BRENT DECOMMISSIONING STAKEHOLDER …...referred to in this section. Readers should not place undue...

1September 2011

BRENT DECOMMISSIONINGSTAKEHOLDER DIALOGUE EVENT

London 20th September 2011

Aberdeen 22nd September 2011

(Shell is operator of the Brent Field for and on behalf of Shell U.K. Limited

and Esso Exploration and Production UK Limited )

2September 2011

BRENT DECOMMISSIONING

BRENT STATUS AND UPDATE

Austin Hand

Project Director – Brent Decommissioning

3September 2011

Cautionary Statement

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 historical fact 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 and assumptions 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. Also included as a forward looking statement is our disclosure of reserves, proved oil and gas reserves, proven mining reserves, organic reserves, net reserves and resources. There are a number of factors 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 this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Group‟s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties 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 effects arising from recategorisation of reserves; (k) economic and financial market conditions in various countries and 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 delays in 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 cautionary statements 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 Royal Dutch Shell‟s 20-F for the year ended December 31, 2010 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of 20th and 22nd

September 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 inferred from the forward-looking statements contained in this presentation.

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 actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation that SEC's 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 on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

Also in this [presentation we have aggregated our equity position in projects for both direct and indirect interest. For example, we have aggregated our indirect interest in the Pluto project via our 34% shareholding in Woodside Energy Ltd.

4September 2011

Project Status - Studies

Project status

Brent decommissioning project now in the “Define” phase (Shell process)

Studies completedConcept select for all four platforms

Topsides removals FEED* studies (nearing completion)

GBS refloat studies completed

Studies currently in progressGBS fate studies

“Legs up” vs. “legs down” studies

EIA planned for completion in Q1 2012

Decommissioning Programme (DP) planned submission of “consultation draft” to DECC planned for Q3 2012

* Front End Engineering and Design

5September 2011

Planned Timeline for Decommissioning Project

Statutory and public consultations (plan = 60 days)

Comparative Assessments

Decommissioning Programme (DP) Prepared

Draft 1: Informal submission of DP to DECC

Draft 2: “Consultation Draft” DP submitted to DECC

Secretary of State Approves DP

Decommissioning Execution

Draft 3 DP submitted to DECC

Derogation Document submitted to DECC

Today

Draft 4 DP submitted to DECC

Q1, 2012

Q2, 2012

Q3, 2012

Environmental Impact Assessment

Q1 2013

Management review (Shell/XoM)

Informal review by DECC

DECC review and consultation with OSPAR

Q2, 2013

Q3/4, 2013

Q3/4, 2013

6September 2011

Project Status - Operations

Project status

Seeking clever solutions in dealing with difficult 40 year old wells

Well abandonment work continues on Brent Delta and Bravo, so far 30 wells completed

Brent Delta handover to decommissioning beginning Q1 2012, Brent Alpha and Bravo planned for end 2013

Brent Decommissioning Services Contract:commenced decommissioning work offshore on Delta

Cell survey planned for later this year - cell survey equipment testing commenced

7September 2011


IRG ACTIVITIES

The Independent Review Group

Please refer to IRG page on the Brent website for this presentation

8September 2011


TECHNICAL OVERVIEW AND STUDIES STATUS

Mike Smith

Senior Project Engineer – Brent Decommissioning

9September 2011

Environmental Impact Assessment

DNV contracted to undertake the EIA study and they commenced work earlier this year

The EIA Scoping Report prepared by DNV sent to stakeholders in May

Some 20 specific comments from the Independent Review Group (IRG) received – mostly

in line with points already covered in DNV‟s scoping report

DNV agreed to some minor changes to the scope of the EIA work based on comments

received

EIA is planned for completion in Q1 2012

EIA will be subjected to public scrutiny as a part of the formal public consultation phase

(likely to be around Q4 2012) of the submitted decommissioning programme to DECC

10September 2011

Brent – Alpha, Bravo, Charlie, Delta

Brent Alpha

Type:Platform, Steel

Topsides weight :16,500 gross /15,500 (dry ) tonnes

Jacket weight:14,300 tonnes (excl. piles)

