UPSTREAM

2,323 KBOED
Oil and gas production
in 2015

3 KEY PROJECTS
Announced first production
in 2015

The Bonga floating

production, storage and
offloading facility off the
coast of Nigeria.
 Our Upstream businesses explore for and extract ■ In Nigeria, we completed the sale of our 30% interest
crude oil and natural gas, often in joint arrangements in OMLs 18 and 29 and related facilities in the Eastern
UPSTREAM with international and national oil and gas companies. Niger Delta, and the Nembe Creek Trunk Line for a

OVERVIEW We also market and trade crude oil and natural gas in
support of our Upstream businesses.
IN 2015, SHELL UPSTREAM
■ Achieved first production from the Corrib gas field
in Ireland. At peak production, the Corrib gas field
is expected to produce around 45 thousand barrels
of oil equivalent per day (boe/d).
■ In Nigeria, we announced first production from
two deep-water projects, the Bonga Phase 3 project
(Shell interest 55%) and Erha North Phase 2 (Shell
CONVENTIONAL interest 43.75%). The Bonga Phase 3 project is an
OIL AND GAS expansion of the Bonga Main development, with peak
Cash engine production expected to be about 50 thousand boe/d.
OIL SANDS ■ We took a major final investment decision (FID)
MINING to advance the Appomattox deep-water development
Cash engine (Shell interest 79%) in the Gulf of Mexico, USA.
Appomattox will initially produce from the Appomattox
DEEP and Vicksburg fields, with peak production estimated
WATER to be around 175 thousand boe/d.
Growth engine
SHALES
Future opportunity
total consideration of around $2.4 billion. In addition,
we completed the sale of our 30% interests in OMLs
71 and 72. Both of these blocks were non-producing.
SO FAR IN 2016
■ In January 2016, in the United Arab Emirates, we
decided to exit the joint development of the Bab sour
gas reservoirs (Shell interest 40%) with Abu Dhabi
National Oil Company (ADNOC).
■ In February 2016, we announced that we postponed
the FID on the Bonga South West deep-water project
in Nigeria.
■ In Brazil, we started production of oil from the third
phase of the deep-water Parque das Conchas BC-10
development (Shell interest 50%) in the Campos basin.
■ Also in Brazil, the seventh non-operated floating,
production, storage and offloading vessel (FPSO),
Cidade de Marciá, (Shell interest 25%) reached first
oil in the BM-S-11 block of the Santos Basin, offshore
Brazil. The FPSO has a production capacity of
150 thousand barrels per day.

Upstream key statistics

2015 2014 2013 2012 2011
Earnings ($ million) (8,833) 5,231 3,640 11,254 17,186
Earnings excluding identified items ($ million) (2,255) 6,754 6,644 10,693 14,192
Cash flow from operations ($ million) 5,453 19,150 17,841 22,131 22,913
Liquids production (thousand b/d) [A] 1,305 1,263 1,317 1,495 1,556
Natural gas production (million scf/d) [A] 5,911 6,593 7,059 7,488 7,588
Total production (thousand boe/d) [A][B] 2,323 2,399 2,534 2,786 2,864
Capital investment ($ million) 18,349 22,169 28,481 25,102 18,580
Capital employed ($ million) 84,727 88,692 93,135 87,413 79,303
Employees (thousands) 22 22 21 N/A N/A
[A] Available for sale.
[B] Natural gas volumes are converted to oil equivalent using a factor of 5,800 scf per barrel.

Upstream earnings [A] Production

$ billion million boe/d

15 4

10 3

5 2

0 1

-5 0
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Liquids
Gas

[A] Excluding identified items.

SHELL INVESTORS’ HANDBOOK 2015 UPSTREAM 25

CONVENTIONAL The conventional oil and gas business is a cash engine In Oman and Brunei, for example, we helped build their

OIL & GAS for Shell. There is a large range of assets here, ranging
from the more traditional basins such as in the North
Sea, Nigeria, Malaysia, Oman and Brunei, as well as
more recent positions such as in Iraq and Kazakhstan.
Our growth projects in conventional oil and gas
should add some 250 thousand barrels per day (b/d)
of production in the next few years. This, combined
with lower spend and improved uptime, should improve
our performance in free cash flow and returns.
oil and gas businesses which have created a foundation
for broader development that remains a principle source
of revenue. In the UK, Norway, the Netherlands and
Denmark, we partnered with other IOCs and led the oil
and gas industries, which helped boost these economies.
Following on from the acquisition of BG, we expect to
accelerate the divestment of non-strategic positions in
conventional oil & gas, to further strengthen this portfolio.

