socially responsible investors briefing in london, april 14, 2015
TRANSCRIPT
1 Copyright of Royal Dutch Shell plc 14 April, 2015
ANNUAL ROUNDTABLE FOR SOCIALLY RESPONSIBLE INVESTORS 14 APRIL 2015 ROYAL DUTCH SHELL PLC
2 Copyright of Royal Dutch Shell plc 14 April, 2015
DEFINITIONS & CAUTIONARY NOTE
Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves.
Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.
Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact.
Resources plays: our use of the term ‘resources plays’ refers to tight, shale and coal bed methane oil and gas acreage.
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies in which Royal Dutch Shell either directly or indirectly has control. Companies over which Shell has joint control are generally referred to as “joint ventures” and companies over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest. This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended December 31, 2014 (available at www.shell.com/investor and www.sec.gov ). These risk factors also expressly qualify all forward looking statements contained in this presentation and should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 14 April, 2015. Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. We may have used certain terms, such as resources, in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.
3 Copyright of Royal Dutch Shell plc 14 April, 2015
ANNUAL ROUNDTABLE FOR SOCIALLY RESPONSIBLE INVESTORS
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
4 Copyright of Royal Dutch Shell plc 14 April, 2015
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
SRI programme
SRI annual roundtable
Ongoing engagement + roadshows
Learning events – hydraulic fracturing and CCS in 2014
Governance programme
Remuneration committee roadshows
Chairman roadshows
AGM
www.shell.com/esg
5 Copyright of Royal Dutch Shell plc 14 April, 2015
SHELL APPROACH TO SUSTAINABILITY
Helping to shape a more sustainable energy future
Sharing wider benefits where we operate
Running a safe, efficient, responsible and profitable business
www.shell.com/sustainability
6 Copyright of Royal Dutch Shell plc 14 April, 2015
AGENDA
Ben van Beurden and Chad Holliday
Climate change: Harry Brekelmans and Angus Gillespie
Q+A
Coffee break
Panel sessions Q&A (40 min each, 5 minutes to rotate):
Drinks
13:00 – 13:45
13:45 – 14:00
14:00 – 14:45
14:45 – 15:10
15:15 – 17:30
17:30 – 18:00
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PANELS
Panel A: North America and Alaska update: Marvin Odum (Director Upstream Americas) and Ann Pickard (EVP Arctic).
Panel B: Upstream International Operated assets and Nigeria: Bart van der Leemput (EVP Upstream International Operated), Osagie Okunbor (Managing Director SPDC), and Rupert Thomas (EVP Environment).
Panel C: HSSE & SP Performance, Environmental policy, Water and CO2: Harry Brekelmans (Director Projects and Technology), Lorraine Mitchelmore (EVP Heavy Oil), and Angus Gillespie (VP CO2).
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TRANSPARENCY
Sustainability reporting
Revenue transparency
Nigeria spills website
Oil sands performance report
Nigeria briefing notes
CDP
Sustainability report
1997 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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SHAREHOLDER RESOLUTION: CLIMATE CHANGE DISCLOSURE
RESOLUTION INFORMATION REQUEST 2013 2014 2015
Ongoing emissions management
Asset portfolio resilience to post-2035 scenarios
Low-carbon R&D and investment strategies
Strategic KPIs and executive incentives
Public policy position
Disclosed by Shell
Board decision to support shareholder resolution at the 2015 AGM
10 Copyright of Royal Dutch Shell plc 14 April, 2015
ANNUAL ROUNDTABLE FOR SOCIALLY RESPONSIBLE INVESTORS
CHAD HOLLIDAY NON-EXECUTIVE DIRECTOR AND CHAIR OF THE CORPORATE AND SOCIAL RESPONSIBILITY COMMITTEE ROYAL DUTCH SHELL PLC
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CORPORATE AND SOCIAL RESPONSIBILITY COMMITTEE
Responsibilities:
Review policy and performance for Shell General Business Principles and Code of Conduct.
Review management of HSSE and social impacts of projects and operations.
Monitor emerging environmental and social issues.
Input into the Shell Sustainability Report.