Number of storage cells: n/a

Well slots: 28

Differences

Steel structure

No oil storage cells

Brent Bravo

Type: Platform, Concrete,Gravity based

Topsides weight: 24,100 gross /23,100 (net) tonnes

GBS weight: 331,300 tonnes

Number of storage cells:16

Well slots:38

Differences

Concrete structureGravity based structure with oil and water storage cells

Brent Charlie

Type:Platform, Concrete,Gravity based

Topsides weight:31,000 gross /30,000 (net) tonnes

GBS weight:290,000 tonnes


Well slots:40

Differences


Brent Delta

Type:Platform, Concrete,Gravity based

Topsides weight: 23,500 gross /22,500 (net) tonnes

GBS weight: 300,900 tonnes


Well slots:48

Differences


11September 2011

Key Differences

Brent Bravo

• GBS ( = derogation case)

• Similar to Brent Delta ... but

• No attic oil in the storage cells (likely case)

•16 oil storage cells

• 2 drilling legs, 1 utility shaft

Brent Charlie

• GBS ( = derogation case)• Different design to BB/BD• Attic oil trapped in the storage cells and some cooling cells• 8 oil storage cells, 2 diesel storage cells, +22 various cooling cells• Heaviest topsides (nearly x2 Brent Alpha)• Well conductors external to legs

Brent Alpha

• Steel jacket – complex structure

• footings = potential derogation case

• No oil storage cells

• Lightest of the topsides

Brent Delta

• GBS ( = derogation case)

• Similar to Brent Bravo ... but

• Attic oil trapped in the storage cells

•16 oil storage cells

• 2 drilling legs, 1 utility shaft

12September 2011

Project Process

High level concepts selected:

• Topsides x4 removed to shore for dismantling (not decided yet if heavy/modular or single lift)

• GBS structures x 3: derogation case to remain in situ (“legs-up” likely proposal tbc)

• Jacket of Brent Alpha to be removed down to -84m below surface. Footings to remain is a derogation case

• Drill cuttings to remain undisturbed

• Debris removed within 500m of each structure and 100m either side of pipelines

• Pipelines, umbilicals etc – bespoke solutions depending on size and current state/location, based on comparative assessment of options for each individual pipeline

• Cell contents (esp. sediments) still under evaluation. Either (A) “leave in place” (+/- cap) or (B) remove and reinject

Assess feasibility

Select the concept

Define the project concept

Execute the project

We are here2006 2010

Sept. 2011(Shell Process)

13September 2011

Proposal

Remove steel jacket down to -84.5m below LAT (Lowest Astronomical Tide) to Leave footings (derogation case)

Rationale for leaving footings vs. full removal

Significantly lower personnel risks (less days subsea work)

-84.5m is the best environmental option (though little to choose between options)

Cutting tools harder to position and use for full removal

No disturbance of drill cuttings on the sea bed

Full removal is estimated to be twice the cost, with no environmental benefit

Footings will be fully marked as subsea obstruction. Studies indicate risk of collision is small.

Cost (estimated)

Some £50m (est.) down to -84.5m; some £110m (est.) for full removal

Brent Alpha Jacket

16

14September 2011

Brent Alpha Jacket Proposal

“Before” Removal extent showing cut

elevation

“After”

15September 2011

Recommended Proposal: Leave in-situ (derogation case and similar to Brent Delta proposal)

Options not preferred: Refloat and inshore dismantling

In-situ dismantling

Option still being studied (also incl. Brent D): Leg (partial) removal

Why leave structure in situ: Lowest safety risk

Least environment footprint

Refloat option carries a significantly higher risk of technical failure

Removal via refloat: significant risk and uncertainty around: Buoyancy

Weight and its distribution

Structural and watertight integrity

Extraction from the seabed

Installation of new systems

Assuming technically feasible, and safety risk acceptable, indications are that “Legs-down” option could cost in the order of an extra £700 million (provisional)

Gravity Base Structures (Brent B and C)

16September 2011

Brent Subsea Facilities Decommissioning Scope

Pipelines (32 various different pipelines):

Rigid pipelines x 19 (85km)

Flexible flowlines / riser x 5 (7km)

Umbilicals x 6 (11km)

Power cables x 2 (25km)

(Umbilicals are classed as pipelines. Treat cables as umbilicals.)

Structures :

x1 no. approx (140 mts)

x 3 no. approx (100 mts each)

Concrete Mattresses* :

500-600 various mats in total, estimated weight approx 2000 tonnes

Debris:

Numerous debris shown on sonar survey in platform 500m zones. Less along pipeline routes.

*Mattresses are flexible structures comprising a series of linked precast concrete blocks, which typically are placed over a pipeline to provide dropped object protection or prevent movement of the pipeline on the seabed.

17September 2011

Regulatory Requirements - Monitoring

17

Petroleum Act 1998, as amended by Energy Act 2008

Operator to implement arrangements for monitoring, maintenance and management of the decommissioned site, and any remains of installations or pipelines that may exist.

