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Projects & Technology - Building the New Energy Future
The future of world energy remains a major question. Shaping it will involve industry, government and other organisations. Matthias considers the role international energy companies play – by pioneering technologies, forming partnerships, and supporting sustainable development. In this speech he presents Shell’s partnerships in Qatar – and elsewhere – as evidence of the opportunities technology and innovation bring.
Projects & Technology - Building the New Energy Future
I am very honoured to speak to you today. Qatar University has developed a deserved reputation for excellence, for constantly reaching higher and pushing back the boundaries of what can be done. It is very exciting to be here, among the brightest and best Qatar has to offer the world – students and academics, scientists, engineers and technologists.
It is also true that you and I live in exciting times. Times of great change, and great progress in many respects. But challenging times, too, requiring visionary leadership, courageous decisions, and a constant flow of new ideas to meet the challenges we face – plus the ability and commitment to make those ideas work. In fact, it’s all about people, technology, and innovation – especially in the energy sector.
As I will show in my remarks today, the future of world energy is a massive question. And it depends on the right people, in the right partnerships, with the right technologies.
In my role at Shell, I see myself as a kind of “primus inter pares explorer” – leading a global team of high performance researchers, scientists and engineers who are continually seeking out the best, most effective technology answers to the energy question.
Those of you who have been involved in the energy sector already in any way – through your studies or employment – will know there’s a multitude of exciting technology developments going on. These create great opportunities – for you as individuals as well as businesses – to grow and develop your own strengths; to do your own “exploring”; and thus expand Qatar’s role as a key player on the world stage; while at the same time, playing your part in meeting the global energy challenge – I think this is one of the most worthwhile goals there are.
Today, I am going to showcase just some of these developments. I would need a few days to tell you about them all – and believe me, I would, if you and I both had the time.
I am a real believer in the power of technology. Some people say that all the inventions have been made, there is nothing left. What nonsense, I say. I have spent nearly 30 years in the oil and gas industry, and most of my career has involved chasing new business opportunities.
Without technology we would never be where we are today in helping to secure one of the basic needs of mankind: energy.
I have great admiration for the ways in which people are unleashing that power to enable a country like Qatar, for example, with its huge natural resource wealth, to play such an important role in global energy – responsibly, with long-term vision and commitment.
Before I talk about these technologies, let me briefly put them in context: why do we need them?
The New Energy Future
We need these technologies because we are all on the brink of a new energy future – a world that looks very different from the one we are accustomed to. We in Shell see this new energy future through what we call “three hard truths”.
These hard truths – the realities of the new energy future – are stark. First, there will be 3 billion more consumers in the world by 2050, and double the energy demand. Second, 70% of global energy will still be coming from nuclear and fossil fuels in 2050, with hydrocarbons steadily becoming harder and more expensive to access and recover. Third, the climate experts continue to lower their estimates of what constitutes a sustainable level of CO2 in the atmosphere; more and more urgently, we need to be able to manage greenhouse gases.
Unpacking these realities a little, we can see that oil and gas will remain indispensable to world energy for many decades to come. There will undoubtedly be great developments in other energy forms – for example, biomass, wind and solar; but these still need a lot of investment, and a lot of technology advances, to gain the necessary scale and commercial strength to make the impact they promise.
Given the combination of rising energy demand and environmental pressures, gas – which burns cleanest of all the fossil fuels – will clearly gain importance. Indeed, it is difficult to envision a sustainable energy future without increased natural gas.
For our part at Shell, we believe a sustainable energy future starts at home. So, as well as doing our utmost with our partners to supply the energy needed by consumers and businesses around the world, we are constantly pursuing ways to increase the efficiency of our own operations, and reduce our own emissions and those of our customers and partners.
That’s why we put so much emphasis on aggressively developing low-CO2 sources of energy, including natural gas and low-CO2 fuel options.
Overall role of IOCs
The goal of most international energy companies, or IOCs, is similar: responsible development of fossil fuels, in the right partnerships.
In Shell’s case, reaching that goal is fuelled by some strong ingredients. For one thing, we have more than a century’s heritage of meeting energy needs. Shipping kerosene from the Caspian Sea, through the Suez Canal, to Asia in the late 1800s must have had its own excitement, and certainly had its own technology challenges.
Since then we have pioneered many technologies: liquefied natural gas (LNG), gas to liquids (GTL), advanced biofuels, carbon capture and storage, Drilling the Limit, Smart Fields®, innovative catalysts, and many more.
We’ve also grown in scale and scope. This is a second ingredient for success. Shell employs about 100,000 people, working in over 100 countries. Wherever we operate, we strive to maximise local content – employing, contracting with and buying from as many local people and businesses as possible.
Our staff represent a tremendous diversity of expertise: from marine biologists to sustainable development specialists, from palaeontologists to economists, from engineers to social scientists.
