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The high road to innovation and technology

Speech given by Matthias Bichsel, Projects & Technology Director, Royal Dutch Shell plc, at the Innovation Summit in the Shell Technology Center, Houston on January 9, 2013.
Matthias Bichsel

Coinciding with the official opening of Shell Technology Center Houston, the Innovation Summit brings together Shell customers and partners, industry observers, academics and environmentalists so that they can see how collaboration leads to innovation. Such innovation fosters the cleaner, safer and more efficient technology that tomorrow’s energy systems need. To this end, Shell scientists and engineers who work to improve the ways crude oil and natural gas are found and produced are integrating their research with that of Shell colleagues who work to improve the subsequent refining and chemical processes. Partnerships with companies outside Shell – indeed, outside the oil and gas industry – also have a crucial role to play.

The high road to innovation and technology

Good morning, everyone. Welcome to Shell Technology Center Houston.

We’ve invited you here to celebrate the start of a new era in Shell's research and development activities in North America.

This rejuvenated Center brings together in one place, for the first time in the US, the technological power of Shell's science and engineering along the entirety of its integrated value chain – from finding and producing crude oil and natural gas to processing them into refined products for consumers.

It’s the largest of three Shell technology hubs – the other two are in Amsterdam in the Netherlands, and in Bangalore, India.

These three hubs link to a network of other technology centres around the world which are, in turn, linked to Shell’s global businesses as well as their customers and partners. Together, they nurture the skills, know-how and creativity that aim to make Shell the most competitive and innovative energy company in the world.

The global context

Why do we need competitive energy innovation? Simple: to deliver more affordable energy with less environmental stress.

The UN says that, by 2050, the world will be home to more than 9 billion people, 2 billion more than today. And those people will, on average, be enjoying a better quality of life – including greater mobility, and better access to modern electricity.

These combined trends ultimately mean increased energy use. By mid century the world will need at least twice as much energy as it did in 2000.

Such growth has the potential to increase existing stresses on the environment. And it gets more complicated, because there are fundamental interconnections between energy resources, water resources and food resources that constrain their development.

A challenging prospect! But we at Shell believe that the challenges ahead can be met:

  • through energy conservation and efficiency, making the most of traditional resources;
  • through more diverse energy sources, adding new ones to the traditional ones; and
  • through cleaner and safer energy – with cleaner, safer products and services.

The regional context

Here in the continental US, a buried treasure has been unlocked in the form of oil and gas that was previously trapped in shale and other “tight” rock formations.

These new resources offer a once-in-a-generation opportunity for development. The availability of lower-cost energy can support economic growth, job creation and even help safeguard national security.

Take the Haynesville shale gas field in Louisiana, for instance. The State of Louisiana estimates that it accounts for almost $4 billion in new household earnings for state residents. It has generated more than 30,000 new jobs in the state; and more than $150 million in increased state and local tax revenues.

Of course, every opportunity has risks associated with it; success is about managing those risks properly.

One example of how you can do that is Shell's operating principles for tight and shale oil and gas. We published these in 2011, for application across our global operations. The five principles cover safety, water, air, footprint and community. They provide a robust framework for projects to operate safely and responsibly.

There are other energy-related issues as well. More discussions are needed to address these. Take growing urbanisation as one: Where will the energy come from to move people within cities? To keep them cool during the summer and warm during the winter?

This is not just a concern for developing countries like China and India. It’s also a major issue here in the US – Houston alone added over 1 million people to its population in the last decade.

Technology

In these and many other areas of concern, technology is a driving force for solutions – enabling the US, for example, to seize the newfound opportunity for lower energy costs and less CO2 emissions.

Technology helps balance the risks involved in developing unconventional gas fields, through solutions to make drilling safer; to frack wells using less water; to reduce air emissions from drilling-rig machinery; and to lessen the amount of truck traffic.

Shell addresses challenges like these by focusing human ingenuity and technological capability where they are needed – and we have plenty of both. We’re the only international oil company in MIT Technology Review’s list of the world’s most innovative companies.

We spend over a billion dollars a year on researching and developing new technologies – more than any of our peers.

We have 11 dedicated Chief Scientists. All of them are internationally recognised experts in areas of vital scientific and engineering importance to our businesses. Six of the 11 are based here, at Shell Technology Center Houston.

And, of course, we now have the Center itself. It will focus on advancing technologies for developing unconventional hydrocarbon resources, such as shale gas, shale oil and heavy oil. It will build on the major contributions Shell has already made to developing oil and gas fields in deep water – and also in Arctic locations, where sub‑zero temperatures and ice-covered seas add another layer of complications. These important contributions will continue.

The Center will also concentrate on the engineering of oil and chemical processing facilities; on developing new, even better fuels and lubricants – not just for the automotive sector but also for aviation; on energy-related biotechnology; and on catalysts for use across all of Shell's chemical processing, whether in a gas plant or in an oil refinery.

Collaboration

Shell Technology Center Houston provides much more than just new and refurbished buildings to accommodate scientists and engineers who used to work at Westhollow and Bellaire. It also provides an environment in which those scientists and engineers can collaborate, or 'cross pollinate' – sharing ideas and expertise.

This kind of collaboration is crucial to meeting the energy challenge in the US and worldwide. But it doesn’t stop at the doors of Shell. We know one company alone cannot provide all the energy solutions the world needs as quickly as the world needs them.

That's why our scientists and engineers engage with the best and brightest minds in academia, in our own industry, and in industries that traditionally have had little to do with oil and gas.

And that's why we're holding this Innovation Summit. We wanted to bring together our customers, partners, environmentalists and industry observers to exchange ideas and share capabilities. And it gives us a chance to share our passion for creating game-changing energy solutions.

During the Summit, you will hear or see some highlights of our successful partnerships with innovative companies, such as Cisco, Intel and IBM – to name just a few.

You will also see modular gas-liquefaction plants that can be quickly built inland, near major trucking routes – helping to realise the potential of natural gas as a transport fuel. And there are sophisticated treatment schemes for tailings – the waste water from oil sands – to speed up land reclamation and minimise freshwater use; there are processes to capture CO2 and store it permanently underground; and much more.

If you’re a scientist or engineer, then this is a very exciting place to be!

The local context

Shell expects this Center to continue its track record of 'firsts' and 'bests' in technology, both upstream and downstream of refineries and gas-processing plants.

Many of those historical milestones originated in Bellaire and Westhollow. Open virtually any textbook on petroleum geology, petrophysics, oil refining or catalytic chemistry and you will come across the names of people who worked either at one or the other location.

Today, Shell Technology Center Houston stands as a modernised and expanded facility that combines the best of Bellaire and Westhollow, with improved energy efficiency and reduced environmental impact – including a 30% reduction in CO2 emissions.

With the formal opening of the Center, Shell is very excited to have reached another milestone.

Thank you for joining us to celebrate it as we embark together into the next era of our innovation journey.