Shell is eyeing an expansion of its sustainable aviation fuel (SAF) production in the United States, as the country presents an attractive environment for the development of low-emission energy solutions, according to Gretchen Watkins, Shell USA’s President. U.S. federal and state legislators have introduced various tax credits to incentivize SAF production. However, mitigating emissions from aviation is notably more complex compared to other transportation sectors that offer more alternatives to fossil fuels.
Watkins, speaking at the Reuters Events Energy Transition conference in Houston, did not specify the extent of Shell’s planned SAF production increase or the timeline for this expansion.
Shell Chief Executive Wael Sawan previously announced the company’s intention to reduce its workforce by at least 15% in the low-carbon solutions division and downsize its hydrogen business as part of an overarching strategy to enhance profitability.
Sustainable aviation fuel is one area where Shell believes it holds a distinct competitive advantage. The production of SAF in the United States is limited due to high production costs. Nevertheless, the Biden administration issued a challenge in 2021, urging the industry to supply a minimum of 3 billion gallons of SAF annually by 2030. Yet, critical decisions concerning which feedstocks qualify for tax credits for biofuel producers remain unresolved.
Watkins expressed optimism about Shell’s involvement in the effort to scale up SAF production, as the company collaborates closely with its customers. Shell currently supplies SAF to airlines and other clients across North America, Europe, and the Asia Pacific region through pilot programs. SAF can be derived from renewable and waste-based sources such as used cooking oil and various forms of waste.
While Shell explores SAF expansion, most of the company’s investments in the U.S. will be directed towards its oil and gas operations, particularly in the Gulf of Mexico. This region offers lower production costs and reduced carbon emissions compared to other areas.
“The U.S. is a place where you’ll see us continue to invest significant amounts of capital,” noted Watkins.
The production platform for Shell’s Whale deepwater oil project has arrived in Corpus Christi, Texas, and will be installed in the Gulf of Mexico in the coming months. The project, set to commence operation in 2024, closely resembles the Vito project, a 100,000-barrels-per-day initiative that began production earlier this year.
