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Conference title: Decentralising powers,
driving productivity
Panel session title: Puzzling out,
powering up performance
Scottish Council for Development and Industry Forum
Edinburgh, UK
Hugh Mitchell
Chief Human Resources and Corporate Officer, Royal Dutch Shell plc
March 20, 2015
Hugh Mitchell speech at the Scottish Council for Development and Industry Forum
In March 2005, Hugh Mitchell was appointed Human Resources
Director of Shell. He became a member of the Executive
Committee in October 2007.
Hugh graduated from Edinburgh University, Scotland, with an MA
(Hons) in Modern History in 1979. Later that year he joined
Human Resources in Shell Exploration & Production in Aberdeen.
Further HR and business roles followed across the UK and Brunei
in both the upstream and downstream businesses.
In 1997 he became HR Vice President for the Global Oil Products
business.
Hugh moved to Shell headquarters in The Hague, the
Netherlands, in 2003 as Director International. His responsibilities
included co-ordinating the company’s worldwide government
relations activities.
Hugh is a member of the Board for the Centre for Advanced
Human Resources at Cornell University in the USA, and a
Foundation Board member of IMD business school in Lausanne,
Switzerland. He was appointed a Fellow of the National
Academy of Human Resources in the USA in 2009. He is also an
Honorary Vice-President of the Chartered Institute of Personnel and
Development (UK).
Hugh was born in Scotland in 1957. He is married to Linda and
they have one daughter and one son. His hobbies include tennis,
football, running and hill walking.
Hugh Mitchell speech at the Scottish Council for Development and Industry Forum
There are major and complex challenges – such as meeting growing energy
demand while cutting greenhouse gas emissions – which are too big for one
government or one organisation to resolve. These challenges demand a collective
response.
In this speech to the Scottish Council for Development and Industry, Hugh Mitchell
highlights two examples of cross-sector collaboration: the proposed Peterhead
carbon capture and storage (CCS) project, and plans to decommission the Brent oil
and gas field in the North Sea.
With the potential CCS project, he observes that the interests of one partner – in this
case a future government – have been taken into account right from the start. It is a
reminder, he says, that one of the most critical partnerships we have is with the past
and the future.
Ladies and Gentlemen, good morning. I’d
like to thank Ross and his team for bringing
us together for this year’s Forum. I’m
delighted to be with you all in Edinburgh.
It’s a city I’ve always thought of as a hub for
great discussions. That was certainly the
case when I was a history student here. And
as a board member of the Edinburgh
Business School, I’ve been pleased to see
it’s still true.
In fact, the School has recently bought the
home of Adam Smith and is renovating it to
become a centre for global economic and
social debate. Smith wrote that “every man
lives by exchanging”. He was referring to
commodities, but it’s just as true of the
exchange of ideas. Something I’m looking
forward to doing over the course of the day.
I want to use my time to talk about
collaboration and how it allows us to
overcome tough challenges and achieve
goals which simply wouldn’t be possible by
going it alone.
I’ll focus on collaboration in the context of
the energy industry which, of course, plays
such a central role in Scotland’s economy.
The oil and gas sector alone supports nearly
2,000 Scottish supply chain companies and
225,000 jobs across the country.
I’ll then talk about an area of collaboration
which could be enhanced in Scotland’s oil
and gas sector, before concluding with
three steps that can be taken to ensure
effective partnerships. Partnerships which
will power Scotland’s economy in the years
ahead.
The benefits of collaboration
First of all, what does collaboration involve
and why is it important?
Towards the end of last year, I was
introduced to two girls from Aberdeen
called Abbey Thomson and Grace Brown.
They told me that until a couple of years
ago, they’d associated the oil and gas
industry with gruff old men in boiler suits,
working on big platforms in the sea. This,
quite understandably, put them off pursuing
a career in the sector.
That’s until they took part in a course which
highlights the huge number of different jobs
available in the energy industry. This piqued
their interest, encouraged them to re-think
their career path, and they’re now on a twoyear intensive course which will give them a
qualification in Electrical Engineering.
Abbey and Grace are two out of two
hundred students who have taken part in a
project run by teachers at the North East
Scotland College and sponsored by Shell.
These two very different organisations
identified a common interest and goal – we
“[Collaboration]
allows us to
overcome tough
challenges and
achieve goals
which simply
wouldn’t be
possible by going it
alone”.
