BRENT DECOMMISSIONING STAKEHOLDER DIALOGUE EVENT

Transcription

1 BRENT DECOMMISSIONING STAKEHOLDER DIALOGUE EVENT London 20 th Aberdeen 22nd (Shell is operator of the Brent Field for and on behalf of Shell U.K. Limited and Esso Exploration and Production UK Limited ) 1

2 BRENT DECOMMISSIONING BRENT STATUS AND UPDATE Austin Hand Project Director Brent Decommissioning 2

3 Cautionary Statement 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. Forwardlooking 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, intend, may, plan, objectives, outlook, probably, project, will, seek, target, risks, goals, should and similar terms and phrases. Also included as a forward looking statement is our disclosure of reserves, proved oil and gas reserves, proven mining reserves, organic reserves, net reserves and resources. 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 the Group s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market 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 effects arising from recategorisation of reserves; (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 December 31, 2010 (available at and ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of 20 th and 22 nd. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forwardlooking 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. The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation that SEC's 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 , available on the SEC website You can also obtain these forms from the SEC by calling SEC Also in this [presentation we have aggregated our equity position in projects for both direct and indirect interest. For example, we have aggregated our indirect interest in the Pluto project via our 34% shareholding in Woodside Energy Ltd. 3

4 Project status Project Status - Studies Brent decommissioning project now in the Define phase (Shell process) Studies completed Concept select for all four platforms Topsides removals FEED* studies (nearing completion) GBS refloat studies completed Studies currently in progress GBS fate studies Legs up vs. legs down studies EIA planned for completion in Q Decommissioning Programme (DP) planned submission of consultation draft to DECC planned for Q * Front End Engineering and Design 4

5 Planned Timeline for Decommissioning Project Q3/4, 2013 Decommissioning Execution Q3/4, 2013 Secretary of State Approves DP Draft 4 DP submitted to DECC Q2, 2013 Derogation Document submitted to DECC Q DECC review and consultation with OSPAR Draft 3 DP submitted to DECC Q3, 2012 Statutory and public consultations (plan = 60 days) Draft 2: Consultation Draft DP submitted to DECC Q2, 2012 Informal review by DECC Q1, 2012 Draft 1: Informal submission of DP to DECC Management review (Shell/XoM) Today Decommissioning Programme (DP) Prepared Comparative Assessments Environmental Impact Assessment 5

6 Project Status - Operations Project status Seeking clever solutions in dealing with difficult 40 year old wells Well abandonment work continues on Brent Delta and Bravo, so far 30 wells completed Brent Delta handover to decommissioning beginning Q1 2012, Brent Alpha and Bravo planned for end 2013 Brent Decommissioning Services Contract: commenced decommissioning work offshore on Delta Cell survey planned for later this year - cell survey equipment testing commenced 6

7 BRENT DECOMMISSIONING IRG ACTIVITIES The Independent Review Group Please refer to IRG page on the Brent website for this presentation 7

8 BRENT DECOMMISSIONING TECHNICAL OVERVIEW AND STUDIES STATUS Mike Smith Senior Project Engineer Brent Decommissioning 8

9 Environmental Impact Assessment DNV contracted to undertake the EIA study and they commenced work earlier this year The EIA Scoping Report prepared by DNV sent to stakeholders in May Some 20 specific comments from the Independent Review Group (IRG) received mostly in line with points already covered in DNV s scoping report DNV agreed to some minor changes to the scope of the EIA work based on comments received EIA is planned for completion in Q EIA will be subjected to public scrutiny as a part of the formal public consultation phase (likely to be around Q4 2012) of the submitted decommissioning programme to DECC 9

10 Brent Alpha, Bravo, Charlie, Delta Brent Alpha Brent Bravo Brent Charlie Brent Delta Type: Platform, Steel Type: Platform, Concrete, Gravity based Type: Platform, Concrete, Gravity based Type: Platform, Concrete, Gravity based Topsides weight : 16,500 gross / 15,500 (dry ) tonnes Jacket weight: 14,300 tonnes (excl. piles) Number of storage cells: n/a Well slots: 28 Differences Steel structure No oil storage cells Topsides weight: 24,100 gross / 23,100 (net) tonnes GBS weight: 331,300 tonnes Number of storage cells: 16 Well slots: 38 Differences Concrete structure Gravity based structure with oil and water storage cells Topsides weight: 31,000 gross / 30,000 (net) tonnes GBS weight: 290,000 tonnes Number of storage cells: 32 Well slots: 40 Differences Concrete structure Gravity based structure with oil and water storage cells Topsides weight: 23,500 gross / 22,500 (net) tonnes GBS weight: 300,900 tonnes Number of storage cells: 16 Well slots: 48 Differences Concrete structure Gravity based structure with oil and water storage cells 10

