Title: Three ways to thrive through the digital and energy transitions
Duration: 34:58 minutes
Description:
The AI Summit is the world’s first and largest conference and exhibition to look at the practical implications of AI for enterprise organisations that are set to transform business productivity. Tim Ensor of Cambridge Consultants introduces and leads discussion with Yuri Sebregts of Shell in unearthing how AI is transforming Shell’s business.
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Interview with Tim Ensor
[Title]
Director of Artificial Intelligence, Cambridge Consultants
[Tim Ensor]
Okay, welcome back. I hope you had a good time over the lunch break.
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Tim Ensor Director of Artificial Intelligence, Cambridge Consultants
The Virtual AI Summit London
[Tim Ensor]
I hope you managed to spend the opportunity with some of our great exhibitors at the event today and, hopefully, make use of the valuable networking time. For this next session, we’re going to start thinking about not just one but two mega-transformations which are affecting us. Firstly, the digital transformation, which we’ve been speaking about already today. But added into that, we’re also going to talk about the energy transformation.
And I’m joined by Yuri Sebregts from Shell. Now, Yuri is the EVP for Technology, and he’s also the CTO for Shell. And that means he oversees the global technology organisation, spanning technology and science and commercialisation, spanning everything from technology strategy to R&D and the commercialisation of that technology. And Yuri’s been with Shell a pretty long time, so he’s seen all of these transformations first-hand. Welcome, Yuri, it’s great to have you here.
Interview with Yuri Sebregts
[Title]
Chief Technology Officer, Shell
[Yuri Sebregts]
Thank you for having me, Tim.
[Tim Ensor]
So, Yuri, I guess, as common with many of us over this slightly strange period, I guess we’ve all been spending time on vacation over the summer. I guess you, as with many of us, have spent some time at home. Because we’re in a slightly strange time, we can’t really jump straight into digitalisation and energy transformation without reflecting on the fact that, I think, the world has changed. Clearly, the COVID pandemic is impacting us all in many, many ways.
So maybe we should start there. Tell us a little bit about how the last six months have been for Shell, both, clearly, in the midst of a health crisis, but, clearly, as an oil and gas company, record-low energy demands. So how has the last six months been for you and your team and your organisation at Shell?
[Yuri Sebregts]
Yes, I think it’s right to start there, indeed, Tim.
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Yuri Sebregts Chief Technology Officer, Shell
The Virtual AI Summit London
[Yuri Sebregts]
Of course, COVID is changing everything beyond what anybody of us had expected. I think this is the biggest change that most of us will experience in their entire lifetime. Indeed, for myself, I haven’t travelled for six months. Now, that is very unusual for me. Normally, in my working life, I was on the road pretty much all the time, meeting people from all around the world, learning new things and looking at how we might apply that in the business. And now everything has changed, and I’ve been working from home for the last six months, like most of my colleagues.
Let’s first recognise this is a humanitarian crisis, yes. We can talk about the economic company on our companies, and, of course, that is very significant. But this starts with being a humanitarian crisis. At the moment that we are having this recorded conversation, already more than 700,000 people in the world have died because of COVID-19. That is just a mindbogglingly large and traumatic, tragic situation. And millions and millions more are at risk of losing their livelihoods. So this is a really big deal. Of course, this is affecting, for us as a company, our customers, our employees, their families, and that’s front of mind.
So the first thing that we found in these past six months is the way we can best help everybody come through this crisis. And that’s making sure we can continue to deliver our products to our customers, because our products, energy products, are pretty much essential to keep everybody’s life going. So making sure that we continue to provide the fuels for emergency vehicles, for delivery trucks, continue to supply the natural gas for people to heat their homes, continue to supply the electricity to keep the lights on, but, also, supply things like chemical feedstock for hand sanitiser. We’re a very large supplier of isopropyl alcohol. And that demand actually surged, as you might expect. Also, continue to supply the lubricants to keep wind turbines turning, and many other products that we supply. So continuity of operations has been an important focus for us.
Then there’s been different and unusual ways in which we’ve made our contribution to fighting the virus and its impacts, for instance, some of our 3D printing capability, to quickly ramp up, together with others, making visors for emergency personnel in the NHS. In the Netherlands, we’ve worked together with the University of Delft and others to quickly build many hundreds of breathing protection apparatus for ICU personnel. Things that, of course, normally, we don’t get involved in, but we have capabilities that we can deploy, and so we do that.
