Shell PLC · LSE:SHEL
Shell — Royal Dutch Shell — Investor Day (March 2014)
90 slides from Shell's investor day presentation, Mar 13, 2014
Slide 1: Balancing Growth & Returns – Management Day 2014
BALANCING GROWTH & RETURNS MANAGEMENT DAY 2014 13 MARCH 2014 ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 13 March, 2014 1
Slide 2: Definitions & Cautionary Note
DEFINITIONS & CAUTIONARY NOTE Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves. 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. Resources are c
Slide 3: Ben van Beurden, Chief Executive Officer
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 13 March, 2014 3
Slide 4: Executing a Consistent, Long-Term Strategy
EXECUTING A CONSISTENT, LONG-TERM STRATEGY Unrelenting focus on HSSE Technology, integration and scale Disciplined capital investment by strategic theme Growth in cash flow through-cycle Competitive shareholder returns Shearwater platform North Sea, UK Copyright of Royal Dutch Shell plc 13
Slide 5: Agenda
AGENDA Ben van Beurden Chief Executive Officer Simon Henry Chief Financial Officer John Abbott Downstream Director Marvin Odum Upstream Americas Director Question & answer session Panel break-outs: Projects & Technology + Upstream International Upstream Americas Downstream Copyright of Royal Dutch S
Slide 6: Focus on Safety
FOCUS ON SAFETY 2013 UPDATE Goal Zero on safety Spills - operational Injuries – TRCF/million working hours million working hours Volume in thousand tonnes TRCF Working hours (RHS) Energy intensity - refineries Process safety trend Energy Intensity Index (EEITM) Number of incidents HSSE priority Ti
Slide 7: Portfolio Management
PORTFOLIO MANAGEMENT RESILIENCE Risk, performance & STRATEGIC INTENT uncertainty ASPIRED RESULTS & PORTFOLIO PAY-OUT ATTRACTIVENESS Growth & returns Opportunity scale Balancing risk and reward Strict investment hurdles and price screens drive returns Copyright of Royal Dutch Shell plc 13 March,
Slide 8: Investment Priorities + Strategic Intent
INVESTMENT PRIORITIES + STRATEGIC INTENT Engines Free cash flow businesses Maintain competitiveness UPSTREAM DOWNSTREAM Asset integrity + selective growth Growth Priority Global leadership established High-grading our rich opportunity set INTEGRATED DEEP-WATER GAS Longer Term Major poten
Slide 9: Financial Performance: Track Record
FINANCIAL PERFORMANCE TRACK RECORD Earnings Cash flow from operations $ billion CCS $ billion Upstream Downstream Corporate Identified items Total capital investment Payout $ billion $ billion Organic capital investment Acquisitions Dividend declared Buyback Copyright of Royal Dutch Shell plc 13 Mar
Slide 10: Financial Performance: Competitive Position
FINANCIAL PERFORMANCE COMPETITIVE POSITION Earnings per share growth – 3 years Cash flow per share growth – 3 years % growth 2010-2013 % growth 2010-2013 Shell Competitors Total shareholder return – 3 years 2013 ROACE % growth 2010-2013 EPS on reported CCS basis ROACE: earnings on reported local GAA
Slide 11: 2014 Priorities
2014 PRIORITIES Returns and cash flow Improve our financial Competitive returns for shareholders performance Take hard choices on new options Enhance our capital efficiency Increase asset sales Reduce pace of growth investment Major deep-water start-ups in 2014 Deliver new projects Int
Slide 12: Improve Financial Performance: Responding to New Market Dynamics
IMPROVE FINANCIAL PERFORMANCE: RESPONDING TO NEW MARKET DYNAMICS North America resources plays Oil Products Groundbirch, Canada Geelong refinery, Australia ~$80 billion capital employed Financial performance not acceptable Multi-year turn-around Priorities: Portfolio restructuring + potent
