In an interview exclusive, Oil & Gas Middle East quizzes Wael Sawan, the new man at the top for Shell in Qatar, on his new role, firing up Pearl GTL, and the outlook for LNG
Andy Brown has left a big pair of shoes to fill. Having implemented Shell’s return to Qatar and supervised $20 billion of investments in Qatargas 4 and Pearl GTL from conception to commissioning, Brown’s achievements earned him the role of Upstream Director International, and Oil & Gas Middle East’s, Project Manager of the Year award. Brown left his role as Qatar Country Chairman and Managing Director on 1 April.
Wael Sawan has stepped up, and will be responsible for leading all Shell’s activities in Qatar, from Pearl gas-to-liquids (GTL), the flagship $19 billion joint development between QP and Shell to Qatargas 4, the LNG joint venture between QP (70%) and Shell (30%). Sawan relishes the opportunity to take over where Brown left off.
“I am delighted and honored to have been given this opportunity. Qatar is a fantastic place to work,” Sawan, who has been with Shell since his leaving McGill university as an engineering graduate in 1997, enthuses.
“Applying technology at massive scale and investing heavily in-country does not happen everywhere in the world. It needs an enabling environment and that is what we find here in Qatar.”
Sawan lauds the desire on the part of Qatar’s national oil companies (NOCs) to genuinely partner with IOCs. “QP acts as a partner, not as a counterparty’” Sawan says.
“There is a fundamental belief that working together for success, where both sides win, is the right approach.” Sawan cites the mammoth port facility at Ras Laffan Industrial City, required to supply the construction of Pearl GTL, as an example.
“For the thousands of shipments we received we enjoyed excellent support from customs and suffered no demurrage,” Sawan reveals.
“But also our thanks must go to the authorities who issued well over 100,000 visas for the labour we needed on the project, without their fast response and support we would never have been able to be successful,” he adds, a disclosure that may have other oil and gas companies in the region glowing green with envy.
As the moratorium on the development of the North Field continues, Shell is pouring investment into a world-scale $6.5 billion petrochemicals complex, and on upstream is looking to the pre-Khuff horizon, where the company will explore Block D with partners CNPC.
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Pearl GTL
Pearl GTL is hitting its stride, and remains a key focus for Shell and Sawan. CEO Peter Voser has confirmed the mammoth plant is ramping up towards full capacity in mid-2012, and going through its inaugural maintenance run.
“Pearl GTL has started up well. We are very pleased with the performance of the plant and the technology,” Sawan says, “Our gasifiers and reactors have shown good performance, as well as the air separation units and the hydrocracker.”
Asked if Shell is taking consideration of a third train at Pearl further, Sawan says his focus is on getting Pearl up to capacity.
Sawan attributes Shell’s smooth delivery of Pearl to rigorous preparation and the foundation given by the Bintulu GTL project in Malaysia, which began producing middle distillates in 1993.
However, Shell had to be careful in designing, constructing and commissioning a GTL plant with ten times Bintulu’s production capacity, which contains over 3,400 systems.
“The key to our success is Shell’s proprietary flawless start up technology,” Sawan explains.
“Most projects think of start-up planning after final investment decision (FID), but we were planning this 9 years ago as 50% of the flaws in starting up major plants are embedded before FID. 2,000 lessons learnt alone came from Bintulu.”
“We also rigorously hunted any novelties in the design or in our application of GTL Technology,” Sawan says.
“We largely built upon our Bintulu experience with modest and deliberate scale-up from the units operating there. Every step out needed its own development release signed by the highest technical authorities in Shell.”
Shell’s chief executive, Peter Voser recently disclosed that the company had already learned from the experience of building Pearl GTL, and has developed a new generation of catalysts which ill be able to build more compact and less expensive GTL plants in future.
While GTL projects in the United States or Australia may be some years off – though Shell is rumoured to be considering a $10 billion plant in Louisiana – Pearl has put Shell in a unique position in Qatar.
LNG
While the shale gas revolution in the US has forced international LNG markets to adjust, Sawan strikes a bullish note on long term LNG demand.
“North American tight gas transforms the energy outlook with plentiful supplies at less than half the cost of imported oil,” he says. “North America will not need significant LNG imports. This frees up Atlantic Basin LNG supplies from many countries for the European market – with many new and planned LNG terminals giving diverse import routes.
In Asia, many new Australian and other LNG projects can provide ample supply – plus there is major potential for unconventional gas.”
Since producing its first liquefied natural gas (LNG) in Algeria in 1964, Shell has taken a lead on LNG development, advising on around 40% of all LNG projects by production volume.
Shell has made a strategic shift to being a majority gas producer, and Pearl GTL and Qatargas4 are already ensuring the company more than offsets production declines elsewhere.
While ExxonMobil has hoovered up most of the major LNG partnerships in Qatar, the prospect of the global boom in gas supply to lead to a glut leaves Shell uniquely well-positioned in the emirate.
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Wael Sawan on energy demand and the role of gas
At Shell, we believe global energy demand is likely to double in the first half of this century.
This demand will be driven by a rising global population which has just reached 7 billion on its way to over 9 billion by 2050, and by strong growth in the emerging economies.
To keep pace with demand, the world will need to invest in excess of $1 trillion per year globally in the total energy supply chain. While renewables are expected to play a growing part of the overall energy mix, fossil fuels will still represent over 60% of the total by 2050.
At the same time, the world must manage its CO2 emissions to avoid the worst consequences of climate change.
Under these circumstances, the case for natural gas is clear, supported by what we call the triple As. To put this into perspective: Firstly, acceptability…as gas is the fastest and cheapest way to tackle coal-fired power’s environmental burden with modern gas plants emitting half the CO2 emissions of new coal plants, and up to 70% less CO2 than old steam turbine coal plants.
Secondly, affordability…with gas-fired power being faster and much less costly to install than any other new source of electricity. It requires less than half the capital cost of coal per MWH, one third of the cost of nuclear, and less than 10% of offshore wind.
And thirdly, abundance…with the International Energy Agency estimating that technically available gas resources equal 250 years of current production, driven by technological advances that have unlocked gas resources around the world.
Wael Sawan on the current and future markets for Pearl GTL products
The last year has been one of successive firsts for the Pearl GTL facility. Shell lifted its first Gasoil shipment on 13 June 2011, first Naphtha shipment on 19 August 2011, first Baseoil shipment on 15 October 2011 and first Normal Paraffin shipment on 22 March 2012.
On the 3 April there was a Pearl GTL product launch in Holland – a demonstration of the reach of products from Qatar to the world.
There are different offtake arrangements for the different products. Ethane will be offtaken by Qatar Petroleum for domestic use. Upstream products (condensate, propane, butane and sulphur) will be marketed by Tasweeq / Qatar International Petroleum Marketing Company in the same way as is done for of all Producing Entities in Qatar.
For the various GTL products there will be different offtake models, involving to various degrees Shell Downstream, Qatar Petroleum and third parties. Those GTL products that are primarily sold to Shell Downstream (middle distillates including GTL Kerosene and GTL Gas Oil as well as GTL Base Oils) will be made available to 3rd parties through Shell Downstream, where this makes economic sense.
Looking ahead to the future there is a robust market outlook for Pearl GTL products. By 2020, the estimate is that the global demand for naphtha, jet kerosene and especially gasoil will grow by some 30%, specifically in Asia-Pacific.
As the global market share leader in finished lubricants, Shell will leverage its downstream trading and marketing capabilities to access the ‘highly liquid’ global commodity markets and maximize the value of GTL products for Qatar and Shell.