11 Key Differences Brent Delta GBS ( = derogation case) Similar to Brent Bravo... but Attic oil trapped in the storage cells 16 oil storage cells 2 drilling legs, 1 utility shaft Brent Bravo GBS ( = derogation case) Similar to Brent Delta... but No attic oil in the storage cells (likely case) 16 oil storage cells 2 drilling legs, 1 utility shaft Brent Charlie GBS ( = derogation case) Different design to BB/BD Attic oil trapped in the storage cells and some cooling cells 8 oil storage cells, 2 diesel storage cells, +22 various cooling cells Heaviest topsides (nearly x2 Brent Alpha) Well conductors external to legs Brent Alpha Steel jacket complex structure footings = potential derogation case No oil storage cells Lightest of the topsides 11

12 Project Process Assess feasibility Select the concept Define the project concept Execute the project High level concepts selected: We are here Sept (Shell Process) Topsides x4 removed to shore for dismantling (not decided yet if heavy/modular or single lift) GBS structures x 3: derogation case to remain in situ ( legs-up likely proposal tbc) Jacket of Brent Alpha to be removed down to -84m below surface. Footings to remain is a derogation case Drill cuttings to remain undisturbed Debris removed within 500m of each structure and 100m either side of pipelines Pipelines, umbilicals etc bespoke solutions depending on size and current state/location, based on comparative assessment of options for each individual pipeline Cell contents (esp. sediments) still under evaluation. Either (A) leave in place (+/- cap) or (B) remove and reinject 12

13 Brent Alpha Jacket Proposal Remove steel jacket down to -84.5m below LAT (Lowest Astronomical Tide) to Leave footings (derogation case) Rationale for leaving footings vs. full removal Significantly lower personnel risks (less days subsea work) -84.5m is the best environmental option (though little to choose between options) Cutting tools harder to position and use for full removal No disturbance of drill cuttings on the sea bed Full removal is estimated to be twice the cost, with no environmental benefit Footings will be fully marked as subsea obstruction. Studies indicate risk of collision is small. Cost (estimated) Some 50m (est.) down to -84.5m; some 110m (est.) for full removal 13 16

14 Brent Alpha Jacket Proposal Before Removal extent showing cut elevation After 14

15 Gravity Base Structures (Brent B and C) Recommended Proposal: Leave in-situ (derogation case and similar to Brent Delta proposal) Options not preferred: Refloat and inshore dismantling In-situ dismantling Option still being studied (also incl. Brent D): Leg (partial) removal Why leave structure in situ: Lowest safety risk Least environment footprint Refloat option carries a significantly higher risk of technical failure Removal via refloat: significant risk and uncertainty around: Buoyancy Weight and its distribution Structural and watertight integrity Extraction from the seabed Installation of new systems Assuming technically feasible, and safety risk acceptable, indications are that Legs-down option could cost in the order of an extra 700 million (provisional) 15

16 Brent Subsea Facilities Decommissioning Scope Pipelines (32 various different pipelines): Rigid pipelines x 19 (85km) Flexible flowlines / riser x 5 (7km) Umbilicals x 6 (11km) Power cables x 2 (25km) (Umbilicals are classed as pipelines. Treat cables as umbilicals.) Structures : x1 no. approx (140 mts) x 3 no. approx (100 mts each) Concrete Mattresses* : various mats in total, estimated weight approx 2000 tonnes Debris: Numerous debris shown on sonar survey in platform 500m zones. Less along pipeline routes. *Mattresses are flexible structures comprising a series of linked precast concrete blocks, which typically are placed over a pipeline to provide dropped object protection or prevent movement of the pipeline on the seabed. 16

