| Danial Norjidi |
THE future of both Shell and the energy industry is “inextricably linked” to gas taking its “rightful place” in the energy mix and it will be crucial in helping meet global energy demand.
Maarten Wetselaar, the Executive Vice President of Shell Integrated Gas said this on Monday while delivering a presentation at Shell’s office in Singapore on the developments of liquefied natural gas (LNG) both globally and in Asia.
He said that growth of the energy system from now to 2050 is generally considered to be about 40 per cent. “Of the enormous energy system that we currently have, we’ll need another 40 per cent of it in terms of output in order to keep the world supplied, and even that will not solve energy poverty around the world.”
Energy demand growth he said, is a very important starting point. “We have to provide a lot more energy to the world for the economy to grow and for energy poverty to really get out of the system.”
He noted that three things – growing energy, lessening CO2 emissions and cleaner air – all need to be solved at the same time.
“There’s actually only one sort of energy that we can look you in the eye and say we know can fix this and that’s gas. It will no doubt have to play along with other sources of energy, it isn’t going to be and we aren’t pretending that it’s going to be 100 per cent of the energy mix in the world, but it is the only one that can solve all these problems at the same time. That gives gas such a bright future in our eyes; that gives it such powerful potential.”
It can address the energy demand issue because there is a lot of gas in the ground – much more than oil, he said. At the current consumption rates, there are about 235 years of gas supply left. “As a government and society you can choose to have gas in your energy system and have generations of gas still left to be consumed, so there’s enough of it.”
He also noted that from an air quality perspective gas is enormously cleaner than its alternatives. “It has less than 10 per cent of the nitrogen oxide, sulphur oxide and small particles that coal emits when burned for power and less than half of the CO2 that coal emits, which he called “a huge difference” and an “opportunity”.
The Executive Vice President of Shell Integrated Gas, Maarten Wetselaar responding to questions. – DA-NIAL NORJIDI
“Over time that 50 per cent of the CO2 starts to become the only problem that’s left to solve, we can capture that CO2 and store it underground, as we are already proving in a number of locations around the world and as we are maturing that technology.”
So it can fix the air quality issue, it can make a big difference on the CO2 side and it can fix the energy availability issue. It is also the perfect partner for renewables. It’s actually likely that renewables will be the major source of energy in the second half of this century. Gas is the perfect complement, because the problem with renewables as we all know, is if the sun doesn’t shine and the wind doesn’t blow, you don’t have electricity.
Storage is still a big problem at the moment, and gas can be switched on and off very quickly in order to supplement power from renewables. In addition, Shell has recently started to push gas as a transportation fuel, particularly for modes of transportation that can’t be electrified. Heavy transport on the road or on sea generally don’t work on batteries. “Gas is quite versatile. It can play in many different markets,” he said.
Wetselaar also highlighted that LNG is the fastest growing fossil fuel around, with an average growth of five per cent a year. Demand for LNG has been doubling every 10 years he said, standing at around 50 million tonnes in 1990, 100 million tonnes in 2000 and more than 200 million tonnes in 2010. The growth he said, is substantial.
Meanwhile, the supply growth of LNG is mostly happening in Australia, North America and East Africa. These are the main supply bases, he said.
“By the 2020s, we expect basically almost all countries in the world to be either importing or exporting LNG. Not exactly everybody but most of the world economy will be in this value chain one way or another as an exporter or importer.”
He highlighted that Shell is ahead of everybody else in volume, technology and in building up a customer base. “In technology, being ahead of the game when it comes to LNG, not only in building big LNG plants but also increasingly miniaturising LNG by going into transportation solutions, smaller scale storage and distribution. Integration, being the best in the world at making sure that our customers always get supplied on time, that our plants never go down because the tank gets full and that our ships are efficiently routed and scaled.”
Shell spends about $1.2 billion a year on research and development and a decent bit of it goes into gas, he said. “We are the world leader in gas-to-liquids, we are ahead of the curve in LNG and also when it comes to gas treatment and contaminated gas we have a very big portfolio of solutions.”
The best example of Shell’s technological edge is its Floating LNG project, Wetselaar said. The 500m long and 90m wide FLNG facility allows for LNG to be processed and offloaded at sea. It reduces the cost and footprint of LNG development as it negates the need for long pipelines to shore, compression platforms to push gas to shore, near-shore works like dredging and jetty construction and so on.
Moving on, Wetselaar went on to highlight, “Gas, for a long time, has been something local, domestic. Europe became a bit of a pipeline-connected market, but it was really only LNG that made this a global business. It’s growing still at five per cent a year, and it’s going to continue to grow a lot as countries clean up their energy mix, clean up their air, work on the CO2 agenda and recognise that gas is such a versatile commodity that they just want to import more and we want to be ready to be there for them with the product at the right price.
Concluding his presentation, he said that Shell is “making a big bet on gas” with its planned takeover of natural gas firm BG Group. “If the combination completes, hopefully in the first quarter of next year, we do so not only because we believe it will be good business.
“Of course, we believe it will be good business otherwise we wouldn’t do it, but we also believe that the future of this industry and this company is inextricably linked to gas taking its rightful place in the energy mix and we want to be there to basically drive that; to be on the front foot and be ahead of that curve and to be the example that people want to follow.”
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