Stuart Bradford: Sowing Seeds, Bearing Fruit
Shell’s Stuart Bradford is sanguine when evaluating his own successes in the natural gas business. But results have not been instantaneous for the experienced gas professional, now Head of Strategy, Marketing and Analysis at Shell Energy Europe, who has been nominated “Executive of the Year” at the European Gas Conference 2012. In an exclusive interview with Natural Gas Europe preceding the conference and awards ceremony, Mr. Bradford explained that seeds he had helped plant at Shell in other capacities had only recently borne fruit.
“One of the things about the energy industry and the gas industry in particular is that it tends to be quite a long-term business, and in the past year, in 2011, it was really pleasing that things I worked hard on in previous years came to fruition. For example, I was one of the members of the team that made the first approaches to Qatar Petroleum to explain our gas to liquids technology to them and to present the idea of developing a large project with them. A number of years down the line, and with a lot of hard work from many people in Shell, that has finally led to the Pearl GTL plant which was inaugurated last year,” he explained.
Gas to liquids technology, he said, was very important for Shell, gas resource holders and for customers. According to Mr. Bradford, Shell’s main GTL focus
had been delivering the Pearl GTL Project in Qatar.
“It’s very significant, both for Qatar and for Shell,” he stated. “It’s the world’s largest GTL project and it marks as a step change in the development of GTL technology from the earlier Shell plant in Bintulu. Pearl is also one of the biggest projects ever undertaken in the global gas business - at the peak of construction for the plant , builders were erecting pipe and steel equivalent to the weight of two and a half Eiffel Towers every month.”
He said the Pearl GTL project would produce about 260,000 barrels/day of products, including 140,000 barrels/day of GTL products.
Bradford contended that the project was also important for Shell customers, explaining, “The GTL technology allows us to produce a range of high quality fuels: transportation fuels that can be blended into traditional diesel fuels or used in a pure state. Whichever way they are used they can result in lower local emissions of pollutants, which is particularly important in heavily congested cities such as London, Berlin or Tokyo.”
Additionally, he added, the plant itself would make enough GTL gas oil fuel to fuel about 160,000 cars per day.
“Longer term,” added Bradford, “the GTL technology offers the potential for the owners of major gas resources to access oil products markets, and that could be a good strategic diversification for them. In order to execute this type of technology, you need the right combination of technical know-how, abundant gas and also the financial capacity and access to labor markets to build the huge plant.”
Another example of Mr. Bradford’s involvement, he explained, was Shell’s development of Floating LNG as a gas commercialization route. He recalled that his team supported the first development of the commercial ideas and the business rationale for developing the technology. After many years of work, involving hundreds of people with technical and commercial skills, this development finally led to the Shell’s final investment decision on the Prelude floating LNG project in Australia, which was announced during 2011. Like Pearl GTL, this project illustrates the scale of some of the frontier projects in today’s global gas business – at 488m long by 74m wide, it will be the largest offshore floating structure ever built, and fully loaded will weigh 600,000 tons – about six times as much as the largest aircraft carrier.
Speaking of LNG, he said the LNG market had seen some very dramatic changes in recent years.
“Quite a number of projects were developed with the objective of bringing LNG to the US, which, at the time the projects were approved, was a market that had particularly strong pricing for US gas prices,” he said. “With the shale gas revolution, not all these volumes are needed – the US may even become an LNG exporter – but I think the market response to this demonstrates why LNG is such an important part of the global gas market: these volumes which were aimed at the US are now mostly being redirected to Asian markets where demand growth has been faster than expected, particularly after the earthquake in Japan and its impact on Japanese nuclear capacity.
“So we see the role that LNG’s playing in providing gas to those markets where it’s needed and the transfer of volumes much more easily than with pipeline gas in response to market signals, which we ultimately think is a very good thing for the global gas market.”
Since he took his position as Head of Strategy, Marketing and Analysis for Shell Energy Europe in 2010, Bradford noted it had been an extremely busy time for the European gas market, which had seen a large number of changes.
“One of the most visible things that I, my team, and many other people at Shell have been active with is Shell’s efforts around gas advocacy. This includes making the case for gas as a fuel of choice in the future energy mix. In addition to this, my team has been very busy in the gas regulatory area. Amongst many other activities, they have been engaging with a wide range of stakeholders around the new REMIT market transparency regulations, particularly around the rules for disclosure of production outages. Here, it was agreed to include wording that would protect the ability of gas producers to hedge unplanned production outages, I believe to the benefit of market operation and to the benefit of customers.”
