Shell Plc · LSE:SHEL
Shell — Royal Dutch Shell — Investor Presentation (September 2017)
36 slides from Shell's investor presentation, Sep 6, 2017
Slide 1: Shell scenarios, modelling and decision making
Shell scenarios, modelling and decision making Royal Dutch Shell plc September 6, 2017 #makethefuture Royal Dutch Shell September 6, 2017
Slide 2: Cautionary note
Cautionary note This presentation contains data from Shell’s New Lens Scenarios. The New Lens Scenarios are a part of an ongoing process used in Shell for 40 years to challenge executives’ perspectives on the future business environment. We base them on plausible assumptions and quantifications, and
Slide 3: Guy Outen, EVP Strategy & Portfolio
Guy Outen EVP Strategy & Portfolio Royal Dutch Shell Royal Dutch Shell September 6, 2017
Slide 4: Exploring alternative futures
Exploring ▪ Energy system was The Present The Path The Future alternative complicated futures ▪ Energy transition and digital: major disruptors FORECAST ▪ Past does not predict the future ▪ Forecasts are inappropriate ▪ Radically uncertain future ▪ Complex future: needs agility Scenario thinking
Slide 5: Scenarios are neither forecasts nor business plans
Scenarios are Scenarios are not forecasts; neither are they our business plan neither Shell considers multiple, bespoke scenarios relevant to decisions Scenarios usage ranges from evaluation of individual opportunities, to portfolio choices, to overarching strategy forecasts nor development pl
Slide 6: Shell's strategy
Shell’s strategy #makethefuture Aspired Future World-class investment case World-class investment Leader: value + case Leader: value + influence influence Reducing our carbon intensity Shared value with society Reducing our Shared value carbon with society intensity Aspired Winning Portfolio
Slide 7: Using scenarios
Using scenarios Future worlds Value chain assessment* Recognising a range of 1 uncertain outcomes 2 Pace of new technology 3 Future World 4 5 Pace of demand growth Value Chains Consider a range of plausible futures Consider existing and new energy value chains Explore social, political + econo
Slide 8: Framework for decision making in uncertainty
Framework for decision making Clarity of objectives in uncertainty Strategy and aspired future External environment and Decisions based on ‘hard’ and Analytic tools disruptors ‘soft’ inputs Consider multiple futures Apply lenses From individual decisions to in decision-focused scenarios to support t
Slide 9: Wim Thomas, Chief Energy Adviser
Wim Thomas Chief Energy Adviser Royal Dutch Shell Royal Dutch Shell September 6, 2017
Slide 10: How scenarios inform modelling
Introduction Scenarios explore “how the Mountains/Oceans How scenarios inform world will work” in the future, and is an essential front-end modelling input in modelling Different parts of the world will develop in their own Resources ways and at different paces Demand Technology innovation ena
Slide 11: Shell models
Shell models Models underpin scenarios and strategic analysis Royal Dutch Shell September 6, 2017 11
Slide 12: World Energy Model (WEM): Estimates global energy demand dynamically
World Energy ▪ Estimates energy demand holistically Model (WEM): ▪ Underpinned by demand, choice and supply modules Estimates global ▪ Uses resource constraints, build rates and prices to balance supply and demand energy demand ▪ Covers other elements such as efficiency and learning curves, and outc
Slide 13: WEM: Key drivers for demand
WEM: Key drivers for demand Population Economic growth Environmental pressures 75 specific scenario-based inputs, considered by: Sector Carrier Energy source Geography Technology Resource availability People’s choices Royal Dutch Shell September 6, 2017 13
Slide 14: WEM: Energy Ladders estimate energy use
WEM: ▪ Different development curves The Energy Ladder 1960 – 2016* by country, by sector Energy Ladders The relationship between income and energy use Estimate energy ▪ Developing nations tend to Primary energy/ (GJ/capita/year) use less energy due to more service needs efficient technologies 400 av
Slide 15: WEM: Choice module determining the energy mix
1414 Sectors 10 Carriers WEM: Acknowledges different user Sectors 10 Carriers 18 Energy Sources Choice module preferences for technologies Ship Electricity Oil (Centralised / Determining the Natural Gas Passenger transport Rail and solutions Distributed Coal energy mix Choices change in response
Slide 16: WEM: Example outputs
WEM: World: Total Final Consumption by sector: Mountains World: Total Primary Energy: Oceans Example outputs EJ/year (energy carrier) EJ/year (energy source) A myriad of different “slices” through the output data set possible World: Total Primary Energy by source: Mountains China: Total Final Consum
Slide 17: WEM: Example outputs comparing two scenarios for consumer choices
WEM: World: Total Final Consumption – by carrier Example outputs EJ/year (energy carrier) Comparing two scenarios for consumer choices of what type of energy they want to use Decarbonisation and efficiency go hand-in-hand with Mountains explores the widespread success of shale gas and strong gover
