Ulaş Aydoğan Çevik
ENERGY SECURITY POLICIES OF ROYAL DUTCH SHELL
The oil industry generally includes many processes of producing of oil products to supply the energy demands in the world. The oil producing and selling process lines have some stages and this stages needs their own professionalism for produce more efficient and effective energy sources. These stages which is I would like to mention are; exploring the oil reserves, extracting the oil, refining processes, transportation of oil and marketing of oil products. Fossil fuels typically use as an energy source but this is not only using area of oil products. Oil products have a large utilization area out of energy production and chemical products or road construction materials could be good examples for understanding the usage areas of oil products.[1]
Royal Dutch Shell Company is one of the major oil producing company in the world. Royal Dutch Shell is a global energy and petrochemical company and the company performs the all processes of oil production. Shell performs these operations under two titles which are upstream and downstream processes. The strategy of Royal Dutch Shell Company increase the company’s profitable developments with their investments on field and industrial area, improving the sustainable development of the company for providing the competitively benefits to their investors and assistance to the world’s energy demand with responsibility.
HISTORY OF ROYAL DUTCH SHELL
The invention of the steam engine triggered the industrial revolution and pioneered to the modern industrial age. Steam engines worked with coal, wood and mainly water however after the invention of the internal combustion engines a new resource which was oil came to important role in the industry and invention of the steam engine and afterwards the invention of the internal combustion engines the labor force lost its importance against the power of engines.[2] At that time oil companies decreased their investments to coal mining.[3]However the labor force didn’t one of declining industrial or social object, in transportation animal which are used as a transportation tool lost their importance as labor force. However there is an interesting calculation about comparing the human power and engine power, 1 hp equals to 735,8 W and a human’s permanent power equals to 70 W and 70 W equals to 0,1 hp so there is a huge difference between human power and engine power if we think a modern automobile has 70-80 hp on the average.[4] After these industrial developments importance of oil and oil products started to increase and today’s global oil companies took their roles in the world.
Royal Dutch Shell existed with the integration of Royal Dutch and Shell in 1907. Before the integration of these companies Royal Dutch were taking 60% of revenues and Shell Transport were taking 40%. Shell quickly expanded their operations across the world. In Europe and some parts of Asia, Shell formed marketing companies. In the United States, Venezuela, Mexico and Russia exploration and production operations of Shell began.[5]
During the 1980’s new petroleum areas explored and the oil companies and Shell enlarged their territory and became global actors. After the collapse of Soviet Union, markets reopened in the Eastern European countries after the Second World War.[6] The 1990’s we saw new technologies such as biomass fuel production and gas liquefaction. Furthermore different transportation routes and types improved specially pipelines constructed for supporting the oil transportation. Meanwhile we should explain the upstream and downstream operations. Upstream operations means to explore of new fossil fuel reserves and to develop the production technologies and downstream operations refer to refines, transportation and marketing sector. Shell’s current values are; operations in more than 70 countries, nearly 87,000 employees, half of production is natural gas, in last year 20,2 million tones LNG sold, 3,3 million barrels of oil producing every day, there are 44,000 service station around the world and operating more than 30 refineries and chemical plants. In 2012 total sales of Shell is 467,2 billion USD, net income is 26,8 billion USD, net capital investment is 29,8 million USD and investments for research and development 1,3 billion USD.[7]
ENERGY SECURITY POLICIES OF ROYAL DUTCH SHELL
Energy security policies of Royal Dutch Shell list under these titles; increase oil and natural gas resources, reducing CO2 intensity of fossil fuels and broaden the energy mix. However private sector could not eliminate alone all problems about energy security so private sector needs positive government assistance in the following area; Access to resources, tax regimes, CO2 policies, diversification and security of energy supply routes.