And then an important topic has been how we keep everybody working safely from home as much as possible. So we quickly ramped up our IT capability so that now we typically have 80,000 employees working from home every day. Where, normally, they would come to offices or to our plants, we only have people coming to the worksite if it’s strictly required, if they’re operating a physical asset or they’re doing laboratory experiments that they can’t do at home, or things like that.
That’s not only typical desk work that we do from home. We’ve also ramped up robots and remote dispatching techniques, enhanced reality cameras on helmets, all kinds of things, to help people continue to do their work from their kitchen table or home office or bedroom or wherever they’re working right now and continue our operation. So a big impact.
And then, of course, as you mentioned, with such an unprecedented slowdown in the economy, we’re also seeing slowdown in the demand for energy products. So we’ve had to adapt our financials, reduce our expenditure, to make sure that we remain economically viable and cash-positive.
[Tim Ensor]
Well, yes, that’s a huge sweep of changes which you and your team are experiencing across both economic and technological and, as you mentioned, humanitarian impacts. So a lot of stuff going on. I guess with an organisation the size of Shell, and with the reach that you have, that’s not surprising you’ve had so many things to deal with.
I guess, listening to a few of the things you mentioned there, it’s pretty clear that digitalisation is a big part of what you’re doing, enabling your team to work from home, helmet cams, all those technologies you mentioned. And, clearly, those are helping in the midst of this COVID pandemic. But at the same time, we’re pretty clear that the climate crisis has not gone away, so the energy transition is still as real as it ever was, or as needed as it ever was, let’s say.
What’s your view? How does digitalisation fit with that? We talked about these two megatrends when we started. So what is the role, then, of digitalisation in the energy transition that you’re seeing?
[Yuri Sebregts]
Yes, clearly, energy transition remains front of mind for us even through a crisis like COVID-19. Once COVID-19 is behind us, the urgent need to completely transform our energy system in the world is still there, of course. It’s probably the challenge for all of us, in our lifetime, to transition the energy system, which is both very, very important to avert catastrophic climate change. It’s also very, very difficult. It is more complex than most people realise.
I mean, everyday energy use in a consumer’s life, we kind of understand the technologies. We’ll all transition to electric mobility at the right time, and many of us have done that already. We can understand how the energy consumption in and around the home is going to have to change. For many people, that’s a bit more challenging than maybe their transport needs, because they have to change the home, and you may have to change your way of life to do that.
But then beyond that, there’s big challenges like how do you change the way our industry runs? Big industrial processes have been designed over many decades, in some cases, more than a hundred years, to run on consuming vast amounts of energy through the burning of fuels in industrial furnaces. And it’s not that easy to change all of that. So a big task there that we are deeply involved in. As a company, we embrace that challenge. We believe we can be an important part of the solution, and we’ve set ourselves the ambition to be a net zero-emission energy company by 2050 or so much earlier as is possible.
Digitalisation as a megatrend is going to be able to help that. It’s probably not going to be the whole solution. The whole solution will also require hard engineering changes and changes that have more to do with physics and chemistry. But digitalisation can certainly help. And I think digitalisation impacts energy transition, possibly the other way around as well. Digitalisation, of course, through energy consumption in server parks and what have you is integrally interwoven with the energy systems.
So these things reinforce and impact each other. But we see them as things that go hand-in-hand. And some of the approaches that we apply to energy transition and how we go about that apply to digitalisation as well, like working together with others, which is indispensable and critical to make progress with both.
[Tim Ensor]
Yes, fantastic. I mean, it is. I don’t think you can understate the impact of climate change. And, clearly, you’ve laid that out amazingly well. In terms of how Shell is approaching that for the piece of the problem which we can see digitalisation contribute to, I think for this conference we should be thinking about that as a topic. And, clearly, there’ll be plenty of thoughts around the physics and the chemistry side of how we can help.
But for the digitalisation piece on its own, that’s a big enough challenge for us to try and get our arms around. What do you see as the key contributors there? How are you approaching that? What are the elements of your approach to digitalisation to make sure you can use that to your advantage through the energy transition?
[Yuri Sebregts]
Well, there’s three broad aspects that I make the core of how I approach it systematically. I could go into specific technical details, but that’s probably not particularly helpful. But at the overarching level, there’s three approaches that I find very, very important. First is, and I just mentioned that already, collaborating with others. Both these transformations are so big that a single company cannot do it all alone and do it itself. Energy transition and digitalisation are things that you do together with others. So you have to make sure that you are able to work together with others very well and that you’re set up to do that.
