royal dutch shell plc socially responsible investors briefing in london, april 24, 2013
DESCRIPTION
Peter Voser, Chief Executive Officer and Chad Holliday, Non-Executive Director and Chairman of the Corporate and Social Responsibility Committee presented to Shell’s Socially Responsible Investors in London during the annual socially responsible investors briefing.TRANSCRIPT
Copyright of Royal Dutch Shell plc April 24, 2013 1
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
INVESTING FOR SUSTAINABLE GROWTH
LONDON APRIL 24, 2013
ROYAL DUTCH SHELL PLC
Copyright of Royal Dutch Shell plc April 24, 2013 2
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
DEFINITIONS AND CAUTIONARY NOTE
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 over which Royal Dutch Shell plc either directly or indirectly has control. Companies over which Shell has joint control are generally referred to “joint ventures” and companies over which Shell has significant influence but neither control nor joint control are referred to as “associates”. In this presentation, joint ventures and associates may also be 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 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’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ 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 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 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 risk factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended December 31, 2012 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward looking statements contained in this presentation and should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, [insert date]. Neither Royal Dutch Shell plc 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. We may have used certain terms, such as resources, in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our 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.
Copyright of Royal Dutch Shell plc April 24, 2013 3
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
ROYAL DUTCH SHELL PLC INVESTING FOR SUSTAINABLE GROWTH
PETER VOSER CHIEF EXECUTIVE OFFICER
Copyright of Royal Dutch Shell plc April 24, 2013 4
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
AGENDA
Plenary Presentation & Q&A: Peter Voser and Chad Holliday: 9:00 – 10:00 Coffee & pastry break: 10:00 -10:35 Q&A (40 min each, 5 minute break): 10:40 – 13:40 Group A: North America update + Project delivery & safety: Marvin Odum and Matthias Bichsel Group B: Scenarios: Jeremy Bentham Group C: Oil Sands, Climate change: Lorraine Mitchelmore and Angus Gillespie Group D: Nigeria and RDS environmental policy, Water and Partnerships: Mutiu Sunmonu and Allard Castelein Lunch (all together): 13:40 - 14:30
Copyright of Royal Dutch Shell plc April 24, 2013 5
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
SAFETY + ASSET INTEGRITY
STANDARD ASSET INTEGRITY MANAGEMENT
Integrity Leadership
Technical Integrity
Design Integrity
Operating Integrity
Promoting Chronic Unease to avoid complacency
Technical process safety discipline team
Improving worksite hazard awareness
400
500
600
700
800
900
0
1
2
3
4
5
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12
‘GOAL ZERO’ ON SAFETY injuries – TRCF/million working hours million working hours
Working hours TRCF
MWCC testing (6,900 ft), GOM, July 2012
Copyright of Royal Dutch Shell plc April 24, 2013 6
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
SRI FIELDTRIPS & ENGAGEMENT SUSTAINABILITY REPORTING
TRANSPARENCY
Nigeria, 2012
www.shell.com/sri
Copyright of Royal Dutch Shell plc April 24, 2013 7
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
0
10
20
30
STRATEGY
LONGER TERM
GROWTH PRIORITY
ENGINES
ORGANIC CAPEX 2013 $ billion
FUTURE OPPORTUNITIES
RESOURCES PLAYS
DEEP-WATER
INTEGRATED GAS
UPSTREAM
DOWNSTREAM
UPSTREAM Growth strategy; price upside Priority: deep-water, integrated gas,
resources plays DOWNSTREAM Optimize re-shaped portfolio Selective growth CLIMATE CHANGE Grow gas and biofuels CCS and energy efficiency FINANCIAL OUTLOOK Investing for growth and competitive payout Through-cycle returns and risk management
Copyright of Royal Dutch Shell plc April 24, 2013 8
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
ROYAL DUTCH SHELL PLC INVESTING FOR SUSTAINABLE GROWTH
CHAD HOLLIDAY NON EXECUTIVE DIRECTOR CHAIRMAN CORPORATE & SOCIAL RESPONSIBILITY BOARD COMMITTEE
Copyright of Royal Dutch Shell plc April 24, 2013 9
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
ACTIVITIES OF THE CSRC