CSRC MEMBERS
CHARLES HOLLIDAY
Chair of CSRC
GERRIT ZALM
PATRICIA WOERTZ
SIR NIGEL SHEINWALD
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SITE VISITS
2014 Activity
Western Canada
Onshore oil and gas
Oil sands operations
Canada LNG potential
2015 Plans
Brazil biofuels
GoM operations
Separate visits:
Moerdijk, Appalachian tight gas, Peterhead
Kitimat Tight gas, Appalachia
Social and environmental considerations incorporated through all stages of major projects
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STRATEGIC KPIS AND EXECUTIVE INCENTIVES
5% weight Personal Safety
5% weight Process Safety
30% weight CFFO
50% weight Operational Excellence
10% weight Safety
20% weight Sustainable Development
10% weight Sustainability
2% weight Water use
4% weight Oil Spill volumes
4% weight Energy Intensity
2015 EXECUTIVE BONUS STRUCTURE
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PARTNERSHIPS + ENGAGEMENT
Leverage outside expertise
Scientific organizations
NGOs
Governmental bodies
Long-term partnerships
Strengthened governance
Wetlands International IUCN The Nature Conservancy EarthWatch Institute
15 Copyright of Royal Dutch Shell plc 14 April, 2015
WORKING WITH OTHERS
$250 million endowment from Shell
Independent charity to support economic development
Example: Global Alliance for Clean Cookstoves
100 million households by 2020
3rd party certification
Collaboration with environmental organizations
Shell certified in 2015
Shell Foundation
Center for Sustainable Shale Development
16 Copyright of Royal Dutch Shell plc 14 April, 2015
ANNUAL ROUNDTABLE FOR SOCIALLY RESPONSIBLE INVESTORS
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
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2050 outlook
Population increases from 7 to 9 billion
Enabled by cheap and reliable energy
Realities
Requirement to mitigate climate change
Oil supply -70% by 2030 without new investment
Key role of gas & CCS
ENERGY TRANSITIONS
Long-term energy supply mix Million boe per day
Gas
Biomass Wind
Coal Nuclear Other renewables Solar
Shell activities Oil
Energy transitions underway
+50%
+50%
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STRATEGY AND INVESTMENT PRIORITIES
1 Iraq, Nigeria onshore (SPDC), Kazakhstan, Arctic, heavy oil
Grow cash flow + deliver competitive returns
Competitive financial performance Project delivery Capital efficiency
ENGINES: Upstream + Downstream
GROWTH PRIORITIES: Integrated gas +
Deep water
LONGER TERM: Resources plays +
Future opportunities1
Restructuring + selective growth
Leadership in LNG and deep water
Balancing growth & non-technical risks
Capital allocation by global themes
19 Copyright of Royal Dutch Shell plc 14 April, 2015
INVESTMENT PRIORITIES
1 Resources plays, Majnoon, infill drilling
Growth priorities: 40%
Longer term: 25%
Engines: 35%
2015 organic capital
investment
50%
40%
Pre-FID large project options
Base
Short-cycle projects1
Post-FID large projects
Conventional exploration
2015 organic capital
investment
10%
Care and maintain activities form base of capital investment
Safe and reliable operations remain our priority
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HSSE + STRATEGY
No harm to people No leaks 12 Life saving rules
Goal Zero
Early identification of SD expertise required
Management framework for SD in new projects
Opportunity realisation
Strategy: balancing growth and returns
Competitive financial performance Project delivery Capital efficiency
Health, safety, security and environment key to delivery of strategy
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Identify & Assess Select Define Execute Operate Decommission & restore
SUSTAINABILITY IN PROJECT LIFE CYCLE
Sustainability objectives
Initial HSE risk analysis
Baseline surveys
Local content strategy
Environmental, social & health management plan
HSE management system
Performance monitoring
Decommissioning plan
FEED FID On stream Explore Feasibility study Ceased production
Environmental, social & health impact assessment e.g.
