Last March, Royal Dutch Shell said it would sell most of its oil sands interests in Canada. This huge project has extracted millions of barrels of sticky hydrocarbons from the ground, and the whole production process is more like mining than drilling. The oil and gas giant announced that it would sell its oil sands assets for $7.25 billion, focusing more on its "global scale and competitive advantage" business.

The statement did not address the deeper reasons for the divestiture. After months of shutdown negotiations at Shell's headquarters in the Hague, executives of the world's largest non-state-owned oil company believe that a fundamental shift is taking place in the energy industry. profitable oil sands could become a burden on the company's debt.

An internal survey conducted by Shell's internal team of analysts, also known as "scenarios", suggests that global demand for crude oil could peak in as little as a decade, which is basically "tomorrow" for an industry that has incremental plans for the 1/4 century. At the same time, fossil fuel alternatives, such as solar, wind and electric cars, are becoming increasingly competitive and prices are falling faster than Shell executives expected, all of which will accelerate the peak. Shell believes that when demand for crude oil reaches its peak, crude oil prices may start to decline slowly. In the end, too low prices will be difficult to cover the production costs of oil sands.

The fall in prices is not another cycle of oil prices. In this well-known cycle, oil prices will, like a roller coaster, rise and fall. At that time, the crude oil century itself will enter a decades-long decline. In this unknown world, to use a word widely circulated by Shell, the price of crude oil is likely to fall endlessly.

If that happens and the company is still clinging to the oil sands, Jeremy Bentham, head of Shell's scenarios team, borrowed the main points of a memo he wrote to his boss (written shortly before the company decided to sell the oil sands) and said to me in a cadent British accent, "then you-- Oh, my God, forgive me-- it's over. "

Shell's printing press raked in $9 billion in profits in the first nine months of 2017 and employs 90, 000 people in more than 70 countries. If the company is seen as a country, its carbon footprint will rank seventh in the world, second only to Germany. Shell ranked seventh in the Fortune Global 500 last year, with sales of $240 billion. Today, the company is shrinking its business in order to survive. It believes that crude oil demand is likely to peak between the late 1920s and late 1940s because the energy industry is undergoing a disruptive shift from crude oil to electricity.

While affordable new alternative energy sources for oil and gas, known as solar, wind and batteries, have fuelled the shift, the government's increasingly stringent greenhouse gas emissions restrictions have exacerbated the pace of the shift. Although the United States withdrew from the Paris climate agreement under President Trump, Europe, China and many developing countries are taking steps to reduce carbon emissions.

If Shell fails to come up with measures to deal with this new energy pattern, the company will be burdened with huge amounts of difficult underground oil and gas resources. Shareholders have spent billions of dollars exploring these resources, but the company will find it unprofitable to exploit and sell these resources because of weak demand.

Van Boden, Shell's chief executive, vowed not to let that happen. "We're not going to sit back and wait," the 59-year-old Dutchman told me in an interview in a corner office in the Hague. "We will take measures to deal with it. "

The problem is that oil giants are increasingly confused about what to do in the future. In the past, "the company had to weigh a series of results, but we could still adopt a conservative strategy to deal with it," Van Boden said. "the challenge now is that we cannot see what will happen in the future," he added. "

To this end, Shell has made some strategic bets. If it works, he will give Shell a new life and adapt to an era when crude oil is no longer the primary lubricant in the global economy. He will transform the oil giant into an energy giant.

His first step is to cut operating costs so that Shell can make money better than its competitors in the run-up to the end of the oil century. Shell expects global gas demand to continue to rise in the coming decades. But Van Boden has been cutting back on his oil project portfolio, retaining only lean assets that provide good returns in markets where the average price of crude oil is less than $40 a barrel. This price is much lower than the average price over the past decade.

Shell has sold billions of dollars worth of projects, including oil sands that it believes cannot meet its new low-cost requirements. The company is redesigning its deepwater crude oil platform and onshore shale gas project in order to streamline it. This is a major cultural change for the company, which has long been known for engineering rather than economic discipline. In addition, in the past two years, the company has laid off 12% of its employees, or 12500 employees, many of whom thought they had found an iron job when they joined Shell, but the layoffs are not over.

Van Boden's second strategy is harder to implement. He hopes that Shell, driven by itself, will become the main force in the electricity era, the first truly international company in this field. Shell has tried it before in the early stages of renewable energy development, but without success. Van Boden will push Shell to a deeper level, thus pushing the company towards the broader goal of selling electricity. Shell is building an onshore wind farm in the North Sea; its consortium is building solar plants in Oman and California; and it has bought one of Europe's largest electric car charging companies and a major British power provider.