Abu Dhabi will remain a leader in world energy matters, according to Malcolm Brinded, Executive Director Exploration and Production of Royal Dutch Shell, in a speech delivered to a special Ramadan Majlis hosted by H.H. Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. Extracts follow.

“Before I start, I would like to express my deep appreciation for the partnerships that Shell has with Abu Dhabi. Next January we will celebrate 70 years of our presence here, and with so many representatives of the ADNOC Group of companies here tonight, I would like up-front to recognise the importance to us of their long standing relationships, to thank Abu Dhabi and ADNOC for the privilege, and to express my sincere hope that we can continue to work together for many decades to come. Another seventy years would be good.

The way the world’s energy systems develop is of vital interest for both Abu Dhabi, which is, and no doubt will remain, a leader in world energy matters, as well as for Shell….
There are three hard truths about the future of the energy systems on which the world depends.

The first hard truth is that with more people and growing prosperity, energy demand is surging. If things go on as they are, by 2050 a world with 9 billion people will be using twice as much energy as today.
The second hard truth is that energy supplies from all sources will struggle to keep pace… The IEA has estimated that 37.5 million barrels a day of new oil production, not far short of half today’s global production, might be required by 2015… So, even if a period of economic slowdown moderates demand growth, there is a major gap to meet…

Challenges here in Abu Dhabi, for example, include commercialising sour gas contaminated with H2S and applying enhanced oil recovery techniques to produce more from heavy oil fields…
The third hard truth is that the environmental stresses from producing and using energy are increasing. The international climate scientists are now 90 percent certain that global warming is caused by the increasing amounts of CO2 and other gases that humans put into the atmosphere. It is likely that this warming is already causing increases in sea level and changing storm patterns. That’s a risk the world simply cannot take…

Transforming energy systems in a few short decades will be very difficult:
difficult because of the scale and complexity of those systems… Technology is key. but there are no silver bullets…
Shell’s latest long-term energy scenarios describe two alternative futures, which we call Scramble and Blueprints.

Scramble is a world where countries seek their own short-term energy security, pursuing bilateral deals for supplies and increasing local production of coal, unconventional fuels and biofuels. Significant action on energy efficiency and emissions reduction is postponed until supply constraints and climatic events force hurried measures…

Blueprints is a more cooperative and forward-looking world, where challenges are anticipated and addressed collectively. Market measures are enacted to promote energy efficiency, emissions reduction and technology transfer.

By 2015, a critical mass of countries is participating in interconnected emissions trading schemes, paving the way for the widespread adoption of CO2 capture and storage.

Carbon Capture and Storage, CCS, is a process whereby CO2 is captured at an industrial source, such as a coal-fired power station, and then injected into deep saline aquifers, or depleted gas fields, or to enhance oil recovery… In Scramble, oil and gas consumption in 2050 is 6 percent up on 2000. Perhaps surprisingly, in the more cooperative Blueprints world, it is nearly 20 percent up, and hydrocarbons would still account for more than a third of total energy supplies in 2050.

In Scramble, energy security concerns prompt a ‘flight to coal’ and global consumption grows by nearly half in the first two decades of the century…

About 20 percent less coal is used in Blueprints. But, more important is the rapid introduction of CCS technology to curb power station CO2 emissions.
It is hard to overstate the importance of tackling these emissions… (but) CCS has the potential to be a practical and effective way of dealing with them.

It is one that I know Abu Dhabi is responding to as part of the Masdar Initiative with the aim eventually of reducing UAE CO2 emissions by almost 40 percent and increasing oil recovery by an additional 10 percent through injecting some of that CO2 in new enhanced oil recovery schemes…

In the Blueprints scenario, almost all coal-fired and gas-fired power plants in OECD countries are equipped with CCS by 2050, and half those elsewhere.

This takes out more than one quarter of global CO2 emissions or the equivalent of 55 million barrels of oil a day… Overall, CO2 emissions from energy in Blueprints are considerably lower than in Scramble…

Let me highlight how the two scenarios model transport.

