THE ROLE OF ENERGY COMPANIES FOR THE FUTURE SOCIETY · Shell Global Solutions (Deutschland) GmbH...

Shell Global Solutions (Deutschland) GmbH

THE ROLE OF ENERGY COMPANIES FOR THE FUTURE SOCIETY

FISITA World Automotive Summit 2014

Dr. Wolfgang Warnecke Chief Scientist Mobility, Shell Projects & Technology

1 October 1 2014

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DEFINITIONS & CAUTIONARY NOTE

Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves.

Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.

Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact.

Resources plays: our use of the term ‘resources plays’ refers to tight, shale and coal bed methane oil and gas acreage.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this presentation, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended 31 December, 2013 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 1 October, 2014. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all.

We use certain terms in this presentation, such as discovery potential, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain this form from the SEC by calling 1-800-SEC-0330.

October 1 2014


OVERVIEW – SHELL AND R&D

3 October 1 2014


A GLOBAL APPROACH – TECHNOLOGY CENTRES

4

Houston, US

Atsugi, Japan Hamburg, Germany

Shanghai, China

Bangalore, India

Amsterdam, Netherlands

October 1 2014


SHELL ENERGY SCENARIOS

5 October 1 2014

SHELL AND SCENARIO PLANNING – WHY?

6 October 1 2014

Scenarios help us wrestle with possible futures

Current Realities (mental models) Multiple Paths

Alternative Future Images

SCENARIOS

MOUNTAINS & OCEANS – OVERVIEW

7 October 1 2014

•  Influence concentrates amongst the already powerful, as advantage brings more advantage

•  Economic development slowed by rigidities in structures and institutions

•  However, some secondary policy developments facilitated

ENERGY •  Sluggish economic growth moderates

supply/demand tensions •  Natural gas becomes the backbone

of the global energy system •  A profound shift occurs in global

transport and infrastructure •  Moderated CO2 and resource

stresses; CCS takes off

•  Emerging interests intermittently accommodated

•  Core reforms unleash growth – and expectations for further reform

•  However, more empowered constituencies hinder some secondary policy advancement

ENERGY •  Supply/demand tightness and

high prices unlock expensive resources and drive user efficiency

•  Liquid fuels and coal continue to dominate as gas undershoots global hopes, until solar becomes new backbone

•  High CO2 and resource impacts. CCS only mandated later

MOUNTAINS OCEANS

„ Wait & See“ „Self-ish“

„ Alliances“

8

MOUNTAINS & OCEANS VIEWS TOTAL PRIMARY ENERGY BY SOURCE

1200

1000

800

600

400

200

0

EJ/y

ear

2000 2010 2020 2030 2040 2050 2060

Source: www.shell.com – new lens scenarios

1200

1000

800

600

400

200

0

EJ/y

ear

2000 2010 2020 2030 2040 2050 2060

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricty

Geothermal Solar Wind

MO

UN

TAIN

S O

CEA

NS

RESOURCE MIX CONTRAST: WORLD’S LARGEST PRIMARY ENERGY SOURCES

SCENARIO CONTRAST: WORLD PASSENGER TRANSPORT

Mountains Oceans

Combined with the impact of higher economic development, Oceans sprawling suburbs lead to higher travel needs than Mountains compact cities

Electricity and Hydrogen Gaseous Hydrocarbon Fuels Liquid Hydrocarbon Fuels & Biofuels

2000 2010 2020 2030 2040 2050 2060 Year

0

10,000

20,000

30,000

40,000

50,000

60,000

Billi

on v

ehic

le k

m

2000 2010 2020 2030 2040 2050 2060 0

10,000

20,000

30,000

40,000

50,000

60,000

Year


NET OIL & GAS IMPORT DEPENDENCY IN SELECTED COUNTRIES


TECHNOLOGY TAKES TIME TO GO FROM RESEARCH TO COMMERCIALITY Global production of primary energy sources

109

108

107

106

105

104

103

Tera

joul

es/y

ear

1960 2050 2040 2030 2020 2010 2000 1990 1980 1970

October 1 2014

Electricity for Mobility? Hydrogen?