And they apply their expertise in a very broad and diverse range of businesses: from oil and gas exploration and development, to refining, trading and marketing, to fuels distribution and advanced biofuels. In my role as Director of Projects and Technology, I have a sort of bird’s eye view across Shell, so I can really appreciate that variety.
All of the situations we work in present technical requirements and challenges of one kind or another: ranging from the Arctic Ocean to desert conditions; from remote deep-water oil and gas fields to the roadside and the home. We have solutions and processes for all of them – our third ingredient for success – and we’re pursuing better ones all the time.
That’s to maintain or grow our competitive advantage; but also because we are genuinely committed to sustainable development – delivering the best value to our shareholders, partners and customers in a socially and environmentally responsible way. This is the fourth ingredient I would like to mention. That commitment makes us proud to engage in things like sponsoring the Sustainability Chair at Qatar University.
Like many other energy companies, we pursue sustainable development with our counterparts in the local setting, the national oil companies of the world.
Shell’s experience of such partnerships extends over many decades, and many regions and countries: from Qatar to Brazil, from Russia to Malaysia, to name but a few. We appreciate the wealth of local knowledge and experience of the NOCs we work with, the growing technical expertise of their people and increasing financial sophistication of their operations.
We are privileged to be able to contribute to these working relationships, by sharing our technology and project development expertise which we have developed over the years and across the globe, upstream and downstream. This combining of strengths creates a win-win that underpins the success of all the parties involved.
There are two excellent examples of partnership right here in Qatar: the Qatargas 4 project, and the Pearl GTL project.
In Qatargas, with our partner Qatar Petroleum, we’re heading for start-up of production towards the end of 2010. When it’s operating at full capacity it will produce 7.8 million tonnes of LNG each year, for export to Dubai, the USA and China.
We’re also partnering with Qatar Petroleum in the Pearl GTL project. This is one of the largest integrated energy projects in the world. The construction of the plant, which is simply huge, has taken some 2 million tonnes of equipment and materials. Some 48,000 people work on the project at the moment. When we were at the peak of construction, there was enough steel and pipe installed to make 2.5 Eiffel Towers every month. It is one of the largest industrial projects the world has ever undertaken.
At the moment we’re in the testing phase of the project, using a control room that contains almost 1,000 control cabinets, hosting 179 servers programmed with 12 million lines of software code. The system is linked to every part of the plant by enough cable to stretch from Doha to London, if laid end to end.
In this partnership, as in our other ventures around the world, we’re always looking for ways to leverage Shell’s global reach. For example, to Qatargas 4 we are able to contribute what we’ve gained over the years as leaders in the global LNG market. And our long experience of GTL includes 15 years operating the world’s first commercial-scale low-temperature Fischer-Tropsch GTL plant in Bintulu, Malaysia – which is beneficial to the Pearl project here in Qatar. We are very pleased to be playing a part in helping to establish Qatar as the number one LNG and GTL producer in the world.
We can also go to the Pearl GTL plant to see a number of technology innovations. Production will be based on Shell’s proprietary middle distillate synthesis process, using advanced catalysts which reduce unit capital expenditure, and allow faster processing.
Moreover, the design of the project specifically helps to limit environmental impact. For example, the facility is designed to use every drop of water, so that no liquids are released from the plant. The Pearl GTL industrial water processing plant will be the world’s largest: recovering, treating and reusing enough water for a city of 140,000 people.
The last ingredient I should mention, which enables energy companies like Shell to contribute properly to responsible development of fossil fuels, is investment; especially our investment in people and technology. Really, it’s blindingly obvious: if we don’t invest in our people, and our technologies, we won’t have a business.
So giving individuals and teams opportunities to develop and grow in our business is central to Shell’s strategy. That happens through training, through on-the-job mentoring and learning, through networks of professionals, and through secondments to other parts of the business and other parts of the world.
We believe very strongly in the importance of giving people a broader view, and an opportunity to see different ways of doing things, as well as nurturing specialist technical skills.
We also believe in putting our money where our mouth is when it comes to technology. Our future depends on having the best – so we must invest. In fact, over the past few years, Shell has invested more in R&D and technology than its international energy company competitors.
Partnerships depend on people
These and other efforts are vital to meeting the global energy challenge. And let me stress again: partnerships are crucial to success in that goal, and success in technology.
An example is the kind of partnership that Shell has with Imperial College, London. This strategic alliance focuses on both research and the application of technology. Imperial’s Faculty of Engineering is co-working with our Exploration and Production Research Centre in the Netherlands, on a wide range of scientific and technical questions, from predictive modelling of oil reservoir properties to earthquake hazard mitigation studies.
We also partner with Texas A&M University, in the Qatar Science and Technology Park. This partnership brings scientists and researchers at Shell together with faculty and students of Texas A&M. Joint projects to date have ranged from testing Shell’s sulphur asphalt for road surfacing, in Ras Laffan, to water treatment solutions using reverse osmosis technology.
