Global Trends in Transport Fuels and the implications for Australian policyRussell CaplanChairman, Shell Companies in Australia

Bureau for Transport and Regional Economics ColloquiumCanberra, 15 June 2006

Global trends Continuing use of conventional fuels Cleaner transport fuels Fuel and engine efficiency Price pressures Refinery location & capacity Self-sufficiency vs economic growth

World energy demand 1971-2030IEA 2004 (reference case)billion tonnes oil equivalentother renewableshydronuclearbiomass & wastecoalgasoil

Demand for Oil to 2030From Akmal and Riwoe (2005), per AIP submission to the Inquiry into Future Oil Supply and Alternative Transport Fuels (2006)

Chart2

47.64.4273.1

50.54.933.93.1

55.16.250.93.3

OECD

Transition Economies

Developing Countries

International Bunkers

mbbl per day

Sheet1

World Primary Energy Demand in the IEA Reference Scenario (Mtoe)

200320102030Growth 2003-2030% of total% of total% of total

Coal2582286037241.4%24.1%23.1%22.9%

Oil3785443155461.4%35.3%35.8%34.1%

Gas2244266039422.1%20.9%21.5%24.2%

Nuclear6877797670.4%6.4%6.3%4.7%

Hydro2272783681.8%2.1%2.2%2.3%

Biomass & waste1143127316531.4%10.7%10.3%10.2%

Other renewables541072726.2%0.5%0.9%1.7%

Total1072212388162721.6%100.0%100.0%100.0%

World Oil Demand in IEA reference Scenario (mbbl per day)

2004201020302004-2030

OECD47.650.555.10.6%

Transition Economies4.44.96.21.3%

Developing Countries2733.950.92.5%

International Bunkers3.13.13.30.3%

Total82.192.4115.51.3%

Sheet1

Coal

Oil

Gas

Nuclear

Hydro

Biomass & waste

Other renewables

Mtoe

Sheet2

OECD

Transition Economies

Developing Countries

International Bunkers

mbbl per day

Sheet3

050100150200250300200020202040206020802100Heavy OilDiesel / GasolineElectricityGasHydrogenData sourceWEC; with modificationSynthetic fueland biofuelsLiquid FuelsGaseous FuelsEnergy Demand x1018 J Forecast global automotive fuel demand to 2100

Global trends Continuing use of conventional fuels Cleaner transport fuelsClean fuels - unleaded, lower sulphurSynthetic fuels GtL, CtLBiofuels Fuel and engine efficiency Price pressures Refinery location & capacity Self-sufficiency vs economic growth

Identical products from gas, coal and biomass Range of feedstock optionsSynthetic Fuels ContinuumNatural GasBiomassFischer-Tropsch processIdentical ProductsGTL SyngasBTLCTLCoalShell Gasification ProcessShell Coal Gasification ProcessGasifier

BiofuelsBio-Gasoline 4%Bio-Diesel 3%XTL Diesel 4%050010001500200025003000350040004500500020052010201520202025KBPDShell Global Road Transport Fuel Volume Base CaseDiesel 45%Gasoline 44%Conventional gasoline and diesel = 89%Bio-fuels: ~ 7 %CO2 reduction from bio-fuel: ~ 3 MT 2005~ 17 MT 2025Source: IEA, PX, DXF

Global trends Continuing use of conventional fuels Cleaner transport fuels Fuel and engine efficiencySmaller cars, hybridsMore dieselMore efficient engine technologyDriver education Price pressures Refinery location & capacity Self-sufficiency vs economic growth

Global trends Continuing use of conventional fuels Cleaner transport fuels Fuel and engine efficiency Price pressuresDemand side factorsSupply side factors Refinery location & capacity Self-sufficiency vs economic growth

Global trends Continuing use of conventional fuels Cleaner transport fuels Fuel and engine efficiency Price pressures Refinery location & capacity Construction of mega-refineriesLocated in Asia or Middle EastRising finished product imports into Australia Self-sufficiency vs economic growth

Asian Refining

Global trends Continuing use of conventional fuels Cleaner transport fuels Fuel and engine efficiency Price pressures Refinery location & capacity Self-sufficiency vs economic growth

Determining a vision for transport fuels in 2050 Should we have a long term transport energy vision? What fuels are present in the vision? Where do our fuels come from? What is the interplay between transport fuels and generation fuels? What environmental footprint will the fuels of the future have? What do we need to do today to set ourselves up to achieve the vision?