Royal Dutch Shell celebrated its 100th anniversary last year, sitting on a pinnacle as the world’s second largest international oil company. It got to that position even though it followed a path that would have defeated many other companies.

The Shell story began in 1833 in London when Marcus Samuels, an antiquities dealer, decided to add oriental sea shells to his inventory. Business prospered and turned into an import/export enterprise.

By 1880 his sons, Marcus Jr. and Sam, had taken over, exporting British machinery and

Before Royal Dutch Shell officially combined in 1907, the company delivered gasoline the hard way. (Photos courtesy of Shell)
textiles and importing rice and china pottery. That was all right until Marcus took an interest in the thriving oil fields around Baku, Azerbaijan, then part of Russia. The Rothschilds and Standard Oil already had a major foothold, but Samuels started making his own deals to serve the lighting and lubrication market.

While Standard Oil shipped its product from the Caspian Sea in leaky barrels, the Samuels brothers bought six tankers, hauled the product overland to open sea and shipped it to Europe through the Suez Canal, all before Standard Oil could intercept its plan and squeeze it out of the business. They renamed the company Shell Transport and Trading Co. in 1897.
Five years earlier, J.B. August Kessler, supported by Henri Deterding, started an oil field in northern Sumatra, Indonesia, built the infrastructure — including tankers — to transport the oil and marketed it. They later called the company Royal Dutch Petroleum Co.

The two companies got together in 1903 to protect themselves from the clout of Standard Oil. They officially merged 100 years ago last year after a twist of misfortune. The Samuels had invested in a disastrous project in Borneo at about the same time as they got involved in a Texas gusher than suddenly ran dry. By 1907, although Shell was twice the size of Royal Dutch, Shell was almost bankrupt. The companies merged with Royal Dutch as 60% owner, but Shell survived.

As leader, Deterding turned the combination into a successful enterprise within 12 months, according to Shell records. The company expanded through Europe and Asia and started E&P in Russia, Romania, Venezuela, Mexico and the United States. It got involved in early auto and airplane races and provided fuel for the first flight across the English Channel, the winner of the Peking-Paris auto rally and the first trans-Atlantic flight in 1919.

World War I threw up another detour to success. Germany confiscated 17% of its Romania assets, but Shell supplied all of the non-German aviation fuel for that war. All of its Russian assets were seized by the government.

Still, by the end of the 1920s, it was the world’s leading oil company with 11% of world production and 10% of world tanker capacity. It also had landed a secured supply line for Middle East oil marketed in Europe.

That was fine until the Depression of the early 1930s dug a pothole in the road. The company was forced to cut its budget and lay off people at the same time Mexico seized its assets in that country and Venezuela imposed harsher terms on production.

Moving into World War II, the company’s foresight in diversifying its markets gave it access to supplies from the world’s largest producer at the time, the United States, and the British government commandeered the 87 tankers in its fleet.

Expansion continued after the war as the company increased operations in Africa and South
A modern station nearly a half century ago helped motorists with their transportation needs.
America, built more refineries, and used supertankers to haul more oil to the expanding automobile market. US car manufacturing rose 60% from 1945 to 1950.

The end of the war did not mean an end to volatility. In 1951 to 1953, Iran seized Shell assets.

It entered Oman in the 1960s, a nation that remains a focal point for Shell operations. It discovered Yibal, that nation’s largest oil field. It also discovered Groningen in The Netherlands, a gas discovery that helped launch exploration in the Southern Gas Basin in the North Sea.

The petrochemical division came out with olefins, PVC, epoxy resins, insecticides, herbicides and liquid detergents.

At the same time, the company adopted a policy of placing local citizens in charge of operations in their countries in a massive campaign that recruited Asians, Africans and South Americans.

Shell delivered the first tanker of liquefied natural gas in 1964 from Algeria to the United Kingdom through its 40%-owned Conch International Methane.

A year later, it was forced to sell its East Indies operations to Indonesia.

Rough spots remained in the road. Col. Muammar Ghaddafi launched a coup in Libya in 1969, took over the government, cut production and raised prices. At the time, Libya provided a fourth of the oil exported to Europe. Other oil producing nations threatened to follow the price increases.

In retaliation to British support of Israel in the Yom Kippur War in 1973, Egypt seized Shell assets in that country, and OPEC raised oil prices from US $3 to $12/bbl and imposed a supply boycott that created long lines at US gasoline stations.

The following decade marked a boom in North Sea development.

The second oil shock hit in 1979 with the Iran-Iraq war and the Iranian revolution. That further restricted supply and sent oil prices to $37/bbl.

High prices usually mean good times. That was true until non-OPEC supplies increased high enough to send the oil price to $10/bbl in 1985. Shell’s budget dropped in half in two years.
Research focused on cost savings as it used 3-D seismic to reduce uncertainty and lower slim-hole and directional drilling costs.

Tense times continued as Shell and other companies working in Nigeria were targeted as being in league with a corrupt government. Even in the current decade Shell encountered a setback when the Russian government forced the company and its partners in the Sakhalin II project in Russia to sell half their interests to state-owned Gazprom.

In spite of the roadblocks, potholes, detours and traffic jams, the company managed an impressive string of victories.

In 1993, it opened the Bintulu gas-to-liquids plant. It operated the world’s largest enhanced oil recovery program between 1978 and 2000 using carbon dioxide to improve production from the Denver Unit in West Texas.

It is working with Chinese oil companies to prove the feasibility of a huge shale oil production project in Jilin Province in northern China. It already has a pilot program in oil shale working in the Piceance Basin of Colorado.

It has teamed up with Total and Saudi Aramco to explore for natural gas through their South Rub Al-Khali Co. in the empty quarter of southern Saudi Arabia.

It pioneered offshore work with fields in The North Sea, The Netherlands, the Gulf of Mexico and Lake Maracaibo in Venezuela.

Among impressive recent projects are Bonga offshore Nigeria, Malampaya in the Philippines, Sakhalin II off Russia’s east coast, and Bijupira and Salema offshore Brazil. Its Champion West field offshore Brunei was among the first intelligent well operations and gave the company a chance to pioneer snake (horizontal zig-zag) and dragon (vertical zig-zag) wells.
It holds part ownership in the massive Greater Gorgon project in development off the west coast of Australia and a 16.8% share of the giant Kashagan field offshore Kazakhstan in the Caspian Sea.

The company built the Na Kika production system that gathers production from several fields in the deep Gulf of Mexico, then turned the field over to BP for operation. In the Norwegian sector of the North Sea, it has taken over operations of the giant Ormen Lange field following construction by Norsk Hydro, now part of StatoilHydro.

The company has set record after record in the Gulf of Mexico at fields including Cognac, Mars, Brutus, Ram Powell, Ursa and Mensa.

It will set more records as its Perdido Hub collects oil from ultra-deepwater wells in three fields on the Perdido Foldbelt at the southern end of the US portion of the Gulf of Mexico and uses innovative techniques to lift the oil to the deepest-water spar platform ever built.
That’s a natural step in Shell’s history. It used the first spar in the oilpatch as a storage tank for its Brent field in the UK sector of the North Sea.