sri event - shell · 4/10/2014 · smaller growth projects 0 10 20 30 40 investment priorities...

1 Copyright of Royal Dutch Shell plc 10 April, 2014

SRI EVENT

10 APRIL 2014 ROYAL DUTCH SHELL PLC

Quest construction, 2013


DEFINITIONS & CAUTIONARY NOTE

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 over which Royal Dutch Shell plc either directly or indirectly has control. Companies over which Shell has joint control are generally referred to “joint ventures” and companies over which Shell has significant influence but neither control nor joint control are referred to as “associates”. In this presentation, joint ventures and associates may also be referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) 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, 2013 (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, 10 April, 2014. 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.

http://www.shell.com/investor

http://www.sec.gov/


INVESTING FOR SUSTAINABLE GROWTH

BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC


ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE

SRI Programme

SRI annual roundtable

Ongoing engagement

Corporate Governance

Remuneration committee roadshows

Chairman roadshows

www.shell.com/esg

Shell’s 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


AGENDA

Ben van Beurden and Chad Holliday Carbon management: Jeremy Bentham, Angus Gillespie and Lorraine Mitchelmore Q+A Coffee break Orientation Panel sessions Q&A (45 min each, 5 minute break): Group Lunch: Panel A: North America update: Marvin Odum (Director Upstream Americas) and Lorraine Mitchelmore (EVP Heavy Oil) Panel B: Upstream International Operated assets and Nigeria: Harry Brekelmans (EVP Upstream International Operated) and Mutiu Sunmonu (Managing Director SPDC) Panel C: HSSE & SP Performance, RDS environmental policy, Water, Partnerships and CO2: Michiel Kool (EVP Safety, Environment & Social Performance), Rupert Thomas (VP Environment) and Angus Gillespie (VP CO2)

09:00 – 09:35 09:35 – 09:55 09:55 – 10:35 10:35 – 11:05 11:05 – 11:10 11:10 – 13:35 13:35 – 14:30



CHAD HOLLIDAY NON EXECUTIVE DIRECTOR CHAIRMAN CORPORATE & SOCIAL RESPONSIBILITY BOARD COMMITTEE ROYAL DUTCH SHELL PLC


ACTIVITIES OF THE CSRC

2013 Activity

Alaska

Safety + environment

Engagement with communities + government

South Africa onshore

Stakeholder engagement

Local content + economic development

2014 Plans

Western Canada

Onshore oil and gas

Oil sands operations

Canada LNG potential

Focus on how Social and Environmental considerations are incorporated through all stages of major projects

Seismic survey, offshore Canada Alaska, Northern slope


PARTNERSHIPS + ENGAGEMENT

Leverage outside expertise

Scientific organizations

NGOs

Governmental bodies

Long-term partnerships

Renewed partnership agreements

Wetlands International IUCN The Nature Conservancy EarthWatch Institute


ENGAGEMENT – RESOURCES PLAYS

Centre for Sustainable Shale Development (CSSD) recent developments

15 performance standards

Air + climate

Water + waste management

Shell anticipates applying for certification and verification in 2014

Environmental Defense Fund (EDF) studies

Phased studies

Shell participated in studies on production

Further EDF studies to come on

Gathering and processing

Transmission and storage

Local distribution

Natural gas vehicles and fuelling stations

Shell tight/shale oil + gas operating principles since 2011

Safety Water Air Footprint Community


TRANSPARENCY

Sustainability reporting

Investor field visit

Operations briefing, Yang 203, China, 2013

Revenue transparency

Nigeria Spills website

Oil sands performance report

Nigeria briefing notes

Carbon Disclosure Project

Sustainability report

1997 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


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


ENERGY SYSTEM

Technology diffusion

TJ/yr

Energy demand outlook

million boe/d

1.0E+03

1.0E+04

1.0E+05

1.0E+06

1.0E+07

1.0E+08

1.0E+09

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

~1% of energy system

Oil Gas Biomass Wind

Coal Nuclear Other Renewables Solar

Shell activities

~30 years to grow a technology to ~1% in today’s energy system

Total Nuclear Biofuels – 1st Gen Wind

Oil LNG Solar Photovoltaic “Laws”