2012 Activities Nigeria Visit Gannet platform, North Sea 2013 Plans Alaska / Arctic Local stakeholder engagement Government and regulatory
Karoo, South Africa Tight gas
Gannet “A” platform, UK North Sea
Whaling ceremony, Nuiqsut, Alaska
Copyright of Royal Dutch Shell plc April 24, 2013 10
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
PARTNERSHIPS
WORKING TOGETHER Leverage outside expertise Scientific organizations NGOs Governmental bodies
EXAMPLE: IRAQ - MAJNOON IUCN and Wetlands International Government capacity strengthening Biodiversity preservation Marshes classified as Wetland of
International Importance (Ramsar)
Environmental
Social
Majnoon, June 2012
Majnoon, natural flooding, February 2013 MULTI STAKEHOLDER APPROACH
Copyright of Royal Dutch Shell plc April 24, 2013 11
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
REVENUE TRANSPARENCY
SHELL POLICY Commitment to transparency Country-level tax disclosure Working with host governments EITI board position
MANDATORY REPORTING LEGISLATION Implementation ongoing Definitions of “project” and useful
information Potential conflict with host country laws
and current contracts Choice of which law to follow
Competitive disadvantage
~$25 BLN TAXES & ROYALTIES ~$85 BLN EXCISE TAX COLLECTED IN 2012 LEADERSHIP IN TAX TRANSPARENCY
www.shell.com/payments
Copyright of Royal Dutch Shell plc April 24, 2013 12
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
SCENARIO COMPARISON
NEW LENS SCENARIOS
Oil
Gas
Biomass/Biofuels
Wind
Coal
Nuclear
Other Renewables
Solar
0
250
500
750
1,000
Exajoules
2000 2030 2060
40 years of scenarios Designed to stretch
management thinking Testing business models Contrasting plausible views
of the future Are not a forecast
SCENARIOS IN SHELL
Copyright of Royal Dutch Shell plc April 24, 2013 13
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
ROYAL DUTCH SHELL PLC INVESTING FOR SUSTAINABLE GROWTH
PETER VOSER CHIEF EXECUTIVE OFFICER
Copyright of Royal Dutch Shell plc April 24, 2013 14
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
POTENTIAL FUTURE WATER FOOTPRINT GLOBAL SHELL INITIATIVES
CEO Water Mandate World Business Council for
Sustainable Development
OPERATIONAL LEVEL ACTIONS
WATER-ENERGY-FOOD
Groundbirch reclaimed water facility, Canada
High:
Medium:
Low:
Resources Plays
Future Opportunities
Upstream Engine
Deep Water Downstream Engine
Integrated Gas
Copyright of Royal Dutch Shell plc April 24, 2013 15
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
GAS
CCS
BIOFUELS
ENERGY EFFICIENCY
CLIMATE CHALLENGE
Global Manufacturing
Raizen, Brazil Sakhalin LNG, Russia
Quest, Scotford complex, Canada
Copyright of Royal Dutch Shell plc April 24, 2013 16
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
OIL OIL
GAS
GAS
0
1
2
3
4
SHELL PRODUCTION Million boe/d
GAS
Production Split
Price Exposure
2011
2017/18
Production Split
Expected Price
Exposure
OIL PRICE
LINKED
AFFORDABLE ABUNDANT ACCEPTABLE
OIL PRICE
LINKED
2012
0 200 400 600 800 1000 1200
CCGT
USC
Old Coal
IGCC
CARBON EMISSIONS
Kg C02/MWhr
CCGT: Combined Cycle Gas Turbine IGCC: Coal Integrated Gasification Combined Cycle USC: Ultra Super Critical Coal CCS: Carbon Capture & Storage
With CCS
Traditional
Copyright of Royal Dutch Shell plc April 24, 2013 17
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
RAIZEN: BRAZIL JV formed 2011, 50-50 Shell/Cosan ~4,500 retail sites 2.2 bln litres ethanol capacity/yr
SHELL Sold 7.7 bln litres of biofuels in 2012 97% independently certified or met our
own sustainability clauses
BIOFUELS
Bonsucro Certified Mills
2011 2012
Mechanically Harvested Cane
2011 2012
0
50
100
150
200
250
H2 '11 H1 '12 H2 '12
$ million
SHELL EARNINGS FROM RAIZEN 2012 PROGRESS
Copyright of Royal Dutch Shell plc April 24, 2013 18
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
QUEST CCS FID September 2012 1 mln tonnes/yr C02 capture and storage
potential Reduce up to 35% of upgrader emissions
Safe storage certification by DNV (1st time for a CCS project)
Expected onstream 2015
CARBON CAPTURE AND STORAGE (CCS) & ENERGY EFFICIENCY
ENERGY INTENSITY
85
90
95
100
105
0
0.5
1
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12
Upstream excl. Oil Sands & GTL Refining Index Chemicals Index
Upstream – gigajoules/tonnes production Index
EXAMPLE: PULAO BUKOM ~$230 mln co-gen investment FID’d 2012 C02 savings of ~0.1mtpa when onstream Manufacturing wide rollout of Energy
management software
Quest CCS project, Canada oil sands
Copyright of Royal Dutch Shell plc April 24, 2013 19
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
0
100
200
300
400
500
2005 2006 2007 2008 2009 2010 2011 2012
0.0
0.5
1.0
2008 2009 2010 2011 2012
