Shell Spreads Its Bets Around as It Prepares for a Greener Future
COVENTRY, England — There seems to be little about the scrappy energy company in central England that would appeal to Royal Dutch Shell, the button-down oil giant.
The little company, First Utility, is an upstart challenger. It offers friendly customer service, and low prices on electricity and natural gas. But it doesn’t own any power plants or gas pipelines; First Utility is a virtual energy company — the product of technological advancement and deregulation.
Its recent acquisition by Shell, a living dinosaur that continues to make its billions pumping fossil fuels out of the ground, illustrates one of the ways the energy companies that dominated the past are looking toward a future in which power is harnessed from the sun and the wind. It is a future that the petroleum industry is increasingly trying to embrace, leveraging its financial and logistical resources as it puzzles out ways to deal with the climate change problem its companies helped create.
Leading Shell’s efforts is Ben van Beurden. Since taking over as Shell’s chief executive in 2014, Mr. van Beurden has had to balance the company’s mainstay oil and gas business with the regulatory, shareholder and societal pressures — not to mention familial guilt — that will perhaps inevitably push Shell and its competitors to leave those businesses behind.
Mr. van Beurden recently recalled how his 9-year-old daughter had once come home from school in tears. “She had heard that the Earth was warming up and being destroyed by people like Shell,” he said.
Investors are concerned, too. Mr. van Beurden faced shareholder resolutions demanding that Shell take steps to mitigate climate change.
To insulate itself, Shell has begun allocating up to $2 billion per year — out of a capital budget of up to $30 billion — to electric power and other alternative energy. So far, it has bought First Utility and invested in operations as varied as a California solar energy business, an offshore wind farm in the Netherlands, a ride-sharing app start-up in London and even a company that provides charging outlets for electric vehicles.
First Utility is the kind of business that could thrive. It couples low prices with a warm approach. Sales agents, who work online and by phone, are trained to try to help customers through problems like the loss of a family member, rather than following a script.
“We try to make sure we have a human conversation,” said Mandeep Deu, First Utility’s customer service manager.
That formula has won over some 850,000 customers in Britain’s bruising energy market and has impressed Shell, which had been supplying the company with power and natural gas. Shell closed a deal to buy First Utility in March after it decided that the company could be an important part of the future energy business it wants to build.
“They give us a platform to grow from,” said Maarten Wetselaar, who heads Shell’s new energies business and its natural gas unit, which means “we will be able to grow much faster than if we were to start” from scratch.
It is something of an evolution for Shell, which — along with other oil companies — has long argued that it was helping mitigate climate change by investing tens of billions of dollars in cleaner-burning natural gas. Shell even completed the purchase of BG, a British energy company, for $54 billion in 2016 to bolster its position as a leader in liquefied natural gas.
But the public was not persuaded, Mr. van Beurden said. “People did not trust us,” he said. They thought that “we were secretly advocating for the prolongation” of oil and gas.