Slide 18: WEM: Example outputs comparing two scenarios for primary energy
WEM: World: Total Primary Energy Example outputs EJ/year (energy carrier) Comparing two scenarios for primary energy mix as a result of different policy, GDP, resources and innovation assumptions Of the New Lens Scenarios, Mountains’ drivers result in ‘earliest’ peak oil demand; Mountains explores
Slide 19: Global Energy Resources database
Assessment as at 2015 Insights: Global Energy Oil, gas and coal expected remaining Sufficient renewable resources, but unequal Resources resources distribution database Renewables annual production potential Sufficient fossil resources for a decarbonised and Essential for Used for Shell
Slide 20: Global Supply Model (GSM) estimates oil and gas production
Global Supply Estimates production at resource category and country level until 2100 Model (GSM) Each resource category develops through its own resource maturation chain Cost of supply curves control how much resource is economic to mature at a given price Estimates oil and Includes an envi
Slide 21: GSM: Example outputs projecting oil and gas supply
GSM: World: Total Oil Production (inc LPG/Condensate) World: Total Gas Production – by gas type Example outputs Bln boe per year TCF per year Projecting oil and gas supply by type, region and resource category North America: Total Oil Production (inc LPG/Condensate) Europe: Total Gas Production – by
Slide 22: Example outputs: Modelling disruption potential of electric vehicles
Example outputs: Key assumptions: Modelling Battery costs continue to decline Regulation strengthens (e.g. ban internal combustion engine (ICE) vehicles in cities) disruption OEM vehicle manufacturers assumed to continue to develop ICE efficiencies potential of Electric vehicles (EV) Global ve
Slide 23: Example outputs: Oil demand context
Example outputs: Passenger road transport makes up around a third Oil demand has fallen in OECD since 2005 Oil demand of global oil use Non-OECD oil demand growth 2.5 times the impact of OECD demand decline context An aggressive EV scenario Global LHCF consumption by Sector Global LHCF consump
Slide 24: Guy Outen, EVP Strategy & Portfolio
Guy Outen EVP Strategy & Portfolio Royal Dutch Shell Royal Dutch Shell September 6, 2017
Slide 25: Summary
Summary ‘Complicated to complex’ context Understand multiple futures to frame decision-making Scenario thinking and holistic modelling is key Use multiple lenses, including ‘minimise maximum regret’ Agile decision-making needed through energy transition Royal Dutch Shell September 6, 2017
Slide 26: Materials available online
Materials available online www.shell.com/ scenariosenergymodels Royal Dutch Shell September 6, 2017 26
Slide 27: Questions and Answers
Questions and Answers Guy Outen Wim Thomas EVP Strategy & Portfolio Chief Energy Adviser Royal Dutch Shell September 6, 2017
Slide 28: Biographies
Biographies Royal Dutch Shell September 6, 2017
Slide 29: Guy Outen
Guy Outen Executive Vice President Strategy & Portfolio Guy Outen was appointed Executive Vice President, Strategy & Portfolio for Royal Dutch Shell plc in 2014. Guy has worked in various commercial, new business and finance roles across all parts of Shell’s business. From 2009 to 2013 he was the EV
Slide 30: Wim Thomas
Wim Thomas Chief Energy Adviser Wim Thomas is Chief Energy Adviser and leads the Energy Analysis practice in Shell. His team is also responsible for Shell’s long-term global energy scenarios, informing Group Strategy. He has been with the Shell Group for some 33 years, with prior positions in drilli
Slide 31: Additional information
Additional information Royal Dutch Shell September 6, 2017
Slide 32: Digitalisation: Board and future business environment
Board and future Beliefs Uncertainties business environment Mega Trends Macroeconomics Example: Example: Sustained era of transition & volatility Political tensions & regional instability Emerging markets drive Global GDP increases Impact of digital technology Market Example: Example: Hydr
Slide 33: Shell scenarios
Shell scenarios Identifying emerging challenges to guide us Globalisation, liberalisation, Social fragmentation & Era of volatile Changing sources of through change technology diffusion; environmental cohesion dilemmas; re- energy influence & decision Trends pressures; Asian growth emergence of Stat
Slide 34: WEM: Countries modelled
WEM: Countries modelled North America South America Europe/Russia Africa Middle East Asia/Pacific Darker-coloured countries are modelled individually. Lighter-coloured countries are modelled collectively as ‘Rest of’ regions, such as ‘Rest of West Africa’. Royal Dutch Shell September 6, 2017
Slide 35: GSM: Countries modelled
GSM: Countries modelled North America South America Europe/Russia Africa Middle East Asia/Pacific Rest of the world Royal Dutch Shell September 6, 2017
Slide 36: Royal Dutch Shell September 6, 2017
Royal Dutch Shell September 6, 2017
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