royal dutch shell plc north america investor visit upstream americas

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ROYAL DUTCH SHELL PLC
NORTH AMERICA
INVESTOR VISIT
UPSTREAM AMERICAS:
PROFITABLE GROWTH IN SHELL
HEARTLAND
MARVIN ODUM
O
DIRECTOR UPSTREAM AMERICAS
1
Copyright of Royal Dutch Shell plc
28/09/2010
SHELL UPSTREAM AMERICAS OVERVIEW
ORGANISATION
PRODUCTION AND CAPITAL INVESTMENT
PRODUCTION
Onshore
Gas
Deepwater/
Oil
Heavy
Oil
Exploration
714 KBOE/D
ONSHORE GAS
On-shore
tight gas
and shale
gas
operations
DW
operations
Other Oil
operations
Oil Sands
mining +
In-situ
Exploration
strategy
Growing
resource
base
2009
2
28/09/2010
CAPITAL INVESTMENT
$9.2 BILLION
DEEPWATER
HEAVY OIL
TRACK RECORD
UPSTREAM COST IMPROVEMENT
SAFETY UPSTREAM AMERICAS
$ Bln
Injuries – TRCF per million working hours
17
FX
PENSIONS
PROVISIONS
16
4
COST SAVINGS
3
15
Q2 2010
4 QUARTERS ROLLING
2008
Continuous improvement
• Organization efficiency
• Logistics
• Procurement/Contract management
3
28/09/2010
2
jan apr 2008
jul
oct jan apr 2009
jul
oct jan apr 2010
jul
2008
2009
2010
oct
SUSTAINABLE DEVELOPMENT
CO2
WATER MANAGEMENT
STAKEHOLDER + NON-TECHNICAL
QUEST CARBON CAPTURE & STORAGE
Alaska drilling program
Athabasca river - Alberta
4
28/09/2010
Groundbirch – tight gas drilling
UPSTREAM AMERICAS
EXPLORATION
5
28/09/2010
EXPLORATION GLOBAL STRATEGY
EARLY ACCESS & UNIQUE
GEOLOGICAL KNOWLEDGE
DEPLOY INTEGRATED
TECHNOLOGY
DRIVE DISCOVERIES TO
PRODUCTION
ALASKA
FOCUS, DELIVERY, CAPABILITY
BC-10
LEVERAGE NEARBY
INFRASTUCTURE
MARS PLATFORM
6
28/09/2010
IMAGING
FOCUS ON MATERIAL
OPPORTUNITIES
HAYNESVILLE
EXPLORATION PORTFOLIO – UPSTREAM AMERICAS
Arctic Alaska
Beaufort Leases, ‘05 &
’07
Chukchi Leases, ‘08
North America Gas
Haynesville entry , ’07 & ‘08
Groundbirch entry, ’08
EagleFord
g
& Marcellus entry,
y, ‘10
Gulf of Mexico
Guyana
y
/ Fr. Guiana
OCS Lease Sales, ‘07
07 - ’10
10
Offshore Blocks, ‘09 & ‘10
Colombia
Onshore Leases, ’07 - ’10
Offshore Leases,
Leases ‘10
10
Brazil
Onshore & offshore leasing
7
28/09/2010
ALASKA – CHUKCHI & BEAUFORT SEA
Chukchi Sea
Alaska North Slope type stratigraphy
‘80s
‘80 – ‘90s
‘90 undeveloped
d l
d oill and
d gas discoveries
d
Beaufort Sea
0
100
Shallow-water drilling (~30-50 meters water depth)
and shallow target depths (2.4 – 3.5 kilometer)
Key challenge remains regulatory and judicial delay
SHELL LEASEHOLD
CHUKCHI SECTION
Crackerjack
1991
Successful leasing in 2005-2008
#1 Chukchi position with 1.6 mln acres
#1 Beaufort Sea position with 0.8 mln acres
Proven, undeveloped petroleum province with
potential
multi-billion boe p
8
28/09/2010
Klondike
1989
Burger
1990
GULF OF MEXICO DEEPWATER EXPLORATION
THREE ACTIVE PLAYS
Mesozoic
Appomattox,
A
tt
Vicksburg
Miocene
W. Boreas, S. Deimos
Vito, Cardamom Deep
Miocene –
South Deimos,
West Boreas, Vito,
Cardamom Deep
Paleogene
Perdido, Stones
0
Paleogene S
Stones,
P
Perdido
did
100
Miles
CONCEPTUAL X-SECTION
Mesozoic –
Appomattox, Vicksburg
In-depth regional studies & subsurface models to high-grade portfolio
Proprietary seismic imaging technologies and well calibration
Infrastructure advantage
9
28/09/2010
GULF OF MEXICO PORTFOLIO REJUVENATION
PORTFOLIO RELOADING
2000-2010 DRILLING SUCCESS RATE
# of blocks leased
100
Miocene