Source: Shell analysis


EXECUTING A CONSISTENT, LONG-TERM STRATEGY

Unrelenting focus on HSSE

Technology, integration and scale

Disciplined capital investment by strategic theme

Growth in cash flow through-cycle

Competitive shareholder returns

Shearwater platform North Sea, UK


Balancing portfolio risk and reward

Strict investment hurdles and price screens drive returns

ASPIRED PORTFOLIO

ATTRACTIVENESS

Growth & returns

Opportunity scale

RESILIENCE

Risk, performance &

uncertainty

PORTFOLIO MANAGEMENT

STRATEGIC INTENT

RESULTS & PAY-OUT


Exploration + pre-FID

Key growth projects

Care + maintain

Smaller growth projects

0

10

20

30

40

INVESTMENT PRIORITIES

Organic capital investment 2014

Future opportunities Resources plays

Deep-water Integrated gas

Upstream engine Downstream (incl. Corporate)

25% Preparing new options

30% Driving new upstream growth

45% Maintaining competitive cash generation

Longer term

Growth priorities

Engines

Credible, competitive, affordable

Investment choices driven on a global thematic basis

$ billion


400

600

800

0

2

4

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13

FOCUS ON SAFETY

Goal Zero on safety Injuries – TRCF/million working hours

Spills - operational Volume in thousand tonnes million working hours

Working hours TRCF

0

5

10

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13

0

10

20

30

40

50

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13

Fatalities

0

200

400

2012 2013

Process safety trend Number of incidents

Tier 1 incidents Tier 2 incidents


Monitor performance and delivery including gap closures agreed in

the HSSE plan

CONTRACTOR SAFETY + MANAGEMENT

Contractors represent 75% of working hours

Contractors included in:

Safety day

12 life saving rules

Three phases of HSSE in contracts:

HSSE Assessment (prequalification)

HSSE Evaluation (sourcing + award)

HSSE Management (post-award)

Gap closure programme for contractors who can’t immediately meet requirements

Green

Amber

Red

Technical

HSSE

Commercial

Assessment Evaluation Contract Management


MANAGING WATER USE

Energy industry is a large industrial consumer

Working with World Business Council for Sustainable Development and IPIECA

New oil and gas may require increased water use

New locations may be in areas of water shortage

Water management plans essential

Shell fresh water withdrawn

170

180

190

200

210

220

230

240

2007 2008 2009 2010 2011 2012 2013

Million cubic metres

Reed bed filtration, Oman

Water treatment plant, Dawson Creek, Canada

Innovative solutions


NIGERIA: SPDC JOINT VENTURE OVERVIEW

*SPDC = 30% Shell, 55% NNPC, 10% Total, 5% Agip; all data on 100% basis unless stated

2013 overview

Substantial increase in theft

NIMASA LNG blockade

Decision to sell assets in East onshore

16 kidnaps, no fatalities

SPDC* production (Shell share) k boe/day

Production impact of crude oil theft (SPDC) k boe/day

Illegal theft and refining Niger Delta, 2013

0

100

200

300

2008 2009 2010 2011 2012 2013

0

50

100

150

200

250

300

350

Oct

-09

Jan-

10

Apr

-10

Jul-1

0

Oct

-10

Jan-

11

Apr

-11

Jul-1

1

Oct

-11

Jan-

12

Apr

-12

Jul-1

2

Oct

-12

Jan-

13

Apr

-13

Jul-1

3

Oct

-13

Oil theft allocated to SPDC Theft related deferment on export lines


0 20 40 60 80 100 120 140 160 180 200

0

5

10

15

20

2006 2007 2008 2009 2010 2011 2012 2013 0

100

200

300

400

500

600

2005 2006 2007 2008 2009 2010 2011 2012 2013

NIGERIA: SHELL ENVIRONMENTAL PERFORMANCE

All data on 100% basis

SPDC JV flare volumes

SPDC spills Thousand tonnes

Remediation # of spills sites*

Illegal tapping point at Ogidigben, 2013

*includes 125 sites from 1969-1993 in Ogoniland confirmed during decommissioning in 2013

