Royal Dutch Shell provided an Alaska update, discussing its Arctic activities and investments. Shell spent $5 billion in Alaska from 2006 to 2012, leasing acreage and drilling exploration wells in the Chukchi and Beaufort Seas. However, the 2012 drilling season faced challenges like heavy ice and a prolonged whaling season, allowing Shell to drill only two top holes. Shell aims to understand the resource potential of the Arctic and employs multiple barriers and response measures to operate safely.
Advancing Discovery New Craigmont Project’s High-grade Copper Potential
Presentation on Shell’s Alaska activities Dec 4th & 5th 2012
1. ROYAL DUTCH SHELL PLC
ALASKA UPDATE
LONDON/THE HAGUE
DECEMBER 4/5th, 2012
Copyright of Royal Dutch Shell plc 4 December, 2012 1
2. ROYAL DUTCH SHELL PLC
ALASKA
MARVIN ODUM
DIRECTOR UPSTREAM AMERICAS
Copyright of Royal Dutch Shell plc 4 December, 2012 2
3. DEFINITIONS AND CAUTIONARY NOTE
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, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies
in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are
referred to as “jointly controlled entities”. In this presentation, associates and jointly controlled entities are also 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‟‟,
„„intend‟‟, „„may‟‟, „„plan‟‟, „„objectives‟‟, „„outlook‟‟, „„probably‟‟, „„project‟‟, „„will‟‟, „„seek‟‟, „„target‟‟, „„risks‟‟, „„goals‟‟, „„should‟‟ 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 potential litigation and regulatory measures as a result of climate changes; (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 factors that may affect future results are contained in Royal Dutch Shell‟s 20-F for the year ended 31 December, 2011 (available at
www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this
presentation, 4 December 2012. Neither Royal Dutch Shell 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. There can be no assurance that dividend payments will match or exceed those set out in this
presentation in the future, or that they will be made at all.
We use certain terms in this presentation, such as resources, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from
including in 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.
Copyright of Royal Dutch Shell plc 4 December, 2012 3
4. GLOBAL ENERGY OUTLOOK
DEMAND GROWTH
Energy demand outlook in million boe/d
9 billion people in 2050
400
Energy demand +60% 2010 – 2050
Solar, Wind and Biofuel only 1% of
energy mix today; growing to 10-15%
300
by 2050
Hydrocarbons continue to be some
70% of energy mix in 2050
200
100
ALL FORMS OF ENERGY
WILL BE NEEDED
0
1980 1990 2000 2010 2020 2030 2040 2050
Oil Solar
Shell Natural gas Other renewables
activities Biomass Nuclear
Wind Coal
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5. ARCTIC ACTIVITY: INDUSTRY
SIGNIFICANT DRILLING ACTIVITY: 1960s TO PRESENT
Significant drilling offshore
>250 wells offshore/
Canada archipelago Arctic North
Archipelago
America
US
Beaufort 174 ~500 wells onshore Prudhoe
Chukchi 5 Bay area
30
Drilling in Norwegian and
Russian arctic
North Slope 494 85 Canada
Alaska Beaufort
85 = Number of wells
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6. RESOURCE POTENTIAL
SHELL ARCTIC POSITIONS
Arctic
SAKHALIN
22% of the undiscovered, technically
recoverable resources in the world 1
UNITED STATES
CHUKCHI
Alaska
NIGLINTGAK ~30 billion bbls of oil and 221 tcf of
BEAUFORT
natural gas 1
CANADA
NORTH POLE RUSSIA
Alaska Outer Continental Shelf
SALYM (mainly Chukchi and Beaufort) to
BAFFIN BAY contain ~27 bln bbl oil and 132 tcf of
natural gas 2
GREENLAND KAZAKHSTAN
KASHAGAN
MAJOR UNDISCOVERED
NORWAY
RESOURCES IN MATURE
ORMEN LANGE
HYDROCARBON AREA
1 USGS Estimates from US Department of the Interior US Geological Survey “Circum-Arctic Resources Appraisal”, 2008
2 MMS Estimate from US Department of the Interior Minerals Management Service “Undiscovered Oil and Gas Resources, Alaska Federal Offshore”, 2006
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7. ALASKA PRODUCTION HISTORY
1957 –Swanson River 1977 - Trans- 1989-1991 Shell 2001 – BP Northstar
oil field, Kenai Alaska Pipeline /Chevron explore Chukchi field, Beaufort Sea,
Peninsula completed sea and drill 5 wells becomes operational
1963 – Shell drills first 1981 - Kuparuk oil 2000 – Conoco Alpine 2002 – Encana, Beaufort
Bbl/d offshore oil well in Alaska field onstream , field, becomes Sea, McCovey Prospect
production Conoco operated operational drilled
1967 – ARCO (BP)
Prudhoe Bay oil field 1987– BP/Exxon 2005 – Shell acquires
discovered Endicott Field, leases in Beaufort Sea
2,500,000 Beaufort Sea,
1969 –Sinclair/ARCO becomes operational.