Slide 13: Continued Drive on Cost Efficiency
IMPROVE FINANCIAL PERFORMANCE CONTINUED DRIVE ON COST EFFICIENCY Enterprise framework agreements (EFAs) cumulative # EFAs negotiated Supply chain efficiency: ~$65 billion / year spend Standardisation + replication: Platforms, subsea equipment, facilities Price positioning of EFAs EFA prices vs. ra
Slide 14: Improve Financial Performance in Upstream Engine
IMPROVE FINANCIAL PERFORMANCE IN UPSTREAM ENGINE PDO Oman UK North Sea kboe/day, Shell share kboe per day, Shell share 2012:117kboe/d 2013: 91kboe/d assumed production with Actual production continued decline Production decline halted 2012-13 impacted by high levels of maintenance focus on up-
Slide 15: Drive to Further Enhance Integrated Gas Profitability
IMPROVE FINANCIAL PERFORMANCE DRIVE TO FURTHER ENHANCE INTEGRATED GAS PROFITABILITY Increasing Shell’s managed sales Shell’s LNG portfolio Total LNG volumes in mtpa Spain Sakhalin Cove Point Elba 2013 Baja QG-4 >25 mtpa Hazira Altamira Oman Nigeria Brunei Atlantic LNG Malaysia Prelude LNG Peru LNG s
Slide 16: 2014 Priorities
2014 PRIORITIES Returns and cash flow Improve our financial Competitive returns for shareholders performance Take hard choices on new options Enhance our capital efficiency Increase asset sales Reduce pace of growth investment Major deep-water start-ups in 2014 Deliver new projects Int
Slide 17: Deconstructing Our Portfolio
DECONSTRUCTING OUR PORTFOLIO Organic 2013 Capital CCS earnings CFFO capital ROACE $ billion employed investment 5 8 5 64 7% DOWNSTREAM Engines ENGINE Mature + drives free cash flow 6 10 7 17 36% UPSTREAM ENGINE 9 12 6 57 17% Growth Priorities INTEGRATED GAS Profitable + growing 3 5 9 23 15% DEEP-WAT
Slide 18: Enhance Capital Efficiency: Take Hard Choices
ENHANCE CAPITAL EFFICIENCY TAKE HARD CHOICES 2014 ~$8 billion capital investment ~$27 billion capital investment Low cost options + Early high-grading Increase predictability Flawless execution of major spend Explore Feasibility study FEED FID On stream Identify & Assess Select Define Execute On str
Slide 19: Making Our Plans Credible, Competitive, Affordable
ENHANCE CAPITAL EFFICIENCY MAKING OUR PLANS CREDIBLE, COMPETITIVE, AFFORDABLE ~150 performance units implemented Sharpen our focus: Targeted growth spend Address underperforming assets Asset sales Increase divestment of non-core positions Wheatstone LNG BC-10 dilution UA resources plays
Slide 20: Capital Ceilings + Option Set Drive Hard Choices
ENHANCE CAPITAL EFFICIENCY CAPITAL CEILINGS + OPTION SET DRIVE HARD CHOICES Integrated Gas IDENTIFY/ASSESS SELECT DEFINE EXECUTE ON STREAM US GTL - Arrow LNG - REDESIGN Abadi LNG ph1 Gorgon LNG T1-3 Atlantic LNG CANCELLED Browse LNG - REDESIGN Prelude FLNG Brunei LNG Gorgon LNG T4 - Abadi LNG ph2
Slide 21: 2013-14 Capital Spending
ENHANCE CAPITAL EFFICIENCY 2013-14 CAPITAL SPENDING Total capital investment $ billion Strict capital ceilings More competitive returns Future opportunities Resources plays Europe Deep-water Africa/Middle East/CIS Upstream Integrated gas Asia Pacific Upstream engine Americas Downstream (incl. Co
Slide 22: 2014 Priorities
2014 PRIORITIES Returns and cash flow Improve our financial Competitive returns for shareholders performance Take hard choices on new options Enhance our capital efficiency Increase asset sales Reduce pace of growth investment Major deep-water start-ups in 2014 Deliver new projects Int
