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Oil and gas required for foreseeable future

Nov 20, 2018
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Ali Al-Janabi, Shell VP and Country Chair for Abu Dhabi talked to Pipeline Magazine about Shell’s strategy going forward

 

What is Shell’s strategy for the MENA region going forward?

Shell’s strategy, not only in the MENA region, but globally, seeks to strengthen our leadership in the oil and gas industry, while positioning the company for growth as the world transitions to a low-carbon energy system. Safety and environmental and social responsibility underpins our business approach. The aim is to reshape Shell as a world class investment case so that the company will thrive not only in the short term but for decades to come. This strategy is underpinned by Shell’s outlook for the energy sector and the need to adapt to substantial changes in the world around us. We have a strong business portfolio in the Middle East and North Africa, stretching back over 100 years in certain countries, and we continue to use our technology leadership to build an even stronger one as we work with our stakeholders to provide energy solutions for the future.

 

How is Shell adapting its portfolio to meet the requirements of today’s energy landscape?

We recognise that the world needs more and cleaner energy. We plan to play a positive role in such an energy transition. In February 2016, Shell completed the acquisition of BG Group, adding significantly to our activities in liquefied natural gas (LNG) worldwide and deep-water oil and gas production in Brazil.

As part of our longer term strategy, we intend to make investments in lower-carbon technologies and energy, such as natural gas, carbon capture and storage, biofuels, wind and solar energy. Prudent changes to our portfolio will strengthen our business and help us play a greater role in the long-term transition to a lower-carbon world. Shell has also made significant progress towards the completion of our three-year US$30 billion divestment programme, which is an important part of our strategy to reshape into a world class investment and to strengthen our financial framework. New projects have more than offset the impact of divestments as we upgraded our portfolio. We have also had record LNG liquefaction and sales volumes. In addition, our downstream business, excluding divestments, continues to grow.

We recently published our Sky scenario, which details how the world could meet the goals of the Paris Agreement, as part of the Shell Scenarios that help Shell leaders, academics, governments and businesses explore ways forward and make better decisions. In addition, we also released our Shell Energy Transition Report which demonstrates why we believe our portfolio is resilient, even within the Sky scenario. In November 2017, Shell announced our industry-leading Net Carbon Footprint ambition, clearly aimed at helping Shell to thrive through the energy transition. Our goal is to become the best company in the industry and a world class investment opportunity, therefore our long-term sustainability must provide both a competitive return for shareholders and positive contributions to society.

 

How big a part does gas play in your business and how has it changed in recent years?

In addition to being the cleanest burning hydrocarbon, natural gas is abundant and versatile. Gas is one of Shell’s key growth priorities. Shell produces around 10.7 billion standard cubic feet of natural gas a day. Our integrated gas organisation manages Shell’s liquefied natural gas (LNG) activities and the production of gas-to-liquids (GTL) fuels and other products. It includes natural gas exploration and extraction, when contractually linked to the production and transportation of LNG, and the operation of the upstream and midstream infrastructure necessary to deliver gas to market. It markets and trades natural gas, LNG, electricity, carbon-emission rights and sells LNG as a fuel for heavy-duty vehicles and marine vessels.

In fact, Shell is one of the world’s largest LNG shipping operators. We directly manage around 40 LNG carriers and charter more than 50 others on long-term time charters. Collectively, this makes up around 20 per cent of the global LNG fleet. Our trading operation buys and sells LNG to and from Shell, its partners and third parties. In this way, we help meet customers’ long-term energy needs and respond flexibly to short-term changes in demand. Shell has LNG supply projects around the world, as well as interests in long-term capacity access to regasification plants.

In addition to having built the world’s largest GTL plant, we also constructed the largest offshore floating LNG facility ever built. Through some of our global operations, we are also safely tapping into unconventional resources of natural gas, known as tight and shale gas. These huge resources of natural gas, the cleanest-burning hydrocarbon, have the potential to create an energy supply revolution around the world helping to meet growing energy demand. Shell has decades of production experience with tight gas – in the USA, Canada, China and Australia. Over time we have found ways to safely develop the fields and produce the gas with greater efficiency, lowering costs and limiting our environmental impact, and we are now looking to export our unconventional experience internationally including to the MENA region.