(BP) Kuparuk oil field 2008 – Shell
discovered acquires leases
in Chukchi sea
2,000,000 1974 - Trans-
Alaska
Pipeline started
1,500,000
2011– ENI
Nikaitchuq
starts
1,000,000
production,
Beaufort Sea
500,000
1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2011
Cook Inlet Kuparuk & Milne Point Colville River & Northstar
Prudhoe Bay North Slope – Other Fields
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8. ALASKA OFFSHORE DEVELOPMENTS
BP Northstar, Beaufort Sea, 2001 BP Endicott, Beaufort Sea, 1987
BP Endicott, Beaufort Sea, 1987
OFFSHORE EXPLORATION +
PRODUCTION UNDERWAY
ARTIFICIAL ISLAND DEVELOPMENTS
ENI Nikaitchuq, Beaufort Sea, 2011
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9. ALASKA DRILLING: WELL CONTROL
Consequences
Hazard
Control & Response &
Barriers Incident Recovery
Minimize Mitigate
likelihood consequences
CONTROL & BARRIERS: RESPONSE & RECOVERY
Known pressures – previous drilling Cap & Contain system
Drilling mud Arctic containment dome
Blow out preventers Arctic containment system
Rigorous training for operators Oil spill response equipment
Real time operating center 2nd rig in theatre for relief well
Drilling well on paper
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10. MULTIPLE BARRIERS -ALASKA
4 BARRIERS DRILLING FLUID BLOW OUT PREVENTER
1 2
3 4
2
CAPPING STACK ARCTIC CONTAINMENT SYSTEM
3 4
1
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11. OIL SPILL RESPONSE
www.shell.us/Alaska
Oil spill response animation
Copyright of Royal Dutch Shell plc 4 December, 2012 11
12. ROYAL DUTCH SHELL PLC
ALASKA
DAVE LAWRENCE
EXECUTIVE VICE PRESIDENT
EXPLORATION/COMMERCIAL
UPSTREAM AMERICAS
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13. SHELL ARCTIC OVERVIEW
2012 DRILLING IN CHUKCHI AND BEAUFORT
2012 ACTIVITIES COMPLETED SAFELY
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14. SHELL INVESTMENT IN ALASKA
ALASKA SPEND 2006 - 2012 ~$5 BILLION CAP & CONTAIN SUPPORT VESSELS
First of its kind custom built More than 20 support vessels in
Arctic Containment System place
Pre-built capping stack
DRILLING ENGAGEMENT
Capitalised Expensed
Leases Exploration expense
Drilling & Support Overhead
Capping and Containment
Two Arctic drill ships in place 450 community visits
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15. CHUKCHI + BEAUFORT
Chukchi
Beaufort
Barrow
Wainwright
Kaktovik
Point Lay
Deadhorse
Kuparuk
Point Hope Prudhoe Bay
Trans Alaska Pipeline
Kivalina
Shell Anadarko Total Conoco Repsol Others
Exxon Chevron BP ENI Statoil Pipelines
COMPETITIVE SHELL ACREAGE POSITION
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16. ALASKA DRILLING SEASON
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Typical Ice Year
Beaufort Ability to drill in
hydrocarbon zone
Whaling break
Ability to drill top
Chukchi hole only
Permit
LIMITED DRILLING WINDOW
Short ice free season
Beaufort whaling shutdown
Chukchi blackout period from HC zones
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18. 2012 PERFORMANCE
CHALLENGES
Heaviest ice year for a decade
Kulluk could not start drilling before the whaling
season began
Permits uncertainty around Arctic Containment
System
Containment dome damaged during testing
Whaling hunt prolonged due to bad weather
and funeral
Discoverer is re-supplied during 2012 operations
RESULTS
2 top holes drilled
>20 vessels and 2,000 employees/contractors
with some 12,000 employee rotations
Successful mobilization + demobilization
Positive support from regulators + community
First time all permits in a useable form were
received
Drilling in Alaskan waters
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19. ROYAL DUTCH SHELL PLC
ALASKA
MARVIN ODUM
DIRECTOR UPSTREAM AMERICAS
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20. STAKEHOLDER ENGAGEMENT + PERMITTING
> 450 STAKEHOLDER ENGAGEMENTS MULTIPLE PERMITTING BODIES + JURISDICTIONS
Kaktovik
Barrow Alaska Dept. of Environmental Conservation
Wainwright
Nuiqsut
Point Lay North Slope Borough
Point Hope Alaska Eskimo Whaling Commission
Kivalina # of engagements
< 10
Kotzebue
National Marine Fisheries Service
Kiana 11 - 20
Shishmaref >20 Bureau of Ocean Energy Management/Bureau
of Safety and Environmental Enforcement
Environmental Protection Agency
Fish and Wildlife Service
United States Coast Guard
LOCAL SUPPORT FOR SHELL
Community engagement
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21. ENGAGEMENT + COMMITMENT
6 YEARS OF ENGAGEMENTS & OUTREACH