Slide 23: Project Management + Benchmarking
PROJECT MANAGEMENT + BENCHMARKING Upstream project status IPA project benchmark Construction time elapsed % Upstream cost Downstream cost 1Q 2Q 3Q 4th Quartile Oversight and accountability Track record Construction time elapsed % IPA – Independent Project Analysis by Industry Benchmarking Consor
Slide 24: Deliver New Projects: Track Record 2010-14
DELIVER NEW PROJECTS TRACK RECORD 2010-14 Consistent delivery of Production growth from key start-ups new projects kboe per day $ billion 2013 impact: $9 billion Raízen CFFO from 2010+ start-ups Gumusut-Kakap Key Upstream project start-ups: Pearl GTL Production Cash flow from operations (RHS) 20
Slide 25: Conventional Exploration Portfolio + Themes
CONVENTIONAL EXPLORATION PORTFOLIO + THEMES Spend Resources/potential including deals added1 ($ billion) (billion boe) Time to Prospect development size Oil & gas split (%) (years) (million boe) 2011-2013 2011-2013 2013 performance 15+ >500 ARCTIC ~2 0 Alaska drilling pause FRONTIER 0.9 Albania:
Slide 26: Global Resources Plays
GLOBAL RESOURCES PLAYS BUILDING CAPABILITIES IN LONG TERM OPPORTUNITY Total resources plays capital investment Western $ billion Canada Russia Germany Ukraine Turkey Changbei Lower 48 USA Tunisia Changbei 2 Oman Sichuan Colombia Americas International Resources + potential 14.4 billion boe Argen
Slide 27: Simon Henry, Chief Financial Officer
SIMON HENRY CHIEF FINANCIAL OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 13 March, 2014 27
Slide 28: Financial Framework and Priorities
FINANCIAL FRAMEWORK AND PRIORITIES Priorities for cash CASH PERFORMANCE 1. Debt service CFFO drives investment + payout 2. Dividends: growth policy 3. Capital investment: disciplined through PAY-OUT INVESTMENT cycle growth Affordability, Dividend linked to profitability, business results 4. Return s
Slide 29: Cash Flow and Pay-out
CASH FLOW AND PAY-OUT Cash generation Dividend track record $ billion $ billion $ billion 2011-13 2013 DOWN STREAM DOWN STREAM UP UP STREAM STREAM Dividend and buy back 12 months Cash flow from operations Capex + equity acc. investments Dividends declared rolling Asset sales Acquisitions Strong bala
Slide 30: Cash Flow + Returns
CASH FLOW + RETURNS Cash flow from operations ROACE $ billion, 4Q rolling %, 4Q rolling Shell Shell peer group peer group ROACE: earnings on reported local GAAP basis Copyright of Royal Dutch Shell plc 13 March, 2014 30
Slide 31: Deconstructing Our Capital Investment
DECONSTRUCTING OUR CAPITAL INVESTMENT 2014 organic capital investment $ billion Exploration Preparing new options + pre-FID Key growth Driving new upstream growth projects Smaller growth projects Maintaining competitive cash generation Care + maintain Balancing growth + returns Copyright of Royal
Slide 32: SEC Proved Reserves Position
SEC PROVED RESERVES POSITION 2013 Reserves performance 2011-13 Reserves additions 2013 RRR 131% 2011-13 RRR 91% Reserves life at end 2013 ~11.5 years 2011-13 Reserves average performance Organic1 additions ~1.4 billion boe Production ~1.2 billion boe Organic reserves replacement 112% Maj
Slide 33: Resources Update
RESOURCES UPDATE Converting resources to production… 2013 resources by theme billion boe Longer-term upside Vito BMS-54 Zabazaba Appomattox Permian Carmon Creek ph1&2 Rabab Harweel Upstream engine Erha North ph2 Integrated gas BC-10 ph3 Deep-water Stones Groundbirch Resources plays Future opportunit
Slide 34: New Start-ups 2013-2018
