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A logo is displayed on the hardhat of a worker at the Royal Dutch Shell processing facility in Loving, Texas, in 2018. Photo: Callaghan O'Hare/Bloomberg via Getty Images

Royal Dutch Shell's sale of its Permian Basin assets to ConocoPhillips can't be untethered from how the industry is positioning itself as it faces pressure on climate change.

Catch up fast: The companies announced the $9.7 billion cash deal yesterday afternoon. ConocoPhillips will get 225,000 acres in Texas it expects will produce 200,000 barrels of oil equivalent per day in 2022.

The big picture: The deal comes as Shell, like other European majors, is moving to diversify its business into low-carbon sectors. The company says its oil production likely peaked in 2019.

  • "The shift in focus among the industry’s largest players seems to be creating opportunities for Conoco, which remains more aligned with traditional oil and gas production," Andrew Dittmar, senior M&A analyst at Enverus, said in a note.
  • ConocoPhillips said in the deal announcement that it's also boosting its 2030 goals for cutting emissions intensity — that is, emissions per unit of output.
  • Northland Capital Markets analyst Subash Chandra tells the Wall Street Journal that environmental issues are becoming a more important part of oil patch deals.
  • "Shell doesn’t want to sell to someone who is going to make them look bad on their ESG metrics even after the sale," he said.

The intrigue: "Shell has been under pressure to accelerate its strategy for the energy transition after a Dutch court ruled that the company must sharply reduce its CO2 emissions this decade," Argus Media notes of the May decision.

Yes, but: Bloomberg unpacks Shell's decision to send $7 billion of the proceeds from the Permian deal back to shareholders even as some European peers spend big on renewables projects.

Go deeper

Texas illegal emissions dropped in 2020 but increased in Dallas area

Photo: Samuel Corum for Anadolu Agency via Getty Images

Illegal emissions dropped statewide in 2020, but North Texas saw an increase in unauthorized pollutants, according to a report from the Environmental Integrity Project and Environment Texas.

Why it matters: 2020's pollutant decline was mostly due to pandemic shutdowns of manufacturing and oil and gas production and not due to increased enforcement of environmental protections, the report says.

Ben Geman, author of Generate
Oct 18, 2021 - Energy & Environment

Democrats' clean power outlook is very muddy

Illustration: Annelise Capossela/Axios

Here are two big questions as a key Democratic proposal to slash emissions from power generation flounders: how much its demise would sap climate protections, and what might replace it.

Catch up fast: New financial carrots and sticks for utilities to deploy zero-carbon power — the Clean Electricity Performance Program (CEPP) — look unlikely to stay in Democrats' big social spending and climate bill.

Updated 1 hour ago - World

Mapping repression in China's Xinjiang region

Data: © Mapbox, © OpenStreetMap; Map: Will Chase/Axios

A sweeping new report released today by an Australian research organization reveals new details about how the Chinese Communist Party — and specifically who within the party — is carrying out its campaign of repression in Xinjiang.

Why it matters: Uncovering the actual offices and individuals implementing the Chinese government's genocide and forced labor policies in Xinjiang can bring accountability and help international companies delink supply chains in compliance with U.S. and EU forced labor laws.