In Scramble, the choice is liquid fuels, with biofuels augmenting fuels from fossil sources. By 2050, biofuels increasingly from less damaging sources account for a quarter of demand by 2050.

In Blueprints, with its sustained focus on efficiency, the energy used in transport is a fifth lower than in Scramble. But the key shift assumed is electrification, with electric and hydrogen vehicles accounting for a sixth of the energy mix by 2050.

But is this the best solution? There would be many advantages to sticking with liquid fuels from hydrocarbons and sustainable biomass. They can utilise the same infrastructure and require an evolution, not a revolution, in engine technology…

In the medium term, blending in the right biofuels combined with continuous improvements in vehicle efficiency have the greatest potential for decarbonising mobility.

In the longer term, the indications are that these can match the benefits of electric vehicles, with the addition of CCS on liquid hydrocarbon fuel production...

I have no doubt that the basic premise of Blueprints is right: that we will all have a better future if countries and companies work together globally to anticipate challenges, and address them early on.

A Scramble scenario would be a turbulent, risky and ultimately unsustainable world.

A Blueprints approach would offer a better long-term basis for sustaining the use of hydrocarbons for energy and chemicals, and for building economies and maintaining global growth.

And I believe that major producers like the United Arab Emirates will play an increasingly important leadership role in such a world.

(But) however much effort we put into exploring the future, we’re still going to be surprised by technology. Which is why in Shell we put so much effort into getting ahead of the game - increasing our R&D spending nearly threefold since 2002, to 50 percent higher than our nearest IOC competitor.

Of course, we undertake our technology development together with our partners in operations around the world. And I should mention here the Abu Dhabi Investment Fund’s stake in the Shell Technology Ventures Fund…

We’ll need all the help technology can give, as the world faces such great energy and environmental challenges. But, above all, the world will need leadership.

And here I am sure that Abu Dhabi can and will play a very strong role ... through the vision of His Highness Sheikh Khalifa bin Zayed,supported by the drive of His Highness Sheikh Mohammed bin Zayed.

One vital area of leadership is in meeting the world’s growing need for oil and gas. Abu Dhabi has an impressive record of serving its global customers:

• by applying advancing technologies, together with its international partners, to build its production capacity,
• by its strong commitment to developing the necessary skills and capabilities for the future, and
• by its consistently statesmanlike role in global energy markets. I have no doubt that this leadership will continue.

I was proud to attend the Masdar inauguration ceremony more than two years ago. Its aim of making Abu Dhabi a centre for developing and exporting alternative energy technologies is both bold and visionary: that’s exactly what I mean by leadership. The Zayed Future Energy Prize, honouring the environmental vision of the late Sheikh Zayed bin Sultan Al Nahyan, will inspire energy innovators everywhere.

These are areas where Abu Dhabi’s leadership is already manifest.

There are, however, a couple of other areas where I believe you could also play a vital role in leading our industry ...

The first would be in recognising how biofuels can complement hydrocarbon fuels in beating the challenge of electric vehicles to provide more environmentally friendly vehicle transportation.

The second relates to my earlier comments about why the introduction of CCS in coal-fired power stations is so important. This will not happen unless the sequestered carbon is given a market value through cap and trade mechanisms. And it needs to happen soon… That’s why I believe achieving a global carbon market is a vital shared interest for this industry.

Meeting the world’s energy challenges will depend on harnessing all the capabilities we have available ...

Abu Dhabi has consistently followed a strategy of utilising the knowledge and capabilities of international oil companies as partners in its energy industries. Likewise, Masdar is also based on cooperation with international partners. This is the Blueprints ethos, and, as I have discussed, the best hope for our world. It is another example of Abu Dhabi’s capacity to lead.

In Shell, we’re very proud to play our part in supporting Abu Dhabi’s progress ... helping to turn His Highness’s vision into reality.