Shell Technology Report by wyagos

SHELL TECHNOLOGY REPORT

The power of innovation

initial concepts and ideas

w w w. s h e l l . c o m / t e c h n o l o g y

CONTENTS

Nonstop Innovation

Smart Fields速

Seismic imaging

Electromagnetic imaging

Snake wells

LNG

Refinery equipment

Catalysts

Styrene monomer/propylene oxide

screening

For more information, please visit the website.

MAIN SHELL TECHNOLOGY CENTRES

Meeting Challenges

The Athabasca project

Amsterdam, the Netherlands

Enhanced oil recovery

Houston, USA

Swellable elastomers

Rijswijk, the Netherlands

CO 2 corrosion inhibitors

Coal gasification

Tight gas

Deep water

GTL Fuel

Bangalore, India

V-Power 速 diesel

Calgary, Canada

Exploring New Horizons

Doha, Qatar

Offshore wind

Hamburg, Germany

Cleaner diesel

Louvain La Neuve, Belgium

Ethanol

Muscat, Oman

Oil shale

Oslo, Norway

Surplus sulphur

Petit Couronne, France

Eco-Marathon

Seraya, Singapore

Carbon capture and sequestration

Thornton, UK

Draugen

CIS technology

Monotowers

OTHER SHELL TECHNOLOGY CENTRES

application

production

demonstration

development

research

T E C H N O L O G Y A N D I N N O VAT I O N F L O W Technology implies much more than research and development. It is the whole sequence from creating scientific ideas, turning those ideas into technological innovations or tools, and then applying them. E

S E L E C T E D PA RT N E R S H I P S

Colorado School of Mines, Golden, Colorado, USA

Russian Academy of Sciences, Moscow, Russia

Imperial College, London, UK

St. Petersburg State University, St. Petersburg, Russia

Institute of Coal Chemistry, Taiyuan, China

Tsinghua University, Beijing, China

MIT, Cambridge, Massachusetts, USA

TU Delft/TNO, Delft, the Netherlands

NTNU-SINTEF, Trondheim, Norway

University of Texas, Austin, Texas, USA

Qinetiq, Farnborough, UK

“

Meeting the world’s growing energy needs in an environmentally responsible manner is a tremendous challenge. Technology is essential to answering that challenge. Shell has been at the forefront of innovation for over 100 years. The launch of the Murex, the world’s first seagoing tanker, revolutionised oil product transport in 1892 and helped establish Shell as a major force in the industry. A succession of advances followed – right up to the present day. I am excited about the first Shell Technology Report because it underlines the continued importance of innovation for us. We’re developing sophisticated methods to maximise the recovery of oil and gas from existing fields, unlock new hydrocarbon resources, and provide cleaner fuels and petrochemicals for the future.

SHELL HAS BEEN AT THE FOREFRONT OF INNOVATION FOR OVER 100 YEARS Scientific advances provide only part of the answer to our challenge. Tomorrow’s increasingly complex energy projects – often in frontier locations like ultra-deep water or the Arctic – will oblige us to apply new technologies at an unprecedented scale. To do so often requires long-term commitment and many billions of dollars of investment. Our proprietary Gas to Liquids (GTL) technology, for example, took 25 years to develop. It offers new ways of delivering natural gas as clean-burning, efficiency-boosting liquid transport fuel and other products to consumers around the world. Now we’re pursuing experimental technologies that we hope will pay dividends for future generations by unlocking new energy sources such as oil shale and biomass. To mitigate the impact of carbon dioxide we’re also developing technologies to capture and store CO2 and investing in alternative energies such as wind and solar. And we continue to improve our refining and chemical operations and their products.

Chief Executive Jeroen van der Veer

Behind all these innovations lies perhaps our most valuable resource – Shell’s people. They are essential to ensuring that we translate promising research into real innovation and technology – and allow Shell to deliver on its commitment to meeting the energy challenge.

