A Blueprint For the Future
Malcolm Brinded, Executive Director Exploration & Production and a Member of the Board of Royal Dutch Shell, recently touched down in Muscat for the 2008 International Conference on Harnessing Technology where he presented the paper “Meeting energy challenges: the technology imperative”. Here he takes time out of his action-packed schedule to meet with OER’s Jessica Brookes to discuss Shell’s role in Oman and the future of the energy industry.

What is your view on world demand and supply of energy?
There is no doubt that energy demand in the world is going to go up dramatically and continue to go up. Most estimates are that between now and 2050 energy demand will double as the world’s population grows towards 9 billion, and as the billions of people in the emerging economies go through industrialisation.

Will demand for hydrocarbon decline in the near future as alternative energy sources are developed?
The demand for hydrocarbons will continue to grow at least for the next 20 to 30 years. The Shell Energy Scenarios (see box: At a glance) both show that oil and gas consumption in 2050 will still be higher than it was in 2000. I think it will grow to say 2030 and then decline. The reason for that is because it will be difficult to develop sufficient alternative supplies of energy to meet demand growth in that time frame. I’m sure alternative energy sources will be developed and fast, but they are starting from such a small base that even if they increase at 10 or 15 per cent a year it will still take a very long time for them to make a significant contribution.

We see the prices of oil constantly fluctuating, is this pattern likely to continue?
My view is yes. It is inevitable that this is a sector where you see a volatility of price. That is the only thing I can say about oil price because predicting the level is extremely difficult. What I do think is that some of the drivers for oil prices long term are clear, such as the continued rise in demand. But what can happen in the short term may be very different as periodic surpluses of capacity arise. There are also a lot of influences that are not down to fundamentals, and that also have to be taken into account in any view of the price of oil. There is a lot of market emotion involved and this can lead to prices going up and down quite quickly.

What is Shell doing to meet the world need for energy?
We are the biggest explorer in the world and we are the largest investor in new projects amongst any of the integrated oil companies. We also invest very heavily in research and development – around one and quarter billion dollars a year in R&D – more than any other oil company. The majority of our R&D expenditure is in upstream and goes into understanding how can we find and produce more oil and gas.

What is Shell doing to help Oman oil production?
Virtually all our efforts are associated with PDO. It is essentially about supporting PDO in the drive to maximise recovery from the existing fields and to find new fields. We have had a very long-standing partnership with Oman, and I am very pleased that the PDO concession agreement has been extended recently for another 40 years. The ways in which we help is first of all with people. We have several hundreds Shell expert staff from elsewhere in the world who are working here in PDO at the moment. We try to bring the best ideas and our best research technology here. With joint stewardship we try and work very closely with the Government to understand what the Government’s needs are, and to try and then influence and ensure that PDO discharges its mandate and meets its business plan effectively. Wherever we see a need that we think we can meet we try to do so, with advice, with people, or with ideas.

We have also been very involved in the development of gas. PDO operates the upstream gas in its concession area on behalf of the Government of Oman, and we are privileged to be a joint venture partner as Shell with the Government in the Oman LNG project, which has been an enormous success. In fact, I was working here when we discovered the gas and the decision was made to build an LNG project. I always find it exciting to see how successful that project has been, how quickly it came on stream and how well it has performed since then.

How much is being invested in enhanced-oil-recovery (EOR)?
I can’t give you an exact figure. What I can say is that PDO is probably the only company in the world that is simultaneously implementing all three EOR technologies (thermal, miscible-flood, and chemical). All of its major projects, each one of which are multi-billion dollar projects, are essentially EOR. I think that by 2015 more than a third of PDO’s oil production will come from EOR. EOR is a very significant part of Shell’s research programme. We have decided to establish an EOR centre in Oman, and to lead our global R&D programme in EOR from the Sultanate.

How has Shell contributed to Oman’s economic and social needs?
Our biggest contribution has to be in the success of PDO, which has been responsible for 90 per cent of the growth in oil and gas production in Oman over the last 40 years, as well as in the LNG development. But I am pleased to say we have a separate and distinct Shell social investment program which has been quite successful over recent years. I am particularly proud of the success of ‘Intilaaqah’ and ‘Intilaaqah Enterprise Fund’ which are programmes to help entrepreneurs develop their skills to run new small to medium sized businesses.

You have lived in Oman before, how does it feel to come back?
I always love coming back to Oman. The country is so beautiful and the people are always very friendly and welcoming. I am impressed by the pace and scale of the new development that I see.

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