NEW START-UPS 2013-2018 Start-up 2013 start-up 2014-2015 2016-2018 Bukom ECC debottleneck Westward-Ho pipeline Bukom cogeneration Jack St.Malo pipeline Singapore LOBP DOWNSTREAM ENGINE Amal Steam Corrib Clair ph2 Schiehallion Redevelopment Tempa Rossa Rabab Harweel integrated
Slide 35: Balancing Growth + Returns
BALANCING GROWTH + RETURNS Positive outlook for ROACE + CFFO in billion $ CFFO 2013 ROACE Near-term growth: deep-water, upstream engines, future opportunities Integrated gas growth 2016+ Restructure resources plays + downstream ROACE (%) Bubble size represents 2013 capital employed 2015/16 p
Slide 36: John Abbott, Downstream Director
JOHN ABBOTT DOWNSTREAM DIRECTOR ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 13 March, 2014 36
Slide 37: Downstream Strategy
DOWNSTREAM STRATEGY Developing and sustaining competitive advantage through… Advantaged Improving our Differentiated Distinguished feedstock + footprint Products + Brand supply Customer Offer Priority to improve our financial performance Copyright of Royal Dutch Shell plc 13 March, 2014 37
Slide 38: Downstream Macro Landscape
DOWNSTREAM MACRO LANDSCAPE Oil Products Chemicals Structural refining overcapacity Chemicals demand growth robust Liquids rich shales changing the dynamics Significant feedstock price movements Efficiency and mogas displacement in North America re-emerges as chemicals exporter transporta
Slide 39: Downstream Operational Excellence
DOWNSTREAM OPERATIONAL EXCELLENCE CONTINUOUS IMPROVEMENT Focus on HSSE continues Capital discipline Injuries – TRCF/million working hours million working hours $ billion Working hours TRCF Non-growth Oil Products Growth Chemicals Operating performance Brand % unplanned downtime Global brand preferen
Slide 40: Downstream Financial Results
DOWNSTREAM FINANCIAL RESULTS Earnings + cash flow Improved Chemicals performance $ billion Potential Challenging Oil Products results Priority to improve ROACE, CFFO & FCF Earnings CFFO CFFO average 2011-13 Capital employed + ROACE Free cash flow $ billion % $ billion $ billion Potential 2009
Slide 41: Downstream Competitive Landscape
DOWNSTREAM COMPETITIVE LANDSCAPE Downstream ROACE Chemicals turn-around Legacy asset positions Complex competitive drivers Shell Downstream Peer group range Earnings on local GAAP basis adjusted for inventory valuation differences and excluding identified items; peer group: Chevron, Total, BP,
Slide 42: Chemicals Turnaround
CHEMICALS TURNAROUND Major improvements delivered Shell Chemicals: Investment in advantaged feedstock Base chemicals + derivatives Refocused on strong core + concentrated footprint Advantaged feedstock Performance units management Bulk sales to industrial customers Returns recovery + g
Slide 43: Oil Products Performance
OIL PRODUCTS PERFORMANCE 2008 – 2013 Reduced footprint + costs Port Arthur expansion Added Brazil biofuels + East marketing growth Returns remain under pressure Portfolio restructuring ROACE remains low Million b/d Million b/d $ billion % -20 % -45 countries -0.4 Mb/d ~6% -10% Refining capac
Slide 44: Portfolio Segmentation + Performance
PORTFOLIO SEGMENTATION + PERFORMANCE Downstream businesses 2013 CFFO ($ billion) Integrated -20% refining Chemicals >40% + marketing value chain Fuels marketing Lubricants -5% 10% Merchant refining Biofuels 2013 ROACE (%) Bubble size = capital employed New segmentation into >80 performance units
Slide 45: Sharper Focus on Upgrading Our Portfolio