17 Regulatory Requirements - Monitoring Petroleum Act 1998, as amended by Energy Act 2008 Operator to implement arrangements for monitoring, maintenance and management of the decommissioned site, and any remains of installations or pipelines that may exist. Scope and duration to be agreed between operator and DECC. DECC Guidance Notes After removal of seabed debris, independent verification of seabed clearance will be required. In addition to debris surveys, a post-decommissioning environmental seabed sampling survey should be undertaken especially to monitor levels of hydrocarbons, heavy metals and other contaminants in sediment and biota. In most cases, a second survey will need to be undertaken some time after the post-decommissioning sampling. Any further surveys will depend on the results of earlier work and the circumstances of each case. If concrete structures or steel footings left in place, owners will have to monitor the condition of the remains at appropriate intervals. Form and duration of programme will depend on particular circumstances, and if necessary will be adapted with time. Survey strategy should be developed in consultation with DECC s Offshore Decommissioning Unit who will consult with other Government Departments. Details of survey strategy should be specified in the Decommissioning Programme

18 Pipelines - Monitoring DECC Guidance Notes, 2011 Operator to devise a suitable monitoring programme with DECC and in consultation with other Government Departments. Details to be specified in the Decommissioning Programme. Structure and duration depend on prevailing circumstances. May have to be updated with time. Typical programme Post-decommissioning survey on completion of decommissioning work. After each survey, submit inspection reports to DECC, Offshore Decommissioning Unit If surveys show potential hazard to other users of the sea, operator to propose appropriate maintenance or remedial work. Long-term monitoring Risk-based monitoring scheme based on pipeline stability and potential impact. Establish a monitoring scheme for each line based on its individual burial history and condition. Conduct inspections for a fixed period of time depending on risk criteria. Then move to reactive surveys, only if concerns about the pipeline arise

19 Monitoring and Liabilities To date, we have undertaken extensive environmental monitoring by way of drill cuttings surveys and environmental baseline surveys. These help us to understand what the impacts on the environment might be so that we can mitigate the effect in the most effective and efficient way possible. After decommissioning we shall undertake monitoring activities as consistent with DECC s Decommissioning Guidelines. Monitoring programme Being assessed at present Full monitoring regime will be included in Decommissioning Programme An example of a monitoring schedule can look like: Year 1 Debris sweep Verification clear seabed As-left structural surveys of derogated platforms and pipelines Post-decommissioning seabed environmental survey Report to DECC and discussion of monitoring programme Year 3 Structural surveys of derogated platforms and pipelines Report to DECC and discussion of monitoring programme Year 5 Seabed environmental survey Year 10 Structural surveys of derogated platforms and pipelines Seabed environmental survey Report to DECC and discussion of monitoring programme Cost of one year s monitoring: 0.5 million p.a. (approx est.) Shell and its co-venturer ExxonMobil remain liable for any remaining facilities 19

20 Drill Cuttings a Reminder of OSPAR/Industry Position A component of the Decommissioning Programme OSPAR Recommendation 2006/5 sets out a two stage process for drill cuttings assessment: Stage 1 initial screening to determine the persistence* and rate of oil loss over the contaminated area Stage 2 assessment of the best available techniques (BAT) and/or the best environmental practice (BEP) for the cuttings pile Stage 2 is required where either: Oil loss > 10 tonnes / year, or Persistence¹ > 500 km 2 years Where both the rate and persistence are below the thresholds, the OSPAR recommendation is that no further action is necessary and the piles may to be left in situ to degrade naturally * Persistence of area of seabed where oil concentration remains above 50mg/kg. 20

21 Drill Cuttings Survey programme designed to conform with OLF* Guidelines to: Survey and sampling using variety of techniques: Environmental survey report still being finalised due to issues with original THC** analyses Survey results Alpha Bravo Charlie Delta Cell top cuttings (height) n/a 3.0m 8.5m 6.8m Cell top cuttings (volume) n/a 592m 3 6,973m 3 798m 3 Seabed cuttings (height) 4.0m 11.2m 9.5m 10.3m Seabed cuttings (volume) 6,506m 3 4,635m 3 5,266m 3 1,575 m 3 * OLF - Oljeindustriens Landsforening (Norway) ** THC - Total Hydrocarbon Content 21

22 BRENT DECOMMISSIONING CELL SURVEY PROJECT John Gillies Execution Manager Brent Decommissioning 22

23 Storage Cells 23

24 Cell Survey Project Aim: to attempt to enter one(+) cells in November 2011 on Brent Delta Allocated for 30 days of ROV support to attempt this cell survey project If entry successful, the plan is: To use sonar to understand better the amounts and distribution of contents To obtain one (or more) sediment samples If possible, more than one cell will be surveyed If sample obtained, it will give an indication if we are in the range of assumptions for the contents being used for the Environmental Impact Assessment and the exposure scenario modeling Intense planning since last year and is continuing. Designing, ordering and manufacture of specialised equipment underway Budget for the 2011 cell survey project = some 35 million 24

