A Fever of innovation
Executive Vice-President of Innovation, Research and Development at Shell Gerald Schotman described his role as Shell‘s chief technology officer as ‘capturing the pace of technology, in a way that really drives society forward’ and gave examples of the company’s product development. “There is a fever of innovation taking place in the industry,” he said.
Envisaging a world in 2050, Mr Schotman outlined a world of 9 billion people, where energy demand doubles, renewable sources of energy feature more prominently, but hydrocarbon fuels remain indispensable. Citing independent research he claimed that 70% of the world’s energy mix would still need to come from fossil fuels.
Shell’s spending on research and development (R&D) currently leads the industry, at $1.1 billion per year and has resulted in a large number of new patents. Examples of Shell’s new technology include a new, floating, liquid natural gas platform – with a surface area equivalent to four football pitches, a ‘bubble curtain’ to deter Arctic whales from oil platforms and the use of concentrated solar panels.
Going further into renewable energy, Mr Schotman showed how Shell is investing in energy from crop waste and geothermic energy, stressing the need for developing a portfolio of these “disruptive technologies” in order to manage risk.
The main technological focus, however, is fossil fuels. Exploration and drilling in the Arctic, accessing ultra-deep water oil reserves and gas extraction pose challenges requiring new solutions. Gas is very much the future for Shell, with global demand expected to increase 50% by 2035. Shell now produces more gas than oil, and believes gas to be a reliable resource which could last for the next 250 years at current production rates.
Schotman also outlined how Shell collaborated with other companies and universities to further its innovation and employed venture capital to demonstrate, develop and deploy new technology.
Innovation was needed, said Schotman, to create technologies that are “better, faster and cheaper” and to differentiate Shell from its competitors. It is clear that – in line with the Summit’s theme of ‘Value Creation at the Edge of Technology’ – Shell sees its value creation as technology-driven in order to deliver an increasingly diverse range of energy sources in an increasingly complex and challenging landscape.
RSM’s Wolf Ketter, Assistant Professor in the Department of Decision and Information Sciences, asked whether the threshold would come when Shell decided to step away from fossil fuels. Mr Schotman replied that he could not see a single cut-off point “The Stone Age did not end because of a lack of stones and the oil age will not end because of a lack of oil,” Mr Schotman responded. “The decision is with the customer. They have to make choices on how they wish to fuel life in the future.” He also mentioned that changes in the energy mix are “significantly faster” than is currently thought, citing figures. Total amount of investment in oil and gas production was $400bn in 2010, while the investment in solar and wind was $200bn.