Strategy Mobile Shell: How digital transformation is underpinning an industry in transition

Shell: How digital transformation is underpinning an industry in transition

Sam Forsdick – March 2021

The oil and gas industry is simultaneously confronting the dual mega-trends of energy transition and digital transformation. Royal Dutch Shell CTO Yuri Sebregts outlines the critical role his technology and R&D teams are playing in supporting those new aims.

Leading a globally distributed team of more than 3,000, Royal Dutch Shell CTO Yuri Sebregts is responsible for technological innovation at all levels within the oil and gas giant — not only digitalization but innovation in chemistry and engineering.

Currently, Sebregts and his organization are intensely focused on the two mega-trends of energy transition and digitalization. “Those are the two headers that catch all the important technology work that’s going on,” he says.

The oil and gas giant has set the target of being a net-zero carbon producer by 2050. But this, of course, represents a massive challenge for a company which, through its customers, has historically been one of the largest contributors to greenhouse gas emissions.

As a spokesperson for Shell recently acknowledged: “Action is needed now on climate change. Addressing a challenge this big requires a collaborative and global approach.”

Royal Dutch Shell CTO Yuri Sebregts

Sebregts claims that the biggest difficulty with the transition to zero-carbon is changing the supply and demand chains simultaneously. “If you are a very large energy company you are therefore tied to that reality of how the current energy system works. The challenge is that Shell and its customers have to change at the same time. Can we change what we supply while the customer changes what they consume?”

For Sebregts, the responsibility as CTO involves coming up with all the technological elements that can make that transition successfully.

Broadly speaking, that effort can be grouped in two areas of focus, according to Sebregts: technologies and approaches that make it easier for customers to make the switch to decarbonize their lives and their business operations, and the creation by Shell of new low-carbon processes for producing energy, materials and chemicals “that are still competitive for investors.”

That offers a lot of scope for action. And among Shell’s sustainability initiatives are the installation of hydrogen fuel pumps across Germany and the UK, investment in the production of low-carbon biofuels such as sugar-cane ethanol, and deployment of carbon capture and storage solutions (CCS). Its large-scale CCS project in Canada called Quest (part of a joint venture with the governments of Canada and Alberta) has captured 5 million tonnes of CO2 to date.
How technology is supporting the energy transition

Although many believe the energy giant must go much further — and faster — it’s certainly aiming high. “We’re going to be an important part of that transition [to net-zero carbon]. It’s our ambition to offer the alternative energy that people need and help each sector change the way energy is consumed in time to achieve the Paris Agreement targets and the scenario where it is possible to stay below a 2 degrees Celsius temperature rise. But it is a challenge.”

At a more immediate level, an area the CTO is currently exploring is improving the energy efficiency of its data centers. Data centers are a large and growing consumer of energy — with some analysts estimating they contribute to 1% of global electricity use.

Shell is now exploring alternative applications for its lubricants and fluids (which are currently used in automobiles, industrial settings and wind turbines) to enhance data center cooling.

Shell employee working at one of its lubricant plants

The air-cooling systems employed by most data centers account for up to 40% of their energy usage. Alongside startup Asperitas, Shell has developed a liquid immersion cooling system, which is helping to deliver better results.

“If you immerse your data servers in fluid and you take the heat away with the liquid rather than through air-cooling, it makes the whole operation a lot more efficient,” Sebregts explains. “It’s a customer offer that improves data center operations and at the same time helps decarbonize the system.”

Sebregts says that Shell is currently exploring thousands of similar technology research and development projects directly connected to aiding with the energy transition.

Sebregts says: “The big breakthrough needed for full transition from fossil fuels and onto renewable electricity is answering the questions of how to store electricity when you have more than you need and how you then get it back when there’s no natural energy sources such as sun or wind.”
The second mega-trend

Digitalization is the second mega-trend Sebregts is currently confronting as CTO of Europe’s largest company (by revenue).

During his six years as CTO, Sebregts says he’s witnessed a “tremendous take-off” in digitalization within the organization. “Many artificial intelligence applications were in a really experimental stage when I joined. We were experimenting with different algorithmic approaches when using machine learning to monitor equipment in the field. Now we’re in mass scale-up and deployment of those technologies. We’ve now got more than 5,000 machine-learning models in operation, and we’re adding a couple of hundred a week.”

One of the challenges facing Sebregts is updating data structures. “It’s easier to apply digitalization to your business model if your business was built around data from the start,” he says. “If you were Amazon, for example, your whole structure and work processes are based around data.”

In some instances, the company is still in the process of moving beyond paper records through scanning and digitization. Similarly, as many of Shell’s operating assets precede global connectivity, labeling systems and tagging are not always uniform across countries. Taking on this task has involved a combination of manual and automated work, with bots and data crawlers employed to help rationalize the mountains of historic data at Shell.

However, there is at least one area where Sebregt’s feels the industry can always play a strong hand. “From a skills and capability perspective, we are in a strong place,” Sebregts says. “We’ve always had lots of people who are really good at math — not just mathematicians but statisticians, theoretical physicists and engineers — who can really push the boundaries of what data science can do for our business.”

He puts that in historical perspective. “As the first computers arrived on the scene in the 1950s and 60s, our industry was one of the first to utilize them and push the boundaries of what was possible. Then, from the 1960s and 70s we were using computers to interpret seismic data, which is a very complex area of mathematics. There’s a lot of depth and background knowledge in the industry that evolved into what we now call digital sciences or digitalization. It’s essentially maths and stats on steroids.”

According to company calculations, digitalization has already helped to create $2 billion in savings at Shell — double its figure for 2019.

Explosion-proof iPads are used when inspecting sites, such as Shell’s shale gas well pad in the Permian Basin

One area of efficiency which has greatly improved — and generated huge savings — under his tenure is access to data in the field. This has come in the form of high-tech solutions, such as a new generation of autonomous sea-floor vehicles, which scan underwater oil and gas pipelines and feed the resulting footage to AI systems to detect areas which need repair before a leak occurs.

Drone and satellite imagery is also used in offshore operations to ensure against leaks. “This type of assessment simply wasn’t possible before AI and machine learning,” Sebregts says. “Previously it would all have had to be done manually, with limits of how much camera footage people could be expected to inspect accurately.”

More low-tech solutions are also proving to have similarly transformative results for field operatives. Using tablet devices in a chemical plant or in a gas processing plant can be risky, as even their small charges can be a sources of ignition when there is a leak. To address that, Shell has implemented thousands of “explosion-proof cases” for tablets, allowing Shell’s employees to access digital information such as equipment drawings, design data, information on repairs and aerial imagery, while moving around sites.

It gives operators “an overview of any facility available at their fingertips,” Sebregts adds. “And it improves efficiency as they don’t have to return to the office to access such documents when inspecting or maintaining a piece of equipment.”