Paleogene
Mesozoic
80
60
100%
50%
40
20
0
0%
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
H1
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
SYSTEMATIC DE-RISKING
MIO/PALEOGENE
Princess
Discovery
1998
Subsurface
Evaluation
Drill 1st Pg
Discovery &
Expand
Leashold
2001
1st EGoM
Lease Sale
Stones
Discovery
2004
2007
Vicksburg
Discovery &
Expand
L
Leasehold
h ld
Shiloh
Discovery
MESOZOIC
10
Expand
Leasehold
28/09/2010
Drill Vito,
W. Boreas,
S. Deimos, &
Card Deep
Discoveries
Early acreage moves ahead of the competition
2010
Step-up in success rates since 2005
Appomattox
Discovery &
Appraisal
Systematic de-risking with advanced seismic
imaging and key well data
2009-10 drilling adds >500 mln boe for Shell
'10
H1
2009-10 DISCOVERIES: VITO AND APPOMATTOX
HUB CLASS DISCOVERIES WITH 100 KBOE/D POTENTIAL (100% BASIS)
Appomattox (Shell 80%, operator)
Discovery well and successful sidetracks
drilled in first half 2010
Vito
Vito
Potential to establish Shell-operated, area
infrastructure hub
> 250 million boe resources with upside
potential
Synergy with 2007 Vicksburg discovery
(Shell 75%) ~10
10 kilometers east
Vito (Shell 55%, operator)
Successful appraisal first half 2010
Pre-salt reservoirs unlocked with proprietary
seismic processing
> 200 million boe resources
11
28/09/2010
2009
Vito Discovered
2010
2011
Vito Appraised
Appomattox
Discovered
Appomattox
Appraisal
2013-2014+
FID
Expected
Appomattox
UPSTREAM AMERICAS
DEEPWATER PRODUCTION & GROWTH
12
28/09/2010
DEEPWATER DEVELOPMENT HISTORY
13
28/09/2010
GULF OF MEXICO – RECENT EVENTS
SPONSOR OF THE MARINE WELL CONTAINMENT SYSTEM
Shell moratorium impacts
4 Floater and 4 TLP/platform rigs
i
impacted
d iin GoM,
G M 1 Floater
Fl
in
i Alaska
Al k
Delayed drilling & exploration
activities:
• Production 2010 impact ~8 kboe/d
• Alaska drilling program delayed
• Standby period to upgrade and recertify Rigs/Equipment/Mgt Systems
for safe and compliant deployment
p
post-moratorium
Cost mitigation on rigs negotiated:
75-90% reduction in standby rig rates
Development activities continuing
Mars
M
B FID
Mitigation for moratorium … industry response … progressing new developments
14
28/09/2010
MARS BASIN RESOURCES GROWTH
ADDING VALUE WITH TECHNOLOGY & EXPLORATION MARS RESOURCE OVERVIEW
Deimos Subsea
Mars TLP
Sea Floor
Million Boe (100%)
2,000
1,500
Antares Salt
1,000
Produced
500
Venus Salt
0
Satellite finds +
Mars performance
M
f
Mars discovery
1989
Mars Basin
Prolific hydrocarbon basin
Shell leadership position
Technology + innovation
1996: Mars platform towed to location
15
28/09/2010
2010 view
CONTINUED VALUE CREATION: MARS BASIN
PRODUCTION HISTORY
Kboe/d at 100%
250
98 DebottleDebottle
neck
200
2004/5
Waterflood
2007
2009
Mars
Discovery
First Oil
Deimos
Subsea
Tie-Back
West
Boreas
Discovery
First Oil
Mars
First Oil
King &
Europa
2010
South
Deimos
Discovery
150
100
100
50
50
0
0
'96
1989 1996 2000
200
Katrina
150
5 KM
250
99/00 Expansion/PtL
'98
'00
'02
'04
'06
'08
'10
71.5% Shell (Operator)
1989 discovery;~900 meters water depth
Mars-B FID
Mars-B FID September 2010:
• 100 kboe/d TLP; 2015 start-up
• Tapping new resources on Mars basin
• South Deimos and West Boreas tie-backs
16
28/09/2010
Mars
B
Mars
A
'15+
NEW POTENTIAL AT AUGER: CARDAMOM DEEP
