree days

Source: U.S. Energy Information Administration, Annual Energy Outlook 2019

The United States has imported more energy than it exports on an annual basis since 1953, when trade volumes were much smaller. Since then, when imports of energy totaled 2.3 quadrillion British thermal units (Btu), gross energy imports generally grew, reaching a peak of 35 quadrillion Btu in 2005. Gross energy exports were as low as 4 quadrillion Btu as recently as 2002 but have since risen to more than 20 quadrillion Btu in 2018, largely because of changes in liquid fuels and natural gas trade.

EIA’s projected changes in net energy trade are driven mostly by evolving trade flows of liquid fuels and natural gas. In the Reference case of EIA’s newly released Annual Energy Outlook (AEO), the United States exports more petroleum and other liquids than it imports after 2020 as U.S. crude oil production increases and domestic consumption of petroleum products decreases. Near the end of the projection period, the United States returns to importing more petroleum and other liquids than it exports on an energy basis as a result of increasing domestic gasoline consumption and falling domestic crude oil production in those years.

U.S. population-weighted heating and cooling degree days

Source: U.S. Energy Information Administration, Annual Energy Outlook 2019
Note: Net trade series in physical units may be different than those shown in energy units (British thermal units) because of differences in energy content of the components.

U.S. natural gas trade in the AEO Reference case, which includes shipments by pipeline from and to Canada and to Mexico as well as exports of liquefied natural gas (LNG), is increasingly dominated by LNG exports to more distant destinations. Increasing natural gas exports to Mexico are a result of more pipeline infrastructure to and within Mexico, allowing for increased natural gas-fired power generation. As natural gas demand grows in Asia and U.S. natural gas prices remain competitive, LNG export capacity increases further before leveling off after 2030 when additional suppliers enter the global LNG market and U.S. LNG is no longer as competitive. EIA projects the difference between natural gas exports and imports to increase throughout the AEO projection period, reaching a high of 23 billion cubic feet per day (Bcf/d) in 2050.

The United States continues to export more coal than it imports (including coal coke) through 2050 in the Reference case, but coal exports do not increase because of competition from other global suppliers closer to major world markets. Trade of electricity with neighboring Canada and Mexico is a relatively small part of U.S. net energy trade flows.

In the AEO Reference case, which reflects current laws and regulations, the United States begins exporting more energy than it imports on an annual basis in 2020 and maintains that status through 2050. In some side cases, the United States again imports more energy than it exports by the mid- to late-2030s.

U.S. population-weighted heating and cooling degree days

Source: U.S. Energy Information Administration, Annual Energy Outlook 2019
Note: Net trade series in physical units may be different than those shown in energy units (British thermal units) because of differences in energy content of the components.

In the AEO’s Low Oil Price case, lower crude oil prices lead to lower crude oil and natural gas production, and the United States returns to importing more energy than it exports by 2035. Similarly, in the Low Oil and Gas Resource and Technology case, crude oil and natural gas production is lower than in the Reference case, and the United States becomes a net energy importer again in 2039.

AEO Natural gas gas oil crude USA liquid fuels exports imports
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Royal Dutch Shell Poised To Become Just Shell

On 10 December 2021, if all goes to plan Royal Dutch Shell will become just Shell. The energy supermajor will move its headquarters from The Hague in The Netherlands to London, UK. At least three-quarters of the company’s shareholders must vote in favour of the change at the upcoming general meeting, which has been sold by Shell as a means of simplifying its corporate structure and better return value to shareholders, as well as be ‘better positioned to seize opportunities and play a leading role in the energy transition’. In doing so, it will no longer meet Dutch conditions for ‘royal’ designation, dropping a moniker that has defined the company through decades of evolution since 1907.

But why this and why now?

There is a complex web of reasons why, some internal and some external but the ultimate reason boils down to improving growth sustainability. Royal Dutch Shell was born through the merger of Shell Transport and Trading Company (based in the UK) and Royal Dutch (based in The Netherlands) in 1907, with both companies engaging in exploration activities ranging from seashells to crude oil. Unified across international borders, Royal Dutch Shell emerged as Europe’s answer to John D Rockefeller’s Standard Oil empire, as the race to exploit oil (and later natural gas) reserves spilled out over the world. Along the way, Royal Dutch Shell chalked up a number of achievements including establishing the iconic Brent field in the North Sea to striking the first commercial oil in Nigeria. Unlike Standard Oil which was dissolved into 34 smaller companies in 1911, Royal Dutch Shell remained intact, operating as two entities until 2005, when they were finally combined in a dual-nationality structure: incorporated in the UK, but residing in the Netherlands. This managed to satisfy the national claims both countries make on the supermajor, second only to ExxonMobil in revenue and profits but proved to be costly to maintain. In 2020, fellow Anglo-Dutch conglomerate Unilever also ditched its dual structure, opting to be based fully out of the City of London. In that sense, Shell is following the direction of the wind, as forces in its (soon to be former) home country turn sour.