Our conventional oil and gas operations are important

to most of the countries in which we operate. We have
always worked with a high level of government involvement
and regulatory control and we partner with others to
execute operations and share risk. We have a proven
capability to sustain deep relationships, spanning many
decades, with governments, national oil companies, other
international oil companies (IOCs) and independents.

Selective growth Capital investment

Thousand barrels per day Clair ph2 $ billion
Tempa Rossa
others
300 10
-30%

Corrib
Sabah gas Kashagan
150 Knarr Schiehallion 5
G-U ph2
others

0 2014–15 2016–17 2018–19 ~2020 0 2013–15 2016–18

Start-ups: 2014 –15 2016 –17 2018+

OIL SANDS We produce and market natural gas, natural gas liquids

MINING (NGL), bitumen and synthetic crude oil. Bitumen is a

very heavy crude oil produced through conventional
methods as well as through enhanced oil recovery.
Synthetic crude oil is produced by mining bitumen-
saturated sands, extracting the bitumen from the sands
and transporting it to a processing facility where
hydrogen is added to produce synthetic crude oil.

We operate the Athabasca Oil Sands Project (AOSP)

in north-east Alberta as part of a joint arrangement
(Shell interest 60%). The bitumen is transported by
pipeline for processing at the Scotford Upgrader, which
is also operated by Shell and located in the Edmonton
area. The Quest carbon capture and storage project
(Shell interest 60%), which is expected to capture and
permanently store more than 1 mtpa of carbon dioxide A CO2 injection well – part of the Quest carbon capture and
(CO2) from the Scotford Upgrader, began operating in storage project, Alberta, Canada.
November 2015.

26 UPSTREAM SHELL INVESTORS’ HANDBOOK 2015

DEEP WATER Deep water is a growth priority for Shell. We have
advantaged positions in Brazil, the Gulf of Mexico,
Nigeria and other regions that offer substantial and
profitable growth potential. We expect our global
deep-water production from already discovered
fields to double to more than 900 thousand barrels
of oil equivalent (boe) per day by the early 2020s.
Exploration in these established basins adds further
growth potential.
We pioneered deep-water development in the US Gulf
of Mexico and have led the industry on technological
achievements for decades. Our Stones development,
due on stream in 2016, is the deepest producing facility
in the world. The Appomattox project, has 650 million
barrels of resources and was given the go-ahead after
reducing the total cost estimate by 20% relative to its initial
project estimate. We expect to begin production later this
decade and will open up a new geological play in the
Jurassic Norphlet formation. Other producing assets in
the USA include Auger, Brutus, Enchilada, Mars, Mars B,
Perdido and Ursa.
Of Shell’s global deep-water production today,
approximately 40% comes from our operated and
non-operated assets offshore Brazil. Our operated Parque
das Conchas project, in the Campos Basin off the coast
of Brazil, began production from its third phase in 2016.
In the Santos Basin, we have a 20% interest to explore
and develop the giant Libra pre-salt oil field. We also
have working interests in other large pre-salt discoveries
in the same basin, which were gained through our
acquisition of BG.
In Nigeria, production from the Bonga field was
expanded in 2015 with the start-up of phase 3 of
the development. In offshore Malaysia, Shell operates
five producing oil fields, including the Gumusut-Kakap
deep-water field where production began in 2014.
We also operate and are developing the Malikai
deep-water field off the coast of Malaysia.

Lowering capital intensity

$ per boe break-even cost (examples)

80

60

40

20

0 Appomattox Kaikias Coulomb Vito Brazil pre-salt

DISCOVER MORE ABOUT The Stones floating production, storage and offloading vessel,
DEEP WATER AT Current estimate – under construction Previous estimate during construction work in Singapore. Stones is our first FPSO
WWW.SHELL.COM/ Current estimate – pre-FID in the Gulf of Mexico.
DEEPWATER

SHALES We have substantial acreage positions in shales Outside of North America, and following a substantial
basins in North America and Argentina. Today, restructuring of Shell’s options, we have retained a
we are minimising our spending in these plays, and substantial acreage holding in the Vaca Muerta regions
working to reduce the economic breakeven point of Argentina, which has liquids-rich shales potential.
and delineate the geological sweet-spots, ahead
of potentially more significant growth spending
after 2020.

Shell’s North America shales acreage includes natural

gas potential in the Marcellus and Utica shales, centred on
Pennsylvania in northeast USA and liquids-rich shales
in the Delaware Permian Basin in west Texas. With
the acquisition of BG, we have increased our Marcellus
acreage in addition to adding positions in Haynesville and
Bossier. We also hold gas and liquids-rich shale positions
at various stages of development in Western Canada.