Hugh Mitchell speech at the Scottish Council for Development and Industry Forum
wanted to introduce girls in Scotland to
careers that weren’t on their radar. And then
we worked together to create a course
which does just that.
Shell couldn’t have done this without the
North East Scotland College. And vice
versa. For me, this is a simple but clear
example of effective collaboration as an
investment for the future.
global warming and long-lasting changes in
the climate.
It’s clear that this is an urgent challenge we
must all share. And close collaboration –
between governments, business and civil
society – is essential if we’re to address it
effectively. It’s the only way to ensure
comprehensive and balanced action.
Easy to say. Tough to do.
Of course, not all forms of collaboration are
that easy. Even though you’re working
towards the same goal, very often it requires
guts, pragmatism, and a willingness to listen
and learn from a wide range of people you
don’t always agree with.
But that mustn’t be enough to put people off.
There are major and complex challenges
which affect all of us. Challenges which are
too big for one government or one
organisation to resolve. As such they
demand a collective response.
Rising demand, fewer emissions
As you all know, one such major challenge
is how to achieve a transition in our global
energy system over the course of the
century, meeting growing demand while
cutting greenhouse gas emissions.
The world’s demand for energy is expected
to be close to 40% higher in twenty-five
years’ time, according to the International
Energy Agency.
This demand is coming from a global
population increasing by around 73 million
a year. That’s nearly 150 times the number
of people living in Edinburgh. It’s also
coming from cities, where more and more of
us are moving. And it’s coming from a
growing global middle-class looking for a
better quality of life.
The impact on the environment of all this
energy demand is highlighted by the
Intergovernmental Panel on Climate
Change. It has warned that continuing to
emit greenhouse gases will lead to further
The pressures on the energy system affect
countries throughout the world in different
ways. But the overarching challenge is
universal.
Efforts to tackle this challenge can be seen
across Scotland. There are two examples
that stand out for me. They have the
potential to boost Scotland’s economy
significantly. And they wouldn’t have
reached the stages they’re at without crosssector collaboration.
Working with the past and the future
First to Peterhead, on Scotland’s north-east
coast, where Shell and SSE are looking to
develop the world’s first full-scale gas
carbon capture and storage project. This
could capture millions of tonnes of carbon
dioxide emissions from the Peterhead Power
Station and store it deep under the North
Sea.
This potential project wouldn’t be going
anywhere without collaboration. The
government, local community councils,
universities, and the regulators who set the
standards for this new industry, are among
those heavily engaged in the process.
A government and industry task force
predicts that a new UK CCS industry could
create “tens of thousands” of new jobs by
2030.
A few years ago, while many governments
focused on how to decarbonise their
economies, specialists at the Department for
Energy and Climate Change went one step
“[Rising global
demand for energy]
is coming from a
global population
increasing by
around 73 million a
year. That’s nearly
150 times the
number of people
living in
Edinburgh”.
Hugh Mitchell speech at the Scottish Council for Development and Industry Forum
further. They looked at how to achieve the
most competitive de-carbonised economy.
To do this, they came up with a model that
considered a host of options, from solar to
tidal power. Then they went through each of
these options, taking them out of the mix
one by one to check how each stacked up
financially. And when they removed CCS
from the model, the economy was worse off
to the tune of £32 billion.
This is an unusual kind of collaboration.
Today’s government collaborated with a
future unknown government, which will deal
with the consequences of any projects
initiated today.
It’s a good example of collaboration
because the interests of one partner – in this
case a future government – were taken into
account and factored in right from the start.
It’s a reminder that one of the most critical
partnerships we have is with the past and
the future.
This is something we’re well aware of at
Shell. The large-scale energy projects we
work on inevitably take a number of years
to deliver. So the ribbon cut by our Chief
Executive to mark the start of a project will
typically have been initiated by his
predecessor. And many of the projects we
start now will be delivered by today’s
graduates.
Learning from your mistakes
Next, I want to look at decommissioning oil
and gas fields nearing the end of their lives.
An essential part of our energy future.
Over the next three decades this will play a
big role in the UK North Sea’s evolution as
many of the 470 offshore installations will
need to be decommissioned.
Contrary to what you might think, this isn’t a
gloomy prospect. At this time of uncertainty
over the oil price, it presents an opportunity
to create a world-class centre of excellence
for decommissioning of platforms and
pipelines. It has the potential to create
thousands of highly skilled jobs. And it
means industry expenditure of between £35
and £50 billion.
