Shell Invests in Chemicals to Accelerate Zero Emissions Goal

15.02.2021 - Shell has announced plans to invest $4-5 billion annually to grow its chemicals and products business as part of an organizational restructuring that aims to accelerate the Anglo-Dutch group’s target of becoming a net-zero emissions energy business by 2050 or sooner.

The reshaped organization will be centered on three pillars – growth, transition and upstream. The chemicals and products business is part of the transition pillar.

Shell had already announced plans in the third quarter of 2020 to transform 14 refining sites to six high-value energy and chemicals parks by 2030 or sooner, with a goal of reducing the group’s production of traditional fuels by 55% by 2030.

The parks will be highly integrated with Shell’s trading and optimization business, along with its standalone chemicals sites. Together, said CEO Ben van Beurden, they will work in real time to ensure Shell always produces the most valuable products for the market, using the flexibility of its assets to maximum effect.

“We see chemical demand continuing to grow outpacing GDP,” van Beurden said. “We will continue to grow our chemicals business with a focus on intermediates and performance chemicals. These are the areas where we have competitive advantages in technology, scale and market access.”

The group is currently building or studying projects in Pennsylvania and Louisiana in the US, and at Nanhai in China.

In addition, Shell is planning to produce virgin chemicals from recycled waste, aiming to process 1 million t/y of plastic waste by 2025.

Van Beurden said the move to sustainable and performance chemicals will bring the company closer to the end-consumer and reduce its exposure to commodities by about 70% by 2030. “Between our opportunities to increase margins and the options we have to invest for growth, we will increase our chemicals cash generation by $1-2 billion a year by 2030,” he said.

As part of its portfolio rebalancing, Shell also intends to invest $2-3 billion in renewables and energy solutions – part of its growth pillar – and about $8 billion in its upstream assets.

To achieve net zero by 2050, Shell said it is targeting a reduction in its net carbon intensity of 6-8% by 2023, 20% by 2030, 45% by 2035 and 100% by 2050, using 2016 as a baseline.

In order to meet these targets, Shell is seeking to have another 25 million t/y of carbon capture and storage (CCS) capacity by 2035. The company is currently involved in three major CCS projects: Quest in Canada, Northern Lights in Norway and Porthos in the Netherlands, which total about 4.5 million t/y.

The Quest facility near Edmonton, Alberta opened in 2015 and by July 2020 had captured and stored 5 million t of CO2, according to Shell Canada.

The Northern Lights project in Oslo is being developed in two phases. Phase one includes concept capacity to transport, inject and store up to 1.5 million t/y of CO2, while phase 2 will expand capacity by 3.5 million t/y. The Norwegian government approved the project last year and phase one is due to go into operation in 2023.

In the Netherlands, the Porthos project in Rotterdam is on schedule to store 2.5 million t/y CO2 from 2024.

Author: Ellaine Burridge, Freelance Journalist