Royal Dutch Shell plc .com Rotating Header Image

Posts under ‘Alternative Energy’

Democrats See Strategy to End Big Oil Tax Breaks

A version of this article appeared in print on May 9, 2011, on page A15 of the New York edition with the headline: Democrats’ Plan Would Offset Deficit by Ending Big Oil’s Tax Breaks.

WASHINGTON — Linking two of the politically volatile issues of the moment, Senate Democrats say they will move forward this week with a plan that would eliminate tax breaks for big oil companies and divert the savings to offset the deficit.

With high gas prices and rising federal deficits in the political spotlight, senior Democrats believe that tying the two together will put pressure on Senate Republicans to support the measure or face a difficult time explaining their opposition to voters whose family budgets are being strained by fuel prices.

President Obama and some top Congressional Democrats have said they want to take some of an estimated $21 billion in savings from ending the tax breaks and steer it to clean energy projects. But the Senate’s Democratic leadership is calculating that using it to cut the deficit instead makes it a tougher issue politically for Republicans who are trying to burnish their conservative fiscal credentials.

“Big Oil certainly doesn’t need the collective money of taxpayers in this country,” said Senator Robert Menendez, Democrat of New Jersey, one of the authors of the legislation that Democrats intend to showcase. “This is as good a time as any in terms of pain at the pump and in revenues needed for deficit reduction.”

As part of the effort to build support for the measure, the Senate Finance Committee has invited multinational oil company executives to discuss the tax subsidies and other government incentives at a hearing on Thursday.

Many Republicans are certain to oppose the proposal, making it hard for Democrats to assemble the 60 votes that will be needed to break a filibuster, given the resistance from energy-state senators in their own ranks. Republicans have characterized calls by Mr. Obama and Congressional Democrats to end the breaks as backdoor tax increases that will only increase gas prices.

“Instead of returning again and again to tax hikes that increase consumers’ costs, the administration and its Democrat allies in Congress should open their eyes to the vast energy resources we have right here at home and to the hundreds of thousands of jobs that opening them up could create,” Senator Mitch McConnell of Kentucky, the Republican leader, said in a statement.

Hoping to reinforce that point, House Republicans are set to approve legislation this week that would expand the coastal areas where energy companies can explore and produce oil and gas.

Democrats say they tailored their bill to make it harder for Republicans to reject after Senator Harry Reid, the majority leader, and Mr. Menendez wrote to colleagues last week that their goal was to “proceed with a bill that maximizes our chances of garnering bipartisan appeal.”

As currently written, the bill would apply only to what Democrats have identified as the five largest and most profitable oil companies: BP, Exxon Mobil, Shell, Chevron and Conoco Phillips. Those involved in writing the measure said they restricted it to those firms by using a definition that applied to major oil companies with certain levels of revenue. Democrats say they believe that approach thwarts Republican arguments that eliminating the tax breaks could affect more than just the major oil firms.

The proposal would end a series of tax advantages for the five companies and produce about $21 billion over 10 years, Democrats say.

More than $12 billion would come from eliminating a domestic manufacturing tax deduction for the big oil companies, and $6 billion would be generated by ending their deductions for taxes paid to foreign governments. Critics suggest that the companies have been able to disguise what should be foreign royalty payments as taxes to reduce their tax liability. The bill would also deny the companies the ability to deduct some intangible drilling and development costs, producing another $2 billion.

Some Congressional Democrats, including Senator Max Baucus, the Montana Democrat who heads the Finance Committee, have proposed using the revenue from the elimination of the tax breaks to promote alternative fuels and provide incentives to purchase fuel-efficient vehicles. Mr. Obama has made similar suggestions, and in his regular address over the weekend he again called for more emphasis on the development of clean energy.

But top Democrats said that reallocating the money that way would allow Republicans to accuse Democrats of picking winners and losers in the energy industry. At the same time, the strict focus on the deficit could cause unrest among Democrats who support alternative energy projects.

Last week’s sudden dip in oil prices, which could show up at the pump soon, might also sap momentum behind the tax measure.

Don Stewart, a spokesman for Mr. McConnell, noted that Democrats typically criticize oil companies when gas prices are high. He pointed to remarks made by Democrats at a 1974 Senate hearing that echoed the current talk of soaring profits and industry bonanzas.

“These guys need a new playbook,” Mr. Stewart said.

