ROYAL DUTCH SHELL PLC

ALASKA UPDATE

LONDON/THE HAGUE
DECEMBER 4/5th, 2012
Copyright of Royal Dutch Shell plc

4 December, 2012

ROYAL DUTCH SHELL PLC

ALASKA
MARVIN ODUM
DIRECTOR UPSTREAM AMERICAS
Copyright of Royal Dutch Shell plc

4 December, 2012

DEFINITIONS AND CAUTIONARY NOTE

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 used to 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 or companies. Subsidiaries, Shell subsidiaries and Shell companies as used in this presentation refer to companies in which
Royal Dutch Shell either directly or indirectly has 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 control are 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/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) ownership
interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
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 managements 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 managements 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. 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
Shells 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 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 measures as a result of climate changes; (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 Shells 20-F for the year ended 31 December, 2011 (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 the date of this
presentation, 4 December 2012. 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. There can be no assurance that dividend payments will match or exceed those set out in this
presentation in the future, or that they will be made at all.
We use certain terms in this presentation, such as resources, that the United States Securities and Exchange Commission (SEC) 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.

Copyright of Royal Dutch Shell plc

4 December, 2012

GLOBAL ENERGY OUTLOOK

DEMAND GROWTH
Energy demand outlook in million boe/d
400

9 billion people in 2050

Energy demand +60% 2010 2050

Solar, Wind and Biofuel only 1% of

energy mix today; growing to 10-15%
by 2050

Hydrocarbons continue to be some

70% of energy mix in 2050

300

200

100

ALL FORMS OF ENERGY

WILL BE NEEDED
0
1980

Shell
activities

1990

2000

2010

2020

2030

2040

Oil

Solar

Natural gas

Other renewables

Biomass

Nuclear

Wind

Coal

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4 December, 2012

2050

ARCTIC ACTIVITY: INDUSTRY

SIGNIFICANT DRILLING ACTIVITY: 1960s TO PRESENT

Significant drilling offshore

>250 wells offshore/

archipelago Arctic North
America

~500 wells onshore Prudhoe

Bay area

Drilling in Norwegian and

Russian arctic

Canada
Archipelago

Chukchi

US
Beaufort

174

30

North Slope
Alaska

494

85

Canada
Beaufort

85

Copyright of Royal Dutch Shell plc

4 December, 2012

= Number of wells

RESOURCE POTENTIAL
SHELL ARCTIC POSITIONS
Arctic
SAKHALIN

Alaska

CHUKCHI

UNITED STATES

NIGLINTGAK
BEAUFORT
CANADA

NORTH POLE

RUSSIA

SALYM
BAFFIN BAY

GREENLAND

~30 billion bbls of oil and 221 tcf of

natural gas 1

Alaska Outer Continental Shelf

(mainly Chukchi and Beaufort) to
contain ~27 bln bbl oil and 132 tcf of
natural gas 2

KAZAKHSTAN

KASHAGAN
NORWAY

ORMEN LANGE

22% of the undiscovered, technically

recoverable resources in the world 1

MAJOR UNDISCOVERED
RESOURCES IN MATURE
HYDROCARBON AREA

USGS Estimates from US Department of the Interior US Geological Survey Circum-Arctic Resources Appraisal, 2008
Estimate from US Department of the Interior Minerals Management Service Undiscovered Oil and Gas Resources, Alaska Federal Offshore, 2006

