John Abbott - TD securities unconventional energy conference - 6 July, 2011


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John Abbott, Executive Vice President Heavy Oil, presented an overview on Shell’s Heavy Oil portfolio at the TD Securities Unconventional Energy Conference.

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John Abbott - TD securities unconventional energy conference - 6 July, 2011

  2. 2. DEFINITIONS AND CAUTIONARY NOTEReserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves for all 2009 and 2010 data, and includes both SEC proved oil and gas reserves and SEC provenmining reserves for 2008 data.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 or SEC proven mining reserves. Resources areconsistent with the Society of Petroleum Engineers 2P and 2C definitions.Organic: Our use of the term Organic includes SEC proved oil and gas reserves and SEC proven mining reserves (for 2008) excluding changes resulting from acquisitions, divestments and year-endpricing impact.To facilitate a better understanding of underlying business performance, the financial results are also presented on an estimated current cost of supplies (CCS) basis as applied for the Oil Products andChemicals segment earnings. Earnings on an estimated current cost of supplies basis provides useful information concerning the effect of changes in the cost of supplies on Royal Dutch Shell‟s resultsof operations and is a measure to manage the performance of the Oil Products and Chemicals segments but is not a measure of financial performance under IFRS.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 forconvenience 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 thosewho 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 “Shellcompanies” 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 acontrolling 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 controlare 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 forconvenience to indicate the direct and/or indirect (for example, through our 24% 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 historicalfact 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 andassumptions 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 offactors 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 thispresentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Shell‟s products; (c) currency fluctuations; (d) drilling and productionresults; (e) reserve estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisitionproperties 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 countriesand 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 delaysin 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 cautionarystatements 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 RoyalDutch Shell‟s 20-F for the year ended 31 December, 2010 (available at and ). These factors also should be considered by the reader. Each forward-lookingstatement speaks only as of the date of this presentation, 6 July 2011. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-lookingstatement 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-lookingstatements 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.The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actualproduction or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as resources andoil in place, that SECs 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 onthe SEC website You can also obtain these forms from the SEC by calling 1-800-SEC-0330. 2 Copyright of Royal Dutch Shell plc 06/07/2011
  3. 3. SHELL NORTH AMERICA HEAVY OILPORTFOLIO PRODUCTION OVERVIEW 2010 Production; ~170 kboe/d MINING IN SITU/OTHER OIL SHALE IN SITU/ Athabasca OTHER Peace River Cold Lake MINING AERA ColoradoOIL SANDS MINING IN SITU RECOVERY  Large resources + growth potential  Cost performance  Footprint management3 Copyright of Royal Dutch Shell plc 06/07/2011