SHELL INVESTORS’ HANDBOOK 2015 UPSTREAM 27

 In conventional exploration, we are executing a In 2015, we had six notable discovery and appraisal
strategy focused on both short-term value through successes – in Australia, Brazil, the UK and the USA.
CONVENTIONAL established ventures and mid-term growth through We made 13 near-field discoveries close to our existing

EXPLORATION expanding our heartlands and selectively exploring

in new frontier basins.
Upstream assets, with some of these new discoveries
already in production by the end of 2015.

Following the acquisition of BG and our exit from
offshore Alaska, exploration expenditure has been
reduced to $2.5 billion per year. Our investments
are balanced between:
■ exploration near our existing assets, which can be
brought on stream quickly and generate high value;
In 2015, in the Gulf of Mexico we had two material
appraisals close to existing infrastructure and areas
under development. From 2010 to 2015, we added
around 1.2 billion barrels of resources (including resources
from deals) in the Gulf of Mexico. In Brazil, progress has
been made at the Libra pre-salt field following our entry
into the position in 2013.

■ testing new geological concepts and finding new
oil and gas resources within our existing heartlands;
■ building new frontier positions in under-explored
selective frontier areas with the potential for significant
discoveries, but which will take longer to develop.
We added new conventional exploration acreage in
Algeria, Australia, Indonesia, Italy, Myanmar, Norway,
the UK and USA.
Shell will continue to deliver high-value exploration
through high-grading the integrated Shell and
BG portfolio, leveraging the best of both.

Conventional exploration themes Prospect size Time to production

(million boe) (years)

FRONTIER Build-up of acreage,

de-risking and drilling in
under-explored basins
>250 10+

HEARTLANDS High-value near field

exploration and drilling
new geological plays in 1-250 1-5+
Shell producing basins

Conventional exploration and appraisal: Wells 2016

Russia

UK
Netherlands Germany
Canada
Albania

USA
Egypt
China
Oman

Trinidad & Tobago

Malaysia Brunei
Nigeria

Tanzania

2016 Targets

Heartlands
Frontier

28 UPSTREAM SHELL INVESTORS’ HANDBOOK 2015

 DENMARK
We have a non-operating interest in a producing
EUROPE concession in Denmark (Shell interest 36.8%), which was
granted in 1962 and will expire in 2042. The Danish
government is one of our partners with a 20% interest.

IRELAND
We are the operator of the Corrib gas project
(Shell interest 45%). Corrib has the potential to supply
a significant proportion of the country’s gas requirements.
Gas started to flow from the field, which is 83 kilometres
off Ireland’s northwest coast, on December 30, 2015.

ITALY
We have two non-operating interests in Italy: the
Val d’Agri producing concession (Shell interest 39.23%)
and the Tempa Rossa concession (Shell interest 25%).
The Val d’Agri Phase 2 project is currently in FEED phase The Bellanaboy Bridge Gas Processing Terminal in Ireland,
and work is being carried out to manage key non-technical which processes gas from the offshore Corrib field.
risks. The Tempa Rossa field is under development and
first oil is expected in 2018.

NETHERLANDS
Shell and ExxonMobil are 50:50 shareholders in
Nederlandse Aardolie Maatschappij B.V. (NAM),
the largest hydrocarbon producer in the Netherlands.
An important part of NAM’s gas production comes from
the onshore Groningen gas field, in which the Dutch
government has a 40% interest and NAM a 60% interest.
In the second quarter of 2015, the Minister of Economic
Affairs of the Netherlands (the Minister) announced a
further reduction in the Groningen production for 2015
to 30 billion cubic metres (bcm), in an effort to diminish
the potential for seismic activity, while allowing a further
3 bcm to be taken from the Norg underground storage
to ensure security of supply. The State Council (“Raad
van State”) ruled in November 2015 that the Groningen
production limit be set at 27 bcm for the gas year 2016,
until the Minister takes a new resolution on NAM’s
production plan. The Minister is expected to approve
a new development plan for Groningen no later than
October 1, 2016. NAM produced 28.1 bcm from the
Groningen field in 2015. While the Dutch government
currently supports the full development of the Groningen
gas field, any decision to change the development plan
to reduce the ultimate recovery of resources would
adversely affect our proved reserves.
NAM also has a 60% interest in the Schoonebeek
oil field, which has been redeveloped using enhanced
oil recovery (EOR) technology. NAM also operates
a significant number of other onshore gas fields and
offshore gas fields in the North Sea.
NORWAY
We are a partner in 36 production licences on the
Norwegian continental shelf. We are the operator in 16
of these, of which four are producing: the Ormen Lange
gas field (Shell interest 17.8%), the Draugen oil field (Shell
interest 44.6%), the Gaupe field (Shell interest 60%) and the
Knarr field (Shell interest 45%). We have non-operated
interests in the producing fields Troll, Gjøa, Kvitebjørn
and Valemon.
UNITED KINGDOM
We operate a significant number of our interests on the UK
Continental Shelf on behalf of a 50:50 joint arrangement
with ExxonMobil. Most of our UK oil and gas production
comes from the North Sea. We have various interests
where we are not the operator in the Atlantic Margin
area, principally in the West of Shetland area (Clair, Shell
interest 28%, and Schiehallion, Shell interest approximately
55%). We also have non-operated interests in the Buzzard
field (Shell interest 21.7%), located in the Outer Moray
Firth, central North Sea; in the J-Block and Jade area
(Shell interest ranging from 30.5% to 35%); interests
ranging from 20% to 49% in the Beryl area fields; and
other operated and non-operated interests in offshore
blocks, with Shell interest ranging from 14.1% to 100%.
REST OF EUROPE
We also have interests in Albania, Germany
and Greenland.

