The price of domestic natural gas isn’t going to increase significantly any time soon, said Royal Dutch Shell plc CEO Peter Voser, but that didn’t stop the company from having its best fourth quarter since 2006.

“Low North American natural gas prices look set to stay, which is a major opportunity for integrated gas products like LNG [liquefied natural gas], GTL [gas-to-liquids] and gas-to-chemicals,” Voser told financial analysts in London. “Shell is one of the few companies that get the full value from integration along the full value chain.”

Last year Shell unveiled plans to leverage its abundant natural gas resources in North America, for LNG exports, GTL and gas-to-chemicals facilities, as well as LNG for transport (see Daily GPI, Feb. 3, 2012). That strategy is delivering results, Voser explained during a conference call outlining fourth quarter 2012 earnings.

“We are one year into the strategic targets we set out a year ago and we are on track, despite some head winds in 2012. Our targets are unchanged: 30-50% higher cash flow in 2012-2015 than the preceding four years, funding sustained investment for future growth, and a competitive dividend for shareholders.” The company is planning a $120-130 billion net capital spending program for 2012-2015, including $33 billion this year.

Shell is maintaining strong positions in its base upstream and downstream businesses, “but we want more integrated gas, more deepwater, and more resources plays, such as shales,” according to Voser. The company’s strategy has put it in a position where it is capital constrained, but there is no shortage of project opportunities, he said.

“I think this is a rather different position than many other sectors in the market today, including our competitors. Strong capital rationing means we can prioritize the most attractive opportunities and re-scope or exit from other priorities or positions.”

But a short-term surge in North American natural gas prices isn’t part of Shell’s calculations.

“If I look at the macro in terms of gas prices in the U.S., I don’t see big moves in 2013. I think it’ll take a little bit longer until it comes back to a range — which we think should be around $3 to $5, or $4 to $6 — where most projects would make sense,” Voser told CNBC Europe Thursday.

Shell reported 4Q2012 earnings after one-time items of $5.6 billion (89 cents/share) on cash flow of $46 billion, compared with $4.8 billion (78 cents) in 4Q2011. The 15% increase over 4Q2011 was a disappointment to some analysts who had expected earnings of about $6.3 billion in 4Q2012.

Shell experienced some setbacks in 2012, including Noble Inc.’s Kulluk drilling rig, which Shell used to begin drilling in Alaska’s offshore last year, separating on New Year’s Eve from a tow vessel on its way to port (see Daily GPI, Jan. 8). The rig, which subsequently grounded on an uninhabited Alaska island, has since been moved to harbor at Kiliuda Bay. The Department of Interior recently launched an “expedited, high-level assessment” of Shell’s drilling program in Alaska’s Beaufort and Chukchi seas. (see Daily GPI, Jan. 11). Shell had completed its Alaska drilling program for the year in late October. It was the the first time in more than 20 years that a producer had been given permission to drill in the state’s offshore (see Daily GPI, Nov. 1, 2012).

At the end of 2012, Shell had 12.4 billion boe of resources on stream worldwide, averaging 3.4 million boe/d of production, and 20 billion boe of resources potential in its active development funnel. The company has about 30 new projects under construction, “which should unlock 7 billion barrels of resources, and drive continued financial and production growth,” Shell said. Oil and gas production is expected to average about 4 million boe/d in 2017-2018, compared to 3.3 million boe/d in 2012.

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