SHARPER FOCUS ON UPGRADING OUR PORTFOLIO Portfolio change Downstream asset sales $ billion Selective Growth: Chemicals China LNG for transport Premium fuels + lubes Biofuels Refinery crude flexibility and product slate others Fix: Attractiveness Motiva Singapore fuels Pernis + Rh
Slide 46: Improving Performance of Key Assets
IMPROVING PERFORMANCE OF KEY ASSETS Bukom – performance turnaround Scotford – building on sustained performance Refinery unplanned downtime in % Unplanned downtime 3-year rolling average Over-supplied fuels market High margin refinery Improving efficiency; advantaged liquids Integrated upstr
Slide 47: Oil Products Growth in Key Markets
OIL PRODUCTS GROWTH IN KEY MARKETS China marketing growth Brazil - Raízen JV # Volume (million litres) billion litres million tonnes billion R$ (local curr) Number of operating sites Fuels volume Fuels volume sold Sugarcane crushed NIBIAT Largest IOC retail network in China Shell branded retail
Slide 48: Downstream Strategy
DOWNSTREAM STRATEGY Developing and sustaining competitive advantage through… Advantaged Improving our Differentiated Distinguished feedstock + footprint Products + Brand supply Customer Offer Priority to improve our financial performance Renewed focus on upgrading our portfolio Returns + free
Slide 49: Marvin Odum, Upstream Americas Director
MARVIN ODUM UPSTREAM AMERICAS DIRECTOR ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 13 March, 2014 49
Slide 50: Upstream Americas Strategy
UPSTREAM AMERICAS STRATEGY Major OECD growth potential for Shell Substantial and diverse resources base Deep-water Heavy Oil Resources Plays Integrated Gas Arctic Industry leadership Mining and in-situ Portfolio repositioning Monetizing gas Long-term potential Profitable + Potential competitive toda
Slide 51: Upstream Americas Portfolio
UPSTREAM AMERICAS PORTFOLIO SUBSTANTIAL UNDEVELOPED UPSTREAM RESOURCES Resources Resources Plays Western Canada Deep-water 11.7 billion boe Carmon Creek dry gas In Situ Heavy Oil Gas monetization options LNG Major undeveloped resources Canada Appalachia dry gas Gas-to-chemicals Resources plays On st
Slide 52: Upstream Americas Portfolio Financials
UPSTREAM AMERICAS PORTFOLIO FINANCIALS DIVERSE BUSINESSES & MATURITY 2013 Organic capital Capital Earnings1 CFFO ROACE $ billion investment employed 1 3 6 15 10% DEEP-WATER Growing + competitive Delivering new growth 2 3 2 19 9% 2014+ HEAVY OIL (3) (0) 5 24 (10)% RESOURCES PLAYS Future Potential (
Slide 53: Upstream Americas Financial Drivers
UPSTREAM AMERICAS FINANCIAL DRIVERS Earnings 2011 to 2013 Balance sheet $ billion $ billion 3.4 - 0.6 0.5 - 0.9 Long term growth - 0.8 - 0.3 - 0.3 -1.4 $3.7 billion GAS clean DD+A 2013 - 0.9 LRS - 0.5 On stream Resources plays 2011 2013 Under construction Deep-water Non productive leases Heavy oil/A
Slide 54: North America Resources Plays
NORTH AMERICA RESOURCES PLAYS PORTFOLIO & STRATEGY Portfolio Announced divestment Liquids rich shales Established in gas plays Dry gas Groundbirch Gas/LRS Liquids rich shales exploration Deep Basin/Kaybob LNG Gas monetization options Foothills/Pembina Canada Restructuring and redefining grow
Slide 55: Liquids Rich Shales
LIQUIDS RICH SHALES EXPLORATION AND APPRAISAL Frontier exploration program since 2010 Announced divestments Liquids rich shale Move to more focused & segmented de- Groundbirch risking Kaybob Positive early results in Duvernay (Kaybob) Pembina and Wolfcamp (Permian) Exit from non-material acr
Slide 56: Dry Gas
DRY GAS ASSESSING MONETIZATION OPPORTUNITIES Major resources position Gas Gas monetization options Drill to maximize use of existing infrastructure Groundbirch Addressing underperforming assets Deep Basin LNG Foothills Acquisition overhang Canada Scale & cost reduction Appalachia Pinedale
