Jean Cadu is the kind of man who might be considered a harbinger of doom in some circles. As Fuels Strategy Adviser for Shell International, it is his job to look into the future and ensure the company is prepared for all eventualities. And what he sees is a huge challenge to meet the energy needs of a vastly growing population while hitting global warming targets.
Embedded within Shell is what is known as the DX Futures team, which has to consider all likely scenarios in the coming years, and the appropriate response to them. It is work which was started 40 years ago, after the first Middle East oil crisis caught the western world flat-footed in 1973.
Members of the team are not clairvoyants or astrologists. They do not make forecasts. They merely consider what could happen, and what the right course of action to any given set of circumstances should be. When a company is considering multi-billion-dollar investments, this is useful information.
Occasionally they are caught out, such as by the uprisings in the Arab world in 2011, the repercussions of which are still painful in some nations. “There is more political instability – things we had not imagined,” says Cadu. “There is an acceleration in the frequency of economic crises, And the demographic transition will be fundamental. Every week between now and 2050, one city of a million inhabitants will emerge, either through population growth or urbanisation. This will place huge stress on transport, mobility, water and energy.”
Many academics, environmentalists, industrialists – including those in the wider automotive industry – and politicians, a group frequently maligned for its short-sightedness, are convinced that by the middle of this century the world population will have grown from seven billion today to nine billion, and that as many as 80% of those people will live in cities compared with around 60% at the moment.
Some people might think that because populations will be living closer to their places of work, world energy demand will fall, but no: the number of vehicles will almost triple from 800 million today to two billion by 2050, and two-thirds of them will still have an internal combustion engine, even if it is allied to some form of electrification.
A growing middle class would rather sit in choking traffic in their own space than share public transport with others. People in the new markets will want to travel in the same way that people in the developed markets have become used to over the past 60 years. And they will want heating, air conditioning, lighting and power for an increasing number of devices. The best estimate is that world energy demand will have doubled by mid-century or shortly after.
This is not quite the end-of-the-world-as-we-know-it scenario that people might fear, however. OEMs are consistently finding efficiencies in the vehicles they produce through small-capacity turbocharged direct-injection engines and advanced transmissions, electrification, aerodynamics and weight-saving.
There are plenty of untapped oil reserves, even if some of them are impossible or uneconomic to exploit with current technology. Alternative fuel sources are now starting to become more mainstream. And small savings can be made through such seemingly simple things as vehicle lubricants.
Cadu cites the example of the United States, where oil production is back to five million barrels a day after declining from that figure to one million barrels a day. Yet the US could soon become a net exporter thanks to the tapping of Light Tight Oil (LTO) – resources which are at an earlier stage of maturation than conventional crude – and shale gas.
“The deal is changing fundamentally in the US with the boom – that is the word – of unconventional resources it is enjoying,” Cadu says. “A lot of domestic consumption is now from indigenous sources. The US could become a net exporter. There is huge availability, but it is a matter of cost, and the environmental impact is such a serious issue that the IEA (International Environment Agency) has published a set of recommendations regarding exploitation.”
Cadu also sees huge potential in turning gases into liquids as a means of decarbonising fuels. Samsung Heavy Industries of Korea is currently building for Shell a 500-metre long, 80-metre wide floating platform which, from 2016, will be able to liquefy 3.6 million tonnes of liquefied natural gas (LNG) per year from 200km (125 miles) off the Australian coast for export to Asian markets.
Shell claims the carbon emissions of LNG are significantly lower than those of coal or oil, although environmentalists argue that the chilling process will negate much of that.
Meanwhile, Shell has gas-to-liquid (GTL) plants in Indonesia and Qatar (Pearl GTL) which, although in their infancy, are expected to provide more than 150,000 barrels of liquids per day to be turned into diesel and aviation fuel as well as vehicle lubricants, paraffin and naptha, with significant reductions in atmospheric pollutants. Shell is considering a third GTL plant in the USA, at a cost of more than US$10bn – hence the need to gets its scenarios right.
“Since 2012, we have become more of a gas company than an oil company,” says Cadu. “There is a lot of potential. We see a world where gas could be prominent. Gas is a fundamental option to decarbonise power. It can get the coal out and replace it with fuel which is less CO2 intensive, and it is an alternative to nuclear power.”
Hydrogen will also play a part in Shell’s fuel strategy of the future, although the implication is that a significant number of cars will have to be around first. Ask Cadu whether there will be Shell stations dispensing clean hydrogen and he says: “People are used to filling up this way.” But question him about when, and he counters with: “Do you know what it costs to build a hydrogen station?”
Ultimately, Cadu says, there will be regional choices. The work being done on second-generation biofuels in Brazil will not work for other markets, for example. Local conditions will always dictate what is best.
Just as the automotive OEMs are now looking to make big gains through a series of small steps with their future products, so it is true with the oil companies. One solution is to reduce the viscosity of oils and greases without losing their capacity to do their job – against the background that customers want stagnant or lower costs and a sealed-for-life durability where possible.
But gains are there to be made. “Lubricants play a key role,” says Dr Selda Gunsel, Shell’s Vice President of Global Commercial Technology. “Up to 20% of fuel consumption in vehicles can be lost through friction. Today, with the right products, we can improve the efficiency of existing vehicles by 30%.”
So, should we be terrified about energy security in the future, or excited? “Efficiency has doubled in the last 50 years, and could double again or better in the next 50,” says Cadu.
“The world has always been faced with challenges, but if demand rises too quickly there will be price volatility. Energy is the greatest challenge facing us today. We have sustainable choices, and this is an issue for every one of us. It is not going to resolve itself.”
About the author: Roger Stansfield is a freelance automotive industry journalist based in London. He covers all aspects of the automotive industry, with a particular focus on future technology.