News

Shell plc SHEL, a multinational oil and gas company based in London, recently announced its final investment decision (FID) on the Manatee project through the company’s subsidiary, Shell Trinidad and Tobago Ltd. This decision will play a significant role in the development of the East Coast Marine Area (ECMA) in Trinidad and Tobago. The project aims to develop the Manatee natural gas field, strategically situated in one of the country's most prolific gas-producing regions.

Importance of the ECMA for Shell

The ECMA hosts Shell's largest gas-producing fields in Trinidad and Tobago, which include Dolphin, Starfish, Bounty and Endeavour. The addition of the Manatee field is expected to boost Shell’s Integrated Gas business by providing essential backfill for the country’s Atlantic LNG facility. This move aligns with Shell’s broader strategy to enhance LNG production capabilities and capitalize on existing infrastructure in the region.

Project Scope and Timeline

Production and Growth Plans: Scheduled to commence production in 2027, the Manatee project is anticipated to reach peak production levels of 104,000 barrels of oil equivalent per day (boed). Shell aims to expand its LNG business 20-30% by 2030 compared to 2022 levels, with liquefaction volumes projected to increase by 25-30% in the same period, as outlined in the company’s Capital Markets Day in 2023.

Development Details: As the operator with a 100% working interest under the sub-Block 6D Production Sharing Contract, Shell plans to implement a Normally Unattended Installation platform within the ECMA. This platform will support eight development wells connected via a 110 km 32-inch pipeline to the onshore Beachfield gas processing facility operated by SHEL. The gas will be exported to the Atlantic LNG facility and the National Gas Company of Trinidad and Tobago for domestic consumption.

Historical Context and Legal Framework

Discovery and International Agreements: The Loran-Manatee field, where the Manatee portion lies within Trinidad and Tobago waters, was initially discovered in 1983. Subsequent appraisals through four wells have confirmed its substantial reserves. The field also extends into Venezuelan waters, known as Loran, with the entire cross-border field covered by a historical Framework Treaty signed between the Governments of Trinidad and Tobago (“GORTT”) and Venezuela (“GOVEN”).

Recent Developments: In 2019, the Unitization Agreement between GORTT and GOVEN was terminated, leading to a new government-to-government arrangement enabling independent development of each country's share of the Loran-Manatee field. This shift reflects evolving geopolitical dynamics while ensuring efficient resource management and development.

Economic and Environmental Impacts

Global LNG Demand Outlook: Amid increasing global demand for LNG, which is projected to rise more than 50% by 2040, Shell’s investment in the Manatee project highlights its commitment to meeting regional and international energy needs. The project’s strategic location and anticipated production volumes are well-positioned to support industrial coal-to-gas transitions, particularly in growing markets like China, South Asia and Southeast Asia.

Sustainability and Emissions Reduction: Zoë Yujnovich, Shell’s Integrated Gas and Upstream director, highlights the project’s dual benefits of meeting rising natural gas demand globally and addressing local energy requirements in Trinidad and Tobago. SHEL’s investment in advanced LNG technologies aims to minimize environmental impact while enhancing operational efficiency, aligning with global efforts to reduce carbon emissions.

Conclusion

Shell’s decision to proceed with the Manatee project represents a significant advancement in Trinidad and Tobago’s energy sector. By leveraging the company’s extensive experience and infrastructure in the ECMA, SHEL aims to not only strengthen its position in the LNG market but also contribute to sustainable economic growth and energy security in the region. As global energy demands evolve, projects like Manatee are crucial in meeting these challenges while driving forward innovations in clean energy technologies.

Zacks Rank and Key Picks

Currently, SHEL carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at some better-ranked stocks like Sunoco LP SUN and SM Energy Company SM, each sporting a Zacks Rank #1 (Strong Buy) and Coterra Energy Inc. CTRA, carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sunoco is valued at $5.67 billion. It is a major wholesale motor fuel distributor in the United States, distributing over 10 fuel brands through long-term contracts with more than 10,000 convenience stores, ensuring consistent cash flow.

SUN’s extensive distribution network across 40 states provides a robust and reliable source of income and the Brownsville terminal expansion should add to its revenue diversification.

Denver, CO-based SM Energyis valued at $5.09 billion. The company currently pays a dividend of 72 cents per share, or 1.63%, on an annual basis.

SM, an independent energy company, engages in the acquisition, exploration, development and production of oil, gas and natural gas liquids in the state of Texas.

Coterra Energy is valued at $19.77 billion. The company currently pays a dividend of 84 cents per share, or 3.16%, on an annual basis.

CTRA is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids.

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