Slide 57: Resources Plays: Major Review of Portfolio Underway
RESOURCES PLAYS MAJOR REVIEW OF PORTFOLIO UNDERWAY Portfolio Staff reduction -30% Grow: Reduction in Shell + Permian contractor staff Kaybob Shell Pembina employees Field office closures Argentina – Vaca Supply chain + Muerta Groundbirch Contractor drilling performance Fix or Divest: Ap
Slide 58: LNG Canada
LNG CANADA PROGRESSING TO FID LNG Canada Coastal GasLink pipeline 2 x ~6 mtpa first phase TransCanada Pipelines (TCPL) to build, own & Kitimat site agreement operate ~700km pipeline 25-year export license secured (24 mtpa) Filed environmental assessment application Environmental assess
Slide 59: Heavy Oil
HEAVY OIL DELIVERY & GROWTH Delivery of production + financial step-up Assets Cost focus + footprint management AOSP: Quest CCS development In Situ: Carmon Creek FID 80 kboe/d AOSP – JV In Situ – Shell Aera – JV ~225 kboe/d ~20 kboe/d ~135 kboe/d Shell 60% Shell 100% Shell 52% Oi
Slide 60: Upstream Americas Integration & Potential
UPSTREAM AMERICAS INTEGRATION & POTENTIAL End to end value chain linkage Efficient evacuation route to market Advantaged refining position Western LNG Canada Canada gas Carmon Creek AOSP LRS Scotford Proposed Energy East Pipeline Puget Sound Sarnia Appalachia Gas to chemicals Martinez Permian
Slide 61: Leading Position in Deep-water
LEADING POSITION IN DEEP-WATER Deep water unit operating cost (Gulf of Mexico) Capital investment $/bbl $ billion Unit cost range Shell unit cost Base Growth Exploration* Divestments Source: Rystad *2013 includes Libra $1.3 billion Production Kboe/d Mars Corridor Auger 2013 Brazil downtime Track r
Slide 62: Deep-water Gulf of Mexico Project Delivery
DEEP-WATER GULF OF MEXICO PROJECT DELIVERY Perdido – 2010 start-up Mars B – February 2014 start-up 150 kboed 100 50 0 ’10 ’11 ’12 ’13 ’14 Payback achieved February 2014 First oil more than 6 months ahead of schedule First producer in the Paleogene (Lower Tertiary) Shell’s 6th and largest TLP
Slide 63: Deep-water Gulf of Mexico New Projects
DEEP-WATER GULF OF MEXICO NEW PROJECTS Appomattox ~150 kboe/d hub potential Integrating Vicksburg A discovery Resources increased 100mmboe to >600 million boe Vito Shell ~80% (operator) ~100 kboe/d potential FEED started late 2013 >300 million boe resources Shell 51.33% (operator) Ma
Slide 64: Upstream Americas Outlook
UPSTREAM AMERICAS OUTLOOK Project flow 2013 2014 2015 2016/2017 Heavy Oil F Carmon Creek Carmon Creek S phase 1 BC-10 ph2 Mars B Cardamom Appomatox Stones S Deep-water S S S F Vito F S BC-10 ph3 LRS de-risking Cost repositioning Resources Plays LRS asset sales Gas integration decisions Integrated Ga
Slide 65: Upstream Americas Strategy
UPSTREAM AMERICAS STRATEGY Major OECD growth potential for Shell Substantial and diverse resources base Deep-water Heavy Oil Resources Plays Integrated Gas Arctic Industry leadership Mining and in-situ Portfolio repositioning Monetizing gas Long-term potential Profitable + Potential competitive toda
Slide 66: Ben van Beurden, Chief Executive Officer
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 13 March, 2014 66
Slide 67: 2014 Priorities
2014 PRIORITIES Returns and cash flow Improve our financial Competitive returns for shareholders performance Take hard choices on new options Enhance our capital efficiency Increase asset sales Reduce pace of growth investment Major deep-water start-ups in 2014 Deliver new projects Int
