x Abu Dhabi, UAEWednesday 24 January 2018

Shell seeks Abu Dhabi's help to prolong oil era

Longevity depends on cutting emissions and storing carbon Tom Ashby abu dhabi // Royal Dutch Shell, Europe's largest oil company, has called on Abu Dhabi to help extend the life of petroleum as a transport fuel against a growing threat from electric cars and the environmental lobby. The plea came during a presentation by a senior Shell executive to Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi, at his Majlis on Wednesday night.

Malcolm Brinded, Shell's executive director of exploration and production, said coal would come into increasing competition with oil as a source of greenhouse gases at a time when policymakers came under pressure to tackle the cause of climate change. This could prompt governments to turn decisively against conventional cars. Abu Dhabi could help extend the life of cars powered by combustion engines by recognising the benefits of combining biofuels with petrol to reduce the amount of carbon in car exhausts, Mr Brinded said.

Another major boost to oil's longevity would come from cutting carbon emissions from coal-fired power stations by promoting carbon capture and storage (CCS) technology, where the gases are pumped into hermetic reservoirs underground. "Why is CCS in coal power so important for the oil industry? Because tackling coal emissions first will leave more carbon space for oil in transport," Mr Brinded said.

"Otherwise the world may be forced to conclude that climate pressures are so strong that there is no option but to decarbonise transport, whatever the cost and convenience advantages of oil." Mr Brinded laid out the company's energy scenarios to 2050 and concluded that, whatever happens, the future would be "challenging". Things cannot continue as they are, with energy demand growing rapidly along with emissions of carbon dioxide while pressure mounts against climate change, he told the assembled dignitaries, including members of the royal family, diplomats and energy officials.

Mr Brinded laid out two possible ways in which the world would react to the conflicting trends shaping the energy industry. In the first scenario that he called "scramble", Mr Brinded saw nations acting alone to secure energy supplies, paying little attention to efficiency. In many cases they turn to domestic supplies of coal and other dirty fuels, while turning up their noses up at global pacts to cut greenhouse gases. Opec keeps oil markets tight under this scenario, and prices are high and volatile.

"Scramble is what we are experiencing today - and it's not very comfortable," Mr Brinded said. The outcome of this behaviour over the next decade would be sudden, draconian government measures to deal with climate change, such as restrictions on personal mobility, causing economic and social disruption, he said. The second scenario, which Mr Brinded called "blueprint", describes a future of greater international co-operation. Opec ensures greater availability of oil, and nations, including China and India, agree to be bound by a global pact on carbon emissions. This leads to a global market in carbon credits, which provides incentives to invest in alternative energy and carbon capture and storage.

Abu Dhabi is already exploring the use of carbon capture through its Masdar initiative. Both scenarios are ultimately negative for the oil industry, in that they foresee the replacement of the combustion engine with an electric motor in the transport sector, which until today has provided the largest market for oil. Mr Brinded argued that the rapid deployment of carbon-capture technology, and a global agreement on carbon credits, would provide the best outcome for both oil companies and oil-exporting nations.

This would drastically reduce the amount of carbon emitted globally, reducing the risks of drastic changes in the climate and extending the life of combustion engines, albeit more efficient ones. Shell is one of a handful of Western oil companies in Abu Dhabi whose 75-year-old concessions are due to expire within the next few years. Mr Brinded made no mention of the concession, but said the company was looking forward to more years to come in the emirate. "Another 70 would be fine," he said.