Scope and duration to be agreed between operator and DECC.

DECC Guidance Notes

After removal of seabed debris, independent verification of seabed clearance will be required.

In addition to debris surveys, a post-decommissioning environmental seabed sampling survey should be undertaken – especially to monitor levels of hydrocarbons, heavy metals and other contaminants in sediment and biota.

In most cases, a second survey will need to be undertaken some time after the post-decommissioning sampling. Any further surveys will depend on the results of earlier work and the circumstances of each case.

If concrete structures or steel footings left in place, owners will have to monitor the condition of the remains at appropriate intervals.

Form and duration of programme will depend on particular circumstances, and if necessary will be adapted with time.

Survey strategy should be developed in consultation with DECC‟s Offshore Decommissioning Unit who will consult with other Government Departments.

Details of survey strategy should be specified in the Decommissioning Programme.

18September 2011

Pipelines - Monitoring

18

DECC Guidance Notes, 2011 Operator to devise a “suitable monitoring programme” with DECC and in consultation with

other Government Departments.

Details to be specified in the Decommissioning Programme.

Structure and duration depend on prevailing circumstances.

May have to be updated with time.

Typical programme Post-decommissioning survey on completion of decommissioning work.

After each survey, submit inspection reports to DECC, Offshore Decommissioning Unit

If surveys show potential hazard to other users of the sea, operator to propose appropriate maintenance or remedial work.

Long-term monitoring Risk-based monitoring scheme based on pipeline stability and potential impact.

Establish a monitoring scheme for each line based on its individual burial history and condition. Conduct inspections for a fixed period of time depending on risk criteria.

Then move to “reactive” surveys, only if concerns about the pipeline arise.

19September 2011

To date, we have undertaken extensive environmental monitoring by way of drill cuttings surveys and environmental baseline surveys. These help us to understand what the impacts on the environment might be so that we can mitigate the effect in the most effective and efficient way possible. After decommissioning we shall undertake monitoring activities as consistent with DECC‟s Decommissioning Guidelines.

Monitoring programme

Being assessed at present

Full monitoring regime will be included in Decommissioning Programme

An example of a monitoring schedule can look like:

Cost of one year‟s monitoring: £0.5 million p.a. (approx est.)

Shell and its co-venturer ExxonMobil remain liable for any remaining facilities

Monitoring and Liabilities

Structural surveys of derogated platforms and pipelines Seabed environmental survey

Year 1Debris sweep “As-left” structural surveys of derogated platforms and pipelines

Verification clear seabed Post-decommissioning seabed environmental survey

Report to DECC and discussion of monitoring programme

Year 3 Structural surveys of derogated platforms and pipelines


Year 5 Seabed environmental survey

Year 10


20September 2011

A component of the Decommissioning Programme

OSPAR Recommendation 2006/5 sets out a two stage process for drill cuttings assessment:

Stage 1 – initial screening to determine the persistence* and rate of oil loss over the contaminated area

Stage 2 – assessment of the best available techniques (BAT) and/or the best environmental practice (BEP) for the cuttings pile

Stage 2 is required where either:

Oil loss > 10 tonnes / year, or

Persistence¹ > 500 km2years

Where both the rate and persistence are below the thresholds, the OSPAR recommendation is that no further action is necessary and the piles may to be left in situ to degrade naturally

* Persistence of area of seabed where oil concentration remains above 50mg/kg.

Drill Cuttings – a Reminder of OSPAR/Industry Position

21September 2011

Survey programme designed to conform with OLF* Guidelines to:Survey and sampling using variety of techniques:Environmental survey report still being finalised due to issues with original THC** analyses

Drill Cuttings

Survey resultsAlpha Bravo Charlie Delta

Cell top cuttings (height) n/a 3.0m 8.5m 6.8mCell top cuttings (volume) n/a 592m3 6,973m3 798m3

Seabed cuttings (height) 4.0m 11.2m 9.5m 10.3mSeabed cuttings (volume) 6,506m3 4,635m3 5,266m3 1,575 m3

* OLF - Oljeindustriens Landsforening (Norway)

** THC - Total Hydrocarbon Content

22September 2011


CELL SURVEY PROJECT

John Gillies

Execution Manager – Brent Decommissioning

23September 2011

Storage Cells

24September 2011

Cell Survey Project

Aim: to attempt to enter one(+) cells in November 2011 on Brent Delta

Allocated for 30 days of ROV support to attempt this cell survey project

If entry successful, the plan is:

To use sonar to understand better the amounts and distribution of contents

To obtain one (or more) sediment samples

If possible, more than one cell will be surveyed

If sample obtained, it will give an indication if we are in the range of assumptions for

the contents being used for the Environmental Impact Assessment and the exposure

scenario modeling

Intense planning since last year and is continuing. Designing, ordering and

manufacture of specialised equipment underway

Budget for the 2011 cell survey project = some £35 million

25September 2011

GBS Cell Sampling

• Design, manufacture and development of procedures to undertake cell sampling at Brent D has progressed through 2010/11 and is nearing readiness for deployment

• Operation involves deployment of equipment weighing more than 20 tonnes in close proximity to the platforms.

• The cell survey project will cost some £35M but data obtained will be invaluable in our decision making process

26September 2011

Stage 1:Base-plate installation

Base Plate Installation• 8 tonne base plate will be deployed from diving support vessel onto prepared

sealing location;• Fixed to cell dome by resin secured anchor bolts• Base plate forms the docking and isolation interface for drilling and sampling

operations

27September 2011

Stage 2: Drilling Cell Dome

Drilling Operation• 14 tonne drill stack will be deployed from ROV support vessel

• Stack will dock onto base plate and drill 8 inch diameter hole through 1.2 metre thick reinforced concrete cell dome

28September 2011

Stage 3: Sampling Tool Deployment

Sampling Operation• Sampling stack will be deployed from ROV support vessel• Stack docks onto base plate and deploys suite of sonar and sampling

devices. Real time data transfer to vessel via umbilical from ROV

29September 2011


“SOUK” SESSION

The Environment Council

30September 2011


BREAK OUT SESSION


31September 2011

Lunch

32September 2011


CELL CONTENTS MANAGEMENT

Mike Smith


33September 2011

Cell Management – Some of the Initial Concepts

13 initial concepts were generated for evaluation. The highlighted concepts are those that are being carried forward:

Utility Shaft Accessed OptionsBio-remediation (sediments + liquid contents)

Physical treatment (sediments + liquid contents)

In situ “Monitored Natural Attenuation” (MNA) (sediments + liquid contents)

In situ capping (sediments + liquid contents)

Remove to onshore (sediments + liquid contents)

Re-inject (sediments + liquid contents)

Subsea Accessed OptionsRe-inject after subsea removal (sediments + liquid contents)

Removal to onshore (sediments + liquid contents)

Fluid removal + in situ bio-remediation of sediments

Fluid removal + in-situ physical/chemical treatment of sediments

Fluid removal + in situ “Monitored Natural Attenuation” (MNA) of sediments

Fluid removal + in situ capping of sediments

Treat all on shore (sediments + liquid contents)

34September 2011

Cell Management – the Two Concepts Being Considered

Concept A – Leave in Place (with or without [MNA*] capping)

Remove attic oil and interphase material

Leave water phase in place after in-situ treatment if necessary

Leave sediment in place with capping layer if necessary

Concept B – Remove and Reinject

Remove attic oil and interphase material

Remove water, if necessary, and dispose down an existing well

Remove sediment and dispose down an existing well

* MNA – Monitored Natural Attenuation

35September 2011

Cell Management – Some Thinking Going ForwardObjective

To obtain enough information to be able to complete a robust comparative assessment in accordance with OSPAR 98/3 and DECC Decommissioning Guidelines. This includes substantiated data on environmental impacts and operational efficiency.

Remove and reinject: key uncertainties

Volume of material

Mobility of material

Ability to inject quantities involved

Leave in place: key uncertainties:

Volume of material

Composition of material

Release rate/exsposure when GBS breaks down and impact on environment

Information required

Volume

Composition

Mobility

Injectivity

36September 2011


CELL CONTENTS EXPOSURE SCENARIOS AND IMPACT MODELLING

Mike Smith


37September 2011

Modelling Cell Collapse and Contents‟ Exposure Scenarios

The storage cells will likely remain intact for some 500 years. However to study

further the “leave in place” option for cell sediments we need to look at what

might be the effects if the sediments become exposed to the sea. To do this the

following questions should be addressed:

How may the legs collapse and cells be damaged ?

How many cells may be damaged ?

How may the contents be exposed to the sea ?

What may the cell contents contain ?

38September 2011

GBS Scenarios

Six scenarios have been developed with different numbers of cells and legs compromised and exposure of contents. The scenarios range from:

Failure of one outer storage cell/leg caused by collision from a foreign object

……….to……..