SHELL INVESTORS’ HANDBOOK 2015 UPSTREAM 29

 BRUNEI
Shell and the Brunei government are 50:50 shareholders
ASIA in Brunei Shell Petroleum Company Sendirian Berhad

(INCLUDING (BSP). BSP has long-term oil and gas concession rights
onshore and offshore Brunei, and sells most of its gas
MIDDLE EAST production to Brunei LNG Sendirian Berhad (BLNG,
Shell interest 25%).
AND RUSSIA)
In addition to our interest in BSP, we are the operator
for the Block A concession (Shell interest 53.9%),
which is under exploration and development, and also
the operator for exploration Block Q (Shell interest 50%).
We have a 35% non-operating interest in the Block B
concession, where gas and condensate are produced
from the Maharaja Lela field.

We also have non-operating interests in deep-water

exploration Block CA-2 (Shell interest 12.5%) and
in exploration Block N (Shell interest 50%), both
under production-sharing contracts (PSCs).
IRAN
Shell transactions with Iran are disclosed separately. See
RDS Form 20-F for the year ended December 31, 2015.
IRAQ
We have a 45% interest in the Majnoon oil field that
we operate under a technical service contract that
expires in 2030. The other shareholders in Majnoon
are PETRONAS (30%) and the Iraqi government (25%),
which is represented by the Missan Oil Company.
Majnoon is located in southern Iraq and is one of
the world’s largest oil fields. Production at Majnoon
averaged 211 thousand boe/d in 2014 and 06
thousand boe/d in 2015.
We also have a 20% interest in the West Qurna 1 field,
which is operated by ExxonMobil.
According to the provisions of both contracts,
our equity entitlement volumes will be lower than
our interest implies.
We also have a 44% interest in the Basrah Gas
Company, which gathers, treats and processes
associated gas produced from the Rumaila, West
Qurna 1 and Zubair fields, that was previously being
flared. The processed gas and associated products,
such as condensate and liquefied petroleum gas (LPG),
are sold primarily to the domestic market with the
potential to export any surplus.
The Karachaganak gas processing complex in north-west
Kazakhstan. Karachaganak is one of the world’s largest
gas and condensate fields.
KAZAKHSTAN
We are the joint operator of the onshore Karachaganak
oil and gas condensate field (Shell interest 29.25%),
where we have a licence through to the end of 2037.
Karachaganak is one of the largest condensate fields in the
world and currently produces around 390 thousand boe/d.
We have a 16.8% interest in the North Caspian
Production Sharing Agreement which covers the offshore
Kashagan field, where the North Caspian Operating
Company is the operator. This shallow-water field covers
an area of approximately 3,400 square kilometres.
Phase 1 development of the field is expected to lead
to plateau production of about 370 kboe/d, on a
100% basis, with the possibility of increasing further
with additional phases of development.
Following the completion of pipeline replacement
and other preparation activities, the operator expects
production to start around the end of 2016.
We also have an interest of 55% in the Pearls PSC,
covering an area of approximately 900 square kilometres
in the Kazakh sector of the Caspian Sea. It includes
two oil discoveries, Auezov and Khazar.
We also have a 7.43% interest in Caspian Pipeline
Consortium, which owns an oil pipeline running from
the Caspian Sea to the Black Sea across parts of
Kazakhstan and Russia.