All data on a Shell operated basis

Million tonnes hydrocarbon flared

volume of operational spills number of operational spills (RHS) volume of sabotage spills number of sabotage spills (RHS)

#

0

5

10

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

-83%

Sites requiring remediation Number of spills in year (all causes)


2010-12 divestments

SPDC licenses

2013 FIDs

Gbaran Ubie Phase 2

TNPL

NIGERIA: SPDC FOOTPRINT REFOCUS

Onshore portfolio Portfolio development 2010 – 2012

Divested 8 OMLs

Proceeds $1.8bn (Shell)

FID Southern Swamp Associated Gas

FID Forcados Yokri Integrated Project

2014+

Asset sales in Eastern Delta

Potential sale of 80-100k boe/d

Concentrate on gas value chain

Selected growth investment 2012 FIDs

Forcados Yokri Integrated project

Southern Swamp Associated Gas

20 mi


IRAQ UPSTREAM

Shell 44%

Started up in 2013

Largest flare reduction project in the world

Processing capacity 500mmscf/d associated gas

2 billion scf/d potential

Shell 45%

Start-up Q3 2013 – currently processing >200kboe/d

2500 local employees

Training for local well engineers

Memorandum of Understanding with IUCN to conserve and restore Hawizeh marsh

Basrah Gas Company

Majnoon oil development

Majnoon Central Processing Facility Basrah Gas Company storage tanks


BRENT DECOMMISSIONING

2013 PROGRESS

Contract award for 4 Brent topsides and Brent Alpha jacket awarded to Allseas

Single lift mechanisms = less offshore hours

Significant stakeholder engagement

Invited ~ 140 bodies to engage

Includes government agencies, environmental groups – including NGOs, academia and fishermen’s associations

Working towards submission of decommissioning plan to DECC

www.shell.co.uk/brentdecom Brent Alpha platform


0

10

20

30

40

50

60

0

2

4

6

8

10

12

14

2006 2007 2008 2009 2010 2011 2012 2013

GRONINGEN – NETHERLANDS GAS

NAM JV: 50% Shell, 50% Exxon

Discovered 1959

Groningen gas field operated by NAM (60%), Dutch state interest 40% (EBN)

300 wells across 20 sites

Produced 53.2 bn m3 2013

Government proposals:

Restrict overall production (42.5bn m3 2014)

Reduced production around Loppersum

€1.2bn made available over 5 years

Includes continued preventative strengthening + repair

Groningen production and profit €bn bn m3

Profit Profit attributable to state Profit attributable to NAM Groningen volume (RHS)

10km

Locations with reduced production

Other production sites Source: Letter from the Minister for Economic Affairs, 5 February 2014


UPSTREAM AMERICAS

Major OECD growth potential for Shell

Managing non-technical risk

Deep-water Industry leadership

Heavy Oil Mining and in-situ

Resources Plays Portfolio repositioning

Integrated Gas Monetizing gas

Arctic Long-term potential

Profitable + competitive today Potential


CLIMATE CHANGE + LOW CARBON FUTURE

GAS INNOVATION: LNG FOR TRANSPORT ENERGY EFFICIENCY: REFINERIES

BIOFUELS: RAIZEN JV CARBON CAPTURE + STORAGE: OIL SANDS


Mongstad Otway Cansolv

Offshore (50 MW net)

Iogen cellulose ethanol (Raizen)

H2 network (Germany)

2 B Energy

Glasspoint Solar EOR

Westhollow research centre “cellulosic biofuels”

LOW CARBON PORTFOLIO

FEED FID

On stream

CCS

Biofuels

Solar

Gorgon (3-4 mtpa)

Quest (>1 mtpa)

Peterhead (1 mtpa)

Raizen (sugar cane ethanol)

Virent

Onshore (450 MW net)

