MIDLAND, Texas—Royal Dutch Shell Plc’s incoming U.S. president, Gretchen Watkins, came to the Hart Energy’s Executive Oil Conference offering a competing idea to competition itself: collaboration.

While competition will always drive the Permian’s performance, working together can also raise standards and improve safety in the basin, Watkins said.

Early coalitions among Shell (NYSE: RDS.A) and independents have already started to improve roads safety, where a fatality occurs every 29 hours, said Watkins, who is also executive vice president of Shell’s upstream unconventionals.

The company is willing to share worksite safety strategies “with anyone willing to learn.”

“The fact is as operators, we have a lot more to gain from collaborating than we do from going it alone,” Watkins said.

Shell believes reducing greenhouse gas emissions adds to the industry’s social and material value, noting that flaring is a top source of the Permian’s methane emissions. At new well production pads, Watkins said Shell has stopped installing flares.

“Reducing flaring is critical for our social and environmental license to operate, as well as our ability to generate revenue,” she said. “We’ve been very encouraged to see substantial reduction in flaring that’s happening just this year.”

Shell is also testing the use of solar energy to power its well pads in the Permian.

“We can benefit by sharing best practices to reduce flaring and methane leaks that can cause us to lose vital product and actually undermine the case for gas as the molecule that can bridge us [in] the energy transition,” she said.

Nevertheless, Watkins said the fundamental driver of the Permian’s “rise to a level of preeminence” has been unbridled competition, with independents leading the charge.

Through competition, operators have “come to understand a very complex terrain here in the Permian Basin,” she said.

The quest to grow leaner and more efficient has resulted in lowered costs and increased production.

“As independents have competed with late arriving oil majors, companies like Shell have had to become more nimble and more agile, and that has been good for us,” she said, adding, that she also sees “independents seizing on oil major’s scale and integration.”

Shell now sees the Permian as much a part of its home turf as its deepwater assets, Watkins said, noting that other oil majors are taking a similar strategic outlook. Shell is now spending between $2 billion and $3 billion a year on its shale assets, including the Permian, the Duvernay and Argentina’s Vaca Muerta play.

RELATED

Shell Bets On Shale For Flexibility In Energy Transition

Shell Reportedly In Talks To Sell GoM Field For $1.3 Billion

Since 2013, Shell has grown its production to 125,000 barrels of oil equivalent per day (boe/d) from 25,000 boe/d. The company now has interest in more than 1,300 operated and nonoperated wells spread across 500,000 acres, Watkins said.

“We project we will reach 200,000 boe/d by 2020, and … 35% year-on-year production growth for the next five years,” she said.

The company is also planning to high-grade its Permian acreage through strategic swaps and small bolt-on acquisitions.

But Shell wants to be a community partner on a range of “important issues that all of us have a stake in” through partnerships. The goal is to build a basin that’s safer, more stable and far more prosperous than ever been before, she said.

“If you share this vision, let's work together to put the days of boom or bust behind us and let’s move toward more collaboration,” she said.

Darren Barbee can be reached dbarbee@hartenergy.com.