Shell Game — Battery Swap Stations, Biofuels, & Boosted Production

November 28, 20213 years ago Steve Hanley 0 Comments

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It’s a tough time to be a major oil company. You see, the science is now clear that oil, gas, and coal are a scourge that threatens the entire human race. Which is a shame, because those fuels have allowed those same humans to enjoy the highest standard of living in history over the past 100 years or so. They provide our electricity, power our vehicles, let us fly to Hawai’i, produce a panoply of industrial goods, grow our food, and make plastics possible.

And yet, if we don’t stop burning fossil fuels, the Earth will be unable to support human life a few generations from now. What is an oil company supposed to do? If you said, “Go out of business,” you may be on to something.

Royal Dutch Shell is struggling with this conundrum, as is every other oil company in the world. How, exactly, does an oil company transition to selling other products? Shell CEO Ben van Beurden told the BBC this month that his plan is to drill for more oil so it can sell more oil to generate more profits so it can invest in zero and low carbon strategies in the future.

Van Beurden spoke to The Beeb at his company’s oil refinery in Pernis near Rotterdam — the largest refinery in Europe and the site of an audacious Greenpeace protest recently. He said he would like to see that facility converted from making gasoline and diesel fuel to making biofuels and hydrogen over the next decade. “At this point in time [the cash] comes from our legacy business,” he said. “These things can only be done if you have a facility (like Pernis) to work with and if you have the cash. If we have to build a hydrogen plant from a wind farm that we build in the North Sea for a billion dollars that is not going to be funded by a hydrogen business — it will be funded by the oil and gas business.”

In other words, Shell has to pump more oil and produce more gasoline and diesel in order to cut its emissions in the future. In fact, the company plans on exploiting a new oil field in the North Sea known as Cambo to produce as much as 170 million barrels of new oil. The reason is simple — at least to him. “Why would you say, ‘Let’s not get our oil and gas demands from our own resources but let’s import from somewhere else, probably with a larger carbon footprint?’ I don’t think that it is going to contribute to the balance of payment for the UK and also will not help the carbon footprint of the world.”

Shell currently has a global carbon footprint equal to that of Russia if you include the emissions from customers using Shell products, the BBC says. It plans to spend four times as much on oil and gas development as on renewables next year.

More Emissions, Not Less

Shu Ling Liauw of Global Climate Insights has analyzed Shell’s spending plans and estimates it will be producing more emissions by 2030 than it is now as it expands its traditional business. “Even if you’re very generous, and assume they get all the amounts of carbon capture and storage and offsets that they need, they might just miss their 2030 targets, and they will not be able to deliver on 2050. In fact, they will be increasing emissions until 2030, and still be producing significant amounts of emissions in 2050,” she says.

Mr. van Beurden says these estimates are speculative and insists Shell is on track, having cut the carbon intensity of its own operations by 17% since 2016. What he doesn’t say, however, is that emissions from operations are only 10% of the total emissions impact of Shell’s business. The other 90% is attributable to the emissions produced when the oil and gas it supplies is burned, known in the business as Scope 3 emissions. Shell and others like to say they have no control over what customers do with their products after they are sold.

That attitude may remind some of you of a satirical song about Werner Von Braun, “a man whose allegiance is ruled by expedience,” in which Tom Lehrer sings, “‘Vonce zee rockets are up, who cares vhere zay come down. That’s not my department!’ says Werner Von Braun.”

Cutting our reliance on fossil fuels needs to be managed over time, van Beurden says, otherwise we will see price shocks in the future that will be counterproductive. “I think this energy transition can be done but it will require a lot of orchestration and a lot of faith of society that it can be done. If you want to destroy the faith by driving up energy prices, by creating shortages or market failures, I think politicians are going to lose societal acceptance that this is actually doable.”

A rough translation of his remarks would go something like this: “Trust us. We know what we are doing. We need to ramp up our oil and gas business so we can ramp it down successfully. Go back to sleep. We’ve got this.” Very Alice in Wonderland, isn’t it?

Battery Swap Stations & Biofuels

Shell is also trying to reposition itself as a more environmentally friendly company by investing in EV infrastructure. It bought Greenlots, and EV charging company, in 2019 and recently renamed it Shell Recharge Solutions. This week, Chinese EV manufacturer Nio announced a new partnership with Shell to build battery swapping stations in China and Europe. The two companies will jointly construct 100 battery swapping stations in China by 2025 and start to construct and operate pilot stations in Europe beginning next year. Shell’s charging network in Europe will also be available to Nio drivers. By supporting the EV revolution, Shell is helping lower global emissions, or so it would have you believe.

Autoblog cites a recent report by Bloomberg about Shell’s plans to convert its Pulau Bukom refinery in Singapore to make biofuels. The repurposed facility will make hydrogen from cooking oils and animal fats. The hydrogen will then be used to make bio-diesel for vehicles, airplanes, and chemical feedstocks. The facility is subject to a final investment decision.

“We have already cut our crude processing capacity here in Bukom,” Aw Kah Peng, chairman of Shell Companies in Singapore, told reporters during a groundbreaking ceremony for a pyrolysis oil unit at the site. “There’s a clear commitment away from fossil as well as traditional fuels.” The biofuels plant will be one of the largest in Asia when built, said Shirley Yap, senior vice president at Shell Singapore. The company is seeking to produce around 2 million tons a year of sustainable aviation fuel by 2025 and process 1 million tons a year of plastic waste globally.

Shell is building a unit that will improve the quality of pyrolysis oil, a liquid made from hard-to-recycle plastic waste. It will have a capacity of 50,000 tons a year, making it Asia’s largest, and will process the equivalent weight of about 7.8 billion plastic bags. No cost was provided for the investment, but you can bet it is a small percentage compared to the ongoing investments in oil and gas the company will make during the same time. And gentle reader, please ignore the fact that Shell products are use to create many of those 7.8 billion plastic bags in the first place.

Shell is also considering a large carbon capture and storage facility near Singapore. We will know more about that when — and if — it happens.

It’s Up To Us!

The BBC takes one parting shot at consumers. As the recent energy crisis brutally exposed, the UK, along with the rest of the world, is still hugely reliant on fossil fuels, it writes. “As long as there is demand for fossil fuels, Shell or someone else will supply it. That demand can be influenced by government carrot or stick, companies can be squeezed by financiers, but consumer behavior will ultimately determine whether the world can hit net zero by 2050.”

It’s our fault, people. The poor oil and gas companies are only responding to the demand we created. “Blame the victim,” is a well known strategy that was polished to a high gloss by Big Tobacco. Now the fossil fuel industry is pushing that same narrative for all it’s worth, with help from the BBC. Does journalism get any better than that?