30 UPSTREAM SHELL INVESTORS’ HANDBOOK 2015

 MALAYSIA
We explore for and produce oil and gas offshore Sabah
and Sarawak under 18 PSCs, in which our interests range
from 20% to 85%.
Offshore Sabah, we operate five producing oil fields
(Shell interests ranging from 29% to 50%). These include
the Gumusut-Kakap deep-water field (Shell interest 29%)
where production via a dedicated floating production
system commenced in 2014. We have additional interests
ranging from 30% to 50% in PSCs for the exploration
and development of four blocks. These include the
Malikai deep-water field (Shell interest 35%), which we
are developing as the operator. We also have a 21%
interest in the Siakap North-Petai deep-water field and
a 30% interest in the Kebabangan field, neither of
which we operate.
Offshore Sarawak, we are the operator of 12 producing
gas fields (Shell interests ranging from 37.5% to 70%).
Nearly all of the gas produced is supplied to Malaysia
LNG in Bintulu, where we have a 15% interest in the
Tiga LNG joint venture, and to our Shell Middle Distillate
Synthesis GTL plant in Bintulu.
UNITED ARAB EMIRATES
In Abu Dhabi, we have a 15% interest in the licence
of Abu Dhabi Gas Industries Limited (GASCO), which
expires in 2028. GASCO exports propane, butane
and heavier-liquid hydrocarbons, which it extracts
from the wet gas associated with the oil produced
by the Abu Dhabi Company for Onshore Oil
Operations (ADCO).
We were working with ADNOC on the development
of the Bab sour gas reservoirs in Abu Dhabi (Shell interest
40%). However, following a careful and thorough
evaluation of technical challenges and costs, we have
decided to exit the joint development of the Bab sour
gas reservoirs with ADNOC and to stop further work
on the project.
REST OF ASIA
We also have interests in areas of Palestinian Authority,
Jordan, Kuwait, Mongolia, Myanmar, the Philippines
and Turkey.

We also have a 40% interest in the 2011 Baram

Delta EOR PSC and a 50% interest in Block SK-307.
Additionally, we have interests in five exploration PSCs:
deep-water block 2B, SK318, SK319, SK320 and SK408.

OMAN
We have a 34% interest in Petroleum Development
Oman (PDO); the Omani government has a 60% interest.
PDO is the operator of more than 160 oil fields, mainly
located in central and southern Oman over an area
of 114,000 square kilometres. The concession expires
in 2044.

We are also participating in the Mukhaizna oil field

(Shell interest 17%).

DISCOVER MORE ABOUT Safety training for the Malampaya gas-to-power project in the Philippines. The deep-water Malampaya project plays an important role
OUR MALIKAI DEEP-WATER FIELD AT in meeting the country’s energy needs.
WWW.SHELL.COM/MALIKAI

SHELL INVESTORS’ HANDBOOK 2015 UPSTREAM 31

 NIGERIA
Our share of production, onshore and offshore,
AFRICA in Nigeria was approximately 278 thousand boe/d
in 2015, compared with approximately 300 thousand
boe/d in 2014. Security issues and crude oil theft in
the Niger Delta continued to be significant challenges
in 2015.

ONSHORE
The Shell Petroleum Development Company of Nigeria
Limited (SPDC) is the operator of a joint arrangement
(Shell interest 30%) that has 17 Niger Delta onshore
OMLs, which expire in 2019. Of the Nigeria onshore
proved reserves, 196 million boe are expected to be
produced before the expiry of the current licences and
402 million boe beyond. To provide funding, modified
carry agreements are in place for certain key projects
and are being reimbursed.

SPDC supplies gas to Nigeria LNG Ltd (NLNG) mainly
through its Gbaran-Ubie and Soku projects. As part of the
strategic review of its interests in the eastern Niger Delta,
SPDC has divested its 30% interest in OMLs 18, 29,
and the NCTL. OML 25 is held for sale, subject to the
resolution of pending litigation. Additional divestments
may occur as a result of the strategic review.
The level of crude oil theft activities and sabotage in
2015 was significantly lower than in 2014, following the
divestment of OMLs 18 and 29, and the NCTL in 2015.
OFFSHORE
Our main offshore deep-water activities are carried out
by SNEPCO (Shell interest 100%) which has interests
in four deep-water blocks, under PSC terms. SNEPCO
operates OMLs 118 (including the Bonga field, Shell
interest 55%) and 135 (Bolia and Doro, Shell interest 55%)
and has a 43.75% interest in OML 133 (Erha), where we
are not the operator, and a 50% interest in oil production
lease 245 (Zabazaba, Etan). SNEPCO also has an
approximate 43% interest in the Bonga South West/Aparo
development via its 55% interest in OML 118. After close
consultation with our partners, it is clear that the Bonga
South West deep-water project requires further project
cost reductions to make it economically viable in the
current business environment. An FID is not expected
before 2017.
First oil was produced in the third quarter of 2015 from
the Bonga Phase 3 development. It is expected to
contribute some 50 thousand boe/d at peak production
through the existing Bonga FPSO export facility.
First oil was also achieved in the third quarter of 2015
from the Erha North Phase 2 development. The project,
in which SNEPCO has a 43.75% interest, is a tie-back
to the Erha FPSO. The Phase 2 development is expected
to result in around 120 million recoverable barrels of oil
from the field.
An engineer carries out routine checks on board the Bonga FPSO
facility off the coast of Nigeria.
Five shallow-water licences (OMLs 71, 72, 74, 77 and
79) were renewed in December 2014 and will expire
in 2034. In 2015, we sold OMLs 71 and 72, both of
which were non-producing.
EGYPT
ONSHORE
We have an interest in BAPETCO, a non-operated
joint venture between Shell and the Egyptian General
Petroleum Company. Onshore operations are located
in the Western Desert and we have an interest in nine
oil and gas producing development leases in the Badr El
Din & Obaiyed, as well as three exploration concessions
(North East Obaiyed, North Matrouh and North East
Alam El Shawish).
OFFSHORE
We have interests in two gas-producing areas offshore
the Nile Delta – where Rashpetco (Shell interest 40%) is
the operator of the Rosetta concession (Shell interest 80%)
and Burullus (Shell 25%) is the operator of the West Delta
Deep Marine concession (WDDM, Shell interest 50%).
We also have development rights over the Harmattan
Deep discovery and (subject to execution of a development
lease) the Notus discovery offshore the Nile Delta (Shell
interest 60%).
REST OF AFRICA
We also have interests in Algeria, Gabon, Kenya,
Namibia, South Africa, Tunisia and Tanzania.

