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Interview

Dick Benschop – President Director, Shell Netherlands

Dick Benschop discusses the scope of Shell’s activities in the Netherlands today, the challenges he must tackle as the company’s president director, and the role of the Netherlands in creating a culture of technological and commercial success in the global business.

What is the scope of Shell’s activities here in the Netherlands, and what are your main areas of focus as president director of Shell Netherlands in the short to medium term?

There are four dimensions to the position of Shell in the Netherlands. Shell’s headquarters are based here in The Hague: not only the company’s corporate headquarters, but the company’s international upstream business as well. This gives a certain dimension to the position of Shell in the Netherlands, next to our position in London where the downstream business is headquartered. The second dimension is in R&D. One of Shell’s three global research labs is here (with the other two in Houston and Bangalore), which was recently rebuilt and today is a world-leading facility.

The next areas are the core of our business: the third dimension is the upstream business, which is conducted via NAM, a joint-venture with ExxonMobil with Shell acting as the operator both onshore and offshore, including at the giant Groningen field. The fourth is the downstream business, of which all parts of the value chain are fully represented in the Netherlands, from the Pernis refinery, the largest refinery in Europe, to our chemicals production facility and the trading business around that, based in Rotterdam, as well as a full suite of commercial fuel and retail businesses in the Netherlands. In total, Shell has around 11,000 staff in the Netherlands, and a considerable production footprint.

The core of my focus as president director of Shell Netherlands is promoting our agenda on everything related to our business here, from upstream to downstream and everything in between – all the areas where Shell is present in the Netherlands. There is a special emphasis within that, especially when talking about the business challenges, based around the competitiveness of the downstream business, which is more of a European issue than a Dutch issue, to ensure a level playing field for the Netherlands within Europe, but also for Europe on a global level: there is an overcapacity in refining in Europe, which is a point of focus in terms of policy and regulation affecting the downstream manufacturing business.

Another important aspect of my focus is centered around innovation and R&D in the Netherlands, which spins out into cooperation externally in the Netherlands with universities such as Delft University of Technology, Eindhoven University of Technology and the University of Twente, as well as research institutions such as TNO, the Dutch national research institute. Much of the research done in our lab today is deeply connected to all kinds of programs, projects, and professorships in the Netherlands.

What opportunities do you have as Shell Netherlands to add to the innovation agenda of the country?

Many new innovative developments in Shell often have Dutch origins, such as gas-to-liquids (GTL), which started in 1973 in the lab in Amsterdam, and was developed into the Pearl GTL plant in Qatar, from where products are now coming back to Rotterdam. Another example is the Prelude FLNG facility, which is destined for Australia, and is currently being built in Korea by Samsung Heavy Industries: the first design and some of the testing of water conditions were done in the Netherlands.

Additionally, the Netherlands is something of a test bed for new technologies and new business ideas for Shell, in both upstream and downstream. One very recent example of this is LNG for transportation. We are working to develop LNG as a transport fuel across the value chain, the first steps of which will be heavy road transport and barges. We will be opening our first LNG filling station for trucks in March in Rotterdam, and two years ago, we took the initiative to order two LNG-powered barges, new built here in the Netherlands, owned by Interbarge and used by Shell on the Rhine. These ships run all the way from Rotterdam to Basel and back.

The next step will be initiating LNG in the maritime sector – we have an agreement for a break bulk facility here with Gate terminal, and will be the launch pad customer for this facility, and we are looking at ship-to-ship bunkering as well. The North Sea and the Baltic Sea have sulfur emission limitations, which will impact the use of heavier marine fuel oils here in the region, but there is a broader interest from companies like Maersk and cities like Singapore, which bodes well for the future of LNG as a marine fuel.

GTL, which originated in Amsterdam, is still being supported from there. The whole suite of gasification technologies and enhanced oil recovery (EOR) is done in Amsterdam, in collaboration with Dutch universities, and a large emphasis on catalysis and chemicals research. There is also a lot of biofuels research being done there as well, which is translated into the external programs we have: we work together with Delft on EOR, and with partners on carbon capture and storage (CCS) and biofuels.

There is a variety of core, first and emerging technologies being developed in-house and with partners in the Netherlands today. A small example of emerging technologies would be solar fuels being developed with Eindhoven university: the research is very future-focused, but potentially extremely interesting. 

What are some of the key market forces affecting Shell Netherlands at the moment, and what strengths, assets and abilities can the company draw on to continue to deliver success?