SEISMIC OVERVIEW
PRODUCTION
Kboe/d
Auger
Platform
100
100
50
50
0
0
Auger
North
Auger
Main
Cardamom
'94
'96
'98
'00
'02
'04
'06
'08
'10
'15+
Shell 100% (operator) Auger TLP & Cardamom
1987
1993
1999-2004
Discovered
First Oil
First TLP
Subsea-Fields
Macaroni
Serrano
Oregano
Habanaro
Llano
l
17
2009/10
2011/12
Deep
Cardamom
discoveries
Deep Cardamom
Subsea system
Expected FID
28/09/2010
Auger 1993: 1st application of a Tension Leg
Pl tf
Platform
in
i deepwater
d
t (820 meters
t
water
t d
depth)
th)
Cardamom Deep discoveries in 2009/10
(>100 million boe resources)
Development options > 20 kboe/d
PERDIDO: START-UP IN 2010
Shell 33.3% (operator); Peak production ~100 kboe/d
Substantial oil in place > 3 billion boe
Recoverable
R
bl resources > 400 million
illi boe
b
…… upside
id
from technology development
First oil in March 2010
Industry first production in Lower Tertiary
Development
D l
t drilling
d illi planned
l
d for
f 5+ years
New world record deepest drilling and production
system
RESERVOIR VIEW
4.85km
KM
Seismic overview of Great White
18
28/09/2010
SHELL DEEPWATER GULF OF MEXICO
SHELL GOM DEEPWATER PRODUCTION
Kboe/d
500
500
250
250
0
0
'94
'97
'00
'03
'06
'09
Cardamom Deep
Auger TLP extended reach
discovery & appraisal
> 100 million boe resources
> 20 kboe/d
kb /d potential
i l
Shell 100% (operator)
Perdido
'15+
W. Boreas, S. Deimos
>150 million boe resources
Tie
Tie-back
back to Mars B
Vito
>200 million boe resources
~100 kboe/d potential
Auger
Mars B
FID for new TLP, Shell 72%
(operator)
~100 kboe/d
Nakika
Mars
Ursa
Brutus
Appomattox
~100 kboe/d hub potential
> 250 million boe reso
resources
rces
Holstein
Stones
Assessing early production options
~80 kboe/d potential
Shell
Sh ll 35% ((operator)
t )
Caesar/Tonga
~50 kboe/d
2009 FID
Shell 22.5%
NEW HUB
0
EXISTING PRODUCTION HUB
SHELL LEASEHOLD
2009 production ~250
~250,000
000 boe/d
>250,000 boe/d new potential for Shell
19
28/09/2010
200 KM
BRAZIL: BC-10
PRODUCTION PERFORMANCE
FIELD LAY-OUT
Kboe/d at 100%
90
60
30
0
Jan
Feb
March
April
May
2010
ACTUAL
June
July
PLAN
2000
2005
2006
2009
2010
BC-10
Discovered
Shell 35%
BC-10
Declared
Commercial
Shell stake
increased to
50%
First Oil
Phase 2
FID
August
Shell 50% (operator); 1780 meters water depth;
Oil in place: ~1.1 billion boe; resources >300 million boe
Unlocking heavy oil in deepwater
Phase 2 FID September 2010
• Argonauta ON field development
• Sustaining
g plateau
p
production
p
Exploration upside
20
28/09/2010
NORTH AMERICA
HEAVY OIL
21
28/09/2010
SHELL NORTH AMERICA HEAVY OIL
PORTFOLIO
PRODUCTION OVERVIEW
2009 Production; ~170 kboe/d
MINING
IN SITU/OTHER
Peace River
IN SITU/
OTHER
Athabasca
MINING
Cold Lake
AERA
CAPACITY OUTLOOK
Kb /d
Kboe/d
Carmon
Creek
400
200
0
Large resources + growth potential
Debottlenecking
Mine +
In Situ+
AERA
Expansion
Cos
Cost pe
performance
o a ce
Footprint management
2008-09
2010-11
ONSTREAM
22
Mine
Expansions
~2020+
CONSTRUCTION
28/09/2010
OPTIONS
IN-SITU AND COLD PRODUCTION
PEACE RIVER POTENTIAL
AERA TRACK RECORD
AERA TRACK RECORD
Belridge field
AERA Energy LLC Shell/Exxon (Shell 51.8%)
Production ~160 Kboe/d (100%)
9 key fields
• Cold & thermal
• ~80 Kboe/d
/
Drill ~ 800 to1,000 wells /year
Enhanced Oil Recovery (Waterflood and Steam Injection)
