Each year the larger oil production companies provide their views of the future, and I recently reviewed that for ExxonMobil. Shell has now produced their projections, though in a somewhat different format as the document “New Lens Scenarios”, which deals with future projections as a set of differing options. That does not make these views less informative.

In reviewing where the world will go, Shell looks more to political impact as the future unrolls. They see the European Union stuck in a Trapped Transition” where:

...the ‘can’ keeps being ‘kicked down the road’ while leaders struggle to create some political and social breathing space. So there is continuing drift, punctuated by a series of mini-crises, which will eventually culminate in either a reset a reset involving the writing off of significant financial and political capital (through pooling sovereignty, for example) or the euro unravelling.

On the other hand, countries such as China and Brazil are resilient:

in their different ways, they had the financial, social, political, or resource ‘capital’ to respond and reform, following a room to Manoeuvre pathway.

Within the next thirty years, as the population grows, so a greater percentage - up to 75% - will live in cities. And these will consume a greater fraction of the global energy supply, perhaps as high as 80%, up from the current 66%.

The document is very much slanted as a socio-political forecast, with considerable polemic in regard to the weaknesses that the company perceives to exist in the West.

Shell postulates two different scenarios for the future. There is the Mountain scenario, where business continues very much as usual, and then there is an Oceans scenario where the ”powers that are” work toward a more accommodative approach to those in the developing world, and to the less fortunate layers of society.

The document begins with the impact if the Mountain scenario is to prevail, driven through a top down control, largely through existing institutions. Shell is not enamoured of this:

In the US, for example, income and wealth inequality continue to increase, with stagnating middle-class earnings, reduced social mobility, and an allegedly meritocratic higher education system, generously supported by tax exemptions, whose main beneficiaries are the children of the successful. Superimposed on this class divide is an increasingly serious intergenerational divide, as commitments to the elderly via entitlement programmes crowd out discretionary expenditures that could rebuild economic and social infrastructure. Similarly, in Europe an ageing population and commitments to high levels of entitlement, which are frequently underfunded, create a mixture of social and political strains that deflect attention from the core structural economic issues facing the region.

Driven by this gloomy picture of the future, Shell anticipates that global GDP growth through the 2030’s will average under 2%. This will, in turn, moderate the growth in energy demand. Through increasing urbanization, the growth of the service sector and the greater use of electricity in developing countries, Shell anticipates that the strong correlation between economic and energy demand growth will be broken.

N.B. All the illustrations come from the Shell New Lens Scenarios document.

You know it is winter when Russia and Ukraine publically row about supplies of natural gas. On Tuesday Ukraine completed the signing of an agreement with Turkmenistan for the supply of natural gas. In the past the purchases have been for up to 36 billion cu m per year, although this was historically through Russian intermediaries. That deal ended in 2006, and Turkmenistan has been able to find a customer in China that now provides an alternate sale that does not leave it dependent on whatever price Russia was willing to provide.

But this does not mean that Ukraine has been able to escape having to pay whatever price Russia wished to impose, since to get from Turkmenistan to Ukraine the natural gas still requires passage through a pipeline that runs through Kazakhstan and Russia. There is no prize for guessing that Gazprom owns those pipelines.

This continues to give Gazprom leverage over Ukraine, and with the North Stream pipeline now approaching its full potential after the second string was commissioned last October, Europe can receive up to 55 billion cu m per year without the gas having to pass through Ukraine.

I have tried in the last two OGPSS posts to show some of the problems that are developing in the flow of oil from Alaska to the rest of the United States. Based on a falling volume of oil produced from the existing fields in the North Slope, the delivery pipeline from Deadhorse to Valdez is approaching levels of flow which will make it more difficult to deliver that oil. There are fields in the region that are still being developed. Alaska_geo has pointed to several developments that are likely to take place over the next year, mainly in exploration but including the development of the Umiat field. One of the mechanisms that the Alaskan Governor has proposed to help encourage industry was to provide a road up to Umiat. The oil reserve for the Umiat field is estimated at 250 mb, but the road may take another five years to finish.

As with the subjects of the last couple of posts not everyone knows where the different places are in Alaska, so since one of the intents with this post is to look at off-shore deposits, let me put up a new map.

Bintulu. For many people involved with gasification, that word often invokes a specific image. In fact, colleagues know when I say “Bintulu” that’s shorthand for Shell’s Bintulu, Malaysia gas-to-liquids (GTL) facility (officially, the Shell Middle Distillate Synthesis plant).

I recently traveled to Malaysia on business, and I learned that I would be in Bintulu (the airport code for Bintulu, by the way, is BTU) for two days. I contacted Shell to see if they could accommodate a visit for the purpose of writing a story about their facility, and they were indeed able to get me into the plant.