25 GBS Cell Sampling Design, manufacture and development of procedures to undertake cell sampling at Brent D has progressed through 2010/11 and is nearing readiness for deployment Operation involves deployment of equipment weighing more than 20 tonnes in close proximity to the platforms. The cell survey project will cost some 35M but data obtained will be invaluable in our decision making process 25

26 Stage 1:Base-plate installation Base Plate Installation 8 tonne base plate will be deployed from diving support vessel onto prepared sealing location; Fixed to cell dome by resin secured anchor bolts Base plate forms the docking and isolation interface for drilling and sampling operations 26

27 Stage 2: Drilling Cell Dome Drilling Operation 14 tonne drill stack will be deployed from ROV support vessel Stack will dock onto base plate and drill 8 inch diameter hole through 1.2 metre thick reinforced concrete cell dome 27

28 Stage 3: Sampling Tool Deployment Sampling Operation Sampling stack will be deployed from ROV support vessel Stack docks onto base plate and deploys suite of sonar and sampling devices. Real time data transfer to vessel via umbilical from ROV 28

29 BRENT DECOMMISSIONING SOUK SESSION The Environment Council 29

30 BRENT DECOMMISSIONING BREAK OUT SESSION The Environment Council 30

31 Lunch 31

32 BRENT DECOMMISSIONING CELL CONTENTS MANAGEMENT Mike Smith Senior Project Engineer Brent Decommissioning 32

33 Cell Management Some of the Initial Concepts 13 initial concepts were generated for evaluation. The highlighted concepts are those that are being carried forward: Utility Shaft Accessed Options Bio-remediation (sediments + liquid contents) Physical treatment (sediments + liquid contents) In situ Monitored Natural Attenuation (MNA) (sediments + liquid contents) In situ capping (sediments + liquid contents) Remove to onshore (sediments + liquid contents) Re-inject (sediments + liquid contents) Subsea Accessed Options Re-inject after subsea removal (sediments + liquid contents) Removal to onshore (sediments + liquid contents) Fluid removal + in situ bio-remediation of sediments Fluid removal + in-situ physical/chemical treatment of sediments Fluid removal + in situ Monitored Natural Attenuation (MNA) of sediments Fluid removal + in situ capping of sediments Treat all on shore (sediments + liquid contents) 33

34 Cell Management the Two Concepts Being Considered Concept A Leave in Place (with or without [MNA*] capping) Remove attic oil and interphase material Leave water phase in place after in-situ treatment if necessary Leave sediment in place with capping layer if necessary Concept B Remove and Reinject Remove attic oil and interphase material Remove water, if necessary, and dispose down an existing well Remove sediment and dispose down an existing well * MNA Monitored Natural Attenuation 34

35 Cell Management Some Thinking Going Forward Objective To obtain enough information to be able to complete a robust comparative assessment in accordance with OSPAR 98/3 and DECC Decommissioning Guidelines. This includes substantiated data on environmental impacts and operational efficiency. Remove and reinject: key uncertainties Volume of material Mobility of material Ability to inject quantities involved Leave in place: key uncertainties: Volume of material Composition of material Release rate/exsposure when GBS breaks down and impact on environment Information required Volume Composition Mobility Injectivity 35

36 BRENT DECOMMISSIONING CELL CONTENTS EXPOSURE SCENARIOS AND IMPACT MODELLING Mike Smith Senior Project Engineer Brent Decommissioning 36

37 Modelling Cell Collapse and Contents Exposure Scenarios The storage cells will likely remain intact for some 500 years. However to study further the leave in place option for cell sediments we need to look at what might be the effects if the sediments become exposed to the sea. To do this the following questions should be addressed: How may the legs collapse and cells be damaged? How many cells may be damaged? How may the contents be exposed to the sea? What may the cell contents contain? 37

38 GBS Scenarios How may the legs collapse and cells be damaged? How many cells may be damaged? Six scenarios have been developed with different numbers of cells and legs compromised and exposure of contents. The scenarios range from: Failure of one outer storage cell/leg caused by collision from a foreign object.to.. Failure of all legs on all platforms causing exposure of up to 6 cells on BB and BD and 4 oil storage cells on BC. [This is considered the most severe possible case] 38