In the upstream business, the Netherlands, like the UK and Norway, is a heartland for Shell. Maintaining this heartland is a key challenge in terms of the development of ever-smaller fields, for example. The ability for near-field exploration, adding to the existing portfolio, and being able to do this economically, has led to very interesting innovation around the way we drill in the Netherlands. Again, the Netherlands is a bit of a test bed in this area: we started onshore with ultra-light land rigs, tested them onshore, and eventually, this led to a number of opportunities for cheaper drilling as the technology was standardized. We then went offshore with the technology we had developed onshore – the result being the Swift rig, as it is called, a new rig that we use today in the North Sea, which has much more automated drilling, lowering costs and improving efficiency.

Another example is enhanced gas recovery, which is achieved through nitrogen injection. We created our first facility for this here in the Netherlands, building a nitrogen facility on top of the test field, which increases the recovery factor and opens a whole new suite of opportunities for us both in the Netherlands and around the world.

On the downstream side, the main challenge is the market situation. It is a widespread problem that many countries and companies are facing. This over-capacity has to be absorbed and dealt with, which is neither easy nor quick to do. The question becomes how do you position yourself for when this happens, throughout that cycle? Our strategy has been to invest in our Pernis refinery in terms of its product slate, and position it as one of the refineries that will stay and service Europe.

Another challenge, which appears in the retail business—again, not a Dutch-specific situation—is the fact that oil consumption in countries like the Netherlands is stable to slightly declining. This is something we expect to see in more OECD countries in the years to come, because of the move to bio, electric, or hydrogen-based fuels in the future. The name of the game here is winning in these stable or declining markets. We are usually exposed to growth in the markets we operate in, but in this case we are not. This is a very interesting challenge, and the Netherlands is now being used to launch a number of new concepts in this area.

Part of the mandate for the ‘gas roundabout’ concept is to provide flexibility in terms of the energy transition, to give the Netherlands the energy supply they need as the transition is made towards new fuels and renewable energies. What role can Shell play in helping the Netherlands to approach this energy transition, and what future opportunities are there?

There are a number of future opportunities for the Netherlands, which all start with R&D. The Netherlands has an interesting program now called the Top Sectors program, a close cooperation between the government, educational institutions and companies. These entities are coming together in nine different sectors, which have been identified as traditional strengths of the Netherlands, to drive investment and to create as much economic spin-off as possible. Energy and chemicals are two of those top nine sectors that are of interest to Shell.

Then there is the topic of the broader energy future of the Netherlands, which is extremely interesting and partly covered by this Top Sector approach, and is an area where the Netherlands can play a distinctive role. I would call it the ‘Gas Roundabout 2.0’ concept: it addresses how gas and renewables are going to work together as the backbone of the new energy system, which will not only be about renewables; gas will be included as well, not just as a transition fuel but as a systems fuel, because of the backup role that gas can play with renewables. The Netherlands is in a particularly interesting place for this due to its large existing gas infrastructure and knowledge base, and the fact that the country is developing renewables today on a much larger scale than before. We are figuring out how to combine all of these elements, and how the Netherlands can be used as a lab to test how this new energy system will actually function.

There are clearly several issues to be solved around renewable energy, for example in terms of the transportation of energy, decentralization and improving efficiency, where gas can be part of the solution. In the longer term, we are investigating power-to-gas projects, where surplus from renewable generation can be converted to hydrogen, which can then be used directly in transport or spiked into the gas grid.

It is an interesting moment for the entire industry. For energy and climate change challenges you need a broad set of solutions: renewables will be an important part of that but gas and other solutions like CCS will have a place as well. There needs to be collaboration and integration, and we are happy to contribute to that, not just in our research and advocacy but the projects on which we are engaged.

Which of the unique characteristics of the Dutch oil and gas industry have contributed the most towards the success of Shell?

There is a broad energy sector in the Netherlands that is highly competitive on a global scale. If you look, for example, at the maritime and offshore industries, there is an enormous global reach in terms of the expertise and skill of the Netherlands. Another of the key characteristics that has contributed towards the success of Shell is the international outlook of the Netherlands. I would say that even among the major IOCs, we are one of the most international as a result of our heritage.

The two main legs Shells stands on as a company in the Netherlands are its technical and commercial achievements: I believe that these are both characteristics that are strong in the Netherlands. Finally, Shell does much of its work today through partnerships and collaborations. Our ability to partner and collaborate is key to our success, especially in today’s world. Research and development is now becoming open innovation: we work in partnerships not just with oil and gas companies, but also with other non-traditional companies such as DreamWorks, HP and IBM, to address the challenges of today. This ability to collaborate is certainly part of the Dutch DNA.

To read more articles and interviews from the Netherlands, and to download EnergyBoardroom’s latest free report on the country, click here.

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