Wind

R&D

Showa shell PV manufacture

Alternative energy carriers

Define Execute On stream Technology Efforts

Shell Technology Ventures

Commercial operation

Technology demonstration/research

Future energy technologies


CARBON MANAGEMENT

JEREMY BENTHAM Vice President Global Business Environment Angus Gillespie Vice President CO2 Lorraine Mitchelmore Executive Vice President Heavy Oil ROYAL DUTCH SHELL PLC


0

250

500

750

1,000

SHELL ENERGY SCENARIOS

Energy demand/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


0

10

20

30

40

50

2000 2010 2020 2030 0

10

20

30

40

50

2000 2020 2040 2060 2080 2100

ENERGY-RELATED CARBON EMISSIONS: SCENARIOS

IEA scenarios (2012) Gt CO2 /yr

Shell scenarios (2013) Gt CO2 /yr

Oceans Mountains Current policies New policies 2° C increase (450 ppm)

Shell has to plan in a range of possible futures IEA 2° C scenarios are normative


CARBON MANAGEMENT

Jeremy Bentham Vice President Global Business Environment ANGUS GILLESPIE Vice President CO2 Lorraine Mitchelmore Executive Vice President Heavy Oil ROYAL DUTCH SHELL PLC


0

1,000

2,000

3,000

4,000

5,000

1990 2000 2010 2020 2030 2040 0

1,000

2,000

3,000

4,000

5,000

1990 2000 2010 2020 2030 2040

DEMAND OUTLOOK + RESERVES

Energy demand: IEA current policies Energy demand: IEA 450 scenario Mtoe /yr Mtoe /yr

Oil Coal Gas Biomass/Biofuels Nuclear Hydro Other Renewables

Shell SEC proved reserves

Resources*

Shell

Reserves life at end 2013: ~11.5 years Further 2P +2C resources

Oil and gas portfolio relevant in IEA 450 scenario Coal demand is most impacted

Shell SEC proved reserves

Resources*

* Resources shown includes only resources in select or define phases (post feasibility study or in FEED) or are under execution or on stream.


PROJECT ECONOMICS: SCHEMATIC

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


0

20

40

60

80

100

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CARBON EMISSIONS

Shell CO2 emissions Energy intensity

85

90

95

100

105

0

0.5

1

'04 '05 '06 '07 '08 '09 '10 '11 '12 "13

million tonnes / yr Gj/tonne (energy required to produce a tonne of oil equivalent)

index

Positive long term trends but future progress more difficult CCS key role in future

Upstream excl. Oil sands Refining index Chemicals index


CARBON MANAGEMENT

Jeremy Bentham Vice President Global Business Environment Angus Gillespie Vice President CO2 LORRAINE MITCHELMORE Executive Vice President Heavy Oil ROYAL DUTCH SHELL PLC


CARBON CAPTURE AND STORAGE (CCS)

QUEST CCS

FID Q3 2012

1 mln tonnes/yr CO2 capture potential

Safe storage certification by DNV (1st time for a CCS project)

Expected on stream 2015

PETERHEAD CCS

Aims to capture 10mln tonnes CO2 over 10 years

Would provide enough clean energy for 500,000 houses

FEED agreement with UK government signed February 2014

Quest CCS project, test injection well, Canada oil sands


CARMON CREEK: IN-SITU HEAVY OIL

2013 FID on 80 kboe/d

1.5 billion barrels of resources

Vertical steam drive integrated with cogen

100% produced water re-cycled

100% Shell

Development overview Transportation options

Central Processing Facilities Site Preparation

Carmon Creek

Quebec

To USGC

Hardisty

Proposed and existing pipelines Proposed East Energy pipeline conversion Tankers

Edmonton

200 miles

US$ 1.8/t (Current local regulation)

US$ 15/t (strengthened

local regulations)

US$ 40/t (base)

Proxy LCFS with bio-fuel

blending

US$ 110/t

NPV carbon price sensitivity + impact

- impact


Q&A



APPENDICES



REVENUE TRANSPARENCY

Commitment to transparency

Voluntary country-level tax disclosure since 2012

EITI board position and founder

Encourage government transparency

www.shell.com/payments

~$24 bln taxes & royalties paid

~$81 bln excise tax collected in 2013

Leadership in tax transparency


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


Overhaul procedures for oil spill clean-up and remediation

Improve on contracting and supervision.