Slide 68: Questions & Answers
QUESTIONS & ANSWERS MANAGEMENT DAY Copyright of Royal Dutch Shell plc 13 March, 2014 68
Slide 69: Key Upstream Projects Under Construction
KEY UPSTREAM PROJECTS UNDER CONSTRUCTION Upstream engine Deep-water Resources plays Integrated gas Future opportunities Copyright of Royal Dutch Shell plc 13 March, 2014 69
Slide 70: Pre-FID Upstream Options
PRE-FID UPSTREAM OPTIONS POTENTIAL 2014-2020 START-UPS Upstream engine Deep-water Resources plays Integrated gas Future opportunities Copyright of Royal Dutch Shell plc 13 March, 2014 70
Slide 71: Identifying New Chemicals Growth Potential
IDENTIFYING NEW CHEMICALS GROWTH POTENTIAL Strengthening our core Portfolio + options Growing our footprint Scotford HCU debottleneck Crackers + derivatives Pennsylvania cracker + PE Al-Karaana petrochemicals Sadaf expansion complex (2050 ktpa) China refining + chemicals Shell Base Chemicals 2
Slide 72: Deliver New Projects: 2014 Start-ups
DELIVER NEW PROJECTS 2014 START-UPS Repsol LNG acquisition, 4.2 mtpa Gumusut-Kakap, Shell 33%, 135 kboe/d Mars B, Shell 72%, 100 kboe/d Cardamom, Shell 100%, 50 kboe/d Copyright of Royal Dutch Shell plc 13 March, 2014 72
Slide 73: Operational Excellence: Oman
IMPROVE PERFORMANCE IN UPSTREAM ENGINES OPERATIONAL EXCELLENCE: OMAN PDO Oman Production decline halted kboe/day, Shell share focus on up-time reservoir development sub-surface dynamics Innovative EOR schemes Actual production assumed production with continued decline Qarn-Alam: enhanced o
Slide 74: Impact of Maintenance in UK North Sea
IMPROVE PERFORMANCE IN UPSTREAM ENGINES IMPACT OF MAINTENANCE IN UK NORTH SEA UK ‘000 boe per day, Shell share 2012 2013 2014 start-ups: Nelson, Anasuria, Shearwater, Pierce, Clair, Pierce, Schiehallion, Pierce, Gannet, Brent/Penguin, Curlew, Clair, Guillemot Brent, Gannet, Curlew Shearwater 2012: 1
Slide 75: Robust LNG Market Dynamics
ROBUST LNG MARKET DYNAMICS LNG import countries Diverse and growing market Regional price variations 1990 2013 2020 Regional gas prices LNG supply $/mmbtu $/mmbtu North West Shelf Sakhalin Gorgon North QG4 Oman LNG Rankin 2 Prelude Malaysia Tiga Pluto FLNG Nigeria Malaysia LNG Dua Japan landed L
Slide 76: Integrated Gas Portfolio
INTEGRATED GAS PORTFOLIO LEVERAGING SHELL’S SCALE AND MARKET GROWTH Priorities Integrate Repsol LNG acquisition Deliver Prelude + Gorgon Hard choices on next options Elba (MMLS) 2013: ~0.7* mboe/d; 20 mtpa LNG Hazira Repsol LNG acquisition Gorgon On stream Under construction Prelude Liquefac
Slide 77: Integrated Gas Developments: Australia
INTEGRATED GAS DEVELOPMENTS UNDER CONSTRUCTION: AUSTRALIA Prelude Floating LNG Gorgon 3.6 mtpa LNG + 1.7 mtpa NGLs ~15 mtpa: 3 trains Development drilling commenced Sep 2013 Expansion potential Hull afloat Nov 2013 Shell 25% (Chevron operator) Darwin supply base > 50% complete Shell
Slide 78: Global Deep-water
GLOBAL DEEP-WATER LEADING IOC DEEP-WATER PORTFOLIO Established production leadership Malaysia/Brunei Standardized developments & Gumusut-Kakap production technology Malikai Sabah Gas Gulf of Mexico Frontier exploration potential Kebabangan KBB Cardamom Petai Stones 2013: 0.3 mboe
Slide 79: Enhance Capital Efficiency: Managing Project Flow
ENHANCE CAPITAL EFFICIENCY MANAGING PROJECT FLOW Deep-water IDENTIFY/ASSESS SELECT DEFINE EXECUTE ON STREAM Libra BMS-54 Appomattox Bonga NW Brazil Bosi field development Bonga Main ph3 Cardamom Gulf of Mexico Vito Bonga North Sabah gas-KBB Nigeria deep-water Zabazaba Bonga Southwest Gumusut-Kakap B
Slide 80: Iraq