One of California’s largest oil and gas producers
Produced its billionth barrel in 2009
18 Kboe/d (2010 est.)
Studying Carmon Creek development
~ 15,000 wells
23
CYCLIC STEAM STIMULATION
28/09/2010
• Cyclic steam and vertical steam drive injection
• 1.5 billion resources potential
AOSP: OIL SANDS MINING
>7 BILLION BARRELS RESOURCES POTENTIAL
Substantial portfolio of 125,000 hectares
Rapid growth since FID in1999 (base project +
Expansion-1)
• 255 Kboe/d mine capacity
• Ramp-up in 2011
• 3.4 bln boe of resources in production
• ~40 years of production
Next Steps: optimization + debottlenecking
• ~85 Kboe/d growth opportunity
• Paced incremental investment
• Assessing >1 mtpa CO2 CCS scheme (QUEST)
Long
L
term
t
growth
th potential
t ti l
• FID pace slowed in 2008
• Continuing with selected permit applications
SCALE: 10 km
AOSP & QUEST = 60% SHELL AND 20% EACH CHEVRON & MARATHON. VOLUMES ON 100% BASIS
24
28/09/2010
OIL SANDS ECONOMICS
>$1 BN/YEAR CASH FLOW POTENTIAL FOR SHELL
AOSP net cash flows = $Bln (Shell)
2.5
0.3
2
Kbbl/d
Expansion 1
start up
Base project
start up
200
1
100
0.0
00
-1
-2
2
-0.3
-2.5
2000
2000
Upgrader
start up
2002
2002
2004
2004
2006
2006
2008
2008
CASH FROM OPERATIONS
PRODUCTION (RHS)
2010
2010
2012
2012
2014
2014
CAPITAL INVESTMENT
Bulldozer in Muskeg Mine
255 Kbbl/d from a 3.4 Bln bbls Resource base
$19 Bln development cost: $5 - $6/bbl
$75,000/flowing
$
/fl
barrel
b
l
Base project pay-back <5 years@ $54/bbl
Expansion 1 adds value >$70 - $75/bbl
Overview Scotford upgrader
25
28/09/2010
NORTH AMERICA
TIGHT GAS
26
28/09/2010
NORTH AMERICA TIGHT GAS: PORTFOLIO
COMPETITIVE POSITIONING IN KEY PLAYS
PRODUCTION GROWTH
Kboe/d
Mmscf/d
250
2009Acreage
New Positions
West Canada
Foothills
1,200
150
Eagle Ford
1,400
1,000
Pinedale
Haynesville JV
South Texas
Rapid portfolio growth build following Pinedale
success since 2001
Industry leading tight gas portfolio
~$17 billion E&A + acquisition invested since
2001: ~40tcfe resources potential
Focus on low cost entry + contiguous acreage
positions
+ 41 %
200
Marcellus
27
+ 17 %
28/09/2010
800
600
100
400
50
200
0
0
2005
2006
2007
2008
2009
2010 H1
TIGHT GAS ECONOMICS
SHELL ACREAGE BREAK-EVEN PRICES
LEARNING CURVE ACCELERATION
$/mcfe
8
Indexed Well Delivery Time per year since first production
120
Expected gas
price range
6
4
100
2
80
0
Mature plays
Emerging plays
BREAKEVEN PRICE
ONGOING BASIS
Total
ENTRY COST
Drill + complete: rapid pay-back + cost
performance
Economics:
60
40
20
Pinedale - 2002
Deep Basin - 2008
Groundbirch - 2008
• Low break-even: $3-$5/mcfe (NPV basis)
• Cash operating costs < $2/mcfe
• Attractive returns and price upside
28
28/09/2010
0
0
1
2
3
Early Deep Basin - 2005
Haynesville - 2008
4
Years
5
6
7
8
9
TIGHT GAS POTENTIAL
~2015 PRODUCTION OUTCOMES
Bcf/d
4
~40 Tcfe resource potential
3
Portfolio can support spend $3-5 billion
per year
2
1
0
~$15 Bln
~$20 Bln
2011-2015 Investment
Budgeting on a 6-12 month rolling
programme
~$25 Bln
CAPEX AND CASH FLOW POTENTIAL
Range
g of production
p
outcomes
$ Bln
Bl
8
Cash flow potential + price upside
CASH FLOW OUTCOMES ON $4
BLN/YR CAPEX SCENARIO
$8 HH
6
$6 HH
Capex range
4
$4 HH
2
0
2009
29
2010
2011
2012
2013
28/09/2010
2014
2015+
SUMMARY
30
28/09/2010
UPSTREAM AMERICAS OUTLOOK
PRODUCTION
Kboe/d
1000
Significant growth for Shell
800
OECD risk profile + price upside
Safety, SD and cost performance
600
Build-up of investment choices
400
• Exploration to production
• Tight gas & heavy oil
200
• Investment pace
0
2009
ONSHORE GAS
2012
DEEPWATER
TIGHT GAS GROWTH DRIVEN BY INVESTMENT PACE; PRE-ASSET SALES
31
28/09/2010
2014
HEAVY OIL

royal dutch shell plc north america investor visit upstream americas

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