THE ROLE OF ENERGY COMPANIES FOR THE FUTURE SOCIETY

Transcription

1 THE ROLE OF ENERGY COMPANIES FOR THE FUTURE SOCIETY FISITA World Automotive Summit 2014 Use this area for cover image (height 6.5cm, width 8cm) Dr. Wolfgang Warnecke Chief Scientist Mobility, Shell Projects & Technology 1

2 DEFINITIONS & CAUTIONARY NOTE Reserves: Our use of the term reserves in this presentation means SEC proved oil and gas reserves. Resources: Our use of the term resources in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions. Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact. Resources plays: our use of the term resources plays refers to tight, shale and coal bed methane oil and gas acreage. The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation Shell, Shell group and Royal Dutch Shell are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words we, us and our are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. Subsidiaries, Shell subsidiaries and Shell companies as used in this presentation refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as associated companies or associates and companies in which Shell has joint control are referred to as jointly controlled entities. In this presentation, associates and jointly controlled entities are also referred to as equity-accounted investments. The term Shell interest is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest. This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as anticipate, believe, could, estimate, expect, intend, may, plan, objectives, outlook, probably, project, will, seek, target, risks, goals, should and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell s 20-F for the year ended 31 December, 2013 (available at and ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 1 October, Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all. We use certain terms in this presentation, such as discovery potential, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No , available on the SEC website You can also obtain this form from the SEC by calling SEC-0330.

3 OVERVIEW SHELL AND R&D 3

4 A GLOBAL APPROACH TECHNOLOGY CENTRES Amsterdam, Netherlands Hamburg, Germany Atsugi, Japan Houston, US Bangalore, India Shanghai, China 4

5 SHELL ENERGY SCENARIOS 5

6 SHELL AND SCENARIO PLANNING WHY? Scenarios help us wrestle with possible futures Current Realities (mental models) Multiple Paths Alternative Future Images SCENARIOS 6

7 MOUNTAINS & OCEANS OVERVIEW MOUNTAINS Influence concentrates amongst the already powerful, as advantage brings more advantage Economic development slowed by rigidities in structures and institutions However, some secondary policy developments facilitated ENERGY Sluggish economic growth moderates supply/demand tensions Natural gas becomes the backbone of the global energy system A profound shift occurs in global transport and infrastructure Moderated CO 2 and resource stresses; CCS takes off Wait & See Self-ish OCEANS Emerging interests intermittently accommodated Core reforms unleash growth and expectations for further reform However, more empowered constituencies hinder some secondary policy advancement ENERGY Supply/demand tightness and high prices unlock expensive resources and drive user efficiency Liquid fuels and coal continue to dominate as gas undershoots global hopes, until solar becomes new backbone High CO 2 and resource impacts. CCS only mandated later Alliances 7

8 MOUNTAINS & OCEANS VIEWS TOTAL PRIMARY ENERGY BY SOURCE 1200 MOUNTAINS EJ/year OCEANS EJ/year Oil Biomass Gasified Biomass Traditional Geothermal Biofuels Coal Nuclear Solar Natural Gas Biomass/Waste Hydroelectricty Wind Source: new lens scenarios 8

9 RESOURCE MIX CONTRAST: WORLD S LARGEST PRIMARY ENERGY SOURCES

10 SCENARIO CONTRAST: WORLD PASSENGER TRANSPORT Mountains Oceans 60,000 60,000 Billion vehicle km 50,000 40,000 30,000 20,000 50,000 40,000 30,000 20,000 10,000 10, Year Year Electricity and Hydrogen Gaseous Hydrocarbon Fuels Liquid Hydrocarbon Fuels & Biofuels Combined with the impact of higher economic development, Oceans sprawling suburbs lead to higher travel needs than Mountains compact cities

11 NET OIL & GAS IMPORT DEPENDENCY IN SELECTED COUNTRIES

12 TECHNOLOGY TAKES TIME TO GO FROM RESEARCH TO COMMERCIALITY Global production of primary energy sources Terajoules/year Electricity for Mobility? Hydrogen?

13 SHELL GTL: DECADES OF RESEARCH, DEVELOPMENT & EXPERTISE Oil industry revolutionized Advancements in Fluid Catalytic Cracking Reinvent Fischer- Tropsch process Amsterdam Laboratory: grams/d Improving gas-toliquid conversion Pilot plant Amsterdam: 3 bbl/d Producing a range of GTL waxes & fluids - after 40 + years of Development Shell first commercial gas-toliquid plant: Bintulu Malaysia capacity 4,700 bbl/d World s largest GTL plant in Qatar: Pearl GTL Qatar 140,000 bbl/d PEARL GTL n Biggest GTL plant worldwide (size of 453 soccer fields n One GTL Tower weighs as much as 7 Jumbo Jets n Steel used could build 10 Eiffel Towers n Built by 50,000 workers from 50 October countries

14 SHELL SCENARIOS - URBANISATION FOCUS 14

15 URBANISATION A KEY GLOBAL TREND 6.3 billion 3.6 billion More than half the world s population lived in cities in 2007 By 2050 it will be three quarters An extra 2.7 billion people We are building the equivalent of a new city of 1.4 million people every week 15

16 NEARLY 50% OF THIS GROWTH IS IN ASIAN CITIES 11% Americas 3% Europe 9% Middle East & N. Africa 29% Sub- Saharan Africa 18% India 13% China 17% Other Asia & Oceania <1% OECD Asia & Oceania 16