But Democrats said they see themselves as occupying the political and policy high ground in this case. They noted that top Republicans like Speaker John A. Boehner and Representative Paul D. Ryan, the Wisconsin Republican who is chairman of the House Budget Committee, have suggested that industry subsidies might have to be curbed.

Even talk of Republican delaying tactics does not seem to disturb Democrats who are eager to engage in a fight about oil.

“I am happy to have this debate on the floor for days,” Mr. Menendez said.

SOURCE ARTICLE

Fossil fuel firms use ‘biased’ study in massive gas lobbying push

Industry urging governments and business to reject renewables in favour of ‘green’ shale gas

Fiona Harvey, environment correspondent, Wednesday 20 April 2011 17.24 BST

Pipes at a natural gas drilling site near Montrose, Pennsylvania. Photograph: Daniel Acker/Getty Images

Senior executives in the fossil fuel industry have launched an all-out assault on renewable energy, lobbying governments and business groups to reject wind and solar power in favour of gas, in a move that could choke the fledgling green energy industry.

Multinational companies including Shell, GDF Suez and Statoil are promoting gas as an alternative “green” fuel. These companies are among dozens around the world investing in new technologies to exploit shale gas, a controversial form of the fuel that has rejuvenated the gas industry because it is plentiful in supply and newly accessible due to technical advances in gas extraction known as “fracking”.

The expansion of shale gas holds out the promise of a glut in gas that is driving down prices and creating a bonanza for the fossil fuel industry. Burning gas in power stations releases about half the carbon emissions of coal, allowing gas companies to claim it is a “green” source of fuel.

Central to the lobbying effort is a report claiming that the EU could meet its 2050 carbon targets €900bn more cheaply by using gas than by investing in renewables. But the Guardian has established that the analysis is based on a previous report that came to the opposite conclusion – that renewables should play a much larger role. The report being pushed by the fossil fuel industry has been disowned by its original authors who referred to it as “biased” in favour of gas.

For the last two months, company lobbyists have been besieging government officials in Europe, the US and elsewhere to push the report. Their efforts are being boosted through alliances with energy-intensive industries, which are joining in the pressure on government in the hope of securing cheap energy.

As the problems with the Fukushima plant in Japan have cast a pall over nuclear power, gas companies sense the chance to brand themselves as the main “green” source of energy. James Smith, outgoing UK chairman of Royal Dutch Shell, one of the leaders in the lobbying effort, said switching to gas would offer the world “a breathing space” in the battle against climate change.

This view was challenged by Prof David Mackay, chief scientific adviser to the UK’s Department of Energy and Climate Change. He told the Guardian: “You can’t reach the [climate] targets like this – there is no way that switching to gas would solve the problem. I don’t think it’s really credible that gas is the only future.”

The lobbying effort by fossil fuel companies has been intense. At a high level meeting on Wednesday, the president of the European parliament hosted a lunch for the gas industry with VIP guests including the EU’s energy chief, Günther Oettinger.

It is the latest in a long round of meetings in recent months between gas lobbyists and senior officials in Brussels, including other EU commissioners and prominent MEPs, as part of the industry’s charm offensive. Oettinger alone has held at least two other major meetings with gas representatives this year.

At most of these meetings, and at many other formal and informal meetings to discuss EU energy and climate change, officials have been presented with a report commissioned by the European Gas Advocacy Forum (EGAF), an industry lobbying group, based in part on an analysis by consultancy firm McKinsey and called Making the Green Journey Work. This report appears to show the EU could meet its 2050 climate targets €900bn more cheaply using gas than by investing in renewables. A copy of the report has also been presented to the office of José Manuel Barroso, the EU president, who has taken a close interest in EU gas supply with visits to the Ukraine, Turkmenistan and Azerbaijan this year.

Apart from coming to different conclusions about renewable energy, the report also relies on questionable assumptions about the future price of technology to capture and store carbon.

The team at the European Climate Foundation that produced the original report described the EGAF version as “biased to one preferential outcome in support of gas advocacy”. They warn that adopting its conclusions would reduce energy security and expose the European economy to the volatile gas price.

A spokesperson for McKinsey said: “It is our long-standing policy not to discuss our clients or the work we do for them.”

David Rimmer, Shell’s general managed for global gas said, “Shell sees renewables as a major part of the future energy mix but this analysis has shown that increased reliance on gas in the near term saves money and jobs, delivers on climate targets and allows new technologies to be improved before large scale deployment.”

