East RDD Pilot Project Status Update

Transcription

1 East RDD Pilot Project Status Update Colorado School of Mines Colorado Energy Research Institute 32 st Oil Shale Symposium October 15-17, 2012 Pat Janicek, Mark Wallis, Gerald Dash, Bartie Bray, Tony Schroeder, Harry Posey Shell International Exploration & Production, Inc. Copyright Copyright Shell Shell International International Exploration Exploration & Production, & Production, Inc. and Inc. its and affiliates its affiliates

2 DEFINITIONS AND CAUTIONARY NOTE!Resources: Our use of the term resources in this announcement includes quantities of oil and gas not yet classified as Securities and Exchange Commission of the United States ("SEC") proved oil and gas reserves or SEC proven mining reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.!the companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement "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 announcement refer to companies in which 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 announcement, 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 per cent. shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.!this announcement contains forward looking statements concerning the financial condition, results of operations and businesses of Shell and the Shell Group. 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 Shell and the Shell Group 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", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Shell Group and could cause those results to differ materially from those expressed in the forward looking statements included in this announcement, 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 announcement 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 Shell's 20-F for the year ended 31 December 2011 (available at and ). These factors also should be considered by the reader. Each forward looking statement speaks only as of the date of this announcement, 17 October Neither Shell nor any of its subsidiaries nor the Shell Group 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 announcement.!shell may have used certain terms, such as resources, in this announcement that the SEC strictly prohibits Shell from including in its filings with the SEC. U.S. investors are urged to consider closely the disclosure in Shell's Form 20-F, File No , available on the SEC website You can also obtain these forms from the SEC by calling SEC Copyright of INSERT COMPANY NAME HERE 2

3 Key Messages n East RDD Project: Three development phases 1. Nahcolite Leach: Inject 350 F H2O 2. Pyrolysis: Heat kerogen in situ to 650 F 3. Reclamation: Cool to <200 F n Currently in drilling and construction phase n Technology improves on previous pilots n Steam injection field test - SIFT (1970s) n ICP tests on Mahogany fee land ( ) n Nahcolite leaching creates permeability for ICP production. n Saline Zone provides natural geologic containment n Drilling and construction: n Initial site prep completed December 2011 n Drilling & Construction start May/June 2012 n Project life: 3.5 to 4.5 years + monitoring 3

4 East RDD Pilot Location!! Project on BLM land NW Piceance Basin East RDD Pilot 4

5 Cross Section- SW to NE Across East RDD Pilot 130 ft below dissolution surface, Nahcolitic Oil Shale Zone for natural geologic containment. Nahcolitic Oil Shale (no GW/flow) Illite Zone 5

6 East RD&D Pilot at a Glance 13 heaters, 2 producers, 6 observers Convert central leach well to central heater Nahcolite dissolution Phase. Produce ~500 to1,000 tons to develop permeability Pyrolysis phase. BLM Plan of Development: 1,500 bbl cum oil production bopd peak Minimal surface facilities (12 acre permit) Reclamation phase. Reference case calls for natural cooling Downgradient groundwater monitors ~40 ft Well Type Leach/Heater Heater Observer Producer 6

7 Well Offset Locations Directional drilling from surface H-pattern to subsurface hex heater pattern Improves drilling safety Improves surface access 7

8 17½ Hole 10¾ Surface Casing Leach Well Construction and Operation Convert leach well to heater after Leach Phase 9 ⅞ Hole 7 ⅝ Casing DissoluWon Surface 2013 N 2 Gas Blanket Underream open hole to 12¼ to accommodate geomechanical shifting during heating phase Flush-joint tubing to minimize transducer cable damage Pressure transducers & thermocouples monitor reservoir conditions continuously Greeno Bed 6½ hole drilled and opened to 12¼ TI Bed TD ⅜ Flush Joint Tubing (IN) Depth TBD. 2⅜ Flush Joint Tubing (OUT) Depth TBD. One perforated joint on botom of string. Nitrogen blanket to minimize thermal losses during leaching. N 2 pressure monitor at surface 8

