Introduction to

Industrial
Operations
18th August 2016 (Thursday)
@ Curtin University, Miri
Speakers from Sarawak Shell Berhad:
- Jude Lim
 Disclaimer
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
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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 34% shareholding in Woodside Petroleum Ltd.) ownership
interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
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demand for the Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve 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 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 factors also should be considered by the reader. Each forward-looking statement
speaks only as of the date of this presentation, 24 July, 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.
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 may have used 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 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.
 A bit about me
 Hometown : Kuching
 Graduated : Curtin University 2015 July
 Course : Bachelors of Chemical Engineering
 Previous Positions in Curtin :
 Student Council President 2013

 Curtin E-FacT President 2013

 Curtin Volleyball Club Vice President 2012/2013

 Curtin Volunteers EXCO Member 2012/2013

 Orientation Leaders 2010-2015

 Catholic Students Society Committee 2011-2013

 iChemE Student member

 Journey to Shell

 2012 : Interned in Linde EOX (2nd Year)

 2013 : Accessed intern in Sarawak Shell Berhad (3rd Year)
 2014 : Offered job in Sarawak Shell Berhad (before 4th Year)
 2016 : Joined Shell as a Operations Engineer
Objectives
 Enhance your understanding
towards industrial operations
(O&G)
 The lecture will provide an
overview of:

 The upstream business

 The downstream business

 Sustainability

 Key achievements

 Contribution to economy
About Shell Active in more than 70 countries
Around 87,000 full-time employees
world-wide
About 43,000 service stations
globally
Fuelling around 7,000 aircraft
every day
Royal Dutch Shell plc is listed on
the stock exchanges of Amsterdam,
London and New York

In 2013 we…
Produced 3.2 million barrels of oil
equivalent per day
Generated earnings of $19.5
billion
Spent $46 billion on net capital
investment
O&G Industry
Why O&G Industry is unique?
A combination of a few
factors makes the Oil &
Gas industry unique

 Cash intensive
projects
 Long lead time
between the initial
expenditure and the
resulting revenue
 High levels of
uncertainty
 Taxation and
contract structure
Health Safety
Security Environment
HSSE is our top priority – central to everything we do
We are committed to preventing incidents such as spills, fires and accidents that
place our people, our neighbours, our facilities, and environment at risk.
No harm to people
Take every effort to reduce harm to the environment to as minimum as
practicable
In short, we are committed to running our business in the most responsible
manner
Why bother about HSSE? We adopt simple HSSE objectives
People  We don’t want anyone to get hurt!
Economic  Keep your body healthy
Legal  it is the only one you have!
Other implications  Take good care of our environment
 it is the only one we have!
 Provide a safe and secure business
environment for all!
Shell in Malaysia
 Shell has been operating in Malaysia since 1891 across the
spectrum of the oil and gas industry

 Malaysia is a Shell heartland

 Community contributions – voluntary social investment

 We have businesses in the Upstream, Downstream, Projects &

Technology, and in Shared Services.

 Shell Malaysia is an integrated energy company comprising

approx. 30 wholly owned and JV companies. Shell Refining
Company (FOM) Berhad is our only public-listed company in
Malaysia.
PSCs in Malaysia
 Only applicable to Upstream
 Petroleum Development Act, 1974
 PETRONAS vested with exclusive rights to
explore/exploit all petroleum deposits
 PETRONAS responsible for management of all
petroleum operations
 Oil Companies are contractors contracted and
supervised by PETRONAS
 Contractors finance all operations i.e. risk capital
and provide technical expertise
 Contractors recover costs under certain formulae
(“cost oil/gas”) when producing stage reached
 Contractors entitled to agreed proportion of
remaining production (“profit oil/gas”) after cost
recovery
 Ownership of all capital assets accrued to
PETRONAS.
Oil Production Sharing Split
EXAMPLE
Profit Oil
PETRONAS
Profit Oil

Contractors Profit Oil

Take Contractor
Cost Oil

Royalty
Cost Oil
Government
Tax Take

Royalty (10%)
Upstream Business
What is Upstream Ops?
Upstream Development Phases

Enhanced
Exploration Appraisal Development Abandonment
Recovery
Types of Wells

Horizontal
Challenging O&G Fields
in M’sia
High pressure and high temperature (HPHT)
High carbon dioxide (CO2), high hydrogen sulfide (H2S) and mercury
content
Deepwater
Highly faulted reservoirs
Offshore Drilling Unit Types
Development Plans
Development Considerations
How much is the estimated reserves?
How much could probably be recovered?
Which is the most economically attractive development option?
Is there market for the hydrocarbon produced?

and a long list of considerations ….

