- Marvin Odum departs after 34 years; led Arctic exploration
- Shell also closing dedicated unconventional resources unit
The departing chief of Royal Dutch Shell Plc’s U.S. division, who presided over its failed quest to find crude in Arctic waters off Alaska, said the effort was still a point of pride because it demonstrated the company’s technical expertise.
Marvin Odum, 57, is leaving the company in a reorganization announced Wednesday. He has been with the company for 34 years and held the post atop its U.S. division, Shell Oil Co., since oil prices were at record highs.
The Arctic was "a big bet," Odum said in a telephone interview Wednesday.
"If the oil that we had hoped was there -- and probably was there at some point in geological history -- in the quantities we were looking for, this would have been a fabulous success," he said.
Though disappointed in the outcome, Odum said he was still proud of the Alaska project because Shell "ultimately executed a very technically successful exploration program" in an area roughly 1,000 miles from the nearest deep-water port and as U.S. regulations were evolving.
Bruce Culpepper, an executive vice president who has been overseeing human resources in the Americas, will become the U.S. country chairman and the president of Shell Oil on April 1.
For nearly eight years, Odum served as the U.S. face of Shell, testifying about industry tax deductions on Capitol Hill and proclaiming the company’s support for pricing carbon dioxide emissions.
Shell’s Arctic endeavor, launched after the company spent a record-setting $2.1 billion buying 275 Chukchi Sea drilling leases in a 2008 government auction, spanned several years but only led to drilling during two: 2012 and 2015.
The 2012 campaign was marred by mishaps, from a drifting drillship and air pollution permit violations to the grounding of Shell’s Kulluk drilling unit amid a botched tow to Seattle. After two months of drilling last year led only to insufficient quantities of oil and gas in a test well, Shell said it would indefinitely abandon Arctic oil development.
The massive logistical undertaking, coming after the blowout of BP Plc’s failed Macondo well in the Gulf of Mexico, provided Shell with lessons that can be applied to other ventures worldwide, Odum said.
"A lot of things were changing around us, whether that was Macondo in the Gulf of Mexico or other things that had an impact on this program, a changing of political views and so forth," Odum said. "We were just in a world where we had to learn as we go on some fronts and deal with changes on other fronts."
As part of the changes announced Wednesday, Shell said it would divide the unconventional resources business unit it created earlier this year to house its shale and heavy oil activities in the Americas, including oil sands projects in Canada and fracking of dense rock formations in the U.S. With Odum’s departure, Shell will move the assets under the administrative controls of its upstream and downstream businesses. Odum had been appointed to lead the division last year.
Shell’s U.S. assets are still "core to this company," Odum said, emphasizing that roughly a third of Shell’s current investment is going to North America. Odum said that Shell is focusing on its best onshore shale holdings, while paring development costs.
"Now it’s more of an opportunity when the external environment is right to start producing more of the resources that we hold,” Odum said. “We’ll aim for the right price signals before we really turn this business on."
Shell said the moves were part of a bid to simplify its structure, following the acquisition of BG Group Plc, which was completed this month. Shell has said it will sell $30 billion of assets in the next three years.
"Marvin has had a long and distinguished Shell career and I’m grateful to him for the central role he’s played in the company’s success," said Ben van Beurden, chief executive officer of Royal Dutch Shell, in a news release Wednesday. "He leaves our important businesses in the Americas well positioned for the next phase of their development."
Odum said his departure is well timed both personally and for Shell. "It works well for the company as we finish globalizing these businesses and finished the BG acquisition and are ready to take the next step in our evolution," he said.
Royal Dutch Shell has pared capital spending and shed workers to weather collapsing crude prices and facilitate the BG acquisition. In North America, Shell sold natural gas and shale assets in Wyoming, Louisiana and Pennsylvania and abandoned projects in Alaska and Canada. Shell also had a $3.9 billion adjusted loss from their Americas business in 2015.
RBC Capital Markets analyst Biraj Borkhataria said Shell is emphasizing "its core competencies" in deep-water development and liquefied natural gas. "The unconventional resources business has long been a troubled area for Shell," Borkhataria said in a research note. "We believe Shell is making the tough choices required to transition into the new entity."
Environmentalists attacked Shell’s Arctic drilling project but have praised Odum’s approach to tackling other issues, including greenhouse gas emissions. Fred Krupp, president of the Environmental Defense Fund, said Odum tried to find solutions to some of the industry’s "most complicated environmental challenges," including releases of methane, a particularly potent greenhouse gas.
"He was one of the first executives in the business to recognize how important these emissions are to the climate," Krupp said in an e-mail. "His involvement brought others to the table, and moved the conversation forward."
Odum succeeded John Hofmeister as the head of Shell Oil in June 2008, after overseeing exploration and production in Canada. His Shell career dates to 1982, when he began as an engineer with the company.