  4. 4. SHELL IN SITU PORTFOLIOPEACE RIVER AERA ENERGY  Cold Production, Vertical Steam Drive  Shell / Exxon LLC (Shell 51.8%) and Cyclic Steam Stimulation  Production ~ 160 kboe/d  Carmon Creek application 2010  Headquartered in Bakersfield CA  Potential for 80 kboe/d project  Enhanced Oil Recovery with potential future use of SAGD  Shell 100%COLD LAKE - ORION GROSMONT  Steam Assisted Gravity Drainage  Investigating In Situ Upgrading Process (SAGD) (IUP)  Design capacity of 10 kboe/d  125,440 hectares in Athabasca oil sands region  Shell began operations in 2007  Shell 100%  Shell 100%4 Copyright of Royal Dutch Shell plc 06/07/2011
  5. 5. PEACE RIVER: CARMON CREEK PROJECTPROCESS OVERVIEW  Vertical well, steam drive scheme  2 phases of 40 kboe/d  Project Phase 1 Pre-FEED  Market Ready Bitumen  Regulatory Application submitted  Incorporating produced water recycling  Acid gas disposal - H2S and some CO2 from produced gas  Cogeneration plant  1.5 bln bbls of resources Additional production capacity: 80 kboe/d (Shell 100%)5 Copyright of Royal Dutch Shell plc 06/07/2011
  6. 6. OIL SANDS MINING: AOSP~7 BILLION BARRELS RESOURCES POTENTIAL  Base project FID 1999 • Muskeg River Mine,155 kboe/d bitumen production (100%) • Scotford Upgrader: Hydrogen addition technology resulting in a volume gain of ~ 3%  AOSP Expansion 1 FID 2006 • Jackpine Mine 100 kboe/d bitumen production (Q3 2010 Start-up) • Addition of third processing train at the Scotford Upgrader (Q2 2011 Start-up)  ~255 kboe/d capacity built in ~10 years • 3.4 billion bbls resources in production • ~40 years production SCALE: 10 km • Optimization opportunities • DebottleneckingAOSP = 60% Shell and 20% each Chevron & Marathon. Volumes on 100% basis 6 Copyright of Royal Dutch Shell plc 06/07/2011
  7. 7. ATTRACTIVE OIL SANDS ECONOMICS JACKPINE MINE  Capital intensive up front + high opex  ~40 year asset life; value chain plays  High unit margins + price upside > $1 BLN/YEAR CASH FLOW POTENTIAL FOR SHELL DELIVERED WORLD CLASS ENERGY PROJECT AOSP net Cash flows - $Bln (Shell) Expansion 1 Kbbl/d  255 kbbl/d from a 3.4 Bln bbls Resource base0.32.5 Base project start up 2 start up 200  $19 Bln development cost: $5 - $6/bbl 1 100  $75,000/flowing barrel0.00 0  Base project pay-back <5 years @ $54/bbl -1  Expansion 1 adds value @ >$70-$75/bbl -2 Upgrader start up-0.3 -2.5 2000 2000 2002 2002 2004 2004 2006 2006 2008 2008 2010 2010 2012 2012 2014 CASH FROM OPERATIONS CAPITAL INVESTMENT PRODUCTION (RHS) *At $70/bbl Oil Price 7 Copyright of Royal Dutch Shell plc 06/07/2011
  8. 8. NORTH AMERICA HEAVY OIL POTENTIAL  Diverse portfolio in heavy oil plays  Large Resource Base  Capital intensive  Long life production potential  Price upsideOPERATED PRODUCTION CAPACITY AND POTENTIALShell Share, kboe/d  AOSP oil sands facility built in ~10 years Mine Carmon Expansions • 255,000 bbls onstream400 Creek Debottlenecking • Debottlenecking economic at $45/boe Mine + Expansion In Situ+ AERA • Long-term expansion potential200  Track record in US and Canadian in-situ production 0 • Canadian expansion potential 2008-09 2010-11 ~2020+ ONSTREAM CONSTRUCTION OPTIONS 8 Copyright of Royal Dutch Shell plc 06/07/2011
  9. 9. QUEST - CARBON CAPTURE & STORAGE PROJECT  Capture CO2 at the Scotford Upgrader from 3 Hydrogen Units  >1 mtpa CO2 will be transported by pipeline and stored over 2 km underground  Funding agreements signed with Government of Alberta and Government of Canada for C$865 million over the construction and 10 year operating life of the project  Regulatory application submitted Dec 2010  FID planned in 2012QUEST PROJECT PROPOSED TIMELINE9 Copyright of Royal Dutch Shell plc 06/07/2011
  10. 10. SOCIAL PERFORMANCE ABORIGINAL ECONOMIC DEVELOPMENT  In early 2011 passed through C$1 billion in contracting & procurement with Aboriginal businesses in just 6 years ABORIGINAL CAPACITY BUILDING  Fort McKay Elder and Day Care Centre  Fort Chipewyan AWQA Day SOCIAL INVESTMENT  JV partners invested over C$2.5 million in social programs in 2010  United Way  Shell Community Service Fund10 Copyright of Royal Dutch Shell plc 06/07/2011
  11. 11. ROYAL DUTCH SHELL PLC11 Copyright of Royal Dutch Shell plc 06/07/2011