Greenhouse gas Biodiversity Water Social performance
Safety design and construction studies
Local content plan
Stakeholder management
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2014 SAFETY PERFORMANCE
Injuries – TRCF/million working hours
Goal Zero on safety Injuries – TRCF/million working hours
Spills - operational Volume in thousand tonnes
Energy intensity – refineries Energy Intensity Index (EEITM)
Process safety Number of incidents
million working hours
Working hours (RHS) TRCF
HSSE priority
Performance + transparency Tier 1 incidents Tier 2 incidents
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CONTRACTOR SAFETY + MANAGEMENT
Monitor performance and delivery including gap closures agreed in the HSSE plan
Green
Amber
Red
Technical
HSSE
Commercial
Assessment Evaluation Contract Management
Goal Zero Number of fatalities Contractors represent 75% of working
hours
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ONGOING EMISSIONS MANAGEMENT
* Indirect emissions were not recorded before 2009
Emissions Million tonnes CO2 equivalent
Energy intensity Gj/tonne (energy required to produce a tonne of oil equivalent)
Upstream excl. Oil sands Refining Chemicals
index
www.shell.com/ghg
Million tonnes hydrocarbon flared 2015 endorsed the World Bank’s Initiative to
Reduce Global Gas Flaring
"Zero Routine Flaring by 2030"
Flaring performance
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WATER MANAGEMENT
Dawson Creek water reclamation, Groundbirch
Shell fresh water withdrawn Million cubic metres
Water regulation evolving rapidly
Water management plans
water scarce areas
future water scarce areas
Centre of Excellence in Bangalore:
Integrated project delivery
Technical support
Water R&D
26 Copyright of Royal Dutch Shell plc 14 April, 2015
REDUCING ONSHORE NIGERIA FOOTPRINT
Restructuring onshore footprint
2010 – 2015 divested 11 OMLs
Targeted investments: gas and pipelines
Forcados Yokri Integrated Project FID
Southern Swamp Associated Gas FID
Gbaran Ubie phase 2 FID
Trans Niger Pipeline Loopline (TNPL) FID
Nigeria onshore portfolio
Concessions – SPDC Legal Divested Concessions Major Rivers/Sea FIDs
Legend
OML 4
OML 40
OML 41 OML 38
OML 42 OML 34
OML 30 OML 26
OML 21
OML20
OML 79
OML 43
OML 27
OML 28
OML 31
OML 35
OML 46
OML 32
OML 36 OML 23 OML 11
OML 29
OML 18
OML 72
OML 24 OML 33
OML 25
OML 77 OML 74 OML 71
Forcados Yokri Integrated project OML 45
Southern Swamp Associated Gas
Gbaran Ubie Phase 2 OML 22 OML 17
TNPL
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NIGERIA: SPDC JOINT VENTURE PERFORMANCE
*SPDC = 30% Shell, 55% NNPC, 10% Total, 5% Agip; all data on 100% basis unless stated
2014 overview
Widespread oil theft remains a challenge
0 fatalities, 19 kidnappings
Production k boe/day (SPDC)
Illegal fitting on NCTL at Opomakri, January 2015
SPDC* spills Thousand tonnes
volume of operational spills number of operational spills >100kg (RHS)
volume of sabotage spills number of sabotage spills >100kg (RHS)
#
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ALASKA UPDATE
Noble Discoverer
Transocean Polar Pioneer
2015 Chukchi Sea
2 rig programme
28 support vessels
Pending Exploration Plan approval & drilling permits
2012 learnings + actions
Upgraded contractor management
Certified Arctic Containment System (ACS)
Improved incident command system and oil spill response
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CANADA UPDATE
13 mtpa in FEED (100% capacity)
Community advisory group
First Nations visit Oman LNG 2014
Environmental Assessment Certificate application
Targets oil sands emissions
Expected start up 2015
1mtpa CO2
LNG Canada Quest Carbon Capture and Storage
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CLIMATE CHANGE PUBLIC POLICY POSITION
Pro-active advocacy
A robust price on carbon
Government support for early stage low carbon technologies
Explore plausible futures in Shell scenarios
Work with governments on energy transitions
Member of / supported:
World Bank Carbon Pricing statement (2014)
World Bank Zero routine flaring initiative
International Emissions Trading Association
Prince of Wales Corporate Leaders Group
Zero Emissions Platform
WEF Oil & Gas Climate Initiative
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CLIMATE CHANGE + LOW CARBON ACTIVITY