Failure of all legs on all platforms causing exposure of up to 6 cells on BB and BD and 4 oil storage cells on BC. [This is considered the most severe possible case]

How may the legs collapse and cells be damaged?

How many cells may be damaged?

39September 2011

The same scenarios have been developed with different numbers of cells and legs compromised and exposure of contents. Some of these are being used as the basis of exposure modeling studies.

The exposure of contents scenarios range from:

Some 2500m³ sediments/ 34,000m³ water (one cell on one GBS)

……….up to……..

Some 45,500m³ sediments/ 567500m³ water (up to 16 cells on 3x GBSs)

[Note: These volumes are for modeling purposes. At this stage we do not yet have actual data from inside the cells]

Cell Contents Exposure Scenarios

What may the cell contents contain? (for modeling purposes)

40September 2011

Previous data from Brent Spar

Storage tanks at Sullom Voe

GBS drilling legs

Historical production records

Sampling of water and interphase material in the cells

“Minicell” and “minicell annulus”

Pig wax*

* wax obtained from pigging operations in the pipework

Sources of Information About Cell Contents

41September 2011

Also based on the information sourced listed in the previous slide, it is possible that the following components could be present in any sediment:

BTEX (Benzene, Toluene, Ethylbenzene, Xylene)

H2S

NORM

TPH (Total Petroleum Hydrocarbon)

PAH (Polycyclic Aromatic Hydrocarbons)

PCB (Polychlorinated Biphenyl)

Heavy Metals

Cell Sediment – Possible Components

42September 2011

Cell Management - Basic Decision Structure

43September 2011


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49September 2011

Approach for Inclusion in the Decommissioning Programme

2011 2012 2013

Initial surveying

Ops Results Interpretation

Field trial on BD

Start Final call

DP submission to DECC followed by public consultation

DECC approvals process

50September 2011

Cell Management – Concept Selection Criteria

Primary Criteria (as per DECC guidelines) Sub-Criteria

Health and Safety Comparative risk assessment

Long term health risk

Environment Operational risk

Residual risk

Net Co2 emissions

Waste balance

Technical Application of technology

Adaptability

Management of uncertainty

Societal Other sea users

Regional development

Onshore communities

Cost Development cost

Implementation cost

Financial exposure

51September 2011


CELL MANAGEMENT BREAK OUT SESSION


52September 2011


FUTURE ENGAGEMENT

Jim Niven

Stakeholder Manager - Brent Decommissioning

53September 2011

Brent Stakeholder Engagement Going Forward (1)

An on-line “e-Engagement” process will follow these September 2011 events. Will last eight weeks

Proposed (only): another set of, but closing, dialogue events in Q2 (?) 2012 in the lead in to submitting the Decommissioning Programme (DP) to DECC in Q3 2012

Stakeholders to advise what they would wish to hear about ....... But ............

Possible topics could include: cell survey update, sample analysis (if available); EIA status and report; Decommissioning Programme structure, (proposed contents, update in timetable); lessons learnt / stakeholder feedback on the dialogue process since 2007

Communications will continue e.g. via the e-Newsletter, www, direct mail etc (ideas for topics on what stakeholders want to hear about always appreciated)

60 day period of statutory public consultation of the DP is proposed. Stakeholders will be asked to respond with their comments sent to DECC

54September 2011

Brent Stakeholder Engagement Going Forward (2)

Cell remediation remains a complex challenge for us and we are busy with a number of studies on this topic. Going forward as we move towards recommending a preferred concept, it is proposed to establish a facilitated stakeholder “mini focus group” with a cross section of our current stakeholders to:

Be informed to a greater depth on our rationale and technical studies going forward along the remediation decision process

To feedback to Shell/Exxon views on the weightings that should be applied to selecting a preferred option

To review our assessment process and evaluation

To act as a communications conduit for other relevant/linked stakeholders

Stakeholders included could represent stakeholder groups like regulators, statutory/formal consultees, NGOs, IRG, academics

We welcome stakeholder views on this proposal please. We propose to contact some stakeholders shortly for their feedback and if they wish to participate in this deeper analysis and involvement in cell remediation issues

55September 2011


PLENARY DISCUSSION


56September 2011


FINAL FEEDBACK SESSION


57September 2011


WAYS FORWARD AND CLOSING REMARKS


58September 2011

BRENT DECOMMISSIONING STAKEHOLDER …...referred to in this section. Readers should not place undue...

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Transcript of BRENT DECOMMISSIONING STAKEHOLDER …...referred to in this section. Readers should not place undue...