32 UPSTREAM SHELL INVESTORS’ HANDBOOK 2015

 CANADA
We have more than 1,800 mineral leases in Canada,
NORTH mainly in Alberta and British Columbia. We produce
AMERICA and market natural gas, NGL, synthetic crude oil and
bitumen. In addition, we have significant exploration
acreage offshore.
SHALES
We continued to develop fields in Alberta and British
Columbia during 2015 through drilling programmes and
investment in infrastructure to facilitate new production.
We own and operate natural gas processing and sulphur-
extraction plants in Alberta and natural gas processing
plants in British Columbia.
SYNTHETIC CRUDE OIL
Synthetic crude oil is produced by mining bitumen-saturated
sands, extracting the bitumen from the sands and
transporting it to a processing facility where hydrogen
is added to produce synthetic crude. We operate the
Athabasca Oil Sands Project (AOSP) in north-east Alberta
as part of a joint arrangement (Shell interest 60%). The
bitumen is transported by pipeline for processing at the
Scotford Upgrader, which we also operate and is located
in the Edmonton area.
We also have a number of other minable oil sands leases
in the Athabasca region with expiry dates ranging from
2018 to 2025. By completing the Alberta Department
of Energy’s prescriptive development requirements prior
to their expiry, leases may be extended.
CARBON CAPTURE AND STORAGE
The Quest carbon capture and storage project
(Shell interest 60%), which is expected to capture and
permanently store more than 1 mtpa of CO2 from the
Scotford Upgrader, began operations in late 2015.
BITUMEN
Bitumen is a very heavy crude oil produced through
conventional methods as well as through EOR methods.
We produce and market bitumen in the Peace River
area of Alberta.
OFFSHORE
We have a 31.3% interest in the Sable Offshore
Energy project, a natural-gas complex off the east coast
of Canada, and other acreages in deep-water offshore
Nova Scotia and Newfoundland. We have a 50%
interest and operatorship in the Shelburne exploration
project offshore Nova Scotia. We also have a number of
exploration licences off the west coast of British Columbia
and in the Mackenzie Delta in the Northwest Territories.
USA
We produce oil and gas in deep water Gulf of Mexico,
heavy oil in California and from shales in Pennsylvania,
Texas, West Virginia, and Louisiana. The majority of
DISCOVER MORE ABOUT our oil and gas production interests are acquired under
OUR QUEST CCS PROJECT AT leases granted by the owner of the minerals underlying
WWW.SHELL.CA/QUEST the relevant acreage, including many leases for federal
onshore and offshore tracts. Such leases usually run
on an initial fixed term that is automatically extended by
the establishment of production for as long as production
continues, subject to compliance with the terms of the
lease (including, in the case of federal leases, extensive
regulations imposed by federal law).
GULF OF MEXICO
The Gulf of Mexico is our major production area in
the USA, and accounts for over 62% of our oil and
gas production in the country. We have an interest in
approximately 400 federal offshore production leases and
our share of production averaged around 253 thousand
boe/d in 2015. Producing assets are Auger, Brutus,
Enchilada, Mars, Mars B, Perdido, Ram Powell and Ursa,
which are Shell operated, and Caesar Tonga and Na
Kika, which are non-operated. In Ursa and Perdido-Great
White, production is supported by water injection.
Efforts are ongoing to reinstate water injection in Mars.
We also secured 17 blocks in the central Gulf of Mexico
lease sales in 2015.
ONSHORE
We have significant shale acreage, centered on
Pennsylvania and West Virginia in north-east USA,
in the Delaware Permian Basin in West Texas, and in
the Haynesville shale gas formation in East Texas and
Northern Louisiana.
CALIFORNIA
We have a 51.8% interest in Aera Energy LLC (Aera),
which operates in the San Joaquin Valley in California.
Aera operates approximately 15,000 wells, producing
around 130 thousand boe/d of heavy oil and gas.
Aera fields Belridge, Lost Hills, Cymric, McKittrick,
Coalinga, Midway Sunset, Ventura and San Ardo are all
operated under a combination of water and steam injection.
ALASKA
We operated for almost 50 years off the coast of Alaska,
including in the Cook Inlet, and the Beaufort and Chukchi
seas, until 1998. Between 2005 and 2012, we acquired
416 federal leases for exploration in the Beaufort and
Chukchi seas. Partial relinquishments and natural
expiration reduced this number to 339 federal leases
by the end of 2015. With the exception of 23 leases in
Harrison Bay in the Beaufort Sea held by a Shell (40%),
Eni (40%) and Repsol (20%) joint venture, all federal leases
are 100% Shell. We hold an additional 18 state leases
in North Slope Beaufort coastal waters, where we have
a 100% working interest.
In September 2015, we safely drilled the Burger J
well in the Chukchi Sea to a depth of 2,073 metres.
The well was deemed a dry hole, and the result rendered
the Burger prospect uneconomic. The well was sealed
and abandoned in accordance with regulations.
SHELL INVESTORS’ HANDBOOK 2015 UPSTREAM 33