Gas Energy Efficiency
Biofuels Carbon Capture & Storage
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CLIMATE CHANGE HARRY BREKELMANS DIRECTOR PROJECTS AND TECHNOLOGY ROYAL DUTCH SHELL PLC
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PROJECTS AND TECHNOLOGY AT SHELL
Field development planning
Project execution
Technical Services
Research & Development
Safety & Environment
Contracting & Procurement
Projects and Technology in numbers:
14,000 staff
323 patent applications
$1.2 billion R&D spend in 2014
Three dedicated technology centres
Amsterdam, Houston, Bangalore
34 Copyright of Royal Dutch Shell plc 14 April, 2015
SHELL ENERGY SCENARIOS
Energy demand by source
Exajoules
40 years of scenarios
Designed to stretch management thinking
Testing business models
Contrasting plausible views of the future
Are not a forecast of likely events
Oil
Gas
Biomass/Biofuels
Wind
Coal
Nuclear
Other Renewables
Solar
2000 2030 2060
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0
10
20
30
40
50
2000 2020 2040 2060 2080 2100
ENERGY-RELATED CARBON EMISSIONS: SCENARIOS
1: The New Lens Scenarios were based on 2011 IEA data, whereas the IEA World Energy Outlook 2014 scenarios are based on 2013 IEA data 2: IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation, 2011
Shell and IEA scenarios1 Life-cycle CO2 intensity of electricity generation
CO2 equivalent/ KWh2 GtCO2/year
Oceans Mountains
Current policies New policies 450 ppm
Shell has to plan in a range of possible futures IEA 2° C scenario is normative
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ENERGY TRANSITIONS
Example: Germany electricity consumption (by source) EJ/Year
Shift to lower carbon energy system
Dynamic, policy-driven changes
Local and global trends
Oil
Biomass Gasified Nuclear
Natural Gas Biofuels Biomass/Waste Solids Hydro-electricity
Coal
Wind Solar Other renewables
Geothermal
37 Copyright of Royal Dutch Shell plc 14 April, 2015
STRANDED ASSETS HYPOTHESIS IGNORES SUPPLY + DEMAND REALITIES
Oil demand & supply million barrels of oil per day
Transport underpins oil demand, despite electric vehicle growth
Natural decline
Oceans
Mountains
IEA current policies
IEA new policies
IEA 450
Substantial supply gap
70 million barrels per day
80% replacement of today’s production
Equivalent to ~6 x Saudi Arabia or ~80 x UKCS
~$15 trillion investment
38 Copyright of Royal Dutch Shell plc 14 April, 2015
DIRECT EMISSIONS MANAGEMENT
GHG emissions plans in both design phase and operation of assets
New projects include energy efficient design
Amal steam using renewables for enhanced oil recovery
Glasspoint
Design and operations Future energy technology
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INDIRECT EMISSIONS MANAGEMENT
FLNG Clean fuels
CCS LNG for transport
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SHELL RESEARCH + DEVELOPMENT
Total R+D spend $mln
Shell Peer group
Significant R+D spend
>$1bn year since 2007
Averaging ~15% low-carbon R+D
Full size hydraulic test rig, The Netherlands
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Mongstad Otway Cansolv
Offshore (50 MW net)
Raizen 2G Iogen cellulose ethanol
H2 network (Germany)
2 B Energy
Glasspoint Solar EOR
Westhollow research centre “cellulosic biofuels”
LOW CARBON R+D AND INVESTMENT STRATEGIES
FEED FID
On stream CCS
Biofuels
Solar
Gorgon (3-4 mtpa)
Quest (>1 mtpa)
Peterhead (1 mtpa)
Raizen 1G (sugar cane ethanol)
Onshore (450 MW net)
Wind
R&D
Showa shell PV manufacture
Alternative energy carriers
Define Execute Operate Technology Efforts
Shell Technology Ventures
Technology demonstration/research
Future energy technologies
Used in Shell operations
Solar PV
Commercial operation*
Gas
LNG 24mtpa GTL LNG 7.4mtpa LNG 6.5mtpa
LNG 7.7mtpa
Exploration
B
C
A
* Volumes in Shell share
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CLIMATE CHANGE ANGUS GILLESPIE VICE PRESIDENT CO2 ROYAL DUTCH SHELL PLC
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SHELL GROUP CO2
Group CO2 function – what we do
CO2 research and analysis
Policy and advocacy
Implementation
Includes CCS
CO2 strategy
CO2 management framework
Regular assessment of CO2 exposure since 2007
Competitive CO2 positioning
Portfolio CO2 emissions, intensity, costs
