Outlook 2008, Petroleum Technology Quarterly

By 2050, the world could be using double, or higher, the amount of energy we use today. The main reasons for this surge are population growth and fast economic development in Asia.

Traditional sources of energy, such as fossil fuels, are becoming harder to reach and more expensive to harness. We cannot rely on “easy oil” supplies to meet that demand. By easy oil, we mean oil and gas that are relatively easy to extract. Many of the world’s future resources are located in the Arctic or offshore in deep water. And much of it is in the form of oil shale and oil sands – so-called “unconventional” oil. All of these require special techniques to develop.

Further compounding the complexity of the supply problem is the reality of carbon dioxide and climate change. Unless we take rapid action, the concentration of carbon dioxide and other greenhouse gases in the atmosphere could surpass the levels that the scientists consider to be still manageable.

To meet these challenges, the world needs to create new energy options and keep the existing ones open. This requires innovation and investment. Shell has been at the forefront of many new technologies and applications:

• In Canada, the organisation uses enhanced oil recovery techniques on bitumen at the Peace River complex that cannot be extracted using conventional oil production technology. And the nearby Scotford upgrader uses a hydrogen-addition process to convert high-viscosity, extra-heavy bitumen from the Muskeg River mine into a wide range of synthetic crude oils.
• Shell is one of several organisations to have developed low-temperature Fischer–Tropsch gas-to-liquids (GTL) technology for producing synthetic fuels. Since 1993, the organisation has operated a medium-scale GTL plant at Bintulu, Malaysia, that has a current capacity of 14,700 bbl/day. With a decade of operating experience from the Bintulu plant, Shell technologists have the confidence to scale up to the 140,000-bbl/day GTL plant planned to be operational in Qatar towards the end of the decade.
• Coal gasification is also important, as countries look at more-efficient and cleaner ways of converting coal into energy. Shell’s coal gasification technology has been proven in three pilot plants in the Netherlands, Germany and the USA, and in the full-scale Buggenum plant (2,000-tonnes/day coal capacity) in the Netherlands. The Buggenum plant uses synthesis gas from the coal gasification process in a combined-cycle plant to generate electricity.

But the energy challenge is not just a question of supply and demand. It is also about minimising our environmental footprint and cutting carbon dioxide emissions from the use of energy. Biofuels offer the potential to slow the rate of growth in the world’s carbon dioxide production.

When used in vehicle engines, biofuels and fossil fuels emit about the same amount of carbon dioxide. The difference is, however, that the organic raw material used to produce biofuels has absorbed the same amount of carbon dioxide from the air through photosynthesis during growth. In theory, this leaves a neutral carbon dioxide balance.

First-generation biofuels, made from food crops, offer some carbon dioxide benefits and can help to improve domestic energy security. But limitations exist concerning the sourcing of feedstocks, including the impact on biodiversity and land use and competition with the food supply industry.

Shell is looking beyond first-generation biofuels and investing in the development of a commercial second-generation business. Second-generation biofuels are made from non-food feedstocks such as waste from agriculture or forestry. However, we estimate that such fuels will not be available in significant commercial quantities in the immediate future. They promise to reduce well-to-wheel carbon dioxide emissions dramatically and to avoid the dilemma of having to choose between food and fuel, but there are still commercial and technical hurdles to be overcome.

Shell is working with other companies to develop innovative technology. The organisation is working with Canadian company Iogen to develop ethanol from lignocellulose (in this case straw) through an enzymatic process. The collaboration began in 2002, and the world’s first commercial demonstration plant opened in Ottawa in 2004. Iogen and its collaborators are now assessing the design and feasibility of a full-scale commercial plant.

In another alliance, Shell is working with German company CHOREN Industries to develop a high-performance synthetic fuel from lignocellulose (wood residue in this case), through a combination of gasification and the Fischer–Tropsch process. The enterprise began in 2005, and the world’s first commercial demonstration plant is planned for opening in Freiberg in 2008.

Other sources of alternative energy, such as advanced solar technology, wind and hydrogen, will be important as part of the long-term response to climate change and concerns about energy security. However, renewables, in common with other new technologies, take time to mature. A transition from a high- to a low-carbon world is possible and necessary, but it will not happen overnight. The pace of change in the global energy system is constrained by the sheer scale and complexity of the energy system we have built, and hydrocarbons will continue to dominate the energy mix for many decades to come.

In the meantime, we should work to improve energy efficiency in the industrial, transport and residential sectors. Shell is committed to reducing the carbon footprint of its refineries and of those that it provides consultation to. The Shell Global Solutions carbon and energy management programme is designed to help improve energy efficiency in large, energy-intensive operations. The programme is a combination of structured management processes and monitoring tools linked to real-time plant data systems. It aims to continuously reduce energy costs, bottlenecks and emission levels.

Society as a whole, not individual companies or industries, must be willing to invest in the development of alternative energy. Governments can create frameworks that support the development of new energy technologies by connecting government specialists with scientists and industry specialists through financial incentives or by mandates. In particular, governments should throw their collective weight behind technologies that will only mature with government support. 

Take carbon capture and storage (CCS), for example. CCS places additional capital costs on investments that cannot be earned back through revenues; it is driven entirely by climate change considerations. CCS technologies will only take off if governments put a price on carbon and give direct support to pilot and demonstration projects.

Meeting the energy challenge will have to be a collective effort involving politicians, scientists, industries and consumers. Together, we form a global society – and that global society will shape future technology and select the appropriate solutions.