PERSONAL SAFETY INDICATORS per million working hours
Shell in Nigeria TRCF (total recordable case frequency)
All data on a Shell operated basis
SHELL IN NIGERIA
2012 PROGRESS Significant operational spill volume
reduction
Remediation backlog essentially cleared
Forcados Yokri & Southern Swamp AGG/Domestic gas FID’s
0
20
40
60
80
0
2
4
6
8
2006 2007 2008 2009 2010 2011 2012
thousand tonnes SPDC: OPERATIONAL SPILLS
volume of spills: number of spills (RHS):
# REMEDIATION PERFORMANCE
# of spills sites
No. Spills in Year all causes Total Outstanding
Copyright of Royal Dutch Shell plc April 24, 2013 20
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
NIGERIA: SPDC JV FLARING
SPDC = 30% Shell, 55% NNPC, 10% Total, 5% Agip; all data on 100% basis
SPDC JV FLARE VOLUMES & INTENSITY MMscf per day Mscf/bbl
0.0
0.2
0.4
0.6
0.8
1.0
1.2
0
300
600
900 AGG/Dom gas FIDs
Completion in 2014/2015; ~ $4 billion
Gas gathering, facility upgrades and new oil production
When complete this should take SPDC JV flaring intensity below current global industry average
FORCADOS YOKRI & SOUTHERN SWAMP
Southern Swamp, Proposed gas plant at Tunu
Flaring Flaring intensity (RHS)
2000 – 2012: 80% REDUCTION IN FLARING
Copyright of Royal Dutch Shell plc April 24, 2013 21
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
NIGERIA OIL THEFT
Illegal refining, Imo River, Q3 2011 Attempted theft, Trans Niger Pipeline, Q3 2012
Large scale illegal refining along the Nembe Creek trunk line, Q1 2013
Copyright of Royal Dutch Shell plc April 24, 2013 22
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
NIGERIA SPDC: INDUSTRIAL SCALE CRUDE THEFT
Niger Delta wide UN theft estimate of 150,000 bbl/d or ~55,000,000 bbl/year
2012 Spills due to sabotage on SPDC rights of way or from SPDC facilities 24,545 bbl
2012 Operational Spills 1,359 bbl 0
75
150
kbbl per day
Measured as stolen from SPDC trunk lines: ~60,000 bbl/d or ~22,000,000 bbl/year
~70% recovery of spilled oil during cleanup in 2012
Copyright of Royal Dutch Shell plc April 24, 2013 23
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
2 top holes drilled >20 vessels and 2,000 employees/
contractors, ~12,000 employee rotations Positive support from community Kulluk rig incident 2013 pause in activity
2012 ALASKA PERFORMANCE
DRILLING FLUID BLOW OUT PREVENTER
CAPPING STACK ARCTIC CONTAINMENT SYSTEM
1
1
2
2
3 4
3 4
MULTIPLE DRILLING BARRIERS
Photo credit to Unified Command
300 km
Kulluk towed to safe harbour in Kiliuda Bay, Jan. 2013
Copyright of Royal Dutch Shell plc April 24, 2013 24
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
BRENT DECOMMISSIONING
Brent has produced 2 billion bbls of oil and 5.8 tcf of gas
Brent “Delta” ceased production Dec 31st 2011
3 other platforms continue to produce Well abandonments already started Decommissioning plan to DECC Q1 2014 STAKEHOLDER ENGAGEMENT 12 stakeholder dialogue sessions Brent “E-News” Independent review group for studies The Environmental Council provides
facilitation for stakeholder engagement Cell Management stakeholder task group www.shell.co.uk/brentdecom
Brent size comparison with Canary Wharf
Brent field schematic, UK North Sea
Copyright of Royal Dutch Shell plc April 24, 2013 25
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
RESOURCES PLAYS TIGHT GAS/LIQUIDS RICH SHALE
2012 DEVELOPMENTS Center for Sustainable Shale Development
(CSSD) launched Shell one of two founding industry
partners; eNGOs, foundations 15 audited performance standards Appalachia region
GHG quantification work on-going with
EDF and University of Texas Austin
China operational build-up
Copyright of Royal Dutch Shell plc April 24, 2013 26
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
SUSTAINABLE DEVELOPMENT
EMBEDDED IN SHELL STRATEGY Building trust
Communities, Society, Industry Taking Action
Cleaner energy, CCS, water Partnerships and Principles
Multi-stakeholder approach Environmental, Social
“As part of the Shell Business Principles, we commit to contribute to sustainable development. This requires balancing short and long term interests, integrating economic, environmental and social considerations into business decision-making.” Shell General Business Principles
Reed bed filtration, PDO, Oman
Copyright of Royal Dutch Shell plc April 24, 2013 27
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
QUESTIONS & ANSWERS
INVESTING FOR SUSTAINABLE GROWTH
Copyright of Royal Dutch Shell plc April 24, 2013 28
Line of axis
Line of axis
Guide
Guide
Guide
Guide
Guide
Guide
Gui
de
Gui
de
Gui
de
Gui
de
INVESTING FOR SUSTAINABLE GROWTH
LONDON APRIL 24, 2013
ROYAL DUTCH SHELL PLC