CO2 screening value of $40 per tonne base case
Long-term assessment of where mitigation or adaptation might be required
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PROJECT ECONOMICS EXAMPLE
NPV analysis: example NPV sensitivities: example
Shell project screening values
$40 / tonne CO2e $70-$110 / bbl Brent oil $3-$5 / mmbtu Henry Hub gas
Future oil, gas and carbon price sensitivities are incorporated in project economics for all Shell projects
-16
-12
-8
-4
0
4
8
12
-4
-3
-2
-1
0
1
2
3
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
$ /yr $ cumulative
Undiscounted Cumulative cashflow
Discounted Cumulative cashflow
Annual cashflow
Base NPV (inc $40/t CO2)
Oil Price
CO2 price
Capex
Opex
Recovery factor
+ impact - impact
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SHELL AND IEA PRICE ASSUMPTIONS
Europe CO2 cost $/tonne
Oil price $/barrel
Shell Planning
IEA “Current Policies”
IEA “New Policies”
Shell base case
IEA “450”
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ASSET PORTFOLIO POTENTIAL RESILIENCE TO SCENARIOS
Oil price effect % difference in NPV vs Shell $90 scenario
CO2 cost effect % difference in NPV vs Shell $40/ tonne scenario
Combined cost effect % difference in NPV
Strategic theme
Downstream Engine
Upstream Engine
Integrated Gas
Deep Water
Resource Plays
Future Opportunities
IEA “Current Policies” IEA “New Policies” IEA “450”
*The final outcome will include factors such as actual energy and CO2 prices, and portfolio choices made by Shell
47 Copyright of Royal Dutch Shell plc 14 April, 2015
ANNUAL ROUNDTABLE FOR SOCIALLY RESPONSIBLE INVESTORS
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
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Q&A
14 APRIL 2015 ROYAL DUTCH SHELL PLC
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14 APRIL 2015 ROYAL DUTCH SHELL PLC
BACKUP
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HUMAN RIGHTS
Founding member of UN Global Compact.
Collaboration with Danish Institute of Human Rights
Implementing Voluntary Principles on Human Rights since 2000
INDUSTRY COOPERATION Human Rights Due Diligence Human Rights & Impact
Assessment Grievance Mechanisms
POLICY COMMITMENT
Business Principles
Shell Code of Conduct
HSSE & SP Control Framework
Supplier Principles
OBJECTIVE Due diligence to avoid infringements of rights Be able to ‘know and show’ systems are effective Access to grievance mechanisms for stakeholders
SHELL FOCUS AREAS
Governance: HSSE SP Exec & Human Rights Working Group
Contracting & Procurement
Human Resources Security
Social Performance
Partnerships: Danish Institute for Human Rights, Consensus Building Institute
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ASSET INTEGRITY AND PROCESS SAFETY
PREVENTING AND MITIGATING MAJOR SAFETY INCIDENTS
Goal Zero: No Harm, No Leaks Assets are safe and we know it
TOP EVENT
THRE
ATS
CO
NSEQ
UEN
CES
Leadership behaviours
Effective design and application of barriers
Standards and processes
Motivated, competent people
Continuous improvement
Control barriers Recovery measures
Plan
Do
Act
Check
1
3 4 5
2
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BRENT FIELD DECOMMISSIONING
Brent Delta Topside plan submitted
Consultation + resubmission
Target date single lift: summer 2016
Full field decommissioning plan to follow
8 year stakeholder engagement
~ 180 bodies
Includes environmental groups and NGOs
www.shell.co.uk/brentdecomm
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GRONINGEN EARTHQUAKES – NETHERLANDS GAS
force: 0.1–1.0 3.5 and higher
Key focus areas
Study work and hazard risk assessments
Innovative collaboration
Intensive stakeholder management and dialogues
Government decisions taken
Production restriction
€1.2bn Mitigation programme
Loppersum
2012-2014 Earthquakes
0 10 20km
www.namplatform.nl
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NIGERIA: SHELL ENVIRONMENTAL PERFORMANCE
Remediation # of spills sites*
*includes 125 sites from 1969-1993 in Ogoniland confirmed during decommissioning in 2013
All data on a Shell operated basis
Sites requiring remediation Number of spills in year (all causes)
Illegal fitting on 28” TNP at Bodo West, Feb 2015
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IRAQ UPSTREAM
Shell 44%, started up in 2013
