A year ago, I asked a middle manager at a multi-national liquid fuels company why its sustainability report didn’t contain any discussion of peak oil. He shot back with a withering “I think we’ve got beyond that.” I believe he was right, though not in the way he intended.
Amidst all the outcry and outrage provoked by the prospect of fracking natural gas from the Karoo, insufficient thought has been given to how the fossil fuel resource is intended to be used. What’s the real motivation behind Big Oil’s attempts to get its hands on those methane molecules?
Energy, of course! You know, the Energy Dilemma? The world needs more energy with less CO2, so “we are producing more cleaner-burning natural gas and using advanced technologies to develop new resources” – it says it right there in Shell’s 2010 Sustainability Report.
But let’s examine that statement carefully. There’s nothing factually incorrect in what Shell says. Natural gas is the cleanest-burning fossil fuel, and Shell (and many of its Big Oil brethren) is producing more of it year after year. However, there’s something about the choice of language that might be opportunist at best, disingenuous at worst.
First, it’s hard to take at face value the notion that Shell’s steady drift into natural gas is the result of a deliberate strategic decision to turn away from dirtier fossil fuels. Consider that the company’s relative growth in gas has occurred over the same period of time that it was investing heavily in the Albertan tar sands. Far easier to swallow is the idea that Shell has simply not been very successful at finding conventional oil resources – recall the reserves scandal of 2004 – so that over time its portfolio has diversified in both directions: simultaneously growing in cleaner-burning natural gas and filthy bituminous hydrocarbon deposits. The next time you meet a Shell executive, ask the question: when was the last time your company (or any other oil major, for that matter) walked away from economically-recoverable conventional oil resources because of a strategic decision to focus on natural gas? They would have a job explaining that one to their shareholders who focus on replacement of reserves as a key indicator of company performance.
Second – here is the crunch – what do Shell (and Sasol) have in mind for all that Karoo shale gas? The clue lies in Qatar. It’s based on an elegant piece of chemical process engineering whereby carbon atoms are stitched together to synthesise the longer hydrocarbon chains that comprise petrol and diesel. The really neat thing is that, technically, you can use anything containing carbon, including cleaner-burning natural gas, filthy dirty lumps of coal, wood chips, my mother’s bathroom curtains, or even the finest Persian carpet. The choice of feedstock informs the economics of the process – rug-to-liquids being at the high end of the cost spectrum – as well as the energy required in the conversion steps. So flexible is this technology platform Shell gave it the label XTL, where X = any source of carbon atoms. When X = natural gas, it’s called GTL. Which brings us back to the Karoo.
Why does this matter? Because in the context of our global Energy Dilemma, what’s important is maximising the energy services – heating, cooling, lighting, mobility, communications – delivered to society while minimising the associated CO2 emissions. This is where the term “cleaner-burning” appears disingenuous. True enough, GTL diesel fuel burns with lower sulphur dioxide, lower nitrous oxides, and lower particulate matter than conventional oil-based diesel (based on current fuel quality standards). This is directionally beneficial in terms of improving urban air quality. However, exactly the same is true of coal-to-liquids diesel, or rug-to-liquids diesel; the “cleaner-burning” character of natural gas has precisely nothing to do with it.
In terms of CO2 – the most important form of pollution wrapped up in this Energy Dilemma – GTL is essentially no better than regular fuel. Which is to say: it’s considerably worse, because by far the most rational use of natural gas in addressing the more-energy-with-less-CO2 conundrum is using it to displace carbon-intensive coal to generate lower-CO2 electricity. In parallel, by investing in electromobility, we simultaneously do away with those nasty tailpipe emissions at a stroke. If instead we allow natural gas molecules to enter the liquid transport fuel supply via GTL plants, we pointlessly fritter away all the carbon advantage inherent in the resource. From a climate change mitigation perspective any decision to follow the GTL path is nothing less than irresponsible.
Then again, the potential use of natural gas as a lower carbon bridging fuel in the struggle against rising CO2 emissions was never the driving force behind Big Oil’s attempts to open up the Karoo. They are not in the electricity business, they are in the liquid transport fuels business. All forms of energy are not the same. For them, the Energy Dilemma is about securing more hydrocarbon resources and leveraging their enormous chemistry sets to create synthetic petrol and diesel that will be set on fire in desperately inefficient motor vehicles. I think we’ve got beyond that.