Decommissioning and Restoration

Shell International

Views from around the world

Peter Webb

International Government Relations

Copyright of Shell International B.V. December 2017 1

 DEFINITIONS AND CAUTIONARY NOTE
Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking
reserves. statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’,
‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’,
Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas
‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms
not yet classified as SEC proved oil and gas reserves. Resources are consistent with the Society of
and phrases. There are a number of factors that could affect the future operations of Royal Dutch
Petroleum Engineers 2P and 2C definitions.
Shell and could cause those results to differ materially from those expressed in the forward-looking
Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes statements included in this presentation, including (without limitation): (a) price fluctuations in crude
resulting from acquisitions, divestments and year-average pricing impact. oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d)
drilling and production results; (e) reserves estimates; (f) loss of market share and industry
Shales: Our use of the term ‘shales’ refers to tight, shale and coal bed methane oil and gas
competition; (g) environmental and physical risks; (h) risks associated with the identification of
acreage.
suitable potential acquisition properties and targets, and successful negotiation and completion of
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companies” as used in this presentation refer to companies over which Royal Dutch Shell plc either forward-looking statements contained in this presentation are expressly qualified in their entirety by
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party interest. forward-looking statement speaks only as of the date of this presentation, 5 December 2017.
Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly
This presentation contains forward-looking statements concerning the financial condition, results of
update or revise any forward-looking statement as a result of new information, future events or
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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 We may have used certain terms, such as resources, in this presentation that United States
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statements. Forward-looking statements include, among other things, statements concerning the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-
potential exposure of Royal Dutch Shell to market risks and statements expressing management’s 32575, available on the SEC website www.sec.gov.

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AGENDA

Typical cost distribution for offshore decommissioning

Diverse Shell experience with decommissioning (not one size fits all)
• Gulf of Mexico
• North Sea
• Elsewhere

Success factors and cost optimization

• Mindset change
• Supply chain innovation
• Collaboration

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Global Spending

Global spending to
decommission assets
expected to grow to

$160 billion
between 2015-2030*
*Source: Woodmac

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Forecast decommissioning expenditure in UK 2016 to 2025
(OGUK Decommissioning Insights 2016)

▪ Facilities preparation and removals

approximately 25%

▪ Offshore wells P&A approximately

half the decommissioning cost

▪ Decommissioning cost efficiency

programmes should always include

a component on Wells P&A

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Removal of ST301 Gulf of Mexico

Date : Topside lift Sept and reefing November 2017

Key dimensions: Topsides 4800t jacket 3500t
Water depth 100m
Chosen option and learning/benefit:
Topsides to shore for recycling
Jacket transported and donated to Louisiana artificial
reef programme reefing (environmental benefit)

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Leman BH, Southern North Sea: Accommodation block and Jacket removal

Date September 2017

Key dimensions: topsides 1000t jacket 600t
Water depth approx. 40m
Chosen option and learning/benefit:
• Use a Sheerleg (or heavy left barge)
• Lump Sum Contract with Decom Contractor
• Dismantling Contractor is a Sub-Contractor to
the Decommissioning Contractor
• Contractor led designs
• Use Lifting Pins for Jacket Lift
• High Focus on Government Agencies (BEIS, HSE)
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Brent D topsides lift. North North Sea

Date: April - May 2017

Key dimensions: topsides 24,200 tonne, 44m high
Water depth 140m
Chosen option and learning/benefit:
Single lift
Reduced safety exposure (offshore, helicopter, etc)
Reduced post CoP opex

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Popeye. Subsea equipment in the Gulf of Mexico

Date: September 2016

Key dimensions: a six-slot subsea cluster
manifold
Water depth 700m
Chosen option and learning/benefit:
• Leave in Place.
• Reduced safety exposure
• Avoided burning 500,000 litres of diesel
• Cost benefit

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India – Tapti project. First D&R project in India

Date: Design phase. Planned 2019.

Key dimensions: 5 jackets with topsides 500-700t
Water depth 20m
Chosen option and learning/benefit:
• Awaiting responses from the market before D&R options
• Close engagement and collaboration with regulators to
clarify D&R requirements
• No use of divers enhance safety reduce cost
• Due diligence on Onshore recycling yards

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Success Factors

MIND SET CHANGE LEARNING FROM OTHER CLEAR, FIT FOR PURPOSE
COUNTRIES D&R REQUIREMENTS

SUPPLY CHAIN INNOVATION CAMPAIGN BUNDLING SHARE GOOD PRACTICE

AND COLLABORATE

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Mind Set Change

 Traditional mindset -> traditional

behaviours -> traditional costs

 ‘Curse of the incumbent ‘

 Declining risk profile

(source: Versabar)

 Stop dictating ‘how’ to

decommission; outcome focus

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Learning from Other Countries
US GoM has seen >4000 structures
Lift boat for shallow
water US GoM decommissioned
(source: Montco)
North Sea less extensive, but still >150
 Knowledge and experience is
building continuously
Indefatigable  Learn from recent D&R projects and
decommissioning plans
UK SNS (Shell)
 Understand differences due to local
context – not ‘one size fits all’
 Benchmarking
 Supple chain as well as operators

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 Clear Fit-for-Purpose D&R Requirements
▪ ASCOPE Guidelines provide good frame work aligned
with Industry good practice.
▪ Industry and govt collaborate on establishing guidelines
and regulations
▪ Fit for purpose for local context
▪ Clear, stable and efficient decision-making process
▪ Risk Based Approach based on science

Safety Environmental impact

Technical feasibility Society
Cost

▪ Leave in Place permitted, when safe and environmentally

responsible
▪ When completed, all residual liabilities should revert to
www.iogp.org/decommissioning the Government.
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Supply Chain Innovation
Contractors are asking for
 Volume

 Scope bundling
 Long term planning
 Flexibility

 Remove schedule imperative

 Leave methodology / tools to us
Operators are asking for
 ‘Coopetition’

 Risk allocation

 Contractors to lead capacity and technology development

 Innovation

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 Campaign / Bundling

▪ Continuous improvement

▪ Not necessarily large

bundle

▪ What do we bundle into a

campaign?

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Share Good Practice And Collaborate Whilst Maintaining Competition

Expanding collaboration into new areas

 Netherlands. Cross-industry and government
cooperation “A Platform for Decommissioning”
 UK. Govt (OGA) led cross industry collaboration
 Brazil. Joint Industry and Govt Project on
Decommissioning assessment methodologies
 Australia. Operator cooperation APPEA
 International. IOGP Decommissioning Committee
 Annual Industry Conferences UK, Norway, USA.
 1st Indian Decommissioning Conference (May 2017)

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