Conquering new frontiers together

Transcription

1 Conquering new frontiers together Nor Shipping Offshore Conference Olso, Norway Andy Brown Upstream International Director, Royal Dutch Shell plc June 5, 2012

2 Andy Brown is the Upstream International Director of Royal Dutch Shell plc. He joined Shell in 1984 after completing his degree in Engineering Science at Cambridge University. In 1985 he was posted to New Zealand, where he worked as a Project Engineer on the Maui A offshore platform. From New Zealand he was posted to Nederlandse Aardolie Maatschappij (NAM) where he worked initially in Central Engineering. Staying at NAM, he was transferred to the F3 offshore project, initially working as a rotating equipment engineer and latterly as Construction Manager for the topsides constructed in Southern Italy. Andy then moved to Brunei Shell Petroleum in 1993 to lead the Front End Engineering Group for the Offshore West region. In 1996 Andy joined Petroleum Development Oman initially as Planning Manager and later as Asset Manager for the Bahja Rima region where he was responsible for the management of the central Oman oil fields. During this time he also played a role in the establishment of Shell Hydrogen. In 2000, Andy was appointed to work with the Vice Chairman of Shell as Senior Advisor for the Middle East and Former Soviet Union, before becoming Private Assistant to the Chairman of Shell in In late 2002, Andy joined Shell Gas and Power as Project Director for the Pearl GTL Project. Following the successful conclusion of the Heads of Agreement (HOA) and Development and Production Sharing Agreement (DPSA) negotiations, Andy was appointed Managing Director of the newly formed Qatar Shell GTL Ltd. He subsequently led the successful delivery and start up of the pioneering Pearl GTL project. Andy was appointed Qatar Country Chairman in In 2009 he was additionally appointed Executive Vice President Qatar in the new Upstream International business with added responsibility for the Qatargas 4 LNG project. Andy was awarded an OBE in the 2012 New Year s Honours List for his services to British-Qatari business relations. Andy is a Fellow of the Institute of Mechanical Engineers. He is also a member of the Nigerian President s Honorary International Investor Council. Andy married his wife Julie in 1985 and they have four children. Andy enjoys skiing, walking, sailing and golf.

3 In the last 100 years the oil and gas industry and the shipping industry have sustained a strong relationship in conquering new frontiers to bring the world the energy it needs. Now, as technologies develop and the demand for energy increases, both industries face the challenge of exploring new areas to unlock new resources. In this keynote speech to the Nor Shipping Offshore Conference in Norway, Andy Brown stresses the important role the maritime industry plays within the oil and gas industry and the progress that has been made. He also discusses Shell s interests in exploring new locations such as the Arctic. Continuous innovation is key in how we operate and both industries can provide value in deliverying new energy resources. It s an honour for me to be here with you and speak about New Frontiers. I also want to reflect on the close relationship and interdependency that exist between the oil and gas industry and the shipping industry. Together, the oil and gas industry and the shipping industry bring energy to the world. Both industries have been pushing the boundaries for over a century in a quest to find, produce and deliver ever more energy to customers around the globe. To meet the growing demand for energy, there will be a need to substantially increase investment levels and push innovation even further. Shell s maritime heritage dates back 120 years. Our long history is marked by many firsts: The Murex, Shell s first bulk tanker, set sail in 1892 and its journey through the Suez Canal achieved a revolution in oil transportation. Shell was an early pioneer in LNG shipping, starting over 50 years ago, with LNG being delivered to the UK on the SS Methane Princess in We have come a long way since then. Today, shipping is a very significant part of Shell s business. We are involved in over 100,000 cargo transfers a year and Shell Shipping & Maritime manages and operates 44 LNG ships, making us the single largest LNG ship operator in the world. And we continue to develop new technologies aimed at improving our daily operations and unlocking more energy resources. The relationship between our industries has evolved significantly over the last 100 years. The maritime expertise in our industries has played an important role in unlocking new energy resources. From the initial need to move products around the world, we are now integrated in the whole offshore value chain. From exploring for new resources to daily support to offshore platforms, we now operate drilling rigs, support vessels, tugs, oil tankers, Floating Production and Storage Offtake (FPSOs), Floating Storage and Regasification Units (FSRUs), LNG carriers. On any one day, Shell has an interest in around 1,500 of the ships and barges Today, shipping is a very significant part of Shell s business. We are involved in over 100,000 cargo transfers a year and Shell Shipping & Maritime manages and operates 44 LNG ships, making us the single largest LNG ship operator in the world.