North America Continued
We have since relinquished all but one of our federal
offshore leases in the Chukchi. This action reflects
the outcome of the Burger J well, and the high costs
associated with the project. In addition, while we
support regulation that enforces high safety and
environmental standards, the unpredictable federal
regulatory environment for the Alaska outer continental
shelf makes it difficult to operate efficiently.
In the summer months of 2016, we will remove remaining
equipment from our drilling sites in Alaska. Separate
evaluations are underway for our federal offshore leases
in the Beaufort Sea. Operatorship of the Harrison Bay JV
has been transferred to Eni, which operates the adjacent
Nikaitchuq field. We are also assessing our state offshore
leases and our interest in more than 1.2 million of Alaska
Foothills acreage we acquired from BG earlier this year.
We continue to believe Alaska and the broader Arctic
have strong exploration potential, and are areas that
could ultimately be important sources of energy to the
State of Alaska, the USA, and the world.
REST OF NORTH AMERICA
We also have interests in Honduras.

SOUTH BRAZIL in February 2016 and as such, this asset will remain in

AMERICA OFFSHORE
We operate several producing fields in the Campos Basin,
offshore Brazil. They include the Bijupirá and Salema fields
(Shell interest 80%) and the BC-10 field (Shell interest 50%).
We started production from the BC-10 Phase 3 project
in early 2016. In 2015, we returned the block in the
Sâo Francisco onshore basin area (Shell interest 60%)
to the regulator.
our Brazil portfolio. We also ceased exploration on one
offshore block in the Espirito Santos basins, BM-ES-27
(Shell interest 17.5%).
REST OF SOUTH AMERICA
We also have interests in Argentina, Aruba, Colombia,
French Guiana and Uruguay.

We operate 10 offshore exploration blocks in the frontier

Barreirinhas Basin (Shell interest ranging from 50% to
100%), along Brazil’s northern equatorial margin and one
offshore exploration block in the Santos Basin, BM-S-54
(Shell interest 80%) and we have a non-operated interest
in an offshore exploration block in the Santos Basin,
BM-S-50 (Shell interest 20%).

We have a 20% interest in a 35-year PSC to develop

the Libra pre-salt oil field in the Santos Basin. With the
BG combination, we now have a 30% interest in the
Sapinhoa and Lapa fields, as well as 25% interests
in the Lula, Iracema, Berbigão, Sururu and Atapú
West fields. The Berbigão, Sururu and Atapú West
fields accumulations are subject to unitisation agreements.

In 2015, we signed a purchase and sale agreement to

DISCOVER MORE ABOUT divest our operating interest in our deep-water production
OUR BC-10 FIELD AT asset Bijupirá Salema, pending regulatory approvals. The FPSO Cidade de Itaguaí is operating in the Iracema Norte
WWW.SHELL.COM/ Subsequently, we confirmed that the agreement for area of Lula field at a water depth of around 2,240 metres.
PARQUE-DAS-CONCHAS 80% of our interest in Bijupirá Salema was cancelled

34 UPSTREAM SHELL INVESTORS’ HANDBOOK 2015

IN FOCUS: With 103 years of continuous activity in Brazil, Shell was the first international
BRAZIL oil company (IOC) to produce oil on a commercial scale in the country, in 2003.
Our current presence in Brazil encompasses both the Upstream and Downstream
sectors of the value chain. Shell’s upstream footprint is mainly comprised of
deep-water assets, and we are operators and consortium partners in several
offshore fields in the Campos, Santos and Barreirinhas basins. The combination
with BG gave Shell an additional production of approximately 175 thousand
boe/d in Q1 2016 from the Petrobras operated pre-salt, which is among the
world’s most important discoveries in the past decade.