Further doubt has been thrown on the industry’s claims by a newly released academic study from Cornell University which found that generating electricity from shale gas – because of the difficulty in extracting it from rocks – produces at least as much carbon dioxide as coal-fired power, and perhaps more.

Jenny Banks, climate and energy policy officer at WWF-UK, called on the British government to halt shale gas exploration. “It would be ridiculous to encourage shale gas when in reality its greenhouse gas footprint could be as bad as or worse than coal. We need to reject this source of gas, and have a clear plan to move away from our dependency on fossil fuels and harness the full potential of renewable technologies.”

Some in the gas industry are careful to argue that its fuel is complementary to renewables, as it can be relatively easily turned on and off to provide flexible back-up power when the wind is not blowing.

This argument is accepted by Oettinger, who insists that both gas and renewable energy will be needed for flexible low-carbon power generation, and some other senior figures. Nobuo Tanaka, the executive director of the International Energy Agency, said: “Gas is potentially a game changer. But it is complementary to renewables, as it can be turned on and off quickly. It could be baseload power and we could turn off coal.”

But renewable energy generators are wary, as they fear that cash-strapped governments will ease off on subsidies for clean power, in favour of licensing gas-fired power stations.

A new gas-fired power station would be expected to have a useful life of about 25 to 40 years. So although switching from coal to gas would help countries meet their short term emissions targets, in the longer term they would be left with fleets of redundant, high-emitting fossil fuel power stations – unless they were fitted with expensive technology to capture and store the carbon dioxide underground. However, this technology is still unproven and it is likely to be decades before it can be widely used. The economics of the technology are highly uncertain, and renewable companies argue that the assumptions used by EGAF to show that the fossil fuel is cheaper than renewables do not stand up to scrutiny.

Shale gas is controversial because it requires large amounts of water to release it from rocks, and the use of potentially dangerous chemicals that could leach into the water supply. Numerous cases in the US, which has led the way in releasing gas from shale rocks using fracking technology, have shown evidence of contamination and dangerous leaks of methane.

Prof Robert Howarth, lead author of the Cornell study, said: “My strong belief is that shale gas has been promoted far beyond the objective evidence of what it can and cannot do. It is time to step back, and objectively analyse whether this is a reasonable energy technology for our future. It is also time to analyse how environmental issues associated with the technology might be reduced, and at what cost.”

SOURCE ARTICLE

Is shale gas as green as the companies say?

Shale gas: is it as green as the oil companies say?

At the heart of the shale gas ‘sell’ is the industry’s analysis of a European Climate Foundation report – an analysis ECF rejects

Fiona Harvey, environment correspondent: Wednesday 20 April 2011 20.49 BST

A natural gas wellhead near Montrose, Pennsylvania. Photograph: Daniel Acker/Getty

“You just wouldn’t believe you could get gas out of that, would you?” said Mark Miller, chief executive of UK gas company Cuadrilla Resources, turning over a lump of hard black rock. It is dark, extremely dense and very heavy, with a smooth and almost chalky feel, and is found buried thousands of feet beneath the surface of the earth in deposits made 300m years ago.

There are no holes, nothing to betray the fact that this shale rock can be made to yield natural gas in such quantities that it could power the globe for centuries.

Shale is being hailed as the green energy of the future because new technologies can be used to fracture the dense rock and flood it with water to release bubbles of natural gas that can be burned for electricity with – according to the gas industry – only about half of the carbon dioxide emissions of coal.

“This source of gas is revolutionary,” said Malcolm Brinded, foremost expert on the technology at Royal Dutch Shell. “It will reduce dependence on imported oil, and in practice price volatility. There is a huge pace of growth.”

Oil companies are rapidly seizing the opportunity. Within two years, predicts James Smith, outgoing UK chairman of Shell, the company will go from being an oil business to a gas producer. “Estimates show that we could have enough gas to power the world for 200 years,” he said.

But proponents of renewable energy argue that the millions spent on lobbying efforts to rebrand gas as “green” are based on questionable assumptions. They say that the oil industry’s attempt to replace renewable power as the main means to combat climate change could destroy the fledgling green energy industry and thwart attempts to stop global warming.

“Any money and investment that is going to gas is money that is not going to renewables,” said Brook Riley, campaigner at Friends of the Earth. “This is a threat to renewables.”