IRAQ Majnoon Basrah Gas company First major green field development in Iraq in 30 BGC: largest flare reduction project in the world years delivering gas to domestic market Start-up in Q3 2013 - currently producing >200 On stream1 May 2013; 320 mmscf/day kboe per day Current processing capa
Slide 81: Nigeria
NIGERIA Deep-water Nigeria LNG Onshore (SPDC JV) 2010-12 divestments SPDC OMLs Bonga + Erha fields Jan ‘14: delivered 3000th LNG 80-100 kboe/d divestment Nov 2005: Bonga start-up; cargo program underway Nigeria’s first deep-water project 4.4 mtpa (Shell 2013) Focus on gas ~90 kboe/day
Slide 82: In-Situ Heavy Oil Growth: Carmon Creek
IN-SITU HEAVY OIL GROWTH CARMON CREEK Development overview Transportation options Proposed and existing pipelines Proposed East Energy pipeline Tankers Carmon Creek Edmonton Hardisty Central Processing Facilities Site Preparation Quebec 200 miles To USGC 2013 FID on 80 kboe/d 1.5 billion barrels
Slide 83: Shell Arctic & Near Arctic
SHELL ARCTIC & NEAR ARCTIC SAKHALIN CHUKCHI UNITED STATES Alaska, Chukchi Russia, Sakhalin NIGLINTGAK BEAUFORT CANADA NORTH POLE RUSSIA SALYM BAFFIN BAY KANUMAS Greenland, Baffin Bay GREENLAND KAZAKHSTAN Russia, Salym KASHAGAN NORWAY BARENTS NORWAY ORMEN LANGE Norway, Ormen Lange Kazakhstan, Kashaga
Slide 84: Upstream Americas HSSE
UPSTREAM AMERICAS HSSE Focus on HSSE continues Process safety Injuries – TRCF/million working hours million working hours Number of incidents Tier 1 incidents Tier 2 incidents TRCF Working hours (RHS) 2013 performance: Add photo Personal injury rate reduced by 30% Process safety incidents reduce
Slide 85: Projects + Technology: Competitive Projects
PROJECTS + TECHNOLOGY: COMPETITIVE PROJECTS Standardization lead time: subsea trees Upstream/ Downstream IPA cost benchmark 6-12 months acceleration months Upstream facilities cost Index Downstream cost effectiveness Peers EFA Standardization effect 1Q 2Q 3Q 4th Quartile Value through standardizatio
Slide 86: Projects + Technology: Wells
PROJECTS + TECHNOLOGY: WELLS Example: Malaysia drilling cost Ultra deep-water rig rates Well costs in $ million ‘000 $/day 75 4th quartile 3rd quartile 50 2nd quartile Shell contracts Major IOC competitors Top quartile 25 Average age of Shell fleet ~10 years Best in class Declining to ~5 years b
Slide 87: Conventional Exploration Portfolio + Spend
CONVENTIONAL EXPLORATION PORTFOLIO + SPEND Reloading our acreage portfolio Exploration spend ‘000 km2 New Zealand $ billion Turkey Black Sea Indonesia Australia Malaysia Norway French Guiana Brazil Guyana Nova Scotia Brunei Italy Alaska South Africa Norway Colombia GOM Albania Australia Greenland Be
Slide 88: 2013 Conventional Exploration Highlights
2013 CONVENTIONAL EXPLORATION HIGHLIGHTS Frontier: Brazil, Libra entry Heartland: GOM, Vicksburg “A” NFE: Brunei, Iron Duke 2013 entry into giant pre-salt Deep-water oil discovery ~30 mln boe discovered discovery >100 million boe Single well with 6 sidetracks 2014: spudding 2 wells She
Slide 89: Exploration + Appraisal: Key Wells 2014-2015
EXPLORATION + APPRAISAL: KEY WELLS 2014-2015 Norway Russia LRS Denmark Netherlands Ukraine North America LRS Albania: follow- Turkey Black Sea up exploration Canada: China Nova Scotia deepwater Egypt Turkey LRS US GoM: Oman LRS Yinggehai Mars Basin, Mesozoic, Miocene, Paleogene plays Brunei Nigeria
Slide 90: Balancing Growth & Returns – Management Day 2014
BALANCING GROWTH & RETURNS MANAGEMENT DAY 2014 13 MARCH 2014 ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 13 March, 2014 90