• Sign up for the Daily Digest E-mail
  • Facebook
  • X
  • LinkedIn

BOE Report

Sign up
  • Home
  • StackDX Intel
  • Headlines
    • Latest Headlines
    • Featured Companies
    • Columns
    • Discussions
  • Well Activity
    • Well Licences
    • Well Activity Map
  • Property Listings
  • Land Sales
  • M&A Activity
    • M&A Database
    • AER Transfers
  • Markets
  • Rig Counts/Data
    • CAOEC Rig Count
    • Baker Hughes Rig Count
    • USA Rig Count
    • Data
      • Canada Oil Market Data
      • Canada NG Market Data
      • USA Market Data
      • Data Downloads
  • Jobs

Shell Canada using ‘warehouse’ approach to drive down oilsands costs

August 27, 201412:49 PM The Canadian Press0 Comments

CALGARY – Shell Canada Ltd., in an effort to cut costs and boost efficiency at its oilsands operations, has found inspiration in an unlikely place: online retailer Amazon.

The company recently adopted a “warehousing” approach to how it manages its tools and equipment, president Lorraine Mitchelmore told reporters Wednesday.

That way, workers don’t waste their time hunting down a piece of pipe and trucks don’t sit idle while mechanics wait on a certain part.

Right now, Shell has the ability to track down 76 per cent of its inventory and hopes to increase that to 96 per cent over the next few years.

“That’s equivalent to Amazon,” said Mitchelmore.

“It’s nothing to do with oil and gas. It’s to do with inventory management. So that’s the kind of thinking we’re bringing to the organization to really try to drive efficiencies and productivity.”

Earlier this year, Shell leased warehouse space in Edmonton, which Mitchelmore says is rapidly becoming a “centre of excellence” for the industry. Shell also has a module yard in Edmonton where it builds components of its oilsands plants.

So far, the turnaround time for overhauling a truck has been decreased from five weeks to two. It used to take days to locate pipes, but now it takes minutes with the help of trackers.

The cost savings of the warehousing approach add up to about $20 million a year. That’s modest in the context of Shell Canada’s European parent company, Royal Dutch Shell PLC, but every dollar counts when oilsands operations must compete with other projects around the world for capital.

Since Royal Dutch Shell welcomed new CEO Ben van Beurden earlier this year, the company’s focus has been on maintaining cash flow so that it can support its dividend and fund future growth.

“Royal Dutch Shell right now is rich in opportunities,” Mitchelmore said.”We’ve built a fantastic portfolio across the globe over the past decade or so. And so now we are capital constrained. We we have to focus.”

“My job right now is to focus on the costs, focus on productivity improvements,” Mitchelmore said.

Shell tests the economics of its projects against a long-term oil price range of between US$70 and US$110 a barrel.

In the oilsands, Shell operates the Athabasca Oil Sands Project mining operation north of Fort McMurray, Alta. and is planning an expansion to its Jackpine mine. Shell is also preparing to build its steam-driven Carmon Creek oilsands project.

The oilsands crude is upgraded into a more easily refined product at its Scotford upgrader, near Edmonton.

Shell is installing carbon capture and storage technology at Scotford. The Quest project, partly funded by the Alberta and federal governments, is meant to capture carbon dioxide from the plant and store the gas underground, preventing it from escaping into the atmosphere. On Wednesday, Shell said the project was 70 per cent complete, on budget and on track to start up next year.

Follow @LaurenKrugel on Twitter

Shell

Follow BOE Report
  • Facebook
  • X
  • LinkedIn

Sign up for the BOE Report Daily Digest E-mail

Successfully subscribed

Latest Headlines
  • Venture Global cashes in on exports from Plaquemines LNG plant, SEC filing shows
  • Journey Energy Inc. Provides Encouraging Results from Its First Three 2025 Duvernay Wells
  • US proposes rules that could boost oil, gas output in US West
  • Ontario Premier Doug Ford pitches railway to Ring of Fire, Alberta is on board
  • Alberta to hold nuclear power consultations as reactor companies weigh opportunities

Return to Home
Alberta GasMonthly Avg.
CAD/GJ
Market Data by TradingView

    Report Error







    Note: The page you are currently on will be sent with your report. If this report is about a different page, please specify.

    About
    • About BOEReport.com
    • In the News
    • Terms of Use
    • Privacy Policy
    • Editorial Policy
    Resources
    • Widgets
    • Notifications
    • Daily Digest E-mail
    Get In Touch
    • Advertise
    • Post a Job
    • Contact
    • Report Error
    BOE Network
    © 2025 Stack Technologies Ltd.