The Shell future - a look at their new projections

I have recently reviewed the predictions made by BP and ExxonMobil as they relate to energy supply and demand in the years to 2030. Shell has just updated their predictions, which extend further out to 2050. In the opening discussion they make the point that new technologies will require, in their words significant time to develop.

New energy technologies must be demonstrated at commercial scale and require thirty years of sustained double-digit growth to build industrial capacity and grow sufficiently to feature at even 1-2% of the energy system.

Thus much of the focus of the report deals with existing fossil fuel capabilities. Specific new factors that have led to the modification of earlier predictions include the greater instability of the global economy; the growth of uncertainty over regulatory steps that will be taken both to address the concerns over climate change, and in light of the Macondo well disaster; the improved supply potential for natural gas both from shales and coal bed methane supplies; and the emergence of a re-invigorated Iraqi energy industry with a potential to develop significant new resources.

Shell has, in the past, developed two different energy scenarios – the first of which it calls Scramble, where the world moves along a Business As Usual (BUA) scenario, only making changes as these become forced upon governments and companies by the impact of changing circumstance. The second is called Blueprint, a scenario that Shell is now announcing it will advocate, where instead of the reactive approach of Scramble, a set of plans is developed to pro-actively address the issues of carbon dioxide generation, and to ensure the world has adequate energy.

The difference between the two approaches was illustrated in the initial document by the predicted sources of energy through the years to 2050. By putting these one after the other, it is possible to compare how supply changes in their two scenarios.

1. Energy supply scenarios for the future – Shell Scramble scenario

2. Energy supply scenarios for the future – Shell Blueprint scenario

One significant change between the two, apart from the lowever absolute level in the lower case, is the smaller role that biofuels play in the more distant out years. For example in the Scramble scenario they are given a much greater role in that future.

Change in biofuel energy production in the Shell Scramble scenario.

In their new set of projections Shell has more forcefully adopted the Blueprint route, and has produced an amended projection of future energy sources through 2030 that makes it easier to compare with the ExxonMobil and BP plots that I have posted in the past.

Comparison of BP and EM energy futures, (The vertical scale is in billions of tons of oil equivalent. )

However, each company having their own set of units, the conversion needed to compare with the earlier plots is that an ExaJoule (EJ) is about equivalent to a Quadrillion Btu (Quad), and a billion tons of oil is the equivalent of 41.9 EJ.

Shell energy sources for the future. Dividing the vertical scale by that 41.9 gives an equivalent full scale value of 19 billion tons of oil equivalent, not that much different from the two other plots above it.

Two things are evident from this plot, one being the increased role that Shell see natural gas playing over the next 20 years, and the other the decrease in the likelihood of biofuels being more of a significant player in that time frame.

The sources for these levels of production are left quite vague in the Shell document. Only the promise of increased production from Iraq – seeming to accept the more optimistic projections of the Iraqi government – is given as a justification for seeing sensibly no decline in overall oil production levels to 2030. However since Shell is a part of some of the new deals which that Government has struck perhaps there are reasons for this optimism. For those who forget:

Officials say the deals will boost Iraq's oil-producing capacity to around 12 million barrels a day by 2017, putting it on a par with Saudi Arabia. That, said Mr. Birol, "may be a challenge to the other oil producers."

Um! Yes!

Shell devote much more of their projection document to the impact of climate change regulation and response than do the other projections. One item that caught my attention was their comment on water needs.

Energy producers are amongst the largest industrial consumers of freshwater. The link between energy production and water will intensify as portfolio choices move increasingly towards more water-intensive production methods such as biofuels and enhanced hydrocarbon recovery methods (EOR). In the US alone, where energy currently accounts for 40% of all freshwater consumption, projected growth in energy production will require an increase of 165% in freshwater withdrawal by 2025.

Shell also tabulated, against their projections, past growth rates for different sectors of the energy supply scenario.



To sustain growth, and to change, for example, current coal burning practice to a total carbon capture and storage (CCS) system for coal use globally by 2050 will require considerable investment and continued research and development, and similar levels of continued development will be required to develop all the sources needed to meet demand needs over the next forty years. It will also require a smarter power distribution system.

Sometime between 2020 and 2030, we can expect the constraining factor for renewables deployment to move from industrial capacity building to accommodation within the energy system. This would impact land-use and require new infrastructure, such as major upgrades to grids 8, 9. These are essential for renewables to maximise their share of the energy mix.

The new report closes by citing some of the factors that might indicate that the world is following a Scramble path, and others that it might be moving toward to Blueprint option.

It will be interesting to see which one turns out, in the end, to be closer to reality. But there are plots in this document that show peak oil occurs around 2020.