WE TRANSLATE

PROMISING RESEARCH INTO REAL INNOVATION AND TECHNOLOGY

“

Group Chief Technology Officer Jan van der Eijk

My career at Shell began in basic research and I have never lost my deep sense of the beauty and glory in technological discoveries. But I am equally aware that new technology is useless unless you know how to apply it. That’s why my Shell colleagues and I are committed to turning innovative ideas into practical ways of providing the energy and petrochemicals societies need to grow and prosper. We are on the eve of a new energy revolution, driven by the world’s need for affordable energy and by the very real threat of climate change. Shell is exploring increasingly hostile environments for new oil and gas reserves, while developing the technology necessary to extract them in responsible and economically viable ways. Our snake wells and smart wells enable us to access resources unreachable just a few years ago. Our deep water know-how does the same. Shell has a long commitment to developing the novel technologies required to tap unconventional resources. In the 1970s we pioneered liquefied natural gas. Today our focus is gas to liquids, oil sands, and coal gasification which extracts cleaner energy from one of the world’s most abundant energy sources. Tomorrow, it may be oil shale and coal to liquids. Many of the technology advances in these and other fields are protected by patents. In the drive to slow the build-up of greenhouse gases, Shell is pursuing cost-effective ways of capturing carbon dioxide from large sources such as power plants and storing it safely underground. Shell’s commitment to renewable energy is plain to see in projects like our first offshore wind farm and our involvement in biofuels.

Shell’s adventurous spirit has often led to great technological achievements In many of these pioneering projects, Shell works with partners – governments, universities, research institutes and other companies. We know from experience that good ideas often bear fruit through collaboration with organisations whose strengths differ from our own. In turn, our partners benefit from our technology and our ability to apply it on a large scale. Shell’s adventurous spirit has often led to great technological achievements. In this report you will find that spirit very much alive. Just as we look back on our past with pride, we also look forward with eagerness to the coming decades and Shell’s continued role in securing the planet’s energy future.

“

EXPLORING NEW HORIZONS

TO APPLY IT

TACKLING CHALLENGES

UNLESS YOU KNOW HOW

CONTINUOUS INNOVATION: PUSHING BOUNDARIES

“ NEW TECHNOLOGY IS USELESS

Nonstop Innovation

Since the early days of the oil industry, ingenuity and technical prowess have been essential to unlocking the affordable energy that makes modern economies tick. At Shell weâ&#x20AC;&#x2122;ve always nurtured a pioneering, can-do spirit â&#x20AC;&#x201C; one that keeps us at the forefront of new techniques to locate energy resources, extract them from increasingly difficult locations, and deliver them to customers. We are constantly pushing the limits of what is technically feasible, in everything from the sophisticated software used to map underground reservoirs to the novel tools we employ to deliver oil and gas from deep beneath the sea.

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Harnessing the power of the digital age Smart Fields® technology

As global energy demand grows, so does the need to get the most from existing oil and gas fields and to speed up the development of new ones. With easily accessible oil increasingly scarce, technology that enables Shell to extract hard-to-tap resources is crucial to meeting the world’s energy challenge.

Shell’s Smart Fields® technology is one answer. It integrates digital information technology with the latest drilling, seismic and reservoir monitoring techniques to provide energy more efficiently. Fields can be unmanned, enabling engineers anywhere to operate them remotely. By monitoring a continuous flow of information, engineers can act swiftly to optimise production. Operations which might once have taken several weeks to complete may now take only hours. Smart Fields® technology could increase the global average amount of oil recovered from a field by around 10% and the amount of natural gas by around 5%. It also boosts production rates. Champion West, located 90 kilometres off the coast of Brunei in the South China Sea, is Shell’s flagship Smart Fields® project – the forerunner of more than a dozen expected to be in operation by 2009. For 30 years Champion West lay dormant, its rich oil reserves locked 2,000-4,000 metres (around 6,500-13,000 feet) beneath the seabed in a complex web of thin reservoirs deemed too expensive to develop.

But now Smart Fields® technology and new drilling techniques (see page 6) have turned Champion West into one of the world’s most advanced oil and gas fields. From deep beneath the seabed, sensors with fibre-optic cables relay digital information about temperature, pressure and other field conditions to control centres on land. Engineers can make speedy decisions on how best to extract the maximum amount of oil, monitor its movement within the reservoir and instantly spot production problems, such as blockages. They can take action – for example, by activating well valves electronically - either to solve a problem, or to increase production by better managing the oil flow. Smart Fields® technology plays a key role in Shell’s plans for future field developments.