4 sailing the world s oceans and rivers. And we are proud to say that we manage our fleet well: in 2012 our reliability was a remarkable 99.6%. Since the late 40 s, when the first commercially viable offshore oil well was drilled in the Gulf of Mexico, the oil and gas industry has continuously pushed the boundaries into ever more challenging offshore locations. The maritime expertise in the industry has played a key role in this process. In the 70 s and 80 s, the North Sea proved to be a challenging new frontier given its tough weather conditions. fields and 25% of them are in water more than 400 meters deep. The challenges are great, but so are the opportunities and excitement to bring these projects onstream. Ormen Lange, considered as Norway s first genuine deepwater development, continues to be the deepest producing field in Europe in water depths up to 1,100 meters. In Ormen Lange, Norsk Hydrol was the operator during the development phase and we took operatorship in All offshore installations were installed on the ocean floor, under extreme weather conditions and sub-zero water temperatures at the seabed. Greater integration between the energy and shipping industries will continue to be needed to allow us to continue to conquer new physical, operational and innovation frontiers. Here in Norway, Troll was declared commercial in the 80 s and is a remarkable offshore milestone. Troll A remains the biggest concrete platform offshore anywhere in the world and it is the tallest structure ever moved over the surface of the Earth by human beings with its 472 meters. Shell was the field developer and our partner Statoil is the field s producing operator. Much of the conventional oil and gas exploration and production will continue to expand to offshore areas, deeper waters and more remote and challenging locations. Greater integration between the energy and shipping industries will continue to be needed to allow us to continue to conquer new physical, operational and innovation frontiers. Of the remaining 2.7 trillion barrels of recoverable conventional oil resources in the world, the IEA estimates 45% is in offshore The gas is brought onshore for processing; and it is then exported to the UK. I know the Norwegians like to say that every fifth cup of tea in England is heated by the help of gas from Ormen Lange. But, when it comes to deepwater, we are going ever deeper; and since the first FPSO used in the 70 s our industries have been working together in developing new technologies and improving the designs to meet the challenges we face. In the Gulf of Mexico we have taken Final Investment Decision in Project Stones. It will host the deepest production facility in the world at 2,896 metres (9,500 feet). It is Shell's first FPSO in the Gulf of Mexico and it will integrate a disconnectable turret, which will allow the FPSO to be unplugged from the well system and sail to safe areas in case of adverse weather conditions during the hurricane season for example.

