Growing oil and gas production from shale fields will act as a “balance” for deepwater projects, the new head of Royal Dutch Shell Plc’s (NYSE: RDS.A) U.S. business said, as the energy major strives for flexibility in the transition to cleaner fuels.

Gretchen Watkins said drilling far beneath oceans in the U.S. Gulf of Mexico, Brazil and Nigeria secured revenues for the longer-term, but tapping shale reserves in the U.S., Canada and Argentina enabled nimble decision-making.

“The role that [the shale business] plays in Shell’s portfolio is one of being a good balance for deepwater,” Watkins said in her first interview since she joined the Anglo-Dutch major in May.

Capital-intensive deepwater projects take time to develop but are seen as lucrative long-term investments. Meanwhile, shale projects require modest cash injections to start up but they ebb and flow faster.

“You can be much more agile in your investment decisions,” said Watkins, adding that spending and operations in the shale business can be ramped up or down, depending on market moves.

“[It] is a natural hedge in the portfolio,” she added.

Watkins, the former CEO of Denmark’s Maersk Oil before it was acquired by France’s Total SA (NYSE: TOT), has become head of the shale business and will take on an additional role overseeing all U.S. operations in the future.

Investments into shale have risen as energy companies have been under pressure to rein in costs, pay down debt and boost returns to investors through dividends and share buybacks.

So-called short-cycle projects have also become more attractive amid uncertainty about future demand for fossil fuels and the expected global shift towards cleaner forms of energy.

Shell, Watkins said, was making bets in order to be in a “thriving mode” through a turbulent energy transition.

Shell is allocating between $2 billion and $3 billion every year to the shale business, which is about 10% of the company’s annual capital expenditure until 2020 and half of its expected spending on deepwater projects.

As costs for deepwater projects come down and can generate a profit with oil prices well below $40 a barrel, they are increasingly competing with shale for capital. “We can stand right alongside deepwater,” said Watkins.

For much of the past decade, smaller oil companies drove the boom in U.S. shale output by making breakthroughs in new drilling technology that turned the U.S. into the world’s fastest-growing producer.

Now big energy companies that were once slow to invest and had difficulties in making the shale business work have become more efficient and achieved scale.

Shell, which took a $2.1 billion write-down on the value of unconventional oilfields in 2013, says its performance has improved and it aims to make shale a bigger part of its business in the 2020s.

Shell is focusing investment in the Permian Basin of Texas and New Mexico and the Duvernay Shale in Alberta. Unconventional oil and gas production is due to double from 250,000 barrels of oil equivalent a day last year by 2020.

But Shell’s U.S. production outlook to 2030 still lags behind Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX) and BP Plc (NYSE: BP), analysts at consultancy WoodMackenzie said. While Exxon Mobil has the most acreage, Chevron has the most valuable portfolio, dominated by its unrivaled Permian position. BP’s recent acquisition of miner BHP Billiton Ltd.’s (NYSE: BHP) U.S. shale assets has also given it a sizeable boost.

Watkins said Shell sought to become even more efficient while keeping rising costs in check. This would boost productivity as it banks on shale as an important engine for growth in the next decade. Costs have fallen by 65% in the Permian and Shell plans to generate free cash flow by 2019 in the basin.

“We are coming into a place in the next year or so where we will be a high-growth business,” said Watkins, referring to both higher levels of production and financial returns.

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