Meanwhile, Mr. Bradford said he believed Europe was quite favorably placed in the global gas market.
“It’s within what we would call ‘economic reach’ of about 70% of the world’s gas resources – that includes access to LNG resources in Africa and the Middle East, access to its own domestic production in the North Sea and in continental Europe, and to the large Russian gas reserves. So we think Europe benefits from a fairly natural diversity of supply and quite a number of options from which to source its gas.”
Given that diversity, he said Shell did not see these options as being in competition with each other. “We think there’s room for development of the gas supply from the southern routes into Europe, potentially development of unconventional gas resources in parts of Europe, and also room for more LNG.”
“We very much see natural gas as being complementary to renewables,” he continued, regarding Shell’s stance on the role of natural gas in Europe.
“Production of renewable energy from solar and wind is intrinsically intermittent and the resulting volatility in power supply you can see now very clearly expressed in markets like Germany or Spain, who have invested quite heavily in renewable energy resources. Natural gas-fired power generation is the power source the most easily able to ramp up and down to compensate for this volatile production from renewable sources, so in the short-term the replacement of coal-fired capacity with modern CCGT technology can provide substantial and fast reductions in CO2 emissions at low cost. It also complements the investment in renewables that governments will decide to do at the same time.”
In the longer term, with the development of carbon capture and sequestration, said Mr. Bradford, natural gas fired power could become an effectively very low carbon emission power source, more or less equivalent with renewables from that perspective.
“So I think it gives policy makers a whole number of advantages and can be deployed in a fully complementary way with growth in the renewables area.”
Shell’s strategy, however, is not just targeting Europe, but covers the globe as a whole.
“We’re a global upstream and downstream energy company. We believe there will be quite a lot of competition for access to upstream resources and new downstream markets, but the key differentiator for Shell is our technology leadership, project delivery capability and the operational excellence,” said Bradford. “GTL and FLNG technologies and projects are examples of this strategy being executed.”
“For us, meeting the global energy demand worldwide – in ways that minimize environmental and social impact – is very important and a major challenge for the industry. We’re committed to improving energy inefficiency in our own operations, supporting our customers in managing their energy demands, continuing our research and development to increase efficiency and reduce emissions in our own oil and gas production.”
He said the real core of Shell’s strategy was this commitment to technology and innovation.
Mr. Bradford explained: “Energy projects are becoming more complex and technically demanding and we believe that our engineering expertise will be a particularly important factor in the growth of our business. So our key strengths include the development and application of technology, the financial and project-management skills that allow us to deliver large oil and gas projects, and the management of integrated value chains to bring products to customers. We leverage our diverse and global business portfolio and customer-focused businesses built around the strength of the Shell brand.”
Having spent many years working on the development of upstream energy projects, in his current role as head of Marketing, Strategy and Analysis for Shell Energy Europe, Mr. Bradford now finds himself on the other end of the value-chain in the execution of this strategy, with a very customer-focused business. “Shell anticipated some of the recent changes in the European gas market and decided at an early stage to integrate its European gas marketing and trading businesses.”
Successfully executing this merger – with IT systems, people and behavioral dimensions – has not been easy. “But now this work is complete we can leverage the combination of marketing and trading skills to provide new ‘Energy Solutions’ to our customers’ gas procurement dilemmas. One example of this has been to offer a service to manage gas storage on behalf of some our industrial gas customers, who after regulatory changes found themselves allocated potentially valuable storage assets. However, these assets are difficult to fully exploit commercially. By combining our trading and operations skills, our knowledge of the complex regulations, and our customers relationships we have developed products to help customers leverage these assets to our mutual benefit. As the European market continues to rapidly evolve, we are working on many similar opportunities where we put these combined skills to work. I’m confident that unlike the large upstream GTL and FLNG projects, which required patient effort over many years, we will very quickly see the results of more of these marketing and trading initiatives in the marketplace!”
Learn more about Shell Energy Europe its website LINK The European Gas Conference and Awards are being held 24-27 January 2012, Vienna LINK