Strategic stakeholder initiatives to 3-D mapping: North Slope to
Washington, DC
North Slope Residents: Listening, adjusting, cooperating: respect for
dialogue
CAA, NSB Science agreement, jobs/contracting
Stakeholder engagement (450+ visits)
Using Traditional knowledge and modifying the program
Put tools in the hands of those that would support us
OPERATIONAL EXCELLENCE
A higher bar: Oil Spill Response, Technology, Science & MOUs
Economic “justice” for stakeholders via local business development Traditional practices
Operational Commitments: whaling, transit, PSOs, emissions
RESOLUTION
Making the case for Shell‟s Alaska Program
A more aggressive legal and outreach strategy
Stronger permits that “learned” from past deficiencies
Mitigate the drive to litigation Community engagement
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22. POTENTIAL DEVELOPMENT
YEAR ROUND ACTIVITY ARCTIC PIPELINE ENVIRONMENT
Development concept Ice gouge
LONG TERM DEVELOPMENT
OPTIONS IN CASE OF DISCOVERY
Strudel scour
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23. SHELL IN ARCTIC CONDITIONS
WORLDWIDE EXPERIENCE ALASKA DRILLING + DEVELOPMENT HISTORY
Kashagan (2000s) Cook Inlet (1960s – 1990s)
Sakhalin (2000s) Beaufort + Chukchi (1980s-1990s)
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24. VISION FOR LONG TERM SUCCESS
SUSTAINED LICENSE TO OPERATE
Exploration + development success
Alignment with stakeholders
National energy policy
INCREASED UTILIZATION OF DRILLING DAYS
Equipment readiness
Expand fleet capability
Realize learning curve on drilling efficiency
ENHANCE VENTURE VALUE
Integrated activity planning
Early program definition
Contracting for long term cost reduction
Kulluk in Dutch Harbour, 2012
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25. ROYAL DUTCH SHELL PLC
ALASKA
Q&A
Copyright of Royal Dutch Shell plc 4 December, 2012 25
26. ROYAL DUTCH SHELL PLC
ALASKA
APPENDIX
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27. CHUKCHI SEA
Shell
Popcorn, 1990
Shell
Shell
Crackerjack 1991
Burger-A, 2012
Chevron
Diamond, 1991
Shell
Burger-1, 1990
Barrow
Shell
Klondike, 1989
Wainwright
Shell Conoco Repsol
ENI Statoil Well Location
EXPLORATION WELLS 1989-1991; BURGER GAS DISCOVERY
KNOWN PRESSURES AND TEMPERATURES
KEY ACTIVITY: BURGER APPRAISAL
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28. BEAUFORT SEA
Shell Anadarko Total Conoco Repsol Others Well Location
Exxon Chevron BP ENI Statoil Pipelines
ENI, Nikaitchuq
Production 2011
BP, Northstar Encana
Antares Production 2001 McCovey 2002
Exxon 1985 Shell
BP, Endicot
Production 1987
Sivulliq, 2012
Amoco (BP)
Galahad 1991 Amoco (BP)
Belcher 1989
Kaktovik
Nuiqsut Point Thomson, Exxon
Prudhoe Bay
Under development
Deadhorse
Oil and Gas
Oil, Gas and Condensate
Trans Alaska Pipeline
NEAR-OFFSHORE EXTENSIVELY DRILLED
KNOWN PRESSURES AND TEMPERATURES
KEY ACTIVITY: SIVULLIQ EXPLORATION PROSPECT
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29. ALASKA FLEET: RIGS
ARCTIC RIGS
Turret moored drill ship
Ice strengthened sponsons
State of the art emissions control
Noble Discoverer: Chukchi sea rig
Moored semi-submersible rig: Shell owned
Conical hull
Ice class rig: designed for arctic
State of the art emissions control
MUTUALLY SUPPORTING RIGS
MAJOR INVESTMENT FOR MULTI
Kulluk: Beaufort sea rig YEAR CAMPAIGN
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30. SUPPORT VESSELS
ICEBREAKER + LOGISTICS OIL SPILL RESPONSE
MV Aiviq: Ice class anchor handler Nanuq: Oil spill response vessel
2 primary + 2 secondary ice management vessels Multiple oil spill response vessels pre-positioned in
Multiple supply vessels theatre
Redundant equipment with two operating areas 500,000 bbl Arctic tanker pre staged
Fleet capable of operating in ice conditions if Onshore and nearshore equipment pre staged
necessary Fully certified equipment and trained staff
Co-ordination with Coast Guard
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31. CAP + CONTAIN SYSTEM
Arctic containment system
Capping Stack:
First response if BOPs fail
Shell commissioned equipment
Arctic Containment System (ACS):
Consists of containment dome and production
vessel
Interoperable with capping stack
FIRST PRE-DEPLOYED CAP &
CONTAINMENT SYSTEM FOR ANY
Shell capping stack WELL WORLDWIDE
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32. ALASKA: SHALLOW WATER, LOW PRESSURE
LOW PRESSURE AND TEMPERATURE REGIME
REDUNDANCY DESIGNED INTO WELLS
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