SHELL GTL: DECADES OF RESEARCH, DEVELOPMENT & EXPERTISE

Reinvent Fischer-Tropsch process

Amsterdam

Laboratory: grams/d

1901

Improving gas-to-liquid conversion

Pilot plant

Amsterdam: 3 bbl/d

1938 1973 1983

Oil industry revolutionized

Advancements in Fluid Catalytic

Cracking

1993 2012

Shell first commercial gas-to-

liquid plant:

Bintulu Malaysia capacity 4,700 bbl/d

2014

World’s largest GTL plant in Qatar:

Pearl GTL Qatar 140,000 bbl/d

n  Biggest GTL plant worldwide (size of 453 soccer fields

n  One GTL Tower weighs as much as 7 Jumbo Jets

n  Steel used could build 10 Eiffel Towers n  Built by 50,000 workers from 50 countries

PEARL GTL

October 1 2014

Producing a range of GTL waxes & fluids - after 40 + years of Development


SHELL SCENARIOS - URBANISATION FOCUS

14 October 1 2014

URBANISATION – A KEY GLOBAL TREND

15 October 1 2014

6.3 billion

3.6 billion

•  More than half the world’s population lived in cities in 2007 •  By 2050 it will be three quarters •  An extra 2.7 billion people •  We are building the equivalent of a new city of 1.4 million people every week

NEARLY 50% OF THIS GROWTH IS IN ASIAN CITIES

16 October 1 2014

11% Americas

3% Europe

9% Middle East �& N. Africa

29% Sub-

Saharan Africa

18% India

13% China

17% Other Asia �

& Oceania

<1% OECD Asia & Oceania

URBAN DENSITY – IMPACT ON TRANSPORT

17 October 1 2014

Source; Newman and Kenworthy, �1989: Atlas Environnement du Monde Diplomatique 2007

URBAN DENSITY (inhabitant/hectare)

Tran

spor

t-rel

ated

Ene

rgy

Con

sum

ptio

n G

igaj

oule

s P

er C

apita

Per

Yea

r

Urban density and transport-related energy consumption


MOBILITY TRENDS & CHALLENGES

18 October 1 2014

THE CHALLENGES FOR FUTURE MOBILITY �

Access to Energy/Fuels Which energy sources will meet the growing demand for mobility?

Total Cost of Ownership Which fuel/vehicle combination will allow mobility to remain affordable ? World Population Growth & Urbanisation How will mobility & infrastructure concepts change mobility in megacities? Reduction of GHG & Local & Noise Emissions Fuel/vehicle options for lowest amount of GHG and local emissions

Changing Consumer Values & Social Acceptance New consumer values – ”Mobility on Demand“. Which factors drive social acceptance & resulting uptake of new fuel/powertrain solutions?

New Technology Options Vehicle Autonomous Drive, Continuous Connectivity, Safety Features (Night vision, active braking, distance control, advanced stability control…)

New Mobility Policy Taxes /Incentives to manage Mobility & Local Entry Restrictions (Cities)


DRIVETRAINS & FUELS – PAST, PRESENT AND POSSIBLE

Renewable Electricity

& Hydrogen?

?