2 MMS

Copyright of Royal Dutch Shell plc

4 December, 2012

ALASKA PRODUCTION HISTORY

Bbl/d
production

1963 Shell drills first

offshore oil well in Alaska

1981 - Kuparuk oil

field onstream ,
Conoco operated

1967 ARCO (BP)

Prudhoe Bay oil field
discovered

2,500,000

1989-1991 Shell
/Chevron explore Chukchi
sea and drill 5 wells

1977 - TransAlaska Pipeline

completed

1957 Swanson River

oil field, Kenai
Peninsula

2002 Encana, Beaufort

Sea, McCovey Prospect
drilled

1987 BP/Exxon
Endicott Field,
Beaufort Sea,
becomes operational.

1969 Sinclair/ARCO
(BP) Kuparuk oil field
discovered

2,000,000

2000 Conoco Alpine

field, becomes
operational

2001 BP Northstar
field, Beaufort Sea,
becomes operational

2005 Shell acquires

leases in Beaufort Sea
2008 Shell
acquires leases
in Chukchi sea

1974 - TransAlaska
Pipeline started

1,500,000
2011 ENI
Nikaitchuq
starts
production,
Beaufort Sea

1,000,000

500,000

1958

1963

Copyright of Royal Dutch Shell plc

1968

1973

1978

1983

1988

Cook Inlet

Kuparuk & Milne Point

Prudhoe Bay

North Slope Other Fields

4 December, 2012

1993

1998

2003

2008

2011

Colville River & Northstar

ALASKA OFFSHORE DEVELOPMENTS

BP Northstar, Beaufort Sea, 2001

BP Endicott, Beaufort Sea, 1987

BP Endicott, Beaufort Sea, 1987

OFFSHORE EXPLORATION +
PRODUCTION UNDERWAY
ARTIFICIAL ISLAND DEVELOPMENTS

ENI Nikaitchuq, Beaufort Sea, 2011

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4 December, 2012

Control &
Barriers

Minimize
likelihood

CONTROL & BARRIERS:

Incident

Response &
Recovery

Consequences

Hazard

ALASKA DRILLING: WELL CONTROL

Mitigate
consequences

RESPONSE & RECOVERY

Known pressures previous drilling

Cap & Contain system

Drilling mud

Arctic containment dome

Blow out preventers

Arctic containment system

Rigorous training for operators

Oil spill response equipment

Real time operating center

2nd rig in theatre for relief well

Drilling well on paper

Copyright of Royal Dutch Shell plc

4 December, 2012

MULTIPLE BARRIERS -ALASKA

4 BARRIERS

DRILLING FLUID
1

BLOW OUT PREVENTER

2

CAPPING STACK
3

ARCTIC CONTAINMENT SYSTEM

4

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4 December, 2012

10

OIL SPILL RESPONSE

www.shell.us/Alaska
Oil spill response animation

Copyright of Royal Dutch Shell plc

4 December, 2012

11

ROYAL DUTCH SHELL PLC

ALASKA
DAVE LAWRENCE
EXECUTIVE VICE PRESIDENT
EXPLORATION/COMMERCIAL
UPSTREAM AMERICAS
Copyright of Royal Dutch Shell plc

