Taking a long-term view - developing fuels for the future
A Shell case study

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Page 1: Taking a long-term view

Shell is a global group of energy and petrochemical companies, operating in more than 145 countries and employing nearly 120,000 people. Shell produces circa 3% of the world's oil and circa 3.5% of the world's gas. Most people know the company for its retail outlets and its oil and natural gas exploration and production activity.

Other Shell activities include:

  • marketing, transporting and trading oil and gas
  • providing oil products for industrial uses, including fuel and lubricant for ships and aircraft
  • generating electricity, including wind power and producing solar panels
  • producing petrochemicals used for plastics, coatings and detergents
  • developing technology for hydrogen vehicles.

Shell considers it a business priority to diversify its business portfolio to include more unconventional fuels in order to meet the worlds increasing demand for energy whilst minimising the impact on the environment. Hence the need for the development of 'future fuels'.

At the present time, any company seeking merely to exploit resources for immediate gain and at the expense of the environment or customers' best long-term interests is likely to generate government scrutiny, public hostility, customer resistance and, possibly, prosecution. Like any well-run business, Shell takes a long term view of what constitutes 'best possible use' of the resources available to it.

One key challenge facing Shell is how to use its profits and accumulated reserves to promote sustainable business growth. Like all companies, Shell distributes some of its profits to shareholders in the form of dividends. It needs to invest any retained profit in developing the business in sustainable ways e.g. investing in new oil and gas drilling projects, refinery improvements, and research into, and development of, new products such as 'future fuels'.

A company like Shell makes an operating profit from its manufacturing and trading activities. Some of this operating profit

  • goes to government in the form of Corporation Tax payments and other tax revenues
  • is distributed to shareholders in the form of dividends
  • is retained in the business, and invested in exploration, operational improvement and research and development.

Together with other major companies, Shell participated in the Sustainable Mobility Project run by the World Business Council for Sustainable Development, which has highlighted the complexity and importance of making transport systems more sustainable.

Some of the initiatives being developed by Shell to contribute to sustainable mobility are outlined in section 5, e.g. developing lower sulphur fuels and building a worldscale Gas to Liquids plant in Qatar.

Shell | Taking a long-term view - developing fuels for the future