Review of SPDC assets in Ogoniland and develop a decommissioning programme

Work with regulators to clarify the legislation governing remedial intervention and target values

Government recommendations

Create of an Ogoniland Environmental Restoration Authority

Create an Ogoni environmental restoration fund

Create a centre of excellence for environmental restoration

Mount a campaign against environmental degradation/ oil theft

NIGERIA: UNEP REPORT UPDATE

SPDC specific recommendations

Fire on the 24” TNP, Bodo West, April 2013


SHELL ARCTIC & NEAR ARCTIC

CANADA

RUSSIA

KAZAKHSTAN

NORWAY

GREENLAND

UNITED STATES

SALYM

KASHAGAN

SAKHALIN

NORTH POLE

ORMEN LANGE

BAFFIN BAY

NIGLINTGAK

CHUKCHI

BEAUFORT

KANUMAS

NORWAY BARENTS

Alaska, Chukchi

Greenland, Baffin Bay

Norway, Ormen Lange

Russia, Sakhalin

Russia, Salym

Kazakhstan, Kashagan


Raizen: Brazil JV formed 2011, 50-50 Shell/Cosan ~4,500 retail sites 2.2 bln litres ethanol capacity/yr

Shell biofuels Sold 9 bln litres of biofuels in 2013 99% of suppliers signed Shell’s sustainability

clauses 32% independently certified

BIOFUELS

Bonsucro Certified Mills

2011 2012

Bonsucro Certification of mills

2013


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2008 2009 2010 2011

As originally reported in the National Inventory

As reported in 2013 using revised methods

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

w

ith H

F

Pneu

mat

ic

Con

trolle

rs

Equi

pmen

t Le

aks

Che

mic

al

Pum

ps

Met

hane

Em

issi

ons

Diff

eren

ce (G

g/yr

)

Gg/yr


0%

1%

2%

3%

4%

5%

6%

7%

8%

EPA 2011 UT/EDF NPC NETL ANL NREL IDA Cornell (High) Cornell (Low)

Critical methane leakage gas vs. coal (3%) based on a 20 year time-frame

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 have 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%


-100

-50

0

50

100

150

200

250

CARBON CAPTURE AND STORAGE (CCS)

Source: GCCSI (Oct 2013, “Global status of CCS”)

Relative cost of CO2 mitigation $ /tonne abated

CCS to play an important part in low carbon options; relevant scope/scale

Quest CCS, Canada.


SHELL CCS: COMPETENCE BASED PROGRAM

Shell operated Non operated

Gorgon Quest TCM

Onshore storage Offshore storage Saline aquifer storage Depleted reservoir storage Pre-combustion capture Post-combustion capture Contaminated gas Heavy oil Refining Gas fired power

In FEED

Peterhead


0

50

100

150

200

2012

Fe

b M

ar

Apr

M

ay

Jun Jul

Aug

Se

p O

ct

Nov

D

ec

2013

Fe

b M

ar

Apr

M

ay

Jun Jul

Aug

Se

p O

ct

Nov

D

ec

IMPROVE FINANCIAL PERFORMANCE IN UPSTREAM ENGINE

Production decline halted

focus on up-time

reservoir development

sub-surface dynamics

Innovative EOR schemes

2012-13 impacted by high levels of maintenance

2013 maintenance downtime 50 kboe per day (vs. 35 kboe per day downtime in 2012)

Address late life assets: fix or divest

PDO Oman

UK North Sea kboe per day, Shell share kboe/day, Shell share

0

100

200

300

2001 2003 2005 2007 2009 2011 2013

2012:117kboe/d

2013: 91kboe/d

Actual production assumed production with continued decline


ENHANCE CAPITAL EFFICIENCY TAKE HARD CHOICES

FEED FID On stream

Explore

Feasibility study

Identify & Assess Select Define Execute On stream

12 billion boe 7 billion boe 11 billion boe

Hard choices on growth projects: US GTL Alaska LNG FID pause in Asia Pacific

AOSP debottlenecking Wheatstone Cove others

~$8 billion capital investment ~$27 billion capital investment

Low cost options + Early high-grading Increase predictability Flawless execution of major spend