39 Cell Contents Exposure Scenarios What may the cell contents contain? (for modeling purposes) The same scenarios have been developed with different numbers of cells and legs compromised and exposure of contents. Some of these are being used as the basis of exposure modeling studies. The exposure of contents scenarios range from: Some 2500m³ sediments/ 34,000m³ water (one cell on one GBS).up to.. Some 45,500m³ sediments/ m³ water (up to 16 cells on 3x GBSs) [Note: These volumes are for modeling purposes. At this stage we do not yet have actual data from inside the cells] 39

40 Sources of Information About Cell Contents Previous data from Brent Spar Storage tanks at Sullom Voe GBS drilling legs Historical production records Sampling of water and interphase material in the cells Minicell and minicell annulus Pig wax* * wax obtained from pigging operations in the pipework 40

41 Cell Sediment Possible Components Also based on the information sourced listed in the previous slide, it is possible that the following components could be present in any sediment: BTEX (Benzene, Toluene, Ethylbenzene, Xylene) H2S NORM TPH (Total Petroleum Hydrocarbon) PAH (Polycyclic Aromatic Hydrocarbons) PCB (Polychlorinated Biphenyl) Heavy Metals 41

42 Cell Management - Basic Decision Structure 42

43 Cell Management - Basic Decision Structure 43

44 Cell Management - Basic Decision Structure 44

45 Cell Management - Basic Decision Structure 45

46 Cell Management - Basic Decision Structure 46

47 Cell Management - Basic Decision Structure 47

48 Cell Management - Basic Decision Structure 48

49 Approach for Inclusion in the Decommissioning Programme DP submission to DECC followed by public consultation DECC approvals process Ops Results Interpretation Start Final call Initial surveying Field trial on BD 49

50 Cell Management Concept Selection Criteria Primary Criteria (as per DECC guidelines) Sub-Criteria Health and Safety Environment Technical Societal Cost Comparative risk assessment Long term health risk Operational risk Residual risk Net Co2 emissions Waste balance Application of technology Adaptability Management of uncertainty Other sea users Regional development Onshore communities Development cost Implementation cost Financial exposure 50

51 BRENT DECOMMISSIONING CELL MANAGEMENT BREAK OUT SESSION The Environment Council 51

52 BRENT DECOMMISSIONING FUTURE ENGAGEMENT Jim Niven Stakeholder Manager - Brent Decommissioning 52

53 Brent Stakeholder Engagement Going Forward (1) An on-line e-engagement process will follow these events. Will last eight weeks Proposed (only): another set of, but closing, dialogue events in Q2 (?) 2012 in the lead in to submitting the Decommissioning Programme (DP) to DECC in Q Stakeholders to advise what they would wish to hear about... But... Possible topics could include: cell survey update, sample analysis (if available); EIA status and report; Decommissioning Programme structure, (proposed contents, update in timetable); lessons learnt / stakeholder feedback on the dialogue process since 2007 Communications will continue e.g. via the e-newsletter, www, direct mail etc (ideas for topics on what stakeholders want to hear about always appreciated) 60 day period of statutory public consultation of the DP is proposed. Stakeholders will be asked to respond with their comments sent to DECC 53

54 Brent Stakeholder Engagement Going Forward (2) Cell remediation remains a complex challenge for us and we are busy with a number of studies on this topic. Going forward as we move towards recommending a preferred concept, it is proposed to establish a facilitated stakeholder mini focus group with a cross section of our current stakeholders to: Be informed to a greater depth on our rationale and technical studies going forward along the remediation decision process To feedback to Shell/Exxon views on the weightings that should be applied to selecting a preferred option To review our assessment process and evaluation To act as a communications conduit for other relevant/linked stakeholders Stakeholders included could represent stakeholder groups like regulators, statutory/formal consultees, NGOs, IRG, academics We welcome stakeholder views on this proposal please. We propose to contact some stakeholders shortly for their feedback and if they wish to participate in this deeper analysis and involvement in cell remediation issues 54

55 BRENT DECOMMISSIONING PLENARY DISCUSSION The Environment Council 55

56 BRENT DECOMMISSIONING FINAL FEEDBACK SESSION The Environment Council 56

57 BRENT DECOMMISSIONING WAYS FORWARD AND CLOSING REMARKS The Environment Council 57

58 58