4 December, 2012

12

SHELL ARCTIC OVERVIEW

2012 DRILLING IN CHUKCHI AND BEAUFORT

2012 ACTIVITIES COMPLETED SAFELY
Copyright of Royal Dutch Shell plc

4 December, 2012

13

SHELL INVESTMENT IN ALASKA

ALASKA SPEND 2006 - 2012 ~$5 BILLION

CAP & CONTAIN

First of its kind custom built

Arctic Containment System

Pre-built capping stack

DRILLING
Capitalised
Leases
Drilling & Support

SUPPORT VESSELS

More than 20 support vessels in

place

ENGAGEMENT

Expensed
Exploration expense
Overhead

Capping and Containment

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4 December, 2012

Two Arctic drill ships in place

450 community visits

14

CHUKCHI + BEAUFORT

Chukchi

Beaufort
Barrow

Wainwright
Kaktovik

Point Lay

Kuparuk

Deadhorse
Prudhoe Bay

Point Hope

Trans Alaska Pipeline

Kivalina
Shell

Anadarko

Total

Conoco

Repsol

Others

Exxon

Chevron

BP

ENI

Statoil

Pipelines

COMPETITIVE SHELL ACREAGE POSITION

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4 December, 2012

15

ALASKA DRILLING SEASON

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

Typical Ice Year

Beaufort

Ability to drill in
hydrocarbon zone

Whaling break

Ability to drill top

hole only

Chukchi
Permit

LIMITED DRILLING WINDOW

Short ice free season

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4 December, 2012

Beaufort whaling shutdown

Chukchi blackout period from HC zones

16

2012 MOBILIZATION
AFFINITY
Fuel supply & CSR tanker

ARCTIC CHALLENGER/CORBIN FOSS

Containment system barge & tug

NOBLE DISCOVERY
Drill ship
FENNICA
Primary Ice management

KULLUK
Drilling rig

TOR VIKING
Anchor handling & secondary
ice management

LAUREN FOSS/TUUQ
Supply & waste storage

NANUQ
Spill recovery & accomodation

ENDEAVOR/PT OLIKTOK
Spill recovery barge & tug

KLAMATH/GUARDSMAN
Spill recovery barge & tug

ARCTIC SEAL
Landing craft

TUKPUK
landing craft

HARVEY EXPLORER
Supply vessel

NORDICA
Primary ice management

HARVEY SPIRIT
Supply vessel

HARVEY SISAUQ
Supply vessel/waste
AIVIQ
Anchor handling &
secondary ice management

22 VESSELS IN THEATRE
~2,000 PERSONNEL
2012 ACTIVITIES COMPLETED SAFELY
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4 December, 2012

Drilling Rig
Support Vessel

Aviation
Oil Spill Response

17

2012 PERFORMANCE
CHALLENGES

Discoverer is re-supplied during 2012 operations

Heaviest ice year for a decade

Kulluk could not start drilling before the whaling

season began

Permits uncertainty around Arctic Containment

System

Containment dome damaged during testing

Whaling hunt prolonged due to bad weather

and funeral

RESULTS

2 top holes drilled

>20 vessels and 2,000 employees/contractors

with some 12,000 employee rotations

Successful mobilization + demobilization

Positive support from regulators + community

First time all permits in a useable form were

received

Drilling in Alaskan waters

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4 December, 2012

18

ROYAL DUTCH SHELL PLC

ALASKA
MARVIN ODUM
DIRECTOR UPSTREAM AMERICAS
Copyright of Royal Dutch Shell plc

4 December, 2012

19

STAKEHOLDER ENGAGEMENT + PERMITTING

> 450 STAKEHOLDER ENGAGEMENTS
Kaktovik

Barrow
Wainwright

MULTIPLE PERMITTING BODIES + JURISDICTIONS

Alaska Dept. of Environmental Conservation

North Slope Borough

Alaska Eskimo Whaling Commission

National Marine Fisheries Service

Bureau of Ocean Energy Management/Bureau

of Safety and Environmental Enforcement

Environmental Protection Agency

Fish and Wildlife Service

United States Coast Guard

Nuiqsut

Point Lay
Point Hope
# of engagements

Kivalina
Kotzebue

< 10

Kiana

Shishmaref

11 - 20
>20

LOCAL SUPPORT FOR SHELL

Community engagement

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4 December, 2012

20

ENGAGEMENT + COMMITMENT
6 YEARS OF ENGAGEMENTS & OUTREACH
Strategic stakeholder initiatives to 3-D mapping: North Slope to
Washington, DC

North Slope Residents: Listening, adjusting, cooperating: respect for

dialogue

CAA, NSB Science agreement, jobs/contracting

Stakeholder engagement (450+ visits)

Using Traditional knowledge and modifying the program

Put tools in the hands of those that would support us

OPERATIONAL EXCELLENCE
A higher bar: Oil Spill Response, Technology, Science & MOUs

Economic justice for stakeholders via local business development

Operational Commitments: whaling, transit, PSOs, emissions

Traditional practices

RESOLUTION
Making the case for Shells Alaska Program

A more aggressive legal and outreach strategy

Stronger permits that learned from past deficiencies

Mitigate the drive to litigation

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4 December, 2012

Community engagement

21

POTENTIAL DEVELOPMENT
YEAR ROUND ACTIVITY

Development concept

ARCTIC PIPELINE ENVIRONMENT

Ice gouge

LONG TERM DEVELOPMENT

OPTIONS IN CASE OF DISCOVERY

Strudel scour

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4 December, 2012

22

SHELL IN ARCTIC CONDITIONS

WORLDWIDE EXPERIENCE

ALASKA DRILLING + DEVELOPMENT HISTORY

Kashagan (2000s)