2014


UPSTREAM AMERICAS PORTFOLIO SUBSTANTIAL UNDEVELOPED UPSTREAM RESOURCES

Resources

Deep-water Resources plays

Heavy oil

On stream Execute (under construction) Select/Define

11.7 billion boe

0.0

0.2

0.4

0.6

0.8

2011 2012 2013

Production million boe per day

Deep-water Resources plays Heavy oil

0

5

10

15

2011 2012 2013 2014E

Capital investments $ billion

Deep-water Resources plays Heavy oil

Pre-FID/other

+2% -20%

Resources Plays

Deep-water

Gas monetization options

Heavy Oil

Western Canada dry gas

Appalachia dry gas

Carmon Creek In Situ

Stones, Appomattox, Vito

Libra

LNG Canada

Gas-to-chemicals

Elba LNG

Major undeveloped resources


UPSTREAM AMERICAS PORTFOLIO FINANCIALS DIVERSE BUSINESSES & MATURITY

2013 $ billion Earnings1 CFFO Organic capital

investment Capital

employed ROACE

1 3 6 15 10%

2 3 2 19 9%

(3) (0) 5 24 (10)%

(1) (1) 1 3 n.a.

(0) (0) 0 0 n.a.

RESOURCES PLAYS

DEEP-WATER

HEAVY OIL

INTEGRATED GAS

ARCTIC

1 Earnings excluding identified items; ROACE based on earnings excluding identified items

Growing + competitive

Delivering new growth 2014+

Future Potential

Restructuring resources plays

Growth options


-2 0 2 4 6 8

10

2010 2011 2012 2013 2014E

NORTH AMERICA RESOURCES PLAYS PORTFOLIO & STRATEGY

North Americas capital investment $ billion

Dry gas Acquisitions LRS Divestments

-50%

-20%

Portfolio

Established in gas plays

Liquids rich shales exploration

Restructuring and redefining growth

Portfolio and spending reduction

Exploration & appraisal in LRS sweetspots

Define gas monetization opportunities

Resources + potential

Future potential

On stream

Execute (under construction)

Select/Define

11.5 billion boe

Future potential = discovered + prospective resources

Haynesville

Elba LNG

LNG Canada

Groundbirch Deep Basin/Kaybob

Foothills/Pembina

Pinedale Gas-to-chemicals

Appalachia

Liquids rich shales Announced divestment


Rockies LRS

Permian

Eagle Ford

Mississippi Lime

Dry gas Gas/LRS


LNG CANADA PROGRESSING TO FID

2 x ~6 mtpa first phase

Kitimat site agreement

25-year export license secured (24 mtpa)

Environmental assessment process initiated

Joint venture: Shell (40%), Kogas, Mitsubishi, PetroChina

TransCanada Pipelines (TCPL) to build, own & operate

~700km pipeline

Filed environmental assessment application

Public consultation and open houses underway

Access to competitive supply

LNG Canada Coastal GasLink pipeline


UPSTREAM AMERICAS INTEGRATION & POTENTIAL

Refinery/ chemical plant

Upstream positions

Midstream positions/capacity

Refinery with LTO capability


LNG Canada Carmon Creek

LRS

AOSP

Scotford

Western Canada gas

Proposed Energy East Pipeline conversion

Sarnia Appalachia

Gas to chemicals

Elba LNG

Ho-Ho

Motiva refineries

Deer Park

Permian

Permian Express

Martinez

Puget Sound

Proposed midstream positions/capacity

End to end value chain linkage

Efficient evacuation route to market

Advantaged refining position

Mobile

sri event - shell · 4/10/2014 · smaller growth projects 0 10 20 30 40 investment priorities...

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