According to Shell’s scenario work oil and natural gas still have leading role to fulfill world’s energy needs in next decades so world’s oil demand in 2000 75 million barrel per day, and the International Energy Agency (IEA) calculating the demand will be double by 2030[8]. But these hydrocarbons are limited and hydrocarbon usage is very high. Due to high energy demand and decrease in the supply of easy oil, oil firms have to find new hydrocarbon resources and get advantage as possible. Oil industry focused on investment in the new Technologies which can increase production level in current oil and gas field. In last years, research and development area has changed in oil industry and industry started to spend their budget on new unconventional resources like oil shale, tight gas and oil sands.[9]
1- Enhanced Oil Recovery (EOR)
In an oil field oil companies are only producing one third of the total reserves. The rest remains underground due to economic and technical reasons. After that point, finding a profitable oil reserves become very hard. To increase oil reserves, techniques focused on improvement the flow of oil. Heating with steam or using gases and chemicals are the ways to do that.[10]Belridge complex in California used steam injection to improve company’s recovery. Even if oil is very heavy and sticky, Aera Energy tried to reach 80% of oil in some fields but for some other fields reaching 10% of oil seen as lucky.[11] Even 1% increase in oil recovery can provide 20-30 billion barrels of additional oil. That number is the same with the USA’S total known oil reserves.[12]
2- CO2 Emissions
A- Reducing CO2 intensity of fossil fuels
One of the main areas of the adding plus advantage to oil industry is reducing CO2 intensity of fossil fuels. It can be done with various ways. We can start it to increase energy efficiency in oil production operations. International oil companies produce not only energy but also consume energy, especially in operations processes of Shell. For instance, Shell achieved to manage monotowers without human control. These are assisted by offshore platforms that are powered by wind and solar power. These applications ensured economical to developed small gas fields in the North Sea.[13] In addition reducing CO2 intensity provide efficiency on energy, decreasing costs and become more profitable.[14]
B- CO2 Capture and Storage
Making fossil fuels cleaner could be made by capture CO2 from power stations and huge industrial installations and storage is in underground CCS is an opportunity for the industry. Oil fields consist of CO2 for decades to boost the production. Therefore the knowledge and expertise exist to sequester CO2 safely and responsibly. Oil and gas reservoirs, inactive coal seams and saline aquifers.[15]Shell is played important role in a several of potential CCS project in Canada, Europe and Australia. Shell is starting in CO2 sink that is a public private research project, began injecting CO2 in a saline aquifer in June 2008.[16] The primary achievement is to reduce the CO2 intensity of liquid fuels on a well to well basis in transportation sector. The ways of doing these with improved conventional fuels, sustainable biofuels, lighter-weight vehicles, more efficient engines, fuel saving driving techniques and in longer terms by applying CSS.
3- Broadening the energy mix
There are global oil companies in the word and these multinational companies called as International Oil Companies (IOCs).[17]When it comes to studying of International Oil Companies (IOCs) about extending the energy mix. Their kernel businesses are hydrocarbons. Furthermore IOCs have a good experience about drilling, refining, chemistry, geology and distribution of transport fuels. For example, Shell is planning half of its production on natural gas.
Moreover new developments show that clean-burning natural gas could be an alternative to coal. Today, gas production and transportation is increasing under favor of liquefying of natural gas. This allows shipping of natural gas to China, India and Europe.[18]
Besides these areas, lots of companies are interested with new areas. For example, while a company interested with diversifying into the nuclear energy, other one trying to the most powerful in geothermal power. For instance, Shell also interested with hydrogen power, biofuels and wind power. Shell is, present, one of world’s top-20 producers of wind power, although wind power is less effective than coal-fired power. Shell portfolio of renewable energy is going to biofuels. Furthermore the place of biofuels in world’s transport fuel mix will probably grow 1% to the point between 7% and 10% in the future.[19]