NONSTOP INNOVATION

Seeing clearly underground with... ...Seismic imaging

Extracting oil would be simple if it were found in huge underground lakes. However it’s always more complicated than that. Hydrocarbons are held in porous rocks like water in a sponge, often in concentrations that are broken up and spread across a large area, making them difficult to find and produce.

Seismic surveys are the most powerful tool that exists to understand what’s going on beneath the surface. First used in the 1920s, the technology employs sound waves that reflect from underground rock layers, allowing us to see into the earth. Back then dynamite charges generated the sound and a few detectors captured reflected waves. The recorded data helped create simple two-dimensional maps. Today sophisticated measuring techniques, combined with powerful computers, create very high-resolution 3D images to reveal the features of a reservoir in more detail. Advanced imaging software helps Shell’s geophysicists process huge quantities of seismic data and filter out distortions caused by underground obstacles such as layers of salt and volcanic rock. They obscure the location of oil by interfering with the direction and velocity of reflected sound waves. Using Shell’s 12 interconnected virtual reality centres around the world, geologists and engineers in different locations can simultaneously study and discuss the same 3D image, which appears to float in the air in front of a large, curved screen. The result of this real-time collaboration is faster and more accurate decisions about how to develop a reservoir.

Seismic technology is constantly evolving. One new application of 3D helps Shell get the most from existing fields. Over the decades-long productive life of a typical reservoir, oil and gas move in unpredictable ways to different locations and are displaced by water, the most common fluid in the rock. By adding a fourth dimension – time – Shell engineers can closely compare surveys taken at intervals to track movements of oil and water and choose the optimum sites to drill new wells. At the Gannet F field in the North Sea off the UK, for instance, a 4D survey revealed substantial remaining oil in areas that had not yet been tapped. In July 2006 a new horizontal well was drilled and has since gone into production. And at the Draugen field offshore Norway (see page 28), a 4D survey showed where to locate a new well to avoid water and maximise oil production. Output increased to a record 77,000 barrels of oil a day. Surveys in 2001 and 2004 allowed Shell to further increase production, raising the target recovery rate to 73% of the field’s oil, up from 50% before.

Rodney Calvert – Chief Scientist Geophysics By pushing the boundaries of seismic technology and the ability to follow production changes in space and time (4D), Rodney secured nine patents in his field of research. His world teaching tour on 4D has strengthened ties with academia, governments and other companies.

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...Electromagnetic imaging NONSTOP INNOVATION

One new technology employed by Shell in deep water exploration uses very low-frequency electromagnetic waves to detect the existence of oil and gas. Receivers are placed on the seabed while a unit towed above them sends out electromagnetic waves. The receivers record how the waves move through the rocks beneath the seabed. Hydrocarbons are more resistant to electromagnetic waves than water so the readings can help to confirm oil and gas resources.

The technique is already paying off: it has enabled Shell and its partners to make several deep water discoveries. Shell is now helping to take a version of this technology to a new level. We are working with its Norwegian developers to make sharper three-dimensional images, using a wider range of frequencies and new computer programs, to improve our ability to detect hydrocarbons in complex geological formations.

For more information, please visit www.shell.com/technology

DID YOU KNOW?

The number of Shell patents worldwide is 26,621 (10,932 fully approved and 15,689 pending)

Accessing hard-to-reach resources Snake wells Shellâ&#x20AC;&#x2122;s snake well technology and drilling technique has lowered the economic barriers to accessing small and geologically complex reservoirs, enabling us to bring oil to market that was out of reach in the past.

Unlike conventional wells, snake wells follow complex horizontal paths, cutting through undulating layers of shale and sand to penetrate a number of reservoir pockets. Output is equivalent to several horizontal or vertical wells, lowering the cost of developing fields and improving overall oil recovery. Thanks to smart technology built into the wells, we can control hydrocarbon production from each of the connected reservoirs (see page 3).