In the Campos Basin, we are the operators of the Bijupirá
and Salema fields (Shell interest 80%) and the BC-10 field
(Shell interest 50%). In March 2016, Shell started production
from the third development phase of BC-10.
In the Santos Basin, we now hold non-operated interests
in BM-S-9 (30%), BM-S-11 (25%), and BM-S-50 (20%)
blocks, all operated by Petrobras. In BM-S-9 we have
a 30% working interest in the Sapinhoa and Lapa fields.
Sapinhoa currently has two FPSOs in operation and Lapa
has one FPSO scheduled to start up later this year. In
BM-S-11, we have a 25% interests in the Lula, Iracema,
Berbigão, Sururu and Atapú West fields. The Iracema and
Lula fields have five FPSOs in operation, with one FPSO
scheduled to start this year and seven FPSOs planned.
As part of the solution to transport gas from the Santos
Basin, Shell has a 25% stake in the Lula Mexilhão Pipeline,
which carries natural gas produced by the FPSOs Cidade
de Angra dos Reis, Cidade de São Paulo and Cidade de
Paraty. The natural gas then travels to a treatment unit in
Caraguatatuba (São Paulo state). Finally, we also have a
25% stake in the Cabiúnas Pipeline (also known as Route
2) along with our partners on BM-S-9 and BM-S-11. With
an extension of 401 kilometres, Route 2 is the longest
subsea pipeline for gas transport in Brazil, with an
operational capacity to move 13 million cubic metres
of natural gas daily. It connects the Santos Basin to
a gas plant in Macaé, in the state of Rio de Janeiro.
With the successful conclusion of the BG combination,
and instant access to their reserves and production share
in the country, our oil and gas output in Brazil is now above
200 thousand boe/d – and on an upward curve – with
steady growth planned through 2020 and beyond.
Shell also holds a 20% interest in a 35-year PSC to
develop the Libra pre-salt oil field located in the Santos
Basin. The ultra-deep water Libra accumulation is located
approximately 170 kilometres (105 miles) off the coast
of Rio de Janeiro. The block covers approximately
1,550 square kilometres in water depths of around
2,000 metres (6,500 feet). The reservoir depth is
around 3,500 metres (11,500 feet) below the sea
floor. Exploration and appraisal drilling is underway,
and an extended well test is scheduled to start producing
in 2017. Libra will potentially make Shell and its international
partners in the consortium the first IOCs to produce oil
and gas in Brazil under a PSC model.
In exploration, Shell operates one offshore block in the
Santos Basin, BM-S-54 (Shell interest 80%), and 10 blocks
in Brazil’s Equatorial Margin offshore Barreirinhas Basin,
an area of considerable geological potential.

Santos Basin floating production, storage and offloading (FPSO) unit schedule
FPSO Name: Chartered/ Shell interest Capacity – oil Capacity – gas
Number Cidade de Location owned (%) Start-up [A] (kboe/d) (mmscf/d)
1 Angra dos Reis Lula Chartered 25 2010 onstream 100 177
2 São Paulo Sapinhoá South Chartered 30 2013 onstream 120 177
3 Paraty Lula North-east Chartered 25 2013 onstream 120 177
4 IIhabela Sapinhoá North Chartered 30 2014 onstream 150 212
5 Mangaratiba Iracema South Chartered 25 2014 onstream 150 283
6 Itaguái Iracema North Chartered 25 2015 onstream 150 283
7 Maricá Lula Alto Chartered 25 2016 onstream 150 212
8 Saquarema Lula Central Chartered 25 2016 150 212
9 Caraguatauba Lapa Chartered 30 2016 100 177
10 Replicant Lula South Owned 25 2017 150 212
11 Replicant Lula Ext. South Owned 25 2017 150 212
12 Replicant Lula North Owned 25 2018 150 212
13 Replicant Atapu South [B] Owned 25 2018 150 212
14 Replicant Berbigáo/Sururu [B] Owned 25 2018 150 212
15 Replicant Atapu North [B] Owned 25 2020+ 150 212
16 Lula West 25 2020+ 150 212
17 Libra Pilot Libra 20 2020+ 180 424
[A] Operator’s view.
[B] The Berbigão, Sururu and Atapu accumulations are subject to unitisation agreements.

SHELL INVESTORS’ HANDBOOK 2015 UPSTREAM 35