PETERHEAD LOW CARBON GAS POWER CCS PROJECT

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PETERHEAD LOW CARBON GAS POWER CCS PROJECT USEA Washington April 25, 2014 Peterhead Power plant Scotland Dr. Wilfried Maas PhD General Manager Technology, Carbon Capture demonstration projects Royal Dutch Shell Projects & Technology 1

UP HERE TOO MUCH CO 2 IS A PROBLEM THE PETERHEAD CARBON CAPTURE AND STORAGE PROJECT DEEP DOWN UNDER THE NORTH SEA THERE IS A SOLUTION Version 1.1 25/08/2010 2

Disclaimer Statement Resources: Our use of the term resources in this presentation includes quantities of oil and gas not yet classified as 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 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 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 forwardlooking 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 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 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 Shell s 20-F for the year ended 31 December, 2013 (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, 25 th April 2014. 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. 3

PETERHEAD CCS PROJECT AT A GLANCE WORLD FIRST first full-scale CCS project on a gas-based power station 340 MW clean power WHERE? capture at Peterhead Power Station; storage in depleted Goldeneye gas reservoir (100 KM offshore) Goldeneye Platform IMPACT 10 million tonnes of CO 2 captured over a ten-year period (90% CO 2 capture from one turbine) TECHNOLOGY post-combustion capture using amines St Fergus Terminal TIMELINE could be operational by the end of the decade Peterhead Power Station 4

AGENDA THE PETERHEAD CCS PROJECT Shell and CCS The Peterhead CCS project Why the project works 5

SHELL DEVELOPING CCS DEMONSTRATION PROJECTS 1. OCAP 2. Barendrecht 3. Draugen 4. ZeroGen 5. Longannet 6. Gorgon 7. TCM 8. Quest 9. Peterhead IN UK CCS COMPETITION 6

WHY THESE PROJECTS? - COMPETENCE BASED PROGRAM! Gorgon TCM Quest Peterhead Onshore storage Offshore storage Saline aquifer storage Depleted reservoir storage Pre-combustion capture Post-combustion capture Contaminated gas Heavy Oil Refining Gas fired power 7

Cost of each phone DEMONSTRATION PROJECTS LEARNING CURVES First of a Kind (FOAK) N th of a Kind (NOAK) Total number of phones ever built Credit; http://itsasmallweb.files.wordpress.com/2011/02/3.jpg 8

AGENDA THE PETERHEAD PROJECT Look-Back Historic Success Factors The Peterhead CCS project Why the project works 9

RETROFIT PROJECT TO EXISTING POWER PLANT CCGT Power Plant Gas Turbine GT13 Steam Turbine ST13 Vent Stack Flue Gas Steam Power Existing New HRSG13 SCR HRSG DCC SCR CO 2 Amine Heat Recovery Steam Generator Direct Contact Cooler Selective Catalytic Reduction (DeNOx) DCC Absorber Reclaime r O 2 Removal 1 st Stage Compression Dehydration 2 nd Stage Compression Dense Phase Offshore Pipeline Mods/ Wells Capture (Cansolv) Compression and Conditioning Transport and Storage 10

CAPTURE: AT PETERHEAD POWER STATION GT13 Capture Plant Location Dense Phase Compression 11

TRANSPORT: DENSE PHASE PIPELINE TO GOLDENEYE 12

INJECTION: GOLDENEYE OFFSHORE FACILITIES Majority of platform (say 90% by weight) can be re-used Some work needed on pipe-work, valves, instrumentation, vent New filters required All or most of the 5 wells need partial work-over but are essentially re-used Installation of a new 213 barg Maximum Allowable Operating Pressure (MAOP) SSIV Replacement of elastomeric seals with material compatible with CO 2 & methanol 13

STORAGE: IN DEPLETED GOLDENEYE FIELD Using a depleted field as a store brings significant data advantages: Exploration, appraisal & development data Long term production history: a very extended well test Proven seal over millions of years Three years of storage assessment work (on Goldeneye) for the Longannet proejct Reprocessed seismic to pore-scale studies Three geological models Geomechanical, reactive transport and dynamic models 14

MEASUREMENT, MONITORING AND VERIFICATION PLAN Comprehensive plan developed entire biosphere and lifecycle Independently (DNV) certified MMV and storage plan 15

NETL Cost and Performance Baseline for Fossil Energy Plants Volume 1: Bituminous Coal and Natural Gas to Electricity Revision 2a, September 2013 GAS CCS: DIFFERENT DRIVERS, METRICS AND GOALS Different cost build up of base costs and of additional cost of CCS: COE, Capex/Opex/Fuel/T&S Footer 16 16

ANTICIPATED TIMELINE CONFIDENTIAL 17

AGENDA WHAT IS MAKING THE PETERHEAD PROJECT WORK? Look-Back Historic Success Factors The Peterhead CCS project Why the project works 18

IT IS GOOD FOR THE UNITED KINGDOM Licence to Operate Prize for Britain Government Objective 32 (52$) Billion/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 19

IT IS GOOD FOR SHELL Licence to Operate Facility Re-Use Gas Advocacy CCS Competence The recently depleted Goldeneye reservoir has more than sufficient capacity for the project The existing wells are relatively new (<10yrs) and in good condition Pipelines are recent and in good condition. Increased use of gas is a swift, affordable way to reduce CO2 emissions CCS commercially deployed on gas post 2030 maintains gas as destination fuel Peterhead CCS key to Shell s competence development programme Offshore Storage Depleted Reservoir Post Combustion Capture Gas+CCS 20

IT IS GOOD FOR THE COMMUNITY Licence to Operate Landmark project for the North-East of Scotland Opportunity to diversify and sustain North Sea industry and skills Potential for development of a CCS industry in the region Learning opportunities for young people growing up alongside an important new industry 21

BUILD WITH CONFIDENCE ENABLING LEGISLATION CCS Directive Transposed Storage Licence granted CLEAR LIABILITY AGREEMENT Government accepts the long term liability at handover Electricity Market Reform (EMR) Contracts for Difference (CfD) DEMO FINANCIAL SUPPORT UK CCS Competition offers upfront capital grant Partial FEED funding Additional R&D support underpinning project EARLY ADOPTER BENEFITS Peterhead Powerplant operates as baseload Negotiated CfD 22

PETERHEAD KNOWLEDGE SHARING Knowledge Transfer Obligations Committed to providing 45 Key Knowledge Deliverables for public dissemination. These deliverables cover key project aspects such as Engineering, Subsurface, Commercial, and HSE. The deliverable content has been agreed in FEED negotiations between Shell and DECC. A specification sheet is provided for each deliverable describing the agreed content. Shell have a dedicated resource and process to manage the dissemination of these Key Knowledge Deliverables DECC Knowledge Sharing Site Public access to (non commercially sensitive) knowledge & information derived from the projects 23

9 STEPS TO A SUCCESSFUL CCS DEMONSTRATION PLANT 1. It is good for Government 2. It is good for me (Industry) 3. It is good for the constituents Licence to Operate 4. Enabling legislation exists 5. Clear liability agreement 6. Financial support for demonstration Build with Confidence 7. Early adopter benefits 8. Trust & Certainty 9. Knowledge sharing Replication 24

PETERHEAD FEED SIGNING 24-02-14 25