A second core aspect is building your in-house capability. Just taking other people’s solutions and deploying them towards your customers, if that’s all that you do, you’re not really making a contribution. So you have to have your own in-house capability that adds to what others are also enabling so that you create combined offers for customers that make their life better and help them make these transitions.
And the third one, and that’s probably the most important one, is giving our customers choice. Not deciding what’s good for the customer but instead giving them options. I have a fundamental belief that energy transition and digitalisation as well are going to be primarily shaped by the choices that customers make. And that will evolve, certainly when you talk about transitions at scale, how things will turn out. So we find it important that we think about, okay, rather than give the customer a single direction on what they should be buying from us, give them options and see which ones they’d like. And then build those out further. So those are three fundamental thrusts on which we shape our approach.
[Tim Ensor]
Excellent. That makes a lot of sense. I think certainly the first two are very dear to my heart, collaborating with others. So as an innovation organisation, that’s what we do all the time. And the idea of building internal capability is something which I’m also keen to explore during this whole conference today. How do organisations start developing their own original innovation in AI? And, clearly, that relies on them having internal capability.
The third one, about customer choice, that is really interesting. So I’m looking forward to hearing a bit more about that. But why don’t we take each in turn? So the collaboration point, I’d love to hear some examples, some of the things you’re doing. Let’s see if we can expand that a little bit and make it more tangible. What are you currently doing? What projects are most exciting you at the moment that you’re collaborating with others on?
[Yuri Sebregts]
Oh, there are so many exciting ones, I can’t give you a definite list, but I can give a couple of examples just from the last couple of months. So we work a lot with universities and research institutes and have done that for many decades.
Just in 2019, we launched more than 200 joint research collaborations with universities around the world, in a whole suite of topics. But one that’s at the intersection of energy transition and digitalisation, for instance, is some work that we started with scientists at the University of Leiden and the Free University of Amsterdam in how in future quantum computing could be used for the modelling of chemical reactions. You’d have to come up with different approaches and whole new algorithms to do that. Modelling chemical reactions is something that we’ve done for a long time in the industry and in academia, and computer power is going up all the time, so you can come up with more sophisticated approaches. But quantum computing, once it’s there, will completely change the game.
So we want to be on the front foot. Being a company that does a lot of chemical conversions, it’s part of the essence of what we do, and how will quantum computing help us do that better, which is important in terms of reduced energy consumption, better yields and things like that. And it may allow us to come up with ways of driving chemical conversions that are fundamentally more sustainable. For instance, photocatalysis, directly capturing the energy from solar energy hitting the earth’s surface to drive chemical conversions, rather than thermo-catalytic reactions, which is today’s normal way of doing things. But, of course, that brings a lot of carbon emissions with it. So that’s quite leading, advanced research. That topic is too big for us to do as a company, but we can make important contributions, so we do that together with academia. That’s one example. I find it very exciting.
Another one, much more near-term, is we’ve just embarked on a deep collaboration with Kongsberg to deploy digital twin technology in our operations. Digital twins, I guess most people on this conference are aware of digital twin technology and why it’s important. But they’re a combination of modelling capability in a digital twin to model based on physics and chemistry, but also statistics, on how equipment operates and behaves under different conditions, storing the history of a piece of equipment in a digital twin, all the original design information, but also the operating regimes that a piece of equipment has gone through during its operating life, and then visualisation techniques. And it's easier for humans to understand how an installation works if you can see it, even if it’s virtual, rather than look at engineering calculations and try and imagine how the equipment will operate under some conditions.
So bringing that digital twin technology to our operations is something that we are deeply involved in ourselves, through our engineers and our operating staff, etcetera. But working together with Kongsberg, who’s really specialised in this, allows us to go much faster. And so it’s a typical collaboration. It’s an example in the here and now on how we deploy digital technologies. Which, again, has an impact on the energy transition, maybe not as fundamental as something like quantum computing for bringing photocatalysis about. But if you can operate your facilities more reliably, more safely, with less emissions, lower energy consumption, by using digital twins, that already has an immediate impact on lowering carbon emissions. So two examples for you there of working together with others.
[Tim Ensor]
Yes, fantastic examples. And I think I really love both of those topic areas. We’re talking about AI, artificial intelligence, for this conference, and I think the digital twin area, I think, is really exciting, not only for the reasons that you’ve mentioned, but as we see in many, many applications, where AI is trying to be brought to bear to drive forward productivity and efficiency, enabling more services, more often than not, the original training data is a challenge for many of those applications.