 

What are the main challenges that the oil and gas sector faces?

Oil, gas and renewables will all be needed to meet demand in the decades ahead, but some sectors and countries will find it more difficult to decarbonise than others. While renewables can play a vital role in power supply, electricity is currently less than 20 per cent of end-use energy consumption. Oil and gas will still be required for the foreseeable future, especially in aviation and heavy industry and in the production of chemicals, plastics and the everyday goods they help produce. However, carbon capture and storage technology could play a key role in CO2 mitigation.

 One example of a partnership between fossil fuels and renewables is the Amal Solar Enhanced Oil Recovery (EOR) pilot project in Oman which uses solar power for steam generation. In collaboration with Shell and Petroleum Development Oman (PDO), GlassPoint Solar uses solar mirrors – not gas – to generate steam for oil recovery. The mirrors concentrate sunlight on a boiler tube containing water to produce high-pressure steam, which is injected into a reservoir to heat heavy oil and boost production. This frees up gas for other uses.

 

How is Shell bringing new technologies to the oil and gas sector?

Our researchers, scientists and engineers develop innovative ways to find and safely produce new energy resources in harder-to reach places and recover more oil and gas from fields where it would otherwise be too difficult or costly to extract. At Shell we use a range of survey methods to find the best places to drill exploratory wells.

These tools help us to look efficiently, safely and cost-effectively for the geological formations that are most likely to contain energy resources. As the era of easy-to-find oil and gas comes to an end, we are developing new technologies that can detect reservoirs that were previously invisible.

These reservoirs can be at depths of more than 3,000 metres, or hidden under thick layers of salt deep below the seabed, or trapped in geological faults where the rock is folded into complex structures. One of Shell’s technologies in this area is our Geosigns visualisation software which is used to turn seismic data into images that can be analysed and interpreted by our scientists quickly and efficiently.

This ability to visualise and interpret billions of signals lies behind our biggest successes in oil and gas exploration. When it comes to well drilling, our creative engineers are at the core – whether replacing manual drilling with automation, or remotely boosting and monitoring the performance of a well. One of the innovations our engineers have developed is DART: Shell’s Drilling Automation and Remote Technology. This technology enables our engineers to simultaneously manage multiple rigs, working together even when thousands of kilometres apart; one example of that was drilling our first unconventional well in Argentina remotely from North America DART centre.

The latest technology developed by our engineers for resource-intensive plays goes even further. The newly developed well manufacturing system will deploy highly automated rigs and central control to enable the mass production of wells faster than ever before. Nearly 1,900 wells engineers, well completion and wells intervention engineers work together with partners across the globe to shape the future of tomorrow’s wells - today. As technology advances, so does our ability to unlock the world’s natural gas resources.

Shell’s technology has the potential to unlock large additional volumes of unconventional gas. For countries with large domestic natural gas resources, the impact of developing substantial additional volumes of natural gas can transform economies.

 

How is Shell embracing the growing digitalisation in the oil and gas industry?

Advancements in digitalisation are vital to providing a wider, more sustainable mix of energy resources for the world’s growing population. Thousands of Shell scientists, researchers and engineers around the globe are working to improve the efficiency of our products, processes and operations, and to commercialise technologies for the transition to a low-carbon energy future. Digital devices are becoming increasingly sophisticated and interconnected.

This networking of connected devices, dubbed the “Internet of Things”, is set to change many of traditional assumptions about energy storage and usage, and with readily available processing power and advanced software, this allows us to create detailed visualisations.

A few examples to refer to are; autonomous underwater inspection vehicle, 3D printing digital detection, smart fields’ systems, and many others. Through our network of technology centres around the world, we work alongside IT companies, consultancies, and research universities. We also invest in innovative technology companies and start-ups through our venture capital arm, Shell Ventures.

Shell Ventures recently invested in Sense Labs, which has developed a connected device that lets households monitor the energy use of any home appliance – not only smart ones – via a mobile app. Shell is continuously working on new digital technologies in several areas which have the greatest potential for our business.

 

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