Paul Goodfellow– Haynesville operations and operating principles


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Shell held a field visit for Socially Responsible Investors in Houston and in the Haynesville gas field, Louisiana, at which Russ Ford, EVP onshore gas, John Hollowell, EVP deepwater and Paul Goodfellow, VP production onshore gas all presented. The focus of the presentations and visit was to illustrate Shell’s tight gas operations in the context of sustainable development and our commitment to responsible deepwater operations.

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Paul Goodfellow– Haynesville operations and operating principles

  2. 2. DEFINITIONS AND CAUTIONARY NOTEResources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas. Resources are consistent with theSociety of Petroleum Engineers 2P and 2C definitions.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 usedto 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 orcompanies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies in which Royal Dutch Shell either directly or indirectlyhas 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 controlare 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/orindirect (for example, through our 24% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of allthird-party interest.This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other thanstatements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based onmanagement’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differmaterially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of RoyalDutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statementsare identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, “scheduled”, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’,‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the futureoperations 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 potentialacquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject tointernational sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial marketconditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays oradvancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained inthis presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance onforward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s Annual Presentation / Form 20-F for the year ended December31, 2010 (available at and ). These factors also should be considered by the reader. Each forward-looking statement speaks only as ofthe date of this presentation, 29 November 2011. 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 inferredfrom the forward-looking statements contained in this presentation.We may have used certain terms in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC,such as resources and oil in place. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website can also obtain these forms from the SEC by calling 1-800-SEC-0330. 2 Copyright of Royal Dutch Shell plc 29 November 2011
  3. 3. HAYNESVILLE – SHELL ACREAGEAREA OF MUTUAL INTEREST (AMI) IN LOUISIANA Tour AMI 50/50 with Encana Bienville Formed 2008 Red DeSoto River Sabine New Orleans AMI ACREAGE POSITION >350,000 AC (~1300 SQ KM ) >350 WELLS DRILLED TO DATE3 Copyright of Royal Dutch Shell plc 29 November 2011
  4. 4. HAYNESVILLE DEVELOPMENTPHASED DEVELOPMENT Shell development began in the north of the AMI Define Shell and industry development has migrated south over time Execute/Operate Select Reservoir depth, temperature, and pressure increase from north to south, Assess increasing development difficulty Mitigation: improvements in technology and drill/completion techniques Identify Majority of play is yet to be developedMULTIPLE WELLS FROM SINGLE PAD4 Copyright of Royal Dutch Shell plc 29 November 2011
  5. 5. HAYNESVILLE – TYPICAL WELLWELL TRAJECTORY – LEASE DRIVEN WELL PERFORMANCE Mmscf/d Decline Curve Initial Rate: 15 mmcf/d 30 Rate at 90 days: 9 mmcf/d 20 Approx 10 Rate at 1 yr: 3 mmcf/d 12,000 ft TVD Lease Line 4,600 ft 1 330 ft 5,280 ftTYPICAL COMPLETIONS SETUP Years 1 2 3 4 5 4600+ ft. lateral length 17 stages per well, Slickwater frac system Typical job: 7 mln lbs sand proppant, 200k bbls fluid Applied technology Hydraulic fracture simulation, microseismic Proppant distribution modeling Haynesville fraccing spread5 Copyright of Royal Dutch Shell plc 29 November 2011
