Shell’s total direct GHG emissions were 72 million metric tons CO2e last year, down 2.7 percent from 74 million in 2011, according to the company’s 2012 sustainability report. This meant GHGs dropped faster than revenue but far slower than income.
From 2011 to 2012, the company’s revenue dropped 0.6 percent, from $470 billion to $467 billion, and income was down 13.9 percent, from $31.2 billion to $26.8 billion.
The main reasons for the emissions drop were reduced flaring in Nigeria and divestments in Shell’s downstream business, the company says. These were partly offset by the ramp-up of production at its Pearl gas-to-liquids (GTL) plant in Qatar.
Report basics
The report is relatively short at 41 pages, but packs a lot of information into that space. GRI confirmed Shell’s A+ reporting level for the sustainability report, together with Shell’s annual report, Form 20-F and its corporate website.
The company says it has focused on managing CO2 emissions, cutting energy use, reducing flaring, using less water, preventing spills, and conserving biodiversity.
But one of the most notable metrics in the report is waste.
Waste
The company’s waste output has risen significantly in the past two years, from 2.1 million metric tons in 2010, to 2.6 million in 2011 and 3.1 million in 2012: an increase of 20 percent over one year and 46 percent over two years. Non-hazardous waste makes up most of those totals (see chart). The report does not explain why waste levels have risen so rapidly.
The company says that in 2012 it recycled, reused or sold over 300,000 metric tons of material that would otherwise have been disposed of as waste.
CO2 emissions
About 55 percent of Shell’s 2012 GHG emissions came from the refineries and chemical plants in its downstream business. The production of oil and gas in its upstream business accounted for over 40 percent of GHG emissions, and shipping activities for less than 5 percent.
Indirect GHG emissions from purchased energy (electricity, heat and steam) were 9 million metric tons CO2e, a decrease from 2011. Shell estimates that the CO2 emissions from its refinery and natural gas products were around 580 million metric tons last year.
The company says a strong, stable price for CO2 within a comprehensive policy framework is needed to achieve significant emissions reductions in the long term. But it says it is not waiting for regulations to emerge, and has put its own price on carbon, of $40 per metric ton. Shell says it considers this CO2 emissions cost in all major investment decisions.
The company says its climate change efforts fall into four categories: improving its operational energy efficiency, producing more natural gas, developing carbon capture technologies and producing low-carbon biofuel.
Operational efficiency
Most of Shell’s operational units increased their energy intensity last year compared to the year before.
Energy intensity for oil and gas production in its upstream business, excluding oil sands and GTL operations, rose 4 percent, from 0.75 to 0.78 GJ per metric ton of production, which the company attributes to rising production of hydrocarbons that need more energy to access, and to increased drilling activity. The company expects that maintaining the energy efficiency levels of recent years will be more difficult in the future as existing fields age and production comes from more energy-intensive sources.
In its oil sands operations, energy intensity in 2012 worsened by 3 percent compared to 2011, from 6.4 to 6.6 GJ per metric ton of production. The data includes mining and upgrading operations. It does not include in situ production.
The overall energy efficiency of Shell’s chemical plants worsened by 1 percent in 2012 compared to 2011, as some of its larger plants operated less efficiently. The chemicals energy index (which the company does not define) increased from 90.8 to 91.7.
But in 2012, the overall energy efficiency for oil product manufacture at Shell refineries improved 2.4 percent compared to 2011, from a Refinery Energy Index of 100.8 to 98.4. Data is indexed to 2002, based on Solomon Associates Energy Intensity Index 2006 methodology.
At its Pernis refinery near Rotterdam, one of the largest in the world, Shell process control technologist Roland Berkhoudt created a software tool that highlights the five largest causes of inefficiency at any given time, expressing those inefficiencies as US dollars wasted per day. The technology and operational teams were then able to save $1.5 million a year by reducing the amount of steam in one section of the refinery alone.
Natural gas
In 2012, Shell produced almost as much natural gas as oil, and it continues to invest in developing natural gas resources (see chart). Shell expects global demand for natural gas to increase by 60 percent by 2030 from its 2010 level, reaching 25 percent of the global energy mix. The company says fossil fuels will still meet about 65 percent of the world’s energy demand by 2050.
Carbon capture
Last year, Shell began construction of its Quest CCS project in Canada, which will potentially store over 1 million metric tons of CO2 a year from its oil sands operations, starting in about 2015. Other CCS projects Shell is involved in include the Technology Centre Mongstad in Norway, the world’s largest facility to develop and test CO2 capture technology, which opened in 2012; and the Gorgon LNG project off Australia, in which Shell has a 25 percent interest. That project is expected to store 3-4 million metric tons of CO2 a year.
Shell says that over the past five years it has spent $2.2 billion on developing alternative energies, carbon capture and storage, and on other CO2-related R&D.
Biofuel
Shell says low-carbon biofuels are one of the quickest, most practical routes to reducing CO2 emissions from the transport fuel mix in the next 20 years. Through its joint venture Raízen, Shell produces ethanol made from sugar cane in Brazil.
Water
In 2012 Shell’s fresh water withdrawal fell 2.9 percent, from 209 to 203 million cubic meters. It says the availability of fresh water is a growing challenge for the energy industry as developing new resources, such as tight gas, can be water-intensive.
At its Groundbirch tight gas project in British Columbia, Shell operates a storage and recycling facility for the water used in tight gas production. Pipelines transport the water to where it is needed in the field, reducing truck movements. The company has also funded the building of a water recycling plant in nearby Dawson Creek. The plant will treat water so that it can be reused in Shell's operations and for other industrial and municipal needs.
Spills
In 2012, Shell’s operational spills of oil and oil products amounted to 2,100 metric tons, the second-lowest level the company has recorded, down from 6,000 metric tons in 2011. But last year the scale of oil theft in Nigeria reached unprecedented levels, and sabotage and theft caused 3,300 metric tons of spills, up from 1,600 metric tons the year before.
Biodiversity
Through its partnership with the International Union for Conservation of Nature (IUCN), Shell has developed eight action plans for major operations in areas of rich biodiversity, and it is developing plans in Iraq, Ireland, Kazakhstan, Nigeria and the UK.
In 2012, Shell worked with Wetlands International on ecosystem baseline studies of the Timan-Pechora region of northern Russia, where the company is planning a new exploration project.
