gom outlook - louisiana state universityshell exploration and production company october 22, 2004....

GOM Outlook

Energy Summit 2004

Greg GuidryExploration Manager – GOM Nearfield

Shell Exploration and Production Company

October 22, 2004

Royal Dutch / Shell Group of Companies

Disclaimer

This presentation contains forward-looking statements that are subject to risk factors

associated with the oil, gas, power, chemicals and renewables businesses. It is believed

that the expectations reflected in these statements are reasonable, but may be affected by a

variety of variables which could cause actual results or trends to differ materially, including,

but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and

production results, reserve estimates, loss of market, industry competition, environmental

risks, physical risks, the risks of doing business in developing countries, legislative, fiscal

and regulatory developments including potential litigation and regulatory effects arising

from recategorisation of reserves, economic and financial market conditions in various

countries and regions, political risks, project delay or advancement, approvals and cost

estimates.


Gulf of Mexico - Attractiveness


Gulf of Mexico Business Environment

ARegulatory• Currently 3 annual Lease Sales• Competitive bidding/auction• 5-10 year leases• Access issue +/- 50% off limits

Commercial• Hyper- competitive – 70 plus Operators• 3 mile sq. leases drive complex JV’s• Tax royality – stable terms


Gulf of Mexico - Exploration Frontlines

Paradigm - “No sand beyond the shelf edge”Ram Powell (1985) – 1st discovery, Auger (1987) – 1st DW Hub, Mars (1989) – Giant FieldDeclining field sizes in discovered playsNew Play Models - Atlantis (1998), Thunder Horse (1999) – Giant FieldsNew Plays - Frontier areas with technical challenges Great White (2002) – opens Perdido play

19831990199520002003

Deep Shelf Gas

ShellBPAmocoExxonCVXBHP

Auger

Ram Powell

Mars

Brutus

Atlantis

Mad Dog

Thunder Horse

DianaHoover

Great White

Tahiti Holstein


Gulf of Mexico – Creaming Curves

Deepwater Gulf of Mexico 2002: America’s Expanding Frontier – OCS Report MM 2002-021


Gulf of Mexico Deepwater resource added by Industry

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

Dis

cove

ry V

olum

es (m

lnbo

e)

Industry Deepwater GoM >1500' (source MMS)

Transition to new playsTransition to new plays

Success in amplitude playSuccess in amplitude play

Capture the satellitesCapture the satellites

Shell Share 6 bln boe – 40%Shell Share 6 bln boe – 40%


Gulf of Mexico PlaysConventional Amplitudes

(above salt)Conventional Amplitudes

(above salt)

New/Emerging plays(largely sub-salt)

New/Emerging plays(largely sub-salt)

Mineral Management Service 2004 estimate:- Shelf ultimate recovery 65 bln boe Yet-to-find - 15 bln boe (Deep Shelf - Gas)- Deepwater ultimate recovery 71 bln boe Yet-to-find - 56 bln boe

Mineral Management Service 2004 estimate:- Shelf ultimate recovery 65 bln boe Yet-to-find - 15 bln boe (Deep Shelf - Gas)- Deepwater ultimate recovery 71 bln boe Yet-to-find - 56 bln boe

1500

'

4000

'

6000

'

8000

'10

000'

Significant Gulf of Mexico Wells in 2004

ShellJoseph

NewfieldWC 77

El PasoRich Mtn.

McMoRanHurricane

LLOGEI 113B

ChevTexPoblano

McMoRanDeep Tern

MillenniumEI 190

ExxonW. Blackbeard

SpinnakerMinute ManMillennium

EC 299

Kerr McGeeChilkoot

Kerr McGeeTiconderoga

ShellCaesar

BPMad Dog Deep

UnocalSequoia

SpinnakerJed

ShellCheyenne

DominionW. Raptor

DominionThunderhawk

AmeradaWembley

ShellBoreas

BPDas Bump

UnocalSt. Malo

ChevTexJackExxon

Hadrian

UnocalSardinia

BPDiamondback

ShellGreat White

UnocalTobago

ChevTexSilver Tip

DevonBig Bend

Kerr McGeeEssex

LegendP & ADrillingDiscoveryPlanned

GP040139.PPT DAF 10/13/04


2004-5 Expiry2006 Expiry2007 Expiry2008 Expiry

GOM Lease Expiry Outlook

2,400 leases expire from 2005 through 2008 – 600/yr vs 250/yr historical avg.

Perdido Paleogene

Miocene

Deep Shelf Gas

East. GOM

Forecasted 5th Gen Rig Requirements

0

5

10

15

20

25

30

35

40

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

2004 2005 2006

Rig

s

0

5

10

15

20

25

30

35

40Additional Short Term Demand

Known Term Projects

Currently Contracted Rigs

Rig Supply

Currently Contracted Rigs

Known Term Projects

AdditionalShort Term Demand

Ultra - Deepwater Rig Requirements


Big Cats planned for 2005 and 2006

Nigeria2005: 42006: 2

Brazil 2005: 22006: 3

GoM2005: 52006: 5

UK 2005: 12006: 2

Egypt2005: 2

Norway 2005: 22006: 3

Denmark2005: 1

Brunei 2005: 12006: 1

Malaysia2005: 12006: 3

2005-06 GOM Plan•25% of global Big Cats


Gulf of Mexico - Technology


Technological Advance


Host: 6340 ftSS: 7600 ft

GOM Development Milestones – A Step Change


Shell Hubs

Mars

Mars Basin

New Orleans

130 miles

Shell HubsShell Hubs

Shell Satellites

Ursa

Place a Mars TLP photo in this chart – left side


Mars Field - “Just In Time” Expansions

1993 Original Design

100 kbbl/d

1999

170 kbbl/d

2000

200 kbbl/d

2001

220 kbbl/d

1998

140 kbbl/d

Production record

209,000 bbl/d (1/1/03)