Gordon Edge, director of policy at Renewable UK, a trade body for wind companies, said: “We must be careful not to lock ourselves into dependence on a finite imported fuel which, while it is less carbon intensive than coal, is nevertheless much more carbon intensive than any renewable.”

Oil companies see gas as a means of recasting themselves as environmentally friendly, with government backing. Newly available forms of gas appear to offer a 50% reduction in carbon emissions compared with electricity generation from coal, meaning most countries could easily meet their 2020 emissions targets – agreed at the 2009 Copenhagen climate conference – at a fraction of the expense of investing in wind, solar and renewables.

These assumptions are backed up by an economic analysis commissioned by the European Gas Advocacy Forum (EGAF) based in part on work by McKinsey, a consultancy which found that Europe could save about €900bn by 2050 if it met its emissions targets through investment in gas rather than renewables.

“This report seems to get pulled out at every meeting,” said one European commission insider. “But what they [the lobbyists] do not say is where it came from.”

This EGAF study is now under question by the very people who helped to write it. In its original form, the study found that renewable energy was the best means of meeting Europe’s energy needs while cutting greenhouse gas emissions. The sources, methodology and conclusions of this original report were made “open source” by the European Climate Foundation (ECF), the green thinktank that commissioned the research and provided much of the material.

But these open source calculations were seized on by the gas industry, which commissioned a new report altering the original conclusions to appear to show that gas would be a cheaper and more viable form of energy than renewables.

The ECF says: “We in no way endorse this [EGAF] report. Heavy dependency on gas, as this report seems to suggest, is not a viable alternative to a low-carbon generation network with low dependence on fossil fuels in terms of cost, energy security, or climate resilience

“[This is because] it will make Europe dependent on one potentially cost-volatile solution, and the successful commercialisation of carbon capture and storage at an unrealistically large scale. It also reduces Europe’s energy security [because Europe has few shale gas reserves to exploit, unlike the US and Asia]. These are high-risk strategies indeed.”

Privately, green campaigners and officials in Brussels are furious at EGAF’s actions. “It is outrageous,” said one insider, who cannot be named. “The way in which this has been distorted by the gas industry is unbelievable.”

What is more, the industry’s core assumption that shale gas offers a 50% reduction on burning coal has also been sharply challenged by a new academic study.

Gas, in its pure form, burns in power stations with about half the carbon dioxide produced by burning coal. But if all of the associated emissions of shale gas are taken into account, this benefit disappears, according to a newly published study from Cornell University.

The study, published in the Climatic Change Letters journal, showed that about 4-8% of the methane from shale gas production escaped to the atmosphere via leaks and venting over the lifetime of a well – much more than from conventional gas drilling. As methane is more than 20 times as powerful a greenhouse gas as carbon dioxide, shale gas is likely to prove more harmful in climate change terms than even coal, which is usually regarded as the dirtiest fossil fuel. The Cornell study concluded that shale gas used to generate electricity had about the same carbon footprint as coal, or even a slightly higher one, and when used as heating or transport fuel would be no cleaner than diesel.

The authors concluded: “The large GHG footprint of shale gas undercuts the logic of its use as a bridging fuel over coming decades, if the goal is to reduce global warming. We do not intend that our study be used to justify the continued use of either oil or coal, but rather to demonstrate that substituting shale gas for these other fossil fuels may not have the desired effect of mitigating climate warming.”

Nor does the fuel appear green when the side effects are taken into account, some of which are potentially lethal. From the US, where the fracturing – fracking – of shale rock has been pioneered, come myriad reports of disastrous gas leaks, land contaminated by the chemicals used in extraction, and drinking water rendered unsafe by pollution from the drilling. The film Gasland featured families whose homes were uninhabitable and who were suffering health problems.

Gas advocates, such as Miller of Cuadrilla, argue that the film, and many other similar reports from the US, seized upon examples from a small minority of companies that have cut corners and pursued poor practices. “There are always a few bad apples in any industry,” he said. “But it is possible to do this in a clean, responsible way that does not lead to these kind of problems.” His company, he said, was spending more than the average in order to ensure its sites did not lead to contamination or gas leaks.

Gas companies also seek to reassure governments and green campaigners that their fuel does not compete with renewables, and can even help countries to include more renewables in the energy mix because it provides flexible generation that can be turned off or on quickly to cope with the intermittency of renewable energy. Green campaigners are less optimistic. They believe that pursuing gas – which is artificially cheap outside Europe because its associated emissions are not properly taken into account – will crowd out investment in renewables, until it is too late and the world is committed to a gas-powered future.

