DEPLETED FIELDS WITH ACTIVE AQUIFERS

Transcription

1 DEPLETED FIELDS WITH ACTIVE AQUIFERS Perfect CO 2 storage candidates? Dr Owain Tucker, Global deployment lead CCS & CCUS Dr Carol Thompson, Reservoir engineer, Peterhead CCS May

2 CAUTIONARY STATEMENT 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. Companies over which Shell has joint control are generally referred to as joint ventures and companies over which Shell has significant influence but neither control nor joint control are referred to as associates. The term Shell interest is used for convenience to indicate the direct and/or indirect 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 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, goals, intend, may, objectives, outlook, plan, probably, project, risks, schedule, seek, should, target, will 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 Shell s 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 regulatory measures addressing climate change; (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 risk factors that may affect future results are contained in Royal Dutch Shell s 20-F for the year ended December 31, 2014 (available at and ). These risk factors also expressly qualify all forward looking statements contained in this presentation and should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, May 21, Neither Royal Dutch Shell plc 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. We may have used certain terms, such as resources, in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No , available on the SEC website You can also obtain these forms from the SEC by calling SEC-0330 March 16,

3 CONTENTS CCS and Shell s response Key challenges for progressing CCS Peterhead to Goldeneye Depleted aquifer connected fields

4 THE DOOR TO A 2 O (1Trillion Tonnes) WORLD IS CLOSING

5 CCS AND UNITED KINGDOM Prize for Britain Government Objective 32Billion /Annum Without CCS, the additional costs to run a decarbonised UK economy in 2050 will be 32Billion.... by the 2020 s, private sector electricity companies can take investment decisions to build CCS equipped fossil fuel electricity generation facilities without Government capital subsidy at an agreed contract for difference strike price that is competitive with the strike price for other low carbon generation technologies UK Energies Technology Institute 6

6 SHELL IS BUILDING EXPERIENCE IN CCS CONSTRUCTION OPERATING TCM Quest OPERATING Peterhead Boundary Dam Shell involvement in CCS Projects; Industrial scale projects in operation Industrial scale projects in construction Planned industrial scale project (FEED) Involvement through Shell Cansolv Technology Gorgon CONSTRUCTION 7

7 CERTAINTY A KEY CHALLENGE FOR PROGRESSING CCS + = Before committing significant capital to a clean power station, investors want certainty on CO 2 storage and on sustained injectivity Storage capacity Low Mid High Adapted from Gorecki 2009, and Allinson 2012 Before committing significant capital to storage appraisal, investors want certainty that the CO 2 will be delivered

8 PROPOSED PETERHEAD PROJECT AT A GLANCE World First the first full-scale CCS project on a gas-fired power station, Status proposal currently in Front End Engineering Design phase, seeking regulatory approvals and Government funding for capital and operating expenses Where capture at Peterhead Power Station; storage in depleted Goldeneye gas reservoir (100 KM offshore) Goldeneye Platform Impact 10 to15 million tonnes of CO 2 captured over a 10 to 15-year period (90% CO 2 capture from one turbine) Technology post-combustion capture using amines St Fergus Terminal Peterhead Power Station

9 PETERHEAD AT A GLANCE Peterhead Power Station Goldeneye Platform Project Technical Line-Up CONFIDENTIAL 10

10 MULTIPLE WELLS, 6 YEAR PRODUCTION TEST Proven seal 50 million year test All the appraisal and well data Performance since start of production 11

11 HISTORY-MATCHED SIMULATION MODEL 12

12 Million Tonnes CO2 STORAGE CAPACITY WITHIN THE ORIGINAL FIELD CAN BE ESTIMATED WITH VERY HIGH CONFIDENCE We know what we produced Modifications for Heterogeneity Relperm effects Mixing Dissolution Capillary trapping Storage capacity of Goldeneye for pure CO CO2 space from Produced gas Heterogeneities "Residual Water Saturation" Mixing with reservoir gas CO2 Dissolution in brine Bouyancy filling Unit E Water leg extra capacity Combined Storage Capacity

13 GOLDENEYE AQUIFER EXTENT May 21,

14 THE AQUIFER CONNECTION Before production 110 km

15 UNDERSTANDING HYDRAULIC CONNECTIVITY At the end of production. The subsequent pressure build up sees the connected volume Aquifer build-up 110 km 110 km Other technical work needed

16 Increasing technical and commercial maturity DEPLETED FIELDS WITH AQUIFERS ARE ATTRACTIVE STORES A depleted field can rapidly yield a high confidence volume It also provides a proven seal, and an estimate of injectivity QUEST today Commercial storage capacity Low Mid High The performance history can also derisk hydraulic connectivity in the aquifer Depleted field Contingent storage capacity Low Mid High FID There is still work to be done on other aspects related to rate of injection, plume migration, and containment Potential aquifer store Prospective storage capacity Low Mid High Discovery Depleted fields, with aquifers, have the potential to accelerate storage development and provide a number of low risk stores around the world. Adapted from: Illustrating the estimation of CO 2 storage capacity for a hypothetical injection site. Allinson et al. GHGT11, Nov 2012 and Guidelines for the Evaluation of Petroleum Reserves and Resources, SPE 2001

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18 Q & A May

19 Shell s CCS projects 1 slide Create a new slide on counterparty risk compare to oil and gas Show the reserves maturation framework So why do we like depleted fields - Show the production profile, injection performance - Show the build up - Show the movie slides with water breaking through - Show the volumetric waterfall - Show the pressure slide along the captain trough - Show potential for expansion

20 CERTAINTY A KEY CHALLENGE FOR CCS + = Before committing significant capital to a clean power station, investors want certainty on storage Storage capacity Low Mid High Adapted from Gorecki 2009, and Allinson 2012 Appraisal costs money and takes time so who pays and when?

21 CERTAINTY A KEY CHALLENGE FOR CCS Before committing significant capital to a clean power station, investors want certainty on storage + = Storage capacity Low Mid High Adapted from Gorecki 2009, and Allinson 2012 Appraisal costs money so who pays? Figure adapted from ZEP report on Transport & Storage business models, 2014 Cost Income Cost and exposure Capture Feasex & FEED Capex Opex Opex Decom Storage Exploration & appraisal Feasex & FEED Capex & baseline Opex Decom Monitoring Transfer & posttransfer monitoring -20y -10y 0 +10y +30y +50y +70y