There is a specific grievance that Royal Dutch Shell has with the Dutch government, the 15% dividend tax collected for Dutch-domiciled companies. It is the reason why Unilever abandoned Rotterdam and is now the reason why Shell is abandoning The Hague. And this point is particularly existentialist for Shell, since its share prices has been battered in recent years following the industry downturn since 2015, the global pandemic and being in the crosshairs of climate change activists as an emblem of why the world’s average temperatures are going haywire. The latter has already caused the largest Dutch state pension fund ABP to stop investing in fossil fuels, thereby divesting itself of Royal Dutch Shell. This was largely a symbolic move, but as religious figures will know, symbols themselves carry much power. To combat this, Shell has done two things. First, it has positioned itself to be at the forefront of energy transition, announcing ambitious emissions reductions plans in line with its European counterparts to become carbon neutral by 2050. Second, it is looking to bump up its dividend payouts after slashing them through the depths of the Covid-19 pandemic and accelerating share buybacks to remain the bluest of blue-chip stocks. But then, earlier this year, a Dutch court ruled that Shell’s emissions targets were ‘not ambitious enough’, ordering a stricter aim within a tighter timeframe. And the 15% dividend tax remains – even though Prime Minister Mark Rutte’s coalition government has been attempting to scrap it, with (it is presumed) some lobbying from Royal Dutch Shell and Unilever.

As simplistic it is to think that Shell is leaving for London believes the citizens of the Netherlands has turned its back on the company, the ultimate reason was the dividend tax. Reportedly, CEO Ben van Buerden called up Mark Rutte on Sunday informing him of the planned move. Rutte’s reaction, it is said was of dismay. And he embarked on a last-ditch effort to persuade Royal Dutch Shell to change its mind, by immediately lobbying his government’s coalition partners to back an abolition of the dividend tax. The reaction was perhaps not what he expected, with left-wing and green parties calling Shell’s threat ‘blackmail’. With democracy drawing a line, Shell decided to walk; or at least present an exit plan endorsed by its Board to be voted by shareholders. Many in the Netherlands see Shell’s exit and the loss of the moniker Royal Dutch – as a blow to national pride, especially since the country has been basking in the glow of expanded reputation as a result of post-Brexit migration of financial activities to Amsterdam from London. The UK, on the other hand, sees Shell’s decision and Unilever’s – as an endorsement of the country’s post-Brexit potential.

The move, if passed and in its initial stages, will be mainly structural, transferring the tax residence of Shell to London. Just ten top executives including van Buerden and CFO Jessica Uhl will be making the move to London. Three major arms – Projects and Technology, Global Upstream and Integrated Gas and Renewable Energies – will remain in The Hague. As will Shell’s massive physical reach on Dutch soil: the huge integrated refinery in Pernis, the biofuels hub in Rotterdam, the country’s first offshore wind farm and the mammoth Porthos carbon capture project that will funnel emissions from Rotterdam to be stored in empty North Sea gas fields. And Shell’s troubles with activists will still continue. British climate change activists are as, if not more aggressive as their Dutch counterpart, this being the country where Extinction Rebellion was born. Perhaps more of a threat is activist investor Third Point, which recently acquired a chunk of Shell shares and has been advocating splitting the company into two – a legacy business for fossil fuels and a futures-focused business for renewables.

So Shell’s business remains, even though its address has changed. In the grand scheme of things, never mind the small matter of Dutch national pride – Royal Dutch Shell’s roadmap to remain an investment icon and a major driver of energy transition will continue in its current form. This is a quibble about money or rather, tax – that will have little to no impact on Shell’s operations or on its ambitions. Royal Dutch Shell is poised to become just Shell. Different name and a different house, but the same contents. Unless, of course, Queen Elizabeth II decides to provide royal assent, in which case, Shell might one day become Royal British Shell.

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