The consequences for genuinely green forms of power, such as wind and solar, could be dire. Investment in gas is posited as an alternative to green fuels. In the US, climate change has been chiefly framed as a matter of energy security. Emissions cuts have been promoted as a way of reducing foreign oil dependence so a new domestic fuel source is very attractive.

With shale gas in plentiful supply in the US, the needs of energy security can now be met without the sharp reductions in emissions needed to avoid dangerous levels of global warming. Investment in wind and solar in the US have already been hit hard by a combination of competition from shale gas, recession and weaker government assistance. The number of wind turbines being erected has “fallen off a cliff”, according to General Electric, one of the biggest turbine manufacturers.

“In the US, it’s as if they do not have to do anything about climate change because they say ‘we have shale gas’,” said Connie Hedegaard, the EU climate chief, of her recent visit to the US. “But you have to have climate change as part of the equation … and avoid the lock-in to fossil fuels.”

That is another key point: The development of a new generation of gas-fired power stations threatens to perpetuate a long-term future of fossil fuel energy generation. Switching from coal-fired power stations to gas produces sizeable short-term reductions in greenhouse gas emissions, as the UK proved through its “dash for gas” in the 1980s and 1990s. But after the initial gains – and unlike renewable energy sources – gas-fired power stations carry on producing carbon emissions for decades. The life of a plant can stretchfrom 25 to 40 years, with the right maintenance

If a new fleet of gas-fired power stations built in the next 10 years are still producing emissions in 2050, it will be impossible for the world to halve emissions by 2050, as scientists say we must.

For this reason, EGAF’s analysis assumes all gas-fired power stations will use carbon capture and storage (CCS) technology from 2030, reducing their emissions to nearly zero.

But the technology has never been used at a commercial scale. Pilot projects cost about £2bn each, running costs are unknown, and there are likely to be severe limitations to where carbon dioxide can safely be stored underground. Using the technology also reduces the amount of energy a power plant can produce.

EGAF assumes that CCS will become “economically viable” in the mid-2020s, but if these complex estimates are even slightly inaccurate, and the technology is more expensive than forecast, by then it would be too late for the renewable industry.

Prof Howarth, lead author of the Cornell study, added: “Carbon storage remains an idea that has little real-world testing. To the extent it has been tested, problems have clearly surfaced, such as leakage of carbon dioxide back to the atmosphere, and water pollution from the materials extracted from the storage due to the highly corrosive, high acidity of the storage material. It remains to be seen whether the technology can be developed in a safe, environmentally responsible way. It also remains to be seen how much this will cost.”

If CCS does not come through as EGAF predicts, then the value of shale gas in the fight against climate change becomes highly questionable.

Shell’s outgoing UK boss has seen oil firm’s role shift in a changing climate

Chairman James Smith says Shell has had to respond to the global warming challenge

Fiona Harvey The Guardian, Friday 8 April 2011

James Smith leaves Royal Dutch Shell at the end of the month

Now is a good time to be running an oil company. Prices are sky-high, energy demand is increasing at an unprecedented rate as the global economy recovers, and there are new markets to be explored. Royal Dutch Shell largely dodged the criticism heaped on the industry after BP‘s catastrophic oil spill last year in the Gulf of Mexico, and is delivering golden results to shareholders. Profits for 2010 were reported as $18.6bn (about £11.4bn), nearly double the $9.8bn for the year before.

So it is not surprising that James Smith, Shell’s outgoing UK chairman, speaks with a tinge of regret. At the end of the month, he will retire from the company he has been part of for 28 years, seven of them in his current role. Like other oil industry executives, Smith has a sense of destiny; an industry once regarded as dull and boring, a mere mechanical process of mineral extraction, has in the past five years taken centre stage in the global economy. “Energy is the most exciting industry,” he says with enthusiasm, in a soft Scottish burr, in his soberly fitted 24th-floor office overlooking the London Eye and the Thames. “It represents the most invigorating challenge. Energy lifts people out of poverty, it enables development. It is a place where people can have excellent careers and great job satisfaction. I’ve always been excited to be part of it.”

Smith, who has just turned 60, has overseen Shell’s latest growth spurt, and its attempted transformation from a dirty industry into a cleaner, greener and more lucrative machine. Until recently, the company still had a link prominently displayed on its home page to its apology over the 1995 Brent Spar oil platform incident: Shell had intended to scuttle Brent Spar but it was eventually dismantled on land.

