Shell Addresses LNG 18 on Need for Innovation

| Australia, Perth

Shell first LNG refuelling station in NetherlandsMaarten Wetselaar, Integrated Gas Director, Royal Dutch Shell plc, addressed invited guests and international delegates at LNG 18 in Perth last week on the theme of Innovation: Widening the Lens. He challenged them to take a fresh look at LNG’s potential for new, innovative approaches and to call on governments to recognise the benefits of gas through the policies they make, arguing that action is needed if LNG is to fulfil its long-term potential.

“Game changers. I take this to mean innovations of one form or another. This is an important topic for one fundamental reason: the LNG industry will only fulfil its long-term potential through a concerted and consistent focus on innovation,” Wetselaar began, deciding to forego discussion on technology in favopour of cost innovation and policy innovation.

COST

Wetselaar continued: “Costs need to come down to reassure policy makers and customers that gas is a competitive choice with all other energy sources, as well as being a responsible choice from an environmental perspective.” He applies this to the entire supply chain and asks that every step be looked at with fresh eyes not marred by myopia.

He presented an example to illustrate the point: “Engineers at Shell have been looking into reducing the cost of LNG re-fuelling sites for road transport in the US and Europe. So we brought together LNG engineers and retail engineers with customers and engine manufacturers.

“Pooling their thinking led to us slashing in half the cost of an LNG re-fuelling site. They developed effective ways to manage boil-off gas and pressure at various stages of the supply chain. They also implemented creative methods for safely reducing the plot size of the sites, thereby saving costs. This kind of collaboration – which helps competitive and cost effective ways of doing business develop – should be the rule, not the exception.

“Another team at Shell has been working on a potential small-scale LNG project in Gibraltar. They identified ways to optimise both the technical and commercial aspects of the project across the value chain, and through valuable insights from Gasnor – a Shell subsidiary in Norway which provides LNG fuel for ships and industrial customers. This led them to developing a new approach at a cost of less than a third of the original estimates.

Wetselaar said such measures help to open up new markets for LNG, with incremental efficiencies across the supply chain delivering desireable cumulative outcomes

POLICY

“One policy that will have a big impact on our industry is a government-led carbon price. Not only will it lead to the development of technologies that can bring about widespread and permanent reductions in emissions,” Wetselaar continued, arguing such interventions, when combined with lower price levels, have impact.

Policies have come about not only in response to the global effort to cut carbon dioxide emissions, but also in reaction to the urgent need to improve air quality in major cities. Although Wetselaar primarily uses power generation examples to illustrate his point, he says the same thinking can eb applied downstream where emissions from marine and land oil-fuelled transportation remain significant:

“The final point to flag when it comes to gas and LNG-related policies is that it’s not just about power generation. Policy decisions are also important when it comes to increasing demand in other sectors, such as transport.

“For example, one cruise liner with 7,000 to 8,000 people on board can use the same amount of fuel as a small city with a population of around 30,000. These ships are essentially floating power stations. So policies to reduce marine emissions will make LNG an attractive fuel for shipping, potentially opening up major new markets for our industry.

Carnival is one of the companies which has already signed up to buy LNG from Shell for in-port power consumption for the AIDAprima cruise vessel.

Wetselaar concluded by reminding listeners of the crucial role natural gas plays and will play in meeting global demand for energy and addressing energy poverty. “We must ensure this trend continues. That’s the best way of meeting future demand growth with less impact on the environment.”

“For gas to achieve its full potential in powering progress in people’s lives and to play a key role in the energy mix, our industry needs to come together to ensure the competitiveness of gas and bring down its cost. And we need to call on governments to recognise the benefits of gas through the policies they make. Let’s work together to make this happen.”

Wetselaar’s full speech can be read here.

(Source: Shell Global)

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