October 1 2014


0

20

40

60

80

100

120

140

TtW fuel

WtT hydrogen

WtT electricity

WtT fuel

B0

FUELS & POWERTRAIN COMPARISON – WTW CO2 EMISSIONS

n  On a WtW basis no CO2 emission-free mobility n  For fossil fuels and > 80% of the CO2 emissions in TtW phase, electric in production phase n  Impact of biofuels seems low but big lever as majority of the vehicles on the road ICE

21

Using JEC Study 2013 dat & Own calculations

g CO2/km 2020 + Powertrain Technology

E20 B7

E0

October 1 2014


REQUIRED: A FULL LIFE CYCLE ANALYSIS (LCA) PERSPECTIVE

22

System boundary is critical and must be relevant to the analysis

Fuel life cycle Well-to-wheels GHG emissions

WtT* emissions: ~20%

+ Vehicle life cycle

Raw Material Vehicle assembly Distribution & Maintenance End of Life

*WtT = Well-to-Tank

TtW** emissions: ~80%

**TtW = Tank-to-Wheels

October 1 2014


FUEL AND LUBES OPTIONS FOR MOBILITY MODES

October 1 2014


H2 OFFERS CO2 REDUCTION - WHERE BIOFUELS GROWTH IS CONSTRAINED

Source for Targets: ec.europa.eu/clima/policies/transport/vehicles/cars

2015 Target 130g

2021 Target 95g

2025 Target 70g?

130g = 4.9l diesel/100km 95g = 3.6l diesel/100km

100 H2 Stations (50 within the CEP) in 2017 400 H2 Stations cross Germany JV in 2023


INTERNATIONAL HYDROGEN INFRASTRUCTURE ACTIVITIES

UK H2 Mobility § Phase 2 accomplished

H2-Mobility France § In preparation

Hydrogen Infrastructure for Transport (HIT) (TEN-T) 3 HRS

§ 45 HRS / 2015 § 500 cars / 2015

USA (California) Japan

§ 1000 HRS till 2025 § 1 Mio. FCEVs till 2025

South Korea

§ 500 HRS till 2020 § 50.000 FCEVs till 2020

China

§ 5 HRS till 2015 § 1.000 FCEVs till 2015

§  68 HRS till 2015 §  5000 FCEVs till 2015

Sources: websites and press releases

§  100 HRS (50 within the CEP) / 2017 § H2 Mobility Germany JV – 400 HRS

10-15 HRS

Germany

October 1 2014


New Consumer Values

Costs & Convenience

Legislation

FUTURE MOBILITY – DRIVERS & TRENDS – NEED FOR PARTNERSHIPS

New Mobility

GHG Reduction

Zero Smog Emission

Refueling Convenience

Transport Mile / Vehicle Cost Of Ownership

‘Continous Online‘ Demand & Connectivity

Changing Lifestyle (Remote Work;

Internet Shopping etc)

New Architecture (‘Live & Park‘)

Suburbanisation (USA)

Urbanisation (Asia)

Open Up New Driveways

Traffic Density

Emotional Mobility

Remote Drive

Mobility On Demand

Bike Share

Car Share

Sub ‘Smart‘ Vehicles & Pedelcs

Combustion Engine Improvements

Emission Free Vehicles BEV (PHEV)/FCEV

Hybridisation Noise Reduction

Crude Oil ends

More Gas

Advanced Biofuels

Renewable Hydrogen

Green Electricity

Travel Time

World Wide Harmonisation

Emission Limits (Noise, Smog & GHG)

Lights & Brakes

Safety

Trade Barriers

Gov. R&D Fundings

Online Purchase Behaviour

Raise in �Goods Transportation

Shrinking Persons Transport km

Ageing Population

Change in Transportation

Urbanisation

Environment

Change in Transportation

New Vehicles

Energy

October 1 2014


STIMULATING THE FUTURE: SHELL ECO-MARATHON – FUEL EFFICIENCY CHALLENGE

27 October 1 2014

•  Started as a friendly bet between Shell scientists,�now a dynamic, evolving event with 4,000 students, 393 teams from 45 countries & rising…

•  Six different power sources – two vehicle categories:

•  UrbanConcept: four wheels, similar appearance to passenger cars, capable of ‘stop & go’ manoeuvres & driving in light wet weather conditions

•  Prototype: single seater, three or four wheels, smaller in size, more streamlined to reducer drag & maximise efficiency

2015 Competition: Manila (Asia)

Detroit (Americas) Rotterdam (Europe)

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