Largest flare reduction project in the world
Avoided 14 million tonnes of CO2 from flaring (100% basis)
Processing capacity 550mmscf/d associated gas
2 billion scf/d potential
Shell 45%, started up in 2013
Flaring increased with production
Flaring reduction programme under construction
To provide power for domestic market late 2015
Basrah Gas Company
Majnoon oil development
Majnoon Basrah Gas Company storage tanks
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REVENUE TRANSPARENCY
Voluntary country-level tax disclosure since 2012
EITI board position and founder
Encourage government transparency
Preparation for reporting 2015 payments in 2016
No country exemptions may cause conflict in law
Shell is actively engaging with host governments including UK
www.shell.com/payments
~$18 bln taxes & royalties paid 2014
~$73 bln excise tax collected in 2014
Leadership in tax transparency
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RESTRUCTURING RESOURCES PLAYS + REDUCING EXPOSURE
Capital investment $ billion
E&A On-stream
Gas Liquids Rich
Colombia
Argentina Neuquen
Oman
China
Arrow CBM
Russia
Americas International
Permian
Appalachia
W. Canada LRS
W. Canada gas
Algeria
-30%
` Germany
Tunisia
Turkey
North America restructured in 2014
International portfolio restructuring underway
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TIGHT GAS OPERATIONS: EMISSIONS MANAGEMENT IN ACTION
Air emissions specifically covered in onshore operating principles
Green completions in UA onshore operations
Infrared cameras to identify fugitive methane
Studies with University of Texas and EDF
Shell conducts its operations in a manner that protects air quality and controls fugitive emissions as reasonably practicable
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DEMAND OUTLOOK AND RESERVES
* Resources shown includes only resources in select or define phases (post feasibility study or in FEED) or are under execution or on stream.
New policies scenario Mtoe/d
Oil Coal Gas Nuclear Hydro Bioenergy Other renewables
Mtoe/d
450 Scenario
Resources* Shell SEC proved reserves
Shell SEC proved reserves
Resources*
Oil and gas portfolio relevant in IEA 450 scenario Coal demand is most impacted
Shell
Reserves life at end 2014: ~11 years Further 2P +2C resources
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ENVIRONMENTAL IMPACT: FUGITIVE METHANE
Study by the University of Texas at Austin in collaboration with the Environmental Defense Fund and 9 operators
Reason for the study:
Wide variation in EPA national inventories
Limited measured data
Data better informs scientifically sound policies and regulations
Key findings:
Measurements from 190 onshore natural gas sites in the US
Total emissions similar to 2011 EPA national inventory
Well completion emissions lower than previously estimated
Emissions from pneumatic controllers and equipment leaks higher than EPA national emission projections
EPA production sector methane emissions
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2010 EPA (313 bcf) 2011 EPA (133 bcf) UT/EDF (119 bcf)
Met
hane
Em
issi
ons
(Gg)
-636
225 80 34
-1000
-500
0
500
Com
plet
ions
with
HF
Pneu
mat
icC
ontro
llers
Equi
pmen
tLe
aks
Che
mic
alPu
mps
Met
hane
Em
issi
ons
Diff
eren
ce (G
g/yr
)
Gg/yr
61 Copyright of Royal Dutch Shell plc 14 April, 2015
ENVIRONMENTAL IMPACT: LIFE CYCLE BENEFITS OF GAS OVER COAL
Current data supports the policy arguments on climatic benefit of gas over coal; though most research has been based on the 2009-2010 EPA inventories with higher system-wide emissions
Definitive answer once EDF series is completed for other segments of the natural gas value chain
Source: US EPA, UT/EDF Study, NPC (George et al), NREL (Logal et al), IDA (Weber et al), Cornell (Howarth et al), ANL (Burnham et al), NETL (Skone et al) and IEA
Met
hane
leak
age
rate
s (%
of
gros
s pr
oduc
tion)
Estim
ate
vs. t
hres
hold
Critical methane leakage gas vs. coal (8%) based on a 100 year time-frame
EPA NG sector total = 1.26%
NG Production Other NG Sector
0.79%
0.47% 0.43%
1.3%
0.69%
1.81% 1.39%
0.34%
0.87%
0.43%
0.73%
1.2%
0.9% 4.11%
3.79%
2.2%
1.4%
62 Copyright of Royal Dutch Shell plc 14 April, 2015
ANNUAL ROUNDTABLE FOR SOCIALLY RESPONSIBLE INVESTORS 14 APRIL 2015 ROYAL DUTCH SHELL PLC