And so the whole digital twin area I see as very closely linked to simulation. And once you’re building up those models, those digital models and simulations at your facilities, that not only allows you to operate them in the moment, but also starts building a really rich set of training data that you could start automating your future ways of running those facilities. So that’s an exciting programme, and I can certainly imagine that having extra value for you in the future.
Let’s move on maybe to the next topic. So you talked about improving your internal capability. You have a pretty large technology organisation and team. Let’s dig into that a little bit more. Tell us a bit about how you’re going about building your internal capability at Shell.
[Yuri Sebregts]
Yes, we build on a lot of history, of course. We’ve been around as a company for quite a while. And mathematics, computation, has been core to what we do from as long as we operate. But, of course, it’s evolved a lot.
I guess a big breakthrough in scaling up the use of computational methods in our company was when we led the advance in interpretation of seismic data from the 1960s onwards. It clearly didn’t have the compute power and capability underlying it, and so people had to be very, very smart in how they used what little computational power there was to extract the maximum information out of seismic signals coming back from the subsurface. But that has built a lot of depth in mathematics, in computational science, that we’ve continued to build on as a company as opportunities kept growing. That’s extended in the 1980s and 90s to building really elite capability in complex fluid flow dynamics.
That again has taken on a bigger and bigger role in designing better processes and equipment as computational power increased, and the ability to handle large volumes of data, starting to combine data science, let’s call it statistics, with physical sciences, physics, calculations and engineering, basically, and have combined approaches, I guess. People will call it grey-box models now, it wasn’t always called like that, but bringing these things together, and the last ten years, more and more using compute-based simulation for chemical processes. I already touched on chemical processes. But chemistry used to be more of a trial-and-error, try-it-out-in-a-lab-and-see-what-happens kind of science, but it’s becoming more and more a computational science as the capabilities to compute through large volumes of interactions continue.
So we build on all that capability. About eight years ago, we created a mathematics, computational and data science skill group, specifically. At the core of that currently are about 350 of our most leading scientists in that area. We realised that this field is evolving fast, and therefore is not best served with a very rigid curriculum. So our approach is to keep that, to see where the field is going, to connect these 350 people a lot with the external environment, with the academic ecosystem, with other companies, see where developments are and make sure we stay abreast with that.
For the larger groups of people, we use a variety of learning programmes where we work with others, as you would expect, Udacity, Microsoft, LinkedIn Learning, a lot of demand-driven learning, so not necessarily pushing curriculums on people, but arouse their interest and then pulling on these programmes. And, also, very much a datacentric approach where good access to data also allows us to understand how the field is developing and how we stay abreast with that.
[Tim Ensor]
Very good. So a strong emphasis on data, the data that you have, I guess. Because, certainly, in your upstream operations, that must be generating vast quantities of data. It’s a pretty well-known application for the volume of data it’s producing. But then a strong focus on education and keeping abreast of the field. I think those are two really strong elements I can see, from what you’ve just said.
So thank you, Yuri. That was a great summary of thinking about building internal capability. I’m really intrigued, though, by the last point that you made, that one about giving customers choice. Tell us a bit more about that. How does that fit with digitalisation and dealing with the energy transition?
[Yuri Sebregts]
Sure, happy to. And my first remark is that it is going to be maybe the last point but it is probably the most important. So, in a way, it’s the first point. As a company, we exist because we can offer solutions to customers that they want and need, right? That’s essentially what we do in society. And we’ve been around as a company for a while, so we’ve done that for over a hundred years.
We’ve got more than a million business customers and more than 100 million consumer customers. And their choices are front of mind for us. That, I believe, is going to be essential for a successful energy transition as well. The choices that customers make are going to shape how the energy transition unfolds. Digital technology can help us offer those choices to customers. It’s probably best explored through some examples.
So maybe the first example that I touch upon is customer loyalty, and, specifically, in the UK, the Go+ customer loyalty scheme that we launched last year. Go+ is a system that customers can choose to join. It’s got a reward engine behind it that monitors the customers’ transactions with us, the energy products that they buy, but, also, the non-energy products. And with their permission, it looks at those data, and it combines them with anonymised data from lots of other consumers and their behaviours. And it predicts loyalty offers that a customer might particularly appreciate because of their preferences and habits.
