Shell stampeding to Calgary
Financially strapped Shell Canada is moving its head office from Canada's financial center, Toronto, to Canada's oil capital, Calgary, Alberta. The Canadian subsidiary of Royal Dutch Shell is the least profitable of Canada's major integrated oil companies. It has been battered by gasoline price wars, by the collapse of its oil sands project in Alberta, and by too heavy a reliance on natural gas in its Canadian energy holdings.
The move to Calgary should help cut costs, says Shell Canada president William Daniel: ''The industry is centered in Alberta, and our people must work with the industry.''
But the Shell move, due to be completed by next year, is a blow to Toronto. The city has gained an estimated 100,000 jobs in office relocations from Quebec Province over the past 15 years. The Shell move involves about 1,000 employees. As part of the reorganization, at least 500 Shell employees will be laid off; others are being encouraged to take early retirement.
Of major Canadian oil companies, Shell has the highest percentage of energy-reserve holdings in natural gas. But demand for natural gas in its key export market, the United States, is weak. A regulated price structure in Canada makes natural gas less profitable than oil. Moreover, the Canadian retail gasoline business has been experiencing a price war. Cutting gasoline prices to gain market share has cut into profits at Shell: In 1983, profits dropped 22 percent from the previous year.