A physicist by training, Smith was born in Inverness. He qualified as a chartered accountant and while working at consultancy Accenture had a number of oil companies among his clients. The lure of the North Sea proved too much to resist and he joined Shell in 1983. Smith did his stint in a far-flung corner of the oil empire, as all ambitious Shell employees are required to do, spending four and a half years in Malaysia and Brunei along with spells in the Middle East and the US and as head of technology at Shell Chemicals.

Appointed chairman of Shell UK in 2004, Smith immediately recognised his tenure would be defined by his response to climate change. The European Union’s emissions trading scheme – the first time that the oil and gas industry had to pay for its carbon emissions – came into force on 1 January 2005.

While oil industry chiefs in the US dismissed global warming as a fad, and tried to rubbish the science behind it, Smith was following in the rather greener footsteps of BP’s Lord Browne.

There was more to it than copying his biggest rival, though, Smith protests. His education as a physicist had led to an early interest in the effect of greenhouse gases on the atmosphere. “I was worrying about climate change in 1973 when I was doing physics in Aberdeen. I have not stopped worrying since,” he says. “Scientists and engineers do think about these things.”

Smith saw that Shell would have to change and he led the group’s programme to invest in renewable energy, building up stakes in plant-based biofuels and offshore wind energy. But these days those programmes – once held up by the company as evidence of its newfound caring, environmentally friendly image – are either defunct or largely irrelevant. Shell has pulled out of renewables: it retains a small stake in biofuels development, but the company’s offshore wind business is no more. Shell announced in May 2008 that it was leaving the consortium building the world’s biggest offshore wind farm, the London Array, and its interests in wind were in effect at an end.

Smith explains the demise of Shell’s wind plans as a return to the company’s core competences. “Wind is a manufacturing business, and we are not a manufacturer,” he says. “You have to do what you’re good at.”

But there was another force at work. The oil industry had found a new green message, and one more palatable to its thirst for drilling and exploration: gas. The development of new techniques for fracturing shale rocks to release their load of natural gas has revolutionised the energy industry in the past three years. Suddenly, vast deposits of previously inaccessible gas have become available for exploitation.

The prospect of a global gas glut has sent prices plummeting, breaking the longstanding link between gas and oil prices, and has led to a bonanza among gas companies that, if fully realised, will dwarf the North Sea oil industry and lead to decades of cheap energy. As a bonus, that energy comes with about half of the carbon dioxide emissions from coal, enabling the fossil fuel to be labelled as “greener” than the alternatives.

Smith is fully aware of the potential. “Shell will be more of a gas company than an oil company within two years,” he predicts, a huge change for a company with 50% more petrol stations than McDonald’s has burger joints (“my proudest boast at Shell”, he chuckles). It is hard to describe how big a change this represents to the energy industry; an abundance of cheap gas will transform its fortunes.

“If you can do carbon capture and storage with gas, then it can be a long term affordable source of green electricity,” says Smith. “It gives the world a breathing space.” What’s more, the sources of shale gas are widely distributed around the world. “There might be 200 years of shale gas supply available,” he notes.

So much for peak oil.

SOURCE ARTICLE

Royal Dutch Shell Reports Strong Earnings for Fourth Quarter

A version of this article will appear in print on February 4, 2011, in The International Herald Tribune.

By JULIA WERDIGIER

LONDON — Royal Dutch Shell said Thursday that its earnings had more than tripled in the fourth quarter because of higher oil and gas prices, and as investments in new projects started to pay off.

Profit at Europe’s biggest oil company rose to $6.79 billion in the last three months of 2010, compared with $1.96 billion in the same period a year earlier.

“We are making good progress against our targets, and there is more to come from Shell,” Peter Voser, Shell’s chief executive, said in a statement.

Excluding non-operating and one-off items the result was $4.1 billion, short of the $4.85 billion average estimate of analysts polled by Reuters. The shares were down 3 percent in early trading.

“Profits are somewhat shy of market estimates,” Richard Hunter, head of British equities at Hargreaves Lansdown in London, said. He added that the “setback is likely to be short-lived, however.”

Shell’s earnings follow a set of strong results from larger rivals such as Exxon Mobil, which reported its highest quarterly profit in more than two years. Earnings at BP, Shell’s closest rival, failed to meet analyst expectations, however, and the company announced the sale of assets that it said would make it a smaller and more agile company.