230 mmcf/d (9/20/01)

Total Gross Oil Production

0

50

100

150

200

'96 '97 '98 '99 '00 '01 '02

kbbl

/d

Actuals

Original forecast


Major Projects – Shell Gas & PowerLNG – Gulf Landing Terminal•38 miles offshore Louisiana•A concrete, gravity-based structure, which will be floated to the site and lowered to rest on the seafloor in about 55 feet of water. •The facility will include a berth for mooring LNG carriers, LNG storage and regasification facilities, and pipelines to connect with existing natural gas pipeline systems in the Gulf of Mexico. •Gas output will be delivered into as many as five major interstate pipelines serving Louisiana and parts of the US Southeast, Midwest, Northeast and Mid-Atlantic.

Real Time Operations Center - New Orleans

Canada

Rocky Mountains

Houston & S. Texas

MoroccoEgypt

N.O.

Venezuela

BrazilNigeria

EPE Europe SakhalinCanada

Rocky Mountains

Houston & S. Texas

MoroccoEgypt

N.O.

Canada

Rocky Mountains

Houston & S. Texas

MoroccoEgypt

N.O.

Venezuela

BrazilNigeria

EPE Europe Sakhalin

Venezuela

BrazilNigeria

EPE Europe Sakhalin

Current ContractsPotential FutureOpportunities

Achievements:• 17% reduction in trouble time during 2003

• RTOC savings exceeds investment

• Global Reach

Vision:• Provide State-of-the-art well visualization

• Efficiently drill and complete wells

• Achieve lowest unit technical cost (UTC)


Gulf of Mexico - Access


Access: Key to the North American Energy Potential

Federal Lands Open to Energy LeasingFederal Lands Closed to Future Energy LeasingOffshore Planning Areas Closed to Future Energy LeasingOCS Planning Areas

Eastern Gulf: 24 Tcf & 4 BBOEastern Gulf: 24 Tcf & 4 BBO

Atlantic Coast: 28 Tcf + 2 BBOAtlantic Coast: 28 Tcf + 2 BBO

Pacific Coast: 19 Tcf + 11 BBOPacific Coast: 19 Tcf + 11 BBO


Eastern Gulf of Mexico

Clinton (1998)Moratorium

Sale 181Actual

Access Challenges• NIMBY• Industry image• NGO opposition• Education• Political support• Environmental

concerns

Sale 181Proposed


Engaging stakeholders

Education and research

Health and Safety

TechnologyMinimizing our impact

Environment

Sustainability in the Offshore


BACKUP


Access: Key to the North American Energy Potential

Environment• Shift to unconventional • Demand growth downgraded• Supply growth difficult• Short term spare capacity• Frontier supply – LNG faces major hurdles

Alaska 300 Tcf

Canadian North225 Tcf

Canadian Rockies250 Tcf

U.S. Rockies300 Tcf

Gulf of Mexico300 Tcf

Source: NPC Draft Report 11/16/99GRI Baseline Projection 2000

Challenges• NIMBY & industry image• NGO’s and education on access

U.S. Gas Supply is migrating to more remote, technically challenging sources

1500

'

4000

'

6000

'

8000

'10

000'

CheyenneCheyenne

Great WhiteGreat White

DB2DB2

FrontierFrontier

Ram Powell G Ram Powell G JosephJoseph

TahitiTahiti

Near Field E&ANear Field E&A

AppraisalAppraisal

CoulombCoulomb

New HubNew Hub

PlesiosaurusPlesiosaurus

DeimosDeimos

2004 Exploration – Gulf of Mexico

EPW Prospects > 200 mln boe

0

10

20

30

40

50

2000 2002 2004

mln

boe

TobagoTobago


Major Projects - Nakika

• First deepwater semi-sub host for Shell• Deepest permanent moored semi-sub• World’s largest pipe in pipe risers• First gas lift risers in the GoM• First electrically heated flowlines/risers• One dual frac pac SMART well• Three triple frac pac SMART wells• Excellent ramp-up & up-time


Public Policy

Issues:

•Domestic energy second largest contributor to Federal Treasury· Access to off-limit areas of the U.S. is good for the country and Louisiana

• MMS has been a great steward of our offshore resources· Coastal states competitiveness with OCS, especially in regard to Shelf Deep Gas

· GOM getting squeezed with no access on the Mexico and Florida flanks

• Canada, Mexico and U.S. cooperation on cross border resource · Provides growth and stability for each countries economy and citizens

• Technology key to unlocking plays & reducing footprint


Public Policy

What can we do?• Grass-roots programs in the coastal states.

• Provide input into the MMS’s next 5-year plan (’07-’12) this winter

• Revenue sharing options with coastal states that support responsible

development.

• Stakeholder engagement strategy

• Congressional and Executive Moratoria changes when Public Opinion

changes.

gom outlook - louisiana state universityshell exploration and production company october 22, 2004....

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