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What is the energy challenge?
"The energy challenge" is a much-used term but what does it really mean for Shell in Australia and our stakeholders, and how are we responding to it?
Global demand for energy has grown ten-fold over the past 100 years and is expected to more than double again by 2050. The supply of "easy oil" cannot keep up with this accelerating demand. Conventional sources of oil and gas in mature basins that are easy to extract are going into decline. Accessing more difficult and unconventional sources of oil and gas comes with technological challenges and higher costs.
Using more energy also means more CO2 emitted at a time when climate change is a critical global issue. In Australia, a country familiar with weather extremes, including drought, we are painfully aware of the threat posed by climate change.
This is the energy challenge presented to us. |
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Tackling the Energy Challenge
Seeking more energy
Diversifying our supply options
Securing energy responsibly
Energy interdependency
Exploring regionally
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Our response is to apply our technical and innovative skills, tempered by our awareness of environmental and social factors, to provide more energy in a safe, environmentally and socially responsible way, while lowering the CO2 emissions that contribute to climate change.
One of the ways we are tackling the question of climate change is by coordinating our approach to CO2 management across all our businesses through a Climate Change Working Group, formed in 2006. The group draws on Shell's experience in many countries. We share best practice with our international colleagues in order to manage our greenhouse gas emissions in Australia in a responsible way as our business grows. We also take into account the expected future cost of emitting CO2 and other greenhouse gases and factor this in whenever we are considering major investments. |
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"We need to tackle the energy challenge now if we are to turn around damaging trends in climate change," said David Hone, an Australian chemical engineer from Adelaide who is currently Shell International's Group Climate Change Advisor based in London. David was speaking at a series of seminars and presentations to Shell staff and stakeholders around Australia. |
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Shell's upstream business in Australia has a strong focus on natural gas, which is the lowest carbon form of fossil fuel, and can be converted efficiently into energy. Where natural gas is used for power generation in place of higher carbon intensive fuels, such as coal, it can help reduce overall greenhouse gas emissions per unit of energy produced. Shell is already the world's largest producer of liquefied natural gas (LNG) with strong growth prospects. Projects in various stages of development in Australia are expected to make a major contribution to this growth and to improving the CO2 profile of countries into which Australian LNG is marketed. There is a plentiful supply of natural gas off the north-west coast of Australia but each project takes several years and substantial investment before the supply can be tapped. The Woodside-operated North West Shelf project (one sixth owned by Shell) has been producing LNG in Australia since 1989. Shell is now engaged in exploring and developing more gas fields in the area. Strong growth in LNG demand has prompted us to take up new offshore acreage with permits in the Carnarvon, Browse and Exmouth Basins. A particularly exciting development is the Gorgon gas project in the Carnarvon Basin, which is Australia's largest known undeveloped gas resource. |
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For decades to come most of our energy will continue to derive from fossil fuels that are contributing to climate change. We are conscious of the need to maintain a diverse number of supply options for the future. Although fossil fuels will still be providing nearly 80% of primary energy in 2030 according to the International Energy Agency, it is essential to pursue alternative forms of energy in order to guarantee supply. Overseas, Shell is investigating alternative forms of energy such as wind, solar, hydrogen power and biofuels. Shell in Australia is following these developments with interest and will benefit from our overseas experience when the technology is ripe for possible introduction here. |
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Globally, Shell has made a commitment to reduce greenhouse gas emissions from Shell operations by 2010 to levels at least 5% lower than in 1990. In Australia, energy-efficient initiatives at our downstream operations and the inclusion of CO2 capture and storage (CCS) technologies into upstream activities are major parts of our response. We are, of course, bound to comply with government legislation on energy policy such as the Federal Government's energy efficiency opportunities programme that requires energy audits to be conducted and publicly reported. Our refineries at Geelong and Clyde are currently participating in the State and Federal Governments' programmes, which call for energy assessments by all companies which use more than a defined threshold of energy. However, we go a step further by taking on voluntary initiatives such as the Greenhouse Challenge Plus that involves public reporting of CO2 emissions. While energy production is the core business of our refineries, considerable amounts of energy are also used during the refining process. To minimise our use of energy and its environmental impact, we have implemented significant improvements such as emission reductions, better water management, expanded air monitoring and changed operator behaviours. By following programmes such as the 2003-2006 Environment Protection Authority Victoria's (EPA) Greenhouse Industry Program, our Geelong Refinery delivered reductions of approximately 55,000 tonnes of CO2-equivalent emissions. Current assessments continue to identify opportunities for further reductions through activities such as optimising units and furnaces, managing steam leaks and enhancement of energy monitoring techniques. |
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 Countries are interdependent in their energy needs. Australia, for example, now imports most of its crude oil requirements while continuing to export large quantities of LNG, obtained from the north-west coast of Australia, to Japan, Korea and China. In fact, LNG has changed the energy profile of Japan and Korea to which the NWS project supplies a third of their total natural gas needs. The energy interdependency requires cooperation with our Shell colleagues around the world and with our neighbouring countries within the Asia Pacific Region. |
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I moved to Perth in November 2006 with part of Shell's Regional Exploration Leadership Team in response to the rapid growth in exploration in Australia.
My Australian team of about 50 people comprises geoscientists and a regional portfolio management group. It is a very creative mixture of Australians and a variety of specialists from other parts of the world contributing their knowledge and experience. We are all playing a part in helping to meet the energy challenge by increasing our investment in this region to find and develop the remote and difficult-to-access natural gas that we know exists off the north-west coast. This is a great time to be an explorer and even more so in this very enjoyable part of the world.
Wouter Hoogeveen Vice President Exploration - Asia Pacific |
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