BIBLIOGRAPHY
Falola, Toyin, Genova, Ann, The Politics of the Global Oil İndustry: An Introduction, Westport: Preager, 2005
Holloway, Sam, “Storage of fossil fuel-derived carbon dioxide beneath the surface of the earth”, Annual Review of Energy and the Environment, Vol.26, No.1, 2001
Kirkpatrick, Larry, Francis, Gregory, Physics: A Conceptual World View, Belmont, CA: Cengage Learning, 2009
Lake, Larry W. , Enhanced Oil Recovery, Upper Saddle River, NJ: Prentice Hall, 1989
Parra, Francisco, Oil Politics: A Modern History of Petroleum, London: LB. Tauris & Co. Ltd, 2004
Shelley, Toby, Oil: Politics, Poverty and the Planet, London: Zed Books Ltd, 2005
Usmani, Arthur, “Current and Potential Applications of Asphalt-Containing Materials,” Arthur Usmani ed. , Asphalt Science and Technology, Boca Raton, FL: CRC Press, 1997
Van den Hove, Sybille, Le Menestrel, Marc and De Bettignies, Henri-Claude, "The oil industry and climate change: strategies and ethical dilemmas." Climate Policy, Vol.2, No.1, 2002
Internet Sources
Carbon Capture and Storage Association Website, <http://www.ccsassociation.org/about-us/our-members/shell/> (02.01.2014)
Gismatullin, Eduard and Bakewell, Sally, “Shell Sees Solar as Biggest Energy Source After Exiting It,” Bloomberg Website, 28.02.2013, <http://www.bloomberg.com/news/2013-02-28/shell-sees-solar-as-biggest-energy-source-after-exiting-industry.html> (02.01.2014)
IEA-ETSAP Website, May 2010, <http://www.iea-etsap.org/web/E-TechDS/PDF/P02-Uncon%20oil&gas-GS-gct.pdf> (02.01.2014)
The Shell Global Homepage, <http://www.shell.com/global/aboutshell/at-a-glance.html> (02.01.2014)
The US Department of Energy Office of Fossil Energy Website, <http://energy.gov/fe/services/petroleum-reserves> (02.01.2014)
[1] Arthur Usmani, “Current and Potential Applications of Asphalt-Containing Materials,” Arthur Usmani ed. , Asphalt Science and Technology, Boca Raton, FL: CRC Press, 1997, p.249
[2] Francisco Parra, Oil Politics: A Modern History of Petroleum, London: LB. Tauris & Co. Ltd, 2004, p. 242
[4] Larry Kirkpatrick, Gregory Francis, Physics: A Conceptual World View, Belmont, CA: Cengage Learning, 2009, p.133
[5]“The Beginnings,” Shell Global Website, <http://www.shell.com/global/aboutshell/who-we-are/our-history/the-beginnings.html> (02.01.2014)
[6] Toyin Falola, Ann Genova, The Politics of the Global Oil İndustry: An Introduction, Westport: Preager, 2005, p. 212
[7] “At a Glance,” The Shell Global Homepage, <http://www.shell.com/global/aboutshell/at-a-glance.html> (02.01.2014)
[8] Toby Shelley, Oil: Politics, Poverty and the Planet, London: Zed Books Ltd, 2005, p. 7
[9] “Unconventional Oil and Gas Production,” IEA-ETSAP Website, May 2010, <http://www.iea-etsap.org/web/E-TechDS/PDF/P02-Uncon%20oil&gas-GS-gct.pdf> (02.01.2014)
[10] Larry W. Lake, Enhanced Oil Recovery, Upper Saddle River, NJ: Prentice Hall, 1989, pp. 1-2
[11] “Enhanced Oil Recovery Report,” Shell Global Website, Feb 2012, <http://s05.static-shell.com/content/dam/shell/static/future-energy/downloads/eor/eor-brochure-2012.pdf> (02.02.2014)
[12] “Petroleum Reserves,” The US Department of Energy Office of Fossil Energy Website, <http://energy.gov/fe/services/petroleum-reserves> (02.01.2014)
[13] “Wind and Sun Power One-Legged Platform,” Shell Global Website, <http://www.shell.com/global/future-energy/innovation/inspiring-stories/monotower.html> (02.01.2014)
[14] Sybille Van den Hove, Marc Le Menestrel and Henri-Claude de Bettignies, "The oil industry and climate change: strategies and ethical dilemmas." Climate Policy, Vol.2, No.1, 2002, pp. 3-18
[15] Sam Holloway, “Storage of fossil fuel-derived carbon dioxide beneath the surface of the earth”, Annual Review of Energy and the Environment, Vol.26, No.1, 2001, pp. 145-166
[16] “Royal Dutch Shell,” Carbon Capture and Storage Association Website, <http://www.ccsassociation.org/about-us/our-members/shell/> (02.01.2014)
[17] Francisco Parra, Oil Politics: A Modern History of Petroleum, London: LB. Tauris & Co. Ltd, 2004, p. 329
[18] “LNG Market,” Shell Global Website, <http://www.shell.com/global/future-energy/natural-gas/liquefied-natural-gas/lng-market.html> (02.01.2014)
[19] Eduard Gismatullin and Sally Bakewell, “Shell Sees Solar as Biggest Energy Source After Exiting It,” Bloomberg Website, 28.02.2013, <http://www.bloomberg.com/news/2013-02-28/shell-sees-solar-as-biggest-energy-source-after-exiting-industry.html> (02.01.2014)
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