Shell was actually the first company to move on to the Qatar Science and Technology Park. At our Qatar Research and Technology Centre there, we are realising a commitment to invest up to $100M over ten years on world-class R&D. This year, we were the first company on the park to file a patent application for an invention. It’s a shutdown procedure to prevent catalyst activity loss in a Fischer-Tropsch reactor, the kind used in our proprietary GTL process.
Elsewhere in the world, we are engaged in important partnerships focused on a number of strategic areas. One of those areas is biofuels. Last year we announced six new research agreements with experts in academic institutions across the world: from the Massachusetts Institute of Technology in the USA to research institutions of the Chinese Academy of Sciences.
In our biofuels strategy, industrial partnerships play a major part as well. We are working with Codexis in the USA on enzyme conversion; and Virent – also in the USA – on the development of biogasoline. We’re also involved in an exciting joint venture called Cellana, working on the conversion of marine algae into biodiesel.
Another very high priority for Shell is addressing the world’s carbon challenge.
Across the globe, from California in the USA to Alberta in Canada to Germany, the UK, and the Netherlands, to Norway, we are working to find solutions to efficiently and effectively sequester CO2 in deep reservoirs and saline aquifers.
We are also busy here in Qatar, where we are working with Qatar Petroleum and Imperial College to find the right techniques for storing CO2 in the reservoirs typical of the Middle East region: fractured, porous, calcium carbonate rock.
As you can see, there’s a lot going on.
To make these and all our other efforts succeed we depend – above all – on having a continuous stream of educated, motivated people. People who demonstrate excellence, who push back the boundaries of what's possible with technology, who are aware of the challenges ahead, and have the urge to do something about them: people who work well in teams and partnerships, who have vision and leadership capabilities.
There are some outstanding examples of vision and leadership here in Qatar. His Highness the Emir maintains a constant focus on building a modern state in Qatar, and on developing and encouraging youth; this, combined with his profound strengths in international relations, have positioned Qatar so strongly for the future. Her Highness Sheikha Moza, internationally recognised for her influence and contribution to social development, as Chair of the Qatar Foundation for Education, Science and Community Development and many other important roles, has been a major driving force for Education City in the Science and Technology Park.
Elsewhere in the world, at our large International Research Centres in the USA, the Netherlands, and – for a few years now – in India, we have thousands of people who focus on innovation, developing new technologies and improving existing ones.
With facilities like our 3D virtual reality systems and real time operating centres, our people are connected across the world to develop new seismic imaging processes, new reservoir simulators, coming up with new ways of drilling wells more safely and cost-effectively, and producing more oil and gas at lower cost.
Technology creates opportunities
Let me now share some examples where technology has a direct impact on our bottom-line performance.
Enhanced oil recovery (EOR) is an important production technology for maximising output. Shell uses three different approaches to EOR: injecting steam, gas or chemicals.
For instance, at the South Belridge field in California we are using steam injection to increase the recovery factor from 10% to – in places – 80%. What this means is that the field has already yielded a billion barrels of oil more than it would have done without EOR. And there is still more to come.
Here in the Region, in the Sultanate of Oman, we’re working with Petroleum Development Oman on chemical injection in the Marmul field. We have just conducted a highly successful trial. We expect to boost production by as much as 10%.
Shell has also pioneered a technology that we call Smart Fields. In the old days, an oil or gas field was developed with simple steel tubes into the reservoir, and the key measurement of pressure, temperature and flow rates in a well was done at three or six month intervals. Today, we have developed a suite of tools and sensors that measure – second by second – what is happening in a reservoir.
An excellent example of Smart Fields lies offshore Brunei, in the Champion West field. Deep beneath the seabed there, sensors with fibre-optic cables relay digital information about temperature, pressure and other field conditions to the control centres on land. The engineers in the centres continuously monitor production, and make quick decisions about how to extract the maximum amount of oil, monitor its movement in the reservoir, and spot production problems – such as blockages – straight away. If they do see one, they can take immediate action – for instance, activating well valves electronically – to sort it out.
Smart Fields integrate digital information technology with the latest drilling, seismic and reservoir monitoring techniques. They deploy the experience of geologists, engineers and others. As well as improving safety, they can help increase the total amount of oil recovered from a field by 10%, and gas recovery by 5%, while also increasing the rate of production.
We’re also pushing the boundaries of deepwater technology. Since 1978, when we installed the world’s tallest fixed platforms Cognac and Bullwinkle in the Gulf of Mexico, we have been utilising and perfecting more innovative technologies to break the water depth barrier. Before that, we were already developing the technologies that would pave the way.