The Brent oil and gas field has produced
almost 10% of the UK’s North Sea oil and
gas since the 1970s, generating more than
£20 billion of tax revenue.
Brent will be one of the first to be
decommissioned in the North Sea. And
earlier this year, Shell submitted the first of
two decommissioning programmes to the
Department for Energy and Climate
Change.
We’ve collaborated with lots of people on
the way. And we will continue to engage
thoroughly and widely.
“Today’s
government
collaborated with a
future unknown
government, which
will deal with the
consequences of
any projects
initiated today…It’s
a reminder that one
of the most critical
partnerships we
have is with the
past and the
future”.
That didn’t happen two decades ago when
we decommissioned Brent Spar, a
redundant oil storage installation in the
North Sea.
Although technical and scientific
assessments supported our proposal to
safely sink this installation in deep water in
the Atlantic Ocean, rather than risk bringing
it to shore, crucially we failed to properly
engage and understand the concerns and
expectations of others.
We’re doing things differently this time
around and have spoken with more than
180 organisations, from the Scottish
Fishermen’s Association to the Marine
Conservation Society.
And we’ve made changes following their
feedback, including setting up an
independent group to focus specifically on
what to do with the storage cells. We’ve
done this, and have provided them with the
facts so that they can come up with their
own conclusions, working with an external
facilitator.
What can be done better
In both of these cases – the proposed
Peterhead CCS project and Brent
decommissioning – I’m convinced that the
“The Brent oil and
gas field has
produced almost
10% of the UK’s
North Sea oil and
gas since the
1970s”.
Hugh Mitchell speech at the Scottish Council for Development and Industry Forum
progress that’s been made to date wouldn’t
have been possible without effective
collaboration.
Again and again, here in Scotland, Shell
has witnessed how collaboration in the oil
and gas industry has made the once
impossible, possible. It’s how the industry
has succeeded in delivering 42 billion
barrels of oil and gas equivalent to date.
That’s about 8 billion barrels more than
global annual oil demand.
Firstly, be comfortable collaborating with
people who don’t necessarily think the way
you do. We live in an imperfect world.
Behaving like an ostrich with its head in the
sand and refusing to listen to anything other
than our own opinion doesn’t work.
Secondly, collaboration must be in
everyone’s mind at the start of a project. By
failing to integrate it right at the front end,
we risk wasting time and money further
down the line.
When it comes to collaboration in the North
Sea, a lot of focus is understandably given
to the partnerships on oil and gas platforms.
This isn’t surprising, as the vast majority of
ventures in the North Sea have between two
and 20 partners.
And finally, accountability must be shared.
We’re all focused on tackling the same
urgent challenges. As such, responsibility for
delivering the desired outcome mustn’t rest
on the shoulders of a single government or
organisation.
But another important partnership is between
the industry and the invaluable supply chain
which supports it.
Collaboration isn’t a new concept. The
saying that two heads are better than one
has been bandied about for a long time.
In a crisis, we come together. Just look at
what happens when we think there might be
damage to a pipeline and it needs to be
inspected quickly: one company lends
another a diving support vessel to help them
out. This means any production shutdown is
kept to the absolute minimum.
It’s something Shell recognises.
Collaboration is one of four core attributes
we expect our leaders to possess. Because
we believe there’s a direct link between
collaborating effectively with all of our
partners, and adding value to the company.
At the moment, the structures aren’t in place
for this flexibility to be the rule and not the
exception. A collaborative approach needs
to be part of our day-to-day practice, rather
than ad hoc.
This is clearly addressed by the Wood
Review, which recommended a tripartite
strategy, involving Government, industry and
a new independent regulator.
The establishment of this regulator – the
OGA – and its mandate to drive industry cooperation is welcome.
Conclusion
To conclude: there are three steps which I
believe are vital to ensuring effective
collaboration.
It’s also clearly something everyone here
recognises, given that we’ve got
representatives from across government,
business and civil society in the room.
And because this appetite for co-operative
engagement is so apparent, I’m confident
that Scotland’s economy has a bright future
ahead.
Thank you very much.
“The establishment
of [a new
independent
regulator] – the
OGA – and its
mandate to drive
industry cooperation is
welcome”.
“Collaboration is
one of four core
attributes we expect
our leaders to
possess”.
Hugh Mitchell speech at the Scottish Council for Development and Industry Forum
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