17 URBAN DENSITY IMPACT ON TRANSPORT Urban density and transport-related energy consumption Transport-related Energy Consumption Gigajoules Per Capita Per Year URBAN DENSITY (inhabitant/hectare) Source; Newman and Kenworthy, 1989: Atlas Environnement du Monde Diplomatique

18 MOBILITY TRENDS & CHALLENGES 18

19 THE CHALLENGES FOR FUTURE MOBILITY Access to Energy/Fuels Which energy sources will meet the growing demand for mobility? Total Cost of Ownership Which fuel/vehicle combination will allow mobility to remain affordable? World Population Growth & Urbanisation How will mobility & infrastructure concepts change mobility in megacities? Reduction of GHG & Local & Noise Emissions Fuel/vehicle options for lowest amount of GHG and local emissions New Technology Options Vehicle Autonomous Drive, Continuous Connectivity, Safety Features (Night vision, active braking, distance control, advanced stability control ) New Mobility Policy Taxes /Incentives to manage Mobility & Local Entry Restrictions (Cities) Changing Consumer Values & Social Acceptance New consumer values Mobility on Demand. Which factors drive social acceptance & resulting uptake of new fuel/powertrain solutions?

20 DRIVETRAINS & FUELS PAST, PRESENT AND POSSIBLE? Renewable Electricity & Hydrogen?

21 FUELS & POWERTRAIN COMPARISON WTW CO 2 EMISSIONS g CO 2 /km E0 E20 B0 B Powertrain Technology TtW fuel WtT hydrogen WtT electricity WtT fuel 0 n On a WtW basis no CO 2 emission-free mobility n For fossil fuels and > 80% of the CO 2 emissions in TtW phase, electric in production phase n Impact of biofuels seems low but big lever as majority of the vehicles on the road ICE Using JEC Study 2013 dat & Own calculations 21

22 REQUIRED: A FULL LIFE CYCLE ANALYSIS (LCA) PERSPECTIVE System boundary is critical and must be relevant to the analysis WtT* emissions: ~20% *WtT = Well-to-Tank **TtW = Tank-to-Wheels TtW** emissions: ~80% Fuel life cycle Well-to-wheels GHG emissions Raw Material Vehicle assembly Distribution & Maintenance End of Life + Vehicle life cycle 22

23 FUEL AND LUBES OPTIONS FOR MOBILITY MODES

24 H 2 OFFERS CO 2 REDUCTION - WHERE BIOFUELS GROWTH IS CONSTRAINED 2015 Target 130g 2021 Target 95g 2025 Target 70g? 130g = 4.9l Shell diesel/100km Global Solutions (Deutschland) Source for GmbH Targets: ec.europa.eu/clima/policies/ transport/vehicles/cars 95g = 3.6l diesel/100km 100 H2 Stations (50 within the CEP) in H2 Stations cross Germany JV in 2023

25 INTERNATIONAL HYDROGEN INFRASTRUCTURE ACTIVITIES UK H2 Mobility 45 HRS / cars / 2015 Phase 2 accomplished Germany 100 HRS (50 within the CEP) / 2017 H2 Mobility Germany JV 400 HRS H2-Mobility France In preparation Hydrogen Infrastructure for Transport (HIT) HRS (TEN-T) 3 HRS Japan USA (California) 68 HRS till FCEVs till 2015 South Korea 1000 HRS till Mio. FCEVs till HRS till FCEVs till 2020 Sources: websites and press releases China 5 HRS till FCEVs till 2015

26 FUTURE MOBILITY DRIVERS & TRENDS NEED FOR PARTNERSHIPS Environment Emission Free Vehicles BEV (PHEV)/FCEV Zero Smog Emission GHG Reduction Noise Reduction New Vehicles Combustion Engine Improvements Hybridisation Remote Drive Sub Smart Vehicles & Pedelcs World Wide Harmonisation Gov. R&D Fundings Trade Barriers Safety Emission Limits (Noise, Smog & GHG) Legislation Lights & Brakes Energy Crude Oil ends More Gas Advanced Biofuels Green Electricity Renewable Hydrogen New Mobility Mobility On Demand Emotional Mobility Bike Share Car Share Ageing Population Travel Time New Consumer Values New Architecture ( Live & Park ) Urbanisation (Asia) Urbanisation Suburbanisation (USA) Traffic Density Open Up New Driveways Raise in Goods Transportation Shrinking Persons Transport km Online Purchase Behaviour Change in Transportation Continous Online Demand & Connectivity Transport Mile / Vehicle Cost Of Ownership Refueling Convenience Changing Lifestyle (Remote Work; Internet Shopping etc) Costs & Convenience

27 STIMULATING THE FUTURE: SHELL ECO-MARATHON FUEL EFFICIENCY CHALLENGE 2015 Competition: Manila (Asia) Detroit (Americas) Rotterdam (Europe) Started as a friendly bet between Shell scientists, now a dynamic, evolving event with 4,000 students, 393 teams from 45 countries & rising Six different power sources two vehicle categories: UrbanConcept: four wheels, similar appearance to passenger cars, capable of stop & go manoeuvres & driving in light wet weather conditions Prototype: single seater, three or four wheels, smaller in size, more streamlined to reducer drag & maximise efficiency 27

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