Reducing our GHG emissions

Producing and processing oil and natural gas is energy intensive. So managing the CO₂ and other greenhouse gases (GHGs) from our facilities is a priority. We have reduced our GHG emissions by nearly 25% compared to 1990. (See Environmental data table, footnote [A], for an explanation of GHG measurements).

Our biggest reductions have come from ending the continuous venting of natural gas at oil production facilities and from the multibillion-dollar programme we launched in 2000 to end continuous gas flaring at oil production facilities. Our total upstream flaring has dropped nearly 60% since 2001. Half the drop in flaring is a result of this programme. The rest has come from lower production in Nigeria – which accounts for two-thirds of our flaring – as a result of the security situation from 2005 to 2007 (see Nigeria).

Outside Nigeria we have effectively met our goal of ending continuous flaring by 2008. Only four upstream sites we operate – representing about 0.25% of our total CO₂ emissions – were still continuously flaring at the end of 2007. They will continue to do so because measures to end flaring would have produced more GHGs at two sites; collecting the gas was technically impossible at the third, and because a small continuous flare is required at the fourth to avoid releasing dangerous hydrogen sulphide.

Improvements in energy efficiency at our refineries and chemicals plants have also helped. Our refineries have improved energy efficiency by almost 2% since 2002, as measured by the Solomon Associates Energy Intensity Index (EII™). Compared to 2001, when they launched their efficiency drive, our chemical plants are almost 9% more energy efficient, based on our Chemicals Energy Index. These long-term gains have come from operating our plants closer to full production capacity, running our Energise™ energy efficiency programme and conducting business improvement reviews (BIRs). Together, Energise™ and BIRs have reduced our GHG emissions by an estimated 1.7 million tonnes a year, saving us more than $180 million annually.

But in the last two years, these improvement trends have reversed at our refineries, mainly because we have had more shutdowns. Starting plants up again after a shutdown requires substantial extra energy. Energy intensity remained unchanged at our chemical plants. Improvements at some sites in 2007 were offset by unplanned shutdowns at others. In response, we are increasing the importance of energy efficiency in our BIRs and implementing a three-year capital investment programme for energy efficiency.

Across the upstream part of our industry, the energy needed to produce each unit of oil or natural gas is rising fast as existing fields age and companies develop more oil from heavy and harder-to-reach deposits. Shell is no exception. Our upstream energy intensity has risen by nearly 30% since 2000. In response, we launched a major programme in Exploration & Production in 2007 putting energy management systems in place at more than 50 of our major assets to improve energy efficiency. The systems were piloted at four locations in 2007. And in our oil sands business, which we report separately this year for the first time, efforts continue to further reduce the energy intensity of our industry-leading operations (see Difficult oil).