9 17 ½ Hole 10 ¾ Surface Casing Heater Wells Construction and Operation 4 TC lines, 3 Heater lines, 1 Inflation line exit wellhead Cable to surface Temperature monitoring during leach phase Temperature monitoring during pyrolysis phase with fixed thermocouples in all wells. DissoluWon Surface ⅞ Hole 7 ⅝ Casing Heated interval 1¼ cable support tubing 4 ½ casing 9 ⅞ hole opened to 12¼ Open hole ( ) Temperature monitoring during reclamation phase Temperature and pressure monitoring in 7 heater wells Legend: Heater TransiWon Splice 4½ Schedule 80 transiwon joint Welded to canister External casing packer w/high temp Elastomers. (ID,OD & Depth TBD) XXH canister set at Total canister length TBD TI Bed TD 2285 Thermocouple 9

10 Facilities Layout Transformer Control Room Truck Loadout Tanks Electrical Instrument Bldg Leach/Heater Wells Process Heaters Separator Bldg 10

11 Initial Construction and Leaching Phase Drill all wells prior to leaching start-up Construct majority of facility prior to leaching. Blind off / block in pyrolysis facilities during leach phase Colorado East RDD Leaching Process 550 BPD, 3-5 wt% NaHCO 3 Soln PPT Nitrogen Pad TT T PT T wt% NaHCO 3 Soln F TT psig Heater TankS Control ettlin Sep. is blocked during leaching Separator FT 80F TankS ettlin Vent(Note 2) PT PT P 5 psig make- up water To Flare Leach phase should last approx 6 months Flash Column LT Settling TankS ettlin (Note 2) (Note 1) Vent maintain reservoir pressure apprx psig Desired leaching temp. 300F Note 1: Level control Note 2: Tank vent line will be provided w/n2 blanket. (Note 1) Cooler TT Trucking 140F 11

12 Facilities Conversion to Pyrolysis Operation Minimal facility conversion from Leach Phase to Pyrolysis Phase Pyrolysis & production should last approximately 2 years 12

13 Key updates since last year! All permits obtained! Site prep work complete Fall 2011! Drilling and construction mobilized May/June 2012! On schedule to begin leaching operations in Q

14 Wells 2012 update n Mobilized May 2012; 13 of 21 wells drilled (as of 10/1/2012) n One LTI on Project to date n Directional program working well n Managing construction and drilling operations simultaneously n Selected rig has minimum footprint, yet is fully capable for well design n Plan is first drill all wells, then complete all wells 14

15 Wells 2012 highlights 15

16 Construction 2012 update n Mobilized at site June 2012 n Managing construction and drilling operations simultaneously n Construction workers on a 10/4, 12 hour/day schedule. Workers stay at TLQ (temporary living quarters) operated by Shell 6 miles from site. n Managing equipment vendor issues (delivery and quality) n Focus on completing work in main process area prior to winter weather. Will complete well hookups and pad area after all wells are drilled and completed 16

17 Highlights- Site Prep complete Dec

18 Highlights-Site Mobilized May/June

19 Highlights- Remote Instrument Enclosure 19

20 Highlights-Setting Tanks 20

21 Highlights- Tank Farm 21

22 Highlights- Setting Electrical- Instrument Bldg 22

23 Highlights- Installing Pipe Racks 23

24 Summary! Complex Multi-phase project 12 acres total footprint 3 phases: Leaching, Pyrolysis & Reclamation! Technology improves on Shell s prior successes in Piceance Basin! Projected project life 3.5 to 4.5 years! Environmentally responsible Conducted complete environmental baseline. Will monitor before construction, during operations, and following reclamation No disturbance to sensitive species or habitats! Project is on track for start up in Q2 2013! Plan to convert successful RDD project to commercial lease 24

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