Unlike BP, which predicted its production would fall this year because of asset sales and the aftermath of the Gulf of Mexico rig explosion, Shell said it was confident of meeting its target of an 11 percent increase in oil and natural gas production from 2009 to 2012.

“These are ambitious targets, but we are on track,” said Mr. Voser, who managed to halt a drop in production last year with a large investment program. He also cut costs and sold less lucrative assets to improve profitability.

Shell started six key projects last year, including in Brazil and Qatar, where it started offshore gas production this year. Oil and natural gas production rose 5 percent to 3.3 million barrels of oil equivalent per day last year. The company invested $3 billion in exploration activities last year, about three times more than BP.

Mr. Voser said he expects total investments of as much as $27 billion this year, including $1.6 billion for a biofuels joint venture in Brazil with Cosan, a Brazilian company that harvests and processes sugar cane.

Shell said it would leave the dividend for the first quarter of this year unchanged at 42 cents a share.

SOURCE ARTICLE

Climate Change Demands Action Now, Shell’s Chief Executive Says

By Ayesha Daya – Jan 17, 2011 4:17 PM GMT+0000

Royal Dutch Shell Plc’s chief said the implementation of climate change agreements made at Cancun last month “won’t happen overnight”, and policymakers must take action now “because the clock is ticking.”

“In the short term, we should focus on areas where we can get the cheapest and quickest carbon dioxide reductions,” Chief Executive Officer Peter Voser said at a renewable energy conference in Abu Dhabi today. “It will take a while for international standards to be implemented, but we are of the opinion that we have to move now.”

Voser offered four ways for policymakers to begin reducing CO2 emissions: energy efficiency, increased use of natural gas, carbon capture and storage projects, and biofuels.

Energy efficiency, such as fuel-efficient vehicles and insulation of buildings, will need government mandates and regulation, he said.

Increased use of natural gas, which would cut emissions by 60-70 percent if it was used in place of coal, will also require government policy to support the switch in fuel type. China has already pledged to obtain 8 percent of its energy consumption from gas by 2020, compared with 4 percent now, he said.

“There’s a revolution in the U.S. now, and also in China with unconventional gas,” Voser said. “So there is ample gas available, and it is cheaper than nuclear power, so it is clearly something in which we can invest.”

Carbon capture and storage projects are yet to be deployed in a big way, and pilot projects require government funding to drive the technology.

Biofuels offer “the only fast transport fuel option” and can be developed in a sustainable way if the correct standards are set, Voser said.

To contact the reporter on this story: Ayesha Daya in Dubai at adaya1@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

BLOOMBERG ARTICLE

Shell sees 2011 as “year of choices” on biofuels

By Scott Malone

CAMBRIDGE, Massachusetts Wed Oct 13, 2010 (Reuters) – Royal Dutch Shell, which is investigating about 10 second-generation biofuel technologies that would use nonfood raw materials, expects to narrow its research to about five options next year, its top scientist said.

“I am putting a lot of time and energy into sustainable biofuels, second-generation biofuels, in essence, the conversion of redundant material, straw, into ethanol,” Gerald Schotman, the Anglo-Dutch oil company’s chief technology officer said on Wednesday. “We’re also playing with ideas on algae, growing algae and then converting algae directly into gasoline and diesel.”

While ethanol has won praise for being a sustainable fuel, today it is largely made from corn and has also drawn criticism for diverting resources that could otherwise be used to feed people.

Shell’s second-generation efforts could work around that problem by converting either agricultural byproducts or algae to liquid fuel, either ethanol or a diesel-like fuel.

The company aims to focus its efforts on about five developing technologies next year, Schotman said in an interview: “2011 is going to be the year of choices.”

Schotman was in Cambridge, just outside Boston, to disclose that Shell had agreed to fund $25 million in Massachusetts Institute of Technology research projects focused on energy over the next five years.

He warned that it will be quite some time before biofuels and other renewable sources of energy, like wind and solar power, displace fossil fuels. By 2050, it’s possible that the world will generate 30 percent of its energy from renewable sources, but that leaves 70 percent in traditional fossil fuels, he said.

“This is a long-distance horse race,” he said of the development process. “The world estimated that it was going to take three laps, but it’s going to take six or seven laps.”