Cook Inlet (1960s 1990s)

Sakhalin (2000s)

Beaufort + Chukchi (1980s-1990s)

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4 December, 2012

23

VISION FOR LONG TERM SUCCESS

SUSTAINED LICENSE TO OPERATE

Exploration + development success

Alignment with stakeholders

National energy policy

INCREASED UTILIZATION OF DRILLING DAYS

Equipment readiness

Expand fleet capability

Realize learning curve on drilling efficiency

ENHANCE VENTURE VALUE

Integrated activity planning

Early program definition

Contracting for long term cost reduction

Kulluk in Dutch Harbour, 2012

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4 December, 2012

24

ROYAL DUTCH SHELL PLC

ALASKA
Q&A
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4 December, 2012

25

ROYAL DUTCH SHELL PLC

ALASKA
APPENDIX
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4 December, 2012

26

CHUKCHI SEA
Shell
Popcorn, 1990

Shell
Burger-A, 2012

Shell
Crackerjack 1991

Shell
Burger-1, 1990

Chevron
Diamond, 1991
Barrow

Shell
Klondike, 1989
Wainwright

Shell

Conoco

Repsol

ENI

Statoil

Well Location

EXPLORATION WELLS 1989-1991; BURGER GAS DISCOVERY

KNOWN PRESSURES AND TEMPERATURES
KEY ACTIVITY: BURGER APPRAISAL
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4 December, 2012

27

BEAUFORT SEA
Shell

Anadarko

Total

Conoco

Repsol

Others

Exxon

Chevron

BP

ENI

Statoil

Pipelines

ENI, Nikaitchuq
Production 2011
Antares
Exxon 1985

BP, Northstar
Production 2001

Encana
McCovey 2002
BP, Endicot
Production 1987

Well Location

Shell
Sivulliq, 2012
Amoco (BP)
Galahad 1991

Amoco (BP)
Belcher 1989

Kaktovik
Nuiqsut

Prudhoe Bay

Point Thomson, Exxon

Under development

Deadhorse
Oil and Gas

Trans Alaska Pipeline

Oil, Gas and Condensate

NEAR-OFFSHORE EXTENSIVELY DRILLED

KNOWN PRESSURES AND TEMPERATURES
KEY ACTIVITY: SIVULLIQ EXPLORATION PROSPECT
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4 December, 2012

28

ALASKA FLEET: RIGS

ARCTIC RIGS

Turret moored drill ship

Ice strengthened sponsons

State of the art emissions control

Moored semi-submersible rig: Shell owned

Conical hull

Ice class rig: designed for arctic

State of the art emissions control

Noble Discoverer: Chukchi sea rig

MUTUALLY SUPPORTING RIGS

MAJOR INVESTMENT FOR MULTI
YEAR CAMPAIGN

Kulluk: Beaufort sea rig

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4 December, 2012

29

SUPPORT VESSELS
ICEBREAKER + LOGISTICS

MV Aiviq: Ice class anchor handler

2 primary + 2 secondary ice management vessels

Multiple supply vessels
Redundant equipment with two operating areas
Fleet capable of operating in ice conditions if
necessary

OIL SPILL RESPONSE

Nanuq: Oil spill response vessel

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4 December, 2012

Multiple oil spill response vessels pre-positioned in

theatre
500,000 bbl Arctic tanker pre staged
Onshore and nearshore equipment pre staged
Fully certified equipment and trained staff
Co-ordination with Coast Guard

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CAP + CONTAIN SYSTEM

Arctic containment system

Capping Stack:
First response if BOPs fail
Shell commissioned equipment
Arctic Containment System (ACS):
Consists of containment dome and production
vessel
Interoperable with capping stack
FIRST PRE-DEPLOYED CAP &
CONTAINMENT SYSTEM FOR ANY
WELL WORLDWIDE

Shell capping stack

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4 December, 2012

31

ALASKA: SHALLOW WATER, LOW PRESSURE

LOW PRESSURE AND TEMPERATURE REGIME

REDUNDANCY DESIGNED INTO WELLS
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4 December, 2012

32