The uptake on that is very successful. We’ve got more than 1 million customers in the UK who have joined that system and are very happy with it. Now, we use that system to also offer our customers the automaticaly offsetting of all the carbon emissions that are associated with their energy products that they buy from us at the forecourt by buying nature-based solutions offsets.
This is important. if you look at the IPCC report or other people that study climate science, the broad consensus is that nature-based solutions are not the whole solution to averting climate change, but it’s certainly an important part of the solution. And bringing that solution to maturity through customer choice and voluntarily making that happen is an important source of progress. And it’s digital platform that makes that possible. We also offer that now through Shell Energy, our home energy-based offer to customers in the UK. And we’ll be extending that further.
Another example is electric vehicle charging. Of course, you can plug in a vehicle and charge it. In our Shell Chargeworks team, we have innovated the last couple years to build smart-charging algorithms that predict how long a customer will be connected to a charging point and monitors the situation on the grid in that vicinity: is there a shortage or a surplus of electricity, how much of the electricity is forecasted to be demanded or supplied in the near future based on weather patterns, sun and wind, etcetera? Because renewable energy content is rising on the grid all the time. And it can then offer the customer the option to optimise at which moment it charges through their period of connection, for either lowest cost or lowest carbon footprint. Because, of course, if you can charge with electricity that came from a wind turbine, that’s lower carbon than if it’s electricity that came from a coal-fired power station.
Now, that smart-charging set of algorithms we are now deploying to the market through Greenlots, which is our subsidiary that offers charging solutions to charge-point owners. That can be destination charging, for instance, shopping malls that have chargers, or cinemas, restaurants, etcetera. It can also be fleet owners, companies that have a fleet of vehicles and on-premise charging facilities. We provide the whole platform for end-to-end charging management with smartness built in to minimise cost and/or CO2 emissions.
It’s consumer choice-based. The consumer chooses whether they delay buying an electric vehicle and want to buy offsets for their petrol consumption, or whether they’re already charging electrically and they want to optimise how they do that, for lowest carbon footprint or lowest cost. And we deploy digital technologies to make that happen. I really think that customer choice is going to be a shaping part of what the energy transition looks like.
[Tim Ensor]
Thanks, Yuri. That was a great summary. I think I much better understand now what you mean by customer choice. It’s essentially allowing consumers to have the option to choose a low-carbon service. And by using digitalisation, it sounds like you’ve got plenty of ways that you’re starting to offer those options, and that makes a lot of sense.
Well, fantastic, thank you so much for that overview of what you’re doing, that discussion through how digitalisation and energy are coming together. And I think just in listening to you, it was just brought home to me afresh just how much organisations like Shell are really at the centre of some of the biggest issues that we as a planet have to deal with.
Certainly, reflecting on some of my time at home over this last period with my children, seeing their schooling upfront in a way which I haven’t done previously, because they’ve been away at school, but whilst they’ve been at home, just realising how much they’re soaking up through digital platforms, the current state of the world, and even at a pretty young age becoming concerned about climate change and the way that society needs to change in order to deal with that issue. And so it’s fantastic to have you bring your thoughts directly from being right in the midst of dealing with those issues.
Great summary. Collaborating with others, building internal capability, giving customers choice. I think those are really solid takeaways for us to be thinking about when we’re exposed to digitalisation and how we bring it to bear in our sectors. Thank you very much, Yuri. Is there anything else you would like to add just as a final thought to round things up?
[Yuri Sebregts]
Maybe not a new thought, but just reflecting back on the times that we live in, COVID-19, of course, is front of mind for all of us. It’s disrupting lives of people around the world in ways that we certainly all didn’t see coming and that are probably once in a lifetime.
I hope that good will come out of it. At some point, we’ll come out the other end of this crisis. A vaccine will be found eventually, and we’ll be able to move on. And the topic of climate change is still going to be there. Let’s make sure we learn from the current phase that we are living through. Are there things like more working from home, less travel, etcetera, that may help abate climate change? But then also let’s make sure that together consumers, as well as producers, we keep moving on energy transition and we can avert the effects of climate change. And digital technologies may well be an important factor in making that happen. The future is there to be made.
[Tim Ensor]
Fantastic. Thank you. Yuri, it’s been great to have a conversation with you. Thank you for sharing your insights. Much appreciated, thank you.
[Yuri Sebregts]
Thank you as well, Tim. Bye-bye.
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