For instance, we used our first remotely operated vehicle in 1962, with a television camera. We also were first to use a semi-submersible drilling system, and we developed the first subsea drilling completion system; we had the first all-weather column stabilised floating drilling rig, and had developed an automatic dynamically positioned deep-water drilling vessel by 1962.
Since our entry into deep-water development, we have continued to achieve firsts, including the first commercial application of multiphase boosters in the Draugen Field off Norway in 1993; this is one of the factors that has enabled us to lead the industry in increasing the step-out distance from host platform to nearby satellite developments. We also set a record for water depth offshore in 1997, at 984 metres, at Ram Powell in the USA.
The deep-water environment is unforgiving, the challenges are immense, and the deeper you go, the more difficult it gets. For instance, very low temperatures on the seabed make oil congeal and gas forms hydrates. Work has to be done using remotely operated vehicles and robotics, because the pressures at these great depths would crush divers, even in heavy diving suits. Waves and currents cause vibrations that put equipment under extreme stress.
So at the Gumusut-Kakap deepwater field, 120 kilometres offshore Malaysia, where production will be in 1,200 metre water depth, we are using Smart Fields technology.
Na Kika, in the Gulf of Mexico, is the deepest subsea cluster in the world. It originally consisted of five independent oil and gas fields, with water depths ranging from 1,770 metres to 2,360 metres. Shell led the completion of the Na Kika field as a cluster of subsea developments tied back to a centrally located, permanently moored floating host facility. This facility is designed to process oil and gas from ten satellite subsea wells.
Perdido, also in the Gulf of Mexico, is the world’s deepest spar, at 2,400 metres. Key technologies in this development include hydrocarbon storage tanks for flow assurance, full-host scale subsea separating and boosting, and the first ever application of wet-tree direct vertical access wells from a spar.
Sulphur contamination, which makes gas sour, can be seen as a problem. For us, it’s an opportunity. In fact, Shell is one of the world’s largest producers and marketers of sulphur, and the only international oil company actively involved with the whole value chain: we recover high volumes of sulphur in oil and gas production and refining; we supply and safely transport elemental sulphur; and we develop, produce and market innovative, sulphur-enhanced products such as fertilisers, road surfacing and building agents.
Let me touch now on technologies that help resource holders to monetise their natural assets more effectively – I’m thinking here particularly of Qatar, with its massive gas resources. These include GTL, which I’ve talked about. Also relevant in this context is floating LNG – a way of producing LNG at source, without the need to pipe the natural gas to shore for liquefaction; this again increases safety and efficiency, depending on the specific environment.
One more technology initiative that I would like to mention at Pearl GTL is called SIMOPS – simultaneous operations. It’s a great example of Shell’s Drilling the Limit approach. SIMOPS reduces the overall time spent per well to that needed for drilling and completion; because all the other activities – perforation, stimulation and clean up – are carried out offline, while we’re drilling the next wells.
By this and other means, we’ve exceeded what was previously top quartile performance – 57 days to drill a well – to just 45 days for the whole process of completion. The project is saving $170M in the process.
Innovative drilling isn’t just about saving money. It’s about environmental performance as well. For example, in Pinedale, in the USA, we have reduced both environmental impact and development costs by increasing the spacing between wells. This also reduces any risks of drilling through depleted zones, and helps to avoid fill-in well placement problems. You can see by simply looking at it how reduced the environmental footprint is compared with more traditional layouts.
Managing our environmental and social footprint is a very high priority for Shell.
As evidence of that, Shell’s sponsorship of the first-ever Chair in Sustainable Development here in Qatar University is part of our contribution to encouraging more people to understand, research and specialise in this vital area.
Qatar University is showing true vision, in its turn, by making sustainable development a core course, involving students and faculty from across the spectrum of the university. This reflects the importance of, and genuine commitment to, embedding sustainable development in the academic curriculum.
We look forward to the fruits of work by the Chair’s first incumbent, Professor Paul Sillitoe, to clarify the issues surrounding sustainable development in Qatar and the Gulf Region, through teaching, research, workshops and other forums at the university.
The energy challenge affects all the people on the planet. And it is creating abundant opportunities for people with an interest and skills in technology to do something about it.
In the coming years, we will need more innovations like the ones I’ve spoken of because we are indeed on the brink of a new energy future. People, technology and innovation are the keys to realising that future responsibly.
I hope I’ve given you a sense of the exciting opportunities there are for you to realise your potential, in helping to meet the global energy challenge.
International energy companies like Shell have an important role to play as well. We're in this game for the long haul, in value –
creating partnerships – here in Qatar and around the world. We look forward to continued development of our partnerships here – with Qatar’s institutions, businesses, and you as individuals.
After all my years in this industry, I am as excited as I was on my first day, by its technology developments, and the potential it holds for yet more innovation to make a greater positive contribution to the planet and its people – being part of the solution, not part of the problem.