MARKETS

Shell gives up on Arctic

ROYAL Dutch Shell CEO Ben van Buerden says the UK super-major will not return to the Arctic in th...

Anthony Barich
Shell gives up on Arctic

In an interview posted on the UK super-major’s website, van Beurden revealed an unrelentingly bullish attitude to oil and gas developments, even in the face of renewable energy growth and energy efficiency improvements that are also needed.

He described Shell not finding enough oil to justify further exploration off the coast of Alaska as “a real disappointment”, particularly as “we had hoped and expected to find quite a lot of oil”.

“But I had always made it clear that if there wasn’t a big enough discovery we would cease operations swiftly and safely,” the CEO added.

“It turned out that there was almost no oil. It was very conclusive, so I had no difficulty in making up my mind.

“In the long run, I think the world economy is going to need Arctic oil. Already, a lot of the oil and gas used around the world today comes from the Arctic and I think it will continue to play a key role. But we have basically walked away from Alaska and I do not see us going back any time soon.”

While Shell was panned for its Arctic exploration jaunt on environmental grounds, he reserved particularly harsh words for those who bag commentary on climate change from experts who prudently say fossil fuels will inevitably be needed, yet take movie stars’ words on the matter as gospel.

As previously stated, Van Beurden reiterated his belief in the role gas will play in the low-carbon future, but had a crack at Hollywood stars who jump too easily on the anti-fossil fuel bandwagon for the sake of fighting climate change, while those who actually know what they’re talking about are derided or ignored.

He said the hardest thing was to be recognised as a valuable partner in the discussion on how to combat climate change while ensuring that people have access to the energy they need.

“It seems at times that those people who understand the energy system best have little or no credibility, in the eyes of the public, when talking about how the transition to a low-carbon society can realistically be achieved,” he said.

“Ironically, film stars and other celebrities seem to have total credibility when talking about it.

“It appears to come from the belief that there are two groups of people – those with good intentions for the planet and people with bad intentions – and guess where Shell gets placed? I object to that notion, because we really do have the same good intentions. I also want the best for the planet and its people.”

All this has resulted in a mistaken belief among some people that climate change can be solved in a simple way – by eliminating fossil fuels.

“Those who understand the energy system know it can’t [be wished away]. It will take a tremendous amount of effort, determination and complex measures to get right,” van Beurden said.

“The problem is that we as an industry have also lost a lot of credibility in this space, in the eyes of the public. So bringing that credibility back to us as a company, to be seen as a valuable part of the solution and one with a vital contribution to make, I find that the most difficult thing.”

The CEO was adamant that fossil fuels could not be simply “wished away”, as the world’s need for them will remain in the foreseeable future.

A key solution is carbon capture and storage, which the International Energy Agency says could account for a sixth of required emissions reductions by 2050.

Shell believes the designs and processes of its CCS facility Quest in Canada, which it opened in November to store more than 1 million tonnes of carbon dioxide a year, will help others use such technology to cut carbon emissions from industrial facilities.

However, he cautioned that it needs “strong and reliable” political support to fulfil its potential.

Thus he described the UK government’s decision last November to cancel its plan to help fund a major CCS development as “a huge disappointment”

“Our Peterhead project in Scotland would have been the world’s first CCS facility fitted to an existing gas-fired power plant,” van Beurden said.

“It was one of the final contenders in a competition which would have placed Britain at the forefront of this vital technology.”

He said CCS could cut emissions from gas-fired power plants by up to 90% and would be a lower-cost way to reduce carbon emissions than offshore wind, for example.

“That is why strong governmental policies that attach a cost to carbon emissions are urgently needed globally. Effective carbon pricing mechanisms give all industries a strong incentive to reduce their emissions significantly,” he said.

“Everyone wants an effective solution to climate change. If you want to put money into something that can make a big difference in the energy and climate-change challenge you had better put it into something that has the biggest bang for the buck.”

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