5 In Malaysia, the Gumusut-Kakap Development will employ the region s first deepwater Floating Production System (FPS) with a processing capacity of 150,000 b/d and an expected production at peak of 135,000 b/d. Blue Marlin, the FPS loadout vessel, took the FPS to the offshore location last week. In exploration, to conduct our drilling activities in West Africa later this year, for example, we will use the Noble Globetrotter II, which is currently in sea trials. We look at the rig and it looks more like a ship than a drilling rig. From the early design phases, the aim was to merge shipping technology with drilling requirements. It is extraordinary the ability of our industries in keeping a rig like this on station with its dynamic positioning capability, even in adverse weather conditions. The rig is able to drill in over 3,000 meters of water, face 52 feet waves, 100 knots winds and 3.5 knots currents. It has a multi-purpose tower designed to maximise productivity and safety, is more energy efficient, uses less fuel and is shorter and lighter than other deep water drillships with similar capacity. In addition, it allows the crane decks to be removed, allowing it to pass through places as the Panama and Suez Canals, expanding the areas in which it can operate. We can t talk about new frontiers without mentioning the Arctic. According to the International Energy Agency (IEA), the Arctic could hold 14% of the oil and over 25% of the gas of the world s yet-to-be discovered resources. We are not new to the Arctic. The oil and gas industry has a long history of successful operations throughout the offshore Arctic and sub-arctic regions. And we fully acknowledge the the challenges that come with development in such a remote and environmentally-sensitive area. In Alaska, we drilled multiple wells in the Chukchi and Beaufort Seas in the 1980s and 1990s. We also drilled at the Bering Sea, St. George Basin, Gulf of Alaska and Cook Inlet where Shell installed the first platforms in challenging conditions. Those platforms are still producing today. Shell remains committed to building an Arctic exploration program including Alaska. We continue to believe that a measured and responsible pace, especially in the exploration phase, fits best in this remote area. We have certainly taken the Kulluk incident very seriously and we reassessed our plans for Future exploration plans for offshore Alaska will depend on a number of factors, including the readiness of our rigs and our confidence that lessons learned from our 2012 drilling program have been fully incorporated. But we cannot ignore all the developed and deployed operational capabilities to support a multi-year, multi-well offshore drilling programme. We had two rigs operating in the area, both for primary drilling purposes and in the unlikely event a relief well is needed. We can t talk about new frontiers without mentioning the Arctic. According to the International Energy Agency (IEA), the Arctic could hold 14% of the oil and over 25% of the gas of the world s yet-to-be discovered resources. Shell remains committed to building an Arctic exploration program including Alaska. We continue to believe that a measured and responsible pace, especially in the exploration phase, fits best in this remote area.

6 Double shear rams on BOPs, a capping stack, an unique Arctic viable containment system and more than 20 marine vessels in place to provide logistics support and oil spill response if needed, with response capability inside one hour for both rigs, with approved capacity to clean up a spill greater than any envisioned worst case scenario discharge, using a combination of mechanical skimming, dispersants, and in situ burning. We have not taken a decision to drill in There are some activities that must take place this year in order to preserve the option to drill in 2014, including filing appropriate permits and plans with relevant regulators as well as engaging local communities and contractors. These activities should not be taken for a final decision to drill. As we continue to move to more challenging and remote areas, we also have to be innovative on how we respond to potential incidents in our operations. Following the Macondo incident we are taking this even more seriously. In 2011, nine international oil and gas companies established the Subsea Well Response Project, with the aim of analysing, developing and deploying mechanisms to improve the industry s response to deepwater subsea well incidents. It is a non-profit joint initiative between BG, BP, Chevron, ConocoPhillips, ExxonMobil, Petrobras, Shell, Statoil and Total. Earlier this year SWRP delivered integrated intervention systems that include four capping stack toolboxes and two hardware kits for subsea application of dispersant at wellhead. SWRP collaborated with the Oil Spill Response Ltd (OSRL) to make this integrated intervention system available to the industry in the event of a subsea well incident. The first intervention system, with a capping stack and hardware kit, is now available for international use from OSRL s Base in Norway. A further three capping devices and another hardware kit will be delivered before the end of Q to the other three locations of the project: Brazil, South Africa and Singapore. We have just entered the third phase of the project, where we will develop a containment toolkit that can support subsea well incident if well shut-in is not immediately possible. Technology development has also been essential to unlock new energy resources and move those resources around the globe. In addition to the innovative approaches seen in deepwater projects, I believe we are seeing unparalleled and exciting innovation in our industry creating new sources of supply and demand for LNG. We are pioneering with the groundbreaking Prelude FLNG technology. We cut the steel in 2012 and plan to start-up the largest floating offshore facility ever built around At 488 meters long, it is approximately the length of a par 5 hole on a golf course. When fully equipped and with its storage tanks full, it will weigh around 600,000 tonnes roughly six times As we continue to move to more challenging and remote areas, we also have to be innovative on how we respond to potential incidents in our operations. In addition to the innovative approaches seen in deepwater projects, I believe we are seeing unparalleled and exciting innovation in our industry creating new sources of supply and demand for LNG.

