Shell: Today's Gas Stations are Tomorrow's "Energy Stations"
What happens to motor oil companies when motors no longer require oil? This question occurred to me in the middle of an interview with Mark Ferner, lubricants group manager for Shell Global Solutions. The answer may be to transform "gas stations" into "energy stations" -- the Shell logo could remain as the fuel changes from gasoline to electricity.
There's a reason the company uses the "global solutions" tag instead of "Shell Motor Oil." As Ferner pointed out, Shell is "an energy company," and it's busily researching its role in an electrified world.
Ferner didn't blink when I asked him about the company's long-term vision. "The average vehicle in the American car park is nine years old," he said, "so the new technology cars will trickle in. As an energy company, lubricants are just one part of what we do. There are many other opportunities, such as the hydrogen market. We can take different fuels and work them through a chemical reformer to make hydrogen. And hydrogen can be used at the gas station level to provide electricity to electric vehicles."
I'm sure Shell takes comfort in the world's need for oil and gas in the foreseeable future. In a 2009 speech, Royal Dutch Shell CEO Peter Voser hedged his bets. "Shell's scenario team believes that by the middle of this century 30 percent of the world's energy could come from wind, solar, and other renewable sources," he said. "We'll see a greater variety of transportation fuels, including biofuels, electricity and hydrogen. And everything from cars to homes will become more energy efficient."
But Voser added, "fossil fuels and nuclear will supply the remaining 70 percent even then. History provides a parallel: Just as the growth of oil and gas did not stop the world from using coal, so the growth of wind and solar won't end the use of oil and gas."
George Augustaitis, an analyst with IHS Automotive, agrees that the transition will take time. "Oil companies still have a long way before they will take the extreme step of getting rid of their lubricant divisions," he says. But he says they will be closely following the popularity of the new EVs in the U.S. and the wider world.
"Oil companies think incredibly creatively about how to adapt in an electric world," Augustaitis said. "But it's important that they not invest too much money and resources there because it could be a long time the U.S., and the world, becomes exceedingly electric."
The bottom line, according to Ferner, is that Shell will be able to "bridge the transition" when it comes. And other oil companies will adapt, too, as the cars on the road evolve. Several informants in charging companies have recently told me that they've been talking with oil companies and gas station chain operators about adding charging to their facilities. That process is already fairly well advanced in Japan, where the Lawson chain is installing charging at 25 outlets. The Tokyo Electric Power Company (TEPCO) has pioneered a fast-charging standard that could "refuel" EVs in 30 minutes -- or provide a "top off" good for 20 miles or more in five minutes.
Some greens think that gas stations will disappear in the future, but I think it's more likely that they'll evolve as part of the long transition.
New York City's environmental planning group, PlaNYC is looking ahead to an EV-dominated transportation grid, and in a recent report predicts that there could be 50,000 plug-in vehicles on city streets by 2015. Mayor Michael Bloomberg recently opened the city's first public charging station.
As the EVs gear up, Shell is already transitioning. Along with other oil companies, it is producing lubricants for 2011 cars that conform to the cleaner fifth-generation ILSAC GF-5 standard. According to Ferner, Shell's oils are being reformulated to make them more "slippery," reducing the coefficient of drag and thus improving fuel efficiency. Lower viscosity will also contribute, as it does in racing.
Since many new cars will have the automatic start-stop technology (shutting down at stoplights) first seen on hybrids, Shell's GF-5 oils are now engineered to prevent oxidation of oil that sits on "hot spots" when the engine is shut down. Another tweak prevents oil additives from evaporating, because of those same hot spots, and turning into ash that can harm emission control systems.
Today's engine oils are evolving rapidly. But electric motors won't need lubrication, and their fuel is measured in volts and amps. The transition from one technology could take 20 years, so Shell and its peers have plenty of time to prepare for a brave new world.
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Photo: Flickr/Mechanikat