Big Oil shrinking: Problems keep mounting at Exxon, Chevron, Shell and TotalEnergies
- March 1, 2022: Vol. 9, Number 3

Big Oil shrinking: Problems keep mounting at Exxon, Chevron, Shell and TotalEnergies

by Mike Consol

Big Oil used to run the table in the United States and around the world, but recent government, shareholder and environmental policies have saddled the super-majors with a host of problems, according to a recent report from Goehring & Rozencwajg Associates, a firm that invests in commodities and natural resources.

The report, titled The Incredible Shrinking Oil Majors, says Big Oil’s problems are continuing to mount as forces are being applied by various ESG groups and shareholders, exacerbating the industry’s reserve replacement and production problems. Among the recent developments: both capital spending and production of oil and natural gas continue to fall for the four super-majors (Exxon, Chevron, Royal Dutch Shell and TotalEnergies).

In 2019, upstream capital expenditures averaged $15 billion per quarter for these four companies. Upstream spending collapsed in tandem with oil prices in 2020; by first quarter 2021, it had fallen by more than 50 percent. Even though oil prices have rebounded, capital spending has lagged far behind, trending upward in 2021 off this past year’s low, but still well below 2019 levels. The large drop in capital spending has already put notable pressure on oil and gas production across the four super-majors. Goehring & Rozencwajg models originally suggested hydrocarbon reserve replacement will fall to only 40 percent, while production itself will fall more than 30 percent by 2030 unless capital spending trends move much higher. It now looks like the severe drop — and weak subsequent rebound — in capital spending over the past 20 months is already pressuring oil and natural gas production. Super-major production has now fallen more than 10 percent since the beginning of 2019.

Three out of the four super-majors face intense ESG-related scrutiny. Royal Dutch Shell’s ESG challenges continue unabated. A Dutch court ruled in May that Royal Dutch Shell must cut its CO2 output by 45 percent by 2030 to align their policies with the Paris Climate Accord.

Shell has already cut spending dramatically over the past decade. After having peaked at $39 billion in 2013, upstream capital spending fell to only $17 billion in 2020, a drop of nearly 60 percent. Spending barely recovered in the three quarters of 2021. A lack of spending has already affected production, according to the report. Pro forma for the 2016 acquisition of BG Group, Shell’s total production has fallen 13 percent since capital spending peaked in 2013.

These trends are accelerating, observes Goehring & Rozencwajg. Shell’s production over the first nine months of 2021 fell 7 percent compared with the same period the previous year. The firm estimates that if Royal Dutch Shell’s upstream capital spending remains at depressed levels, the company will only be able to replace 30 percent of production with new reserves and production will fall 40 percent over the next nine years. If spending is further curtailed, as is being proposed, Shell’s oil and natural gas production would collapse, something that may have already begun.

Download the Goehring & Rozencwajg Associates’ report here.


Mike Consol ( is editor of Real Assets Adviser. Follow him on Twitter (@mikeconsol) and LinkedIn ( to read his latest postings.

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