7 as much as the largest aircraft carrier. It has been designed to withstand severe weather and will stay moored even during a Category 5 cyclone. The Prelude Project is well underway, with construction occurring at various locations around the world. But we are also innovating in LNG demand. We see tremendous growth potential for LNG as a transport fuel, especially in the marine segment. Norway was one of the first European nations to focus on this. There are about 34 vessels in Norway operating LNG today. More than a third of the current LNG fuelled vessels in Norway are Platform Support Vessels Here Shell acquired Gasnor, a market leader in supplying LNG to industrial and marine customers. Of the 34 partly-lngpowered-ships operating today, Gasnor has contracts to deliver LNG to 31 of them. Leveraging our combined strengths, we will expand Marine LNG bunkering in the rest of NW Europe and beyond. More recently, in the Netherlands, Shell launched the world s 1st 100% LNG propelled barge Greenstream which is going to operate along the Rhine. And in North America we are developing two new LNG corridors, primarily for the marine industry in the Gulf Coast and Great Lakes areas. I have no doubt that we will need to continue to push new physical and innovation frontiers in the future as we move to deeper water and increasingly remote locations, and as the volumes of oil and gas shipped around the world increases. As mentioned, the oil and gas industry and the shipping industry have enjoyed a close relationship over the last century and they are becoming increasingly more integrated. I see fertile ground for further innovation and value creation for both our industries. Jointly we will deliver ever more challenging development projects in remote and harsh ocean environments, and provide energy to markets around the world. Bringing together owners and operators across the shipping, and offshore oil and gas industries, to discuss and progress common issues, particularly with regards to safety, will be a positive step forwards. One less safety incident is one more success for the industry Thank you. We see tremendous growth potential for LNG as a transport fuel, especially in the marine segment. As mentioned, the oil and gas industry and the shipping industry have enjoyed a close relationship over the last century and they are becoming increasingly more integrated.

8 Recent speeches by Shell s senior leadership (NOTE: This page is required for EC-level speeches only. Contact Editorial Services for the most updated version of this page) The path to a more sustainable energy future, Peter Voser Getting the future energy mix right: How the American shale revolution is changing the world, Peter Voser Do the research, Matthias Bichsel The high road to innovation and technology, Matthias Bichsel Future of energy: solutions through cooperation, Marvin Odum Europe s stake in the Canadian energy supply revolution, Simon Henry Facing up to our global challenges in a volatile, uncertain world, Jorma Ollila ET Extraterritoriality alien or friend, Peter Rees Investment, innovation & imagination: the keys to Canadian-American leadership in the global energy challenge, Marvin Odum Natural gas: innovation for a sustainable future and global growth, Peter Voser South-East Asia: The journey to a more secure and sustainable energy future, Simon Henry Global legal challenges facing the petro-chemical industry, Peter Rees Energy demand, supply and downstream infrastructure challenge, Mark Williams Floating LNG: a natural gas innovation, Matthias Bichsel For information about Shell, including downloadable versions of these speeches and other publications, please visit shell.com.com. Shell International Limited, Permission should be sought from Shell International before any part of this publication is reproduced, stored in a retrieval system, or transmitted by any other means. Agreement will normally be given, provided the source is acknowledged. The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this publication the expressions Shell, Group and Shell Group are sometimes used for convenience where references are made to Group companies in general. Likewise, the words we, us and our are also used to refer to Group companies in general or those who work for them. These expressions are also used where there is no purpose in identifying specific companies.