 Upstream
Surface Facility Overview
Function of a surface facility is to bring hydrocarbon from the wellhead to
the customer, while satisfying its own operating needs and disposing of
waste products.
WELLHEAD CUSTOMER

Separate
Gathering Evacuate Transfer/
/Treat Store
Measure

Surface System

Wells
Wells
Reservoirs
Reservoirs
Oil Processing

Oil Platform
Terminal

SBM Tanker
Pipeline
Uses of Produced HC - OIL

Lubricants
Fuels

OIL

Asphalt
Gas Processing
Why do we process gas?
OFFSHORE GAS
 To add value
COMPLEX
Removes water  To make it dry
Compress gas  To meet customers’ specifications
Export to shore  To manage toxicity and corrosion
concerns

LNG EXPORT
Cools the gas to low
temperatures and
liquifies the gas
GAS RECEIVERS

LNG
PLANT
 Uses of Produced HC - GAS
Who are our customers? e.g. in Miri

Electricity

GAS

ABF - fertilizers

SMDS – quality petroleum

products (diesel, wax, Domestic use
kerosene) – gas for household use
 Key Challenges in Prod Facilities

 Wax
 Sand
 Disposal of produced
water
 Disposal of produced
gas (oil fields)
 Corrosion
 High mercury content
 Toxic gases (H2S)
Downstream
Operations
 Shell Refining Company
 Shell Middle Distillate Synthesis (SMDS)
 Shell Refining Company Malaysia (Hengyuan
International Ltd)

Shell Refining Company (Hengyuan International Ltd)

• Port Dickson
• 156,000 barrels per day
• Processes: Distillation, Hydoprocessing, Catalytic Cracking, Blending
• Products: LPG, Propylene, Petrol, Diesel, Sulphur
• 90% of refined products are sold in M’sia
• Listed on Main Board with 51% Shell Interest
Refinery Technology
Gas to Liquid (GTL) development
SMDS, Bintulu

• First GTL plant in the world

• Shareholders: Shell, Mitsubishi, Petronas, Sarawak Government
• Customers in more than 50 countries. To date more than 2,000
shipments
• Plant capacity: 14,700bbl/d
• Converts natural gas to long chain paraffins which are
subsequently either
• hydrocracked to produce middle distillates OR
• fractionated to produce chemical feedstocks and waxes
• Products: Naphtha, Kerosene, Gasoil, Chemical feedstock, Waxes,
Drilling Fluids
(a range of products from natural gas that have undetectable levels of sulphur
and aromatics making them unrivalled in terms of purity)
SMDS Basic Process Steps
Downstream Retail
Commitment to Sustainability
Helping meet the world’s growing need for energy in economically, socially and
environmentally responsible ways … based on our principles

“…reduce the environmental

“Long-term profitability is
impact of our operations, products
essential…”
and services…”

“…be good neighbours…

“…balancing short and long manage the social impacts of our
term interests…” activities… enhance benefits to
local communities…”

“…integrating economic,
“…regular dialogue and
environmental and social
engagement with our
considerations into business
stakeholders is essential…”
decision-making…”
Achievements
Contributions

 Largest foreign taxpayer

 Jobs for people: We employ about 6,500 people

 O&G contributes to 25% of Malaysia’s GDP

 Electricity: Sarawak Energy

 Transportation and logistics

Contributions
 Building Malaysian talent
 Shell Scholarship Awards – more than RM10 million annually
 Shell Eco-Marathon Asia
 Campus Ambassador
 ProjekLINK for coded welders (Miri and Bintulu)

 Leaving a positive legacy

 Piasau Nature Reserve, Miri
 Tungog Rainforest Eco-camp, Sandakan
 Shell-Maliau Basin Visitors Information & Reception Centre , Sabah
 Research facility at Tumunong Hallu ,Sabah
 Annual grants of RM500,000

 Partnering with communities

 We Care We Share
 Government programmes
 SERASI
 Nature Camps
 Fishermen Programme

 Making Malaysian roads safer

 Road Safety Exhibition
 Road Safety Education to National Service Camps in Sarawak
 Road Safety Council membership