(Reporting by Scott Malone; Editing by Steve Orlofsky)

REUTERS ARTICLE

Shell gives MIT $25m for gas, oil research

Royal Dutch Shell PLC will give the Massachusetts Institute of Technology $25 million to research new, efficient technologies to help find and deliver oil and natural gas, officials are expected to announce today.

Click to continue reading “Shell gives MIT $25m for gas, oil research”

Shell CEO:UK Should Divert Investment From Offshore Wind To Gas

OCT 12, 2010

LONDON (Dow Jones)–The U.K. government should divert investment from offshore wind power to natural gas exploration and production, Peter Voser, chief executive of energy giant Royal Dutch Shell PLC (RDSB.LN), said Tuesday.

It will be impossible to hit 2020 carbon dioxide emission reductions targets without increased use of natural gas in the country, Voser said at the Oil and Money conference in London. Using natural gas instead of coal is also a cheaper way to cut emissions than offshore wind, he said.

-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjnes.com

SOURCE

Energy source of the future won’t be a fossil fuel

IS THIS A HOAX?

Comment by Arend Lammertink, MSc. (right) on “Shell CEO: Nat Gas To Play Prominent Global Energy Role

Posted on Sep 14th, 2010 at 12:27 pm

I think these guys may be in for a little surprise about what will be the energy source of the future. It won’t be a fossil fuel. It will be the electric field, available for free all across the universe.

Let me first mention that I hold a Masters degree in Electrical Engineering. I never believed any claims that there would be such thing as “free energy”. Energy that is basically free for the taking for virtually nuts. Sure, you have solar energy, but solar panels are that expensive to make that they are not interesting from an economic point of view.

But, curious as I am, I did investigate some of the systems that claimed to produce energy out of seemingly nothing. What I found out is that when you look at the dirty details of what we know as electricity, it is the electric field that really powers our circuits. While it seems like we convert mechanical energy into electrical energy by turning the shaft of a generator, in reality it is the electric field that powers our circuits.

Each and every charge carrier in the universe emits an electric field for free, 4/7, 7 days a week, 365 days a year, indefinately. And that electric field contains energy, as has been shown without a shadow of a doubt by the German Prof. Claus Turtur:

http://www.wbabin.net/physics/turtur1e.pdf

In the chapter “A circulation of energy of the electrostatic field” (pages 10-14) he makes a straightforward calculation of the energy density of the static electric field surrounding a point charge using nothing more than Coulombs law and the known propagation speed of the electric field, the speed of light, and shows that there must be some kind of energy circulation between the vacuum and charge carriers, which eventually leads to the conclusion that the electric field is a wonderful and free energy source. And that means it it not a question of if but how to use this energy source to give us as much clean, non polluting energy as we like, for free.

So, with this knowledge I investigated three independent inventions that claimed to be able to power cars seemingly out of nothing. And to my own surprise they all turned out the use the same basic principle, a principle that can be explained from the bottom up without any difficulty using nothing but hard electrical engineering theory.

So, there we are. We know the electric field is an clean energy source that is free for the taking and we know how three independent inventions, of which two have been shown to work in public, used this energy source using the exact same set of tricks. So, it is only a matter of time now before all the oil companies will be out of business and fossil fuel will be a thing of the past.

If you are interested, you can read all about how to pull this off, in principle, over here:
http://peswiki.com/index.php/Article:Free_Electric_Energy_in_Theory_and_Practice

I must stress that this is a work in progress, but the basic stuff is there for everyone to see, for free. No strings attached.

COMMENT RECEIVED FROM ONE OF OUR CONTRIBUTORS:

If this guy was really on to something his life wouldn’t be worth a ‘bucket full of warm spit’. Too many large companies and national economies depend upon the ‘system’ the way it is.

I think that in concept he is correct about electrical fields. However, there are two of them, positive and negative, and they counteract the effects of each other. That is why all objects are essentially ‘neutrally charged’. I think the fellow has a great imagination but that he needs to keep working on the idea. But he also needs to keep his mouth shut. If his idea worked people would swarm all over it in a heartbeat. He couldn’t keep the wolves at bay. Everybody and their uncle would be trying to steal his ideas and technology. If his idea worked someone would have kidnapped him already and would be torturing the crap out of him to get him to talk. Furthermore, OPEC and BIG OIL would put a price on his head. If this guy was really on to something his life wouldn’t be worth a ‘bucket full of warm spit’. Too many large companies and national economies depend upon the ‘system’ the way it is.

RIGHT OF REPLY: Response from Arend Lammertink, MSc.