Shell Sees CNG As Part Of Solution To Reducing Emissions

Outside Royal Dutch Shell’s research laboratories in Amsterdam, a stack of tubes, tanks, and dials four stories high percolates twenty-four hours a day. This bewildering-looking apparatus is a tiny prototype of one of Shell’s crown jewels: the huge Pearl gas-to-liquids plant in Qatar.

Now gradually increasing production, Pearl sucks in huge volumes of natural gas from the gargantuan North Field under the aquamarine Gulf and — in a feat of seeming alchemy — transforms the gas into jet fuel and diesel and other liquids far more valuable than natural gas these days. Eventually, Pearl could earn Shell $10 billion per year, justifying its nearly $20 billion cost.

The Shell lab’s director, HP Calis, presents a sample from Pearl for a visitor to sniff. Because it is made from purified gas, the clear fluid in his flask does not have the nauseating odor of gasoline and other products of oil refineries. To Mr. Calis’s evident pleasure, it is as sweet-smelling as beeswax, indicating it will burn cleaner than its conventional cousins. Shell lore has it that one can even drink the stuff, though Mr. Calis said he would not recommend it.

Over the years, Shell — the largest European oil company — has invested tens if not hundreds of billions of dollars in being a world-leading producer, processor, and transporter of natural gas. For instance, it has stakes in facilities amounting to about one-third of all the global production of liquefied natural gas: gas supercooled to a liquid so that it can be shuttled around the world like oil.

The rise of LNG has meant that natural gas is increasingly traded like other commodities, at a time when the explosion of shale gas output in North America has increased the supply, leading to sharply lower prices.

The company portrays this "gas revolution" as a big opportunity to exploit the company’s expertise, even though low prices are depressing profit. The company argues that the boom in supply means that natural gas, which accounts for about one-quarter of global energy consumption, should be viewed as a main solution to reducing climate-warming carbon dioxide emissions and not part of the problem.

Burning natural gas to generate electricity — a major use — produces substantially less carbon dioxide than untreated coal. China, where Shell is well-positioned, sees the gas as an antidote to the coal fumes that choke its cities and wants to double the proportion of the use of natural gas in its energy mix by 2015.

The company is scrambling to find still more uses for natural gas, beginning to supply ships out of Rotterdam with LNG, replacing viscous bunker fuel. It is also setting up a "Green Corridor" for LNG-fueled trucks from Edmonton, Alberta, to Vancouver, British Columbia, and wants to install LNG pumps at U.S. truck stops. The company is also working on a plan that might put a Pearl-like gas-to-liquids plant on the U.S. coast of the Gulf of Mexico, executives said.

But Shell and the wider gas industry still have a problem — especially in Europe, the part of the world most serious about doing something about global warming. Europe is aiming to reduce carbon dioxide emissions eighty percent by 2050, from 1990 levels. Natural gas may be cleaner than coal or oil, but it is still a fossil fuel that produces substantial quantities of carbon dioxide. The products that emerge from Pearl may smell nice and burn cleaner, but their carbon dioxide footprint is similar to that of conventional fuels.

Critics say the gas industry has been dragging its feet on making major investments in reducing emissions. The most promising way to eliminate carbon dioxide, especially in the electric power area, appears to be a process called carbon capture and storage. The idea with carbon capture is to strip out the carbon dioxide from fossil fuels and pump it somewhere it can be safely contained forever, like a depleted oil field or an aquifer.

But carbon capture is expensive and, because it has been slow to move from the drawing board to reality, unproven. There are also fears that the carbon stored underground might escape. Tellingly, there are few if any large-scale carbon capture projects under way at gas-fired power plants.

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