  6. 6. HAYNESVILLE -PERFORMANCE PRODUCTION Mmscf/d 1400 1200 TOTAL GROSS 1000 SHELL NET 800 600 400 200 0 Jan Jul Jan Jul Jan Jul Jan Jul 2008 2009 2010 2011Haynesville Drilling Rig DRILLING COST REDUCTIONS Well Drilling Cost ($millions) Drilling costs lowered by ~50% 12 Underbalanced and Hard Rock Drilling Pad drilling in 2011 + 20% longer laterals Drill days reduced from 98 days to 40 days 6 Completion costs lowered by ~45%: Improved EURs; larger fracs, optimization Improved efficiency 0 Cycle time reduced ~60%MULTIPLE WELLS FROM SINGLE PAD 2008 2009 2010 YTD 20116 Copyright of Royal Dutch Shell plc 29 November 2011
  7. 7. HAYNESVILLE - SAFETYSAFETY PERFORMANCETotal recordable case frequency # Drilling Rigs operated 12 12 Days Since Last Rigs TRCF Group Recordable 10 10 8 8 Producing Operations 1488* 6 6 Drilling Rig 1 703* 4 4 Drilling Rig 2 669 2 2 Drilling Rig 3 587 0 0 Jan May Sep Jan May Sep Jan May Sep Drilling Rig 4 532 2009 2010 2011 Drilling Rig 5 360 Drilling Rig 6 233 Producing Operations: no recordables Drilling Rig 7 209 since field startup, October 2007 Drilling Rig 8 130 Drilling Rig 9 111 Completions 94 *No recordables since startup Data as of 11/18/117 Copyright of Royal Dutch Shell plc 29 November 2011
  8. 8. HAYNESVILLE – STAKEHOLDER MANAGEMENTNON TECHNICAL RISKS COMMUNITY INVOLVEMENTHaynesville operating environment Community initiatives Road Transport Highly engaged in local community Noise abatement Energy Camp Louisiana – Co-founding Sponsor Water Haynesville Expo Severance/Property taxes Local Chambers of Commerce In the background Louisiana Oil and Gas Association (LOGA) C02 Active, regular involvement with state and local legislators and regulators Fraccing8 Copyright of Royal Dutch Shell plc 29 November 2011
  9. 9. SHELL & TIGHT GAS:5 CORE PRINCIPLES Safety & Well Footprint Shell works to reduce its Integrity operational footprint. Shell designs, constructs and operates wells and facilities in a safe and responsible way. Water Community Shell conducts its operations to Shell engages with local protect groundwater and reduce communities regarding socio- water use as reasonably economic impacts that may arise practicable. from our operations. Air Shell conducts its operations in order to protect air quality and control its fugitive emissions.9 Copyright of Royal Dutch Shell plc 29 November 2011
  10. 10. WATER AND FLUIDS MANAGEMENTTYPICAL OPERATION: SIGNIFICANT TRUCKING USE PINEDALE: LIQUIDS GATHERING SYSTEM (LGS)Condensate Sales Prod. Water Disp. Frac. Water SupplyHAYNESVILLE AREA: REDUCED TRUCKING USE No condensateCondensate Sales Prod. Water Disp. production 90-miles of LGS for condensate and water. Temporary Supply piping Frac. Water surface Condensate exported via pipeline. Increased yield & for frac water supply price. Excess water injected in disposal wells via pipeline. • Truck produced water only LGS provides water re-use distribution piping for frac • Maintain program near-term per ALARP jobs. study outcome LGS recovers flared tank gas for increased gas sales. Rollover, 200710 Copyright of Royal Dutch Shell plc 29 November 2011
  11. 11. PAD DRILLING: REDUCING SURFACE FOOTPRINTPINEDALE: SHELL OPERATED JONAH: COMPETITOR Up to 4 pads each pad having up to 32 wells Up to 64 pads with each pad having a single wellSQUARE MILE OVERVIEW SQUARE MILE OVERVIEW Adjacent gas fields, different development impacts Shell setting new standards for surface footprint reduction11 Copyright of Royal Dutch Shell plc 29 November 2011
  12. 12. FRACCING CHEMICAL DISCLOSUREFRAC FOCUS ( All Shell wells in the US report chemical use Shell discloses all chemicals used in fraccing to during Fraccing on the Fracfocus website the extent allowed by our suppliers. 2 month lag time Shell supports legislation requiring suppliers of chemicals to disclose this information12 Copyright of Royal Dutch Shell plc 29 November 2011
  13. 13. ROYAL DUTCH SHELL PLC Q&A HOUSTON/SHREVEPORT NOVEMBER 201113 Copyright of Royal Dutch Shell plc 29 November 2011