Snake wells were made possible by the development of drills that can be steered with high accuracy, in conjunction with software pioneered by Shell that generates detailed computer models of underground geology and reservoirs (see pages 4-5). Accurate computer imagery of reservoirs and steerable bits enable drills to hit a target far underground that is less than two metres (6.6 feet) across. >>>

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The first snake well was drilled at Brunei’s Iron Duke oil field, a series of pockets in an area a mere 28 metres (92 feet) thick, two kilometres (1.2 miles) long and 300 metres (984 feet) wide. In the upper part of the reservoir sits a layer of natural gas whose pressure drives the oil to the well, so accurate drilling was essential to avoid hitting it. Shell’s second snake well, Champion West offshore Brunei, is eight kilometres (5 miles) long and drains the same reserves as two traditional wells, boosting Brunei’s production to the highest level in 25 years.

For more information, please visit www.shell.com/technology

NONSTOP INNOVATION

Bringing cleaner energy closer to home LNG Demand for natural gas – the cleanest fossil fuel – continues to accelerate. But with many large gas fields located far from customers, the challenge is cost-effectively delivering the fuel to users. Cooling natural gas to -162°C (-260°F) creates a clear, colourless, non-toxic liquid with 600 times less volume that is easily transported by ship. Gas is typically cooled by successive cycles of refrigeration using giant compressors and heat exchangers. Shell helped pioneer the liquefied natural gas (LNG) sector, as a partner in the construction of the world’s first plant designed to export LNG at Arzew, Algeria, in 1964. Since then Shell has participated in, and provided the technical advice for, projects that count for 40% of today’s global LNG production. With four decades of experience in production and transportation of LNG, Shell remains a pacesetter in the industry. The Brunei Liquefied Natural Gas plant has never missed a contractual delivery since being commissioned in 1972 and now operates at 150% of its original design capacity. The Qalhat plant in Oman, completed in 2005, has one of the lowest unit costs of any liquefaction facility yet built.

Shell continues to improve the technology behind LNG. A new liquefying process that uses a mix of refrigerants at the first cooling stage – rather than just one, as was normal until now – has helped us build the first LNG plant in extremely cold climates. By varying the concentrations of the refrigerants at our plant on Russia’s Sakhalin Island, the system can compensate for fluctuations of up to 25°C (77°F) in outside air temperature over the seasons and maximise LNG production. Shell is now developing the next generation of technology. In Shell’s new design, gas flows through two simultaneous, parallel cooling cycles, rather than the typical series of three successive cycles. This parallel setup boosts the maximum capacity of a single production unit to eight million tonnes per year, compared to the typical five million for a conventional design. It also improves reliability, since production can continue at 60% capacity if one of the parallel cycles shuts down.

On the road to cleaner diesel Refinery equipment As limits on sulphur in fuels have tightened over the years to fight pollution, Shell has steadily improved refining equipment to produce cleaner diesel.

All crude oil contains some sulphur. To remove it, refineries combine partially refined oil with hydrogen under high pressure and pour the mixture over catalysts to convert sulphur into hydrogen sulphide. It is then absorbed by solvents and separated from the oil. To help meet ever-tighter standards, Shell researchers redesigned equipment inside refinery reactors, the large steel vessels where catalytic reactions occur. The changes also made reactors more reliable and helped improve catalyst efficiency, lowering costs. In earlier designs, the oil trickled down from small pipes held by a horizontal plate in the top of the vessel, coming

into contact with 80-90% of the catalysts. However, that approach would have made it prohibitively expensive to meet new standards in Europe and the United States – which allow only traces of sulphur – because the catalysts would have needed frequent changing. As a solution, Shell developed a distributor with nozzles that spray the oil uniformly so that it comes in contact with 100% of the catalysts. The new design extends the catalysts’ life, reducing both the amount of catalysts needed over time and the number of costly shutdowns required to replace them. Shell also installed equipment lower down in the reactor to inhibit overheating, which can shorten catalyst life. Cool hydrogen is introduced into horizontal disk-shaped plates inside the vessel to keep the temperature below 400°C (752°F). Both the cooling disks and nozzles are compact designs, leaving more room for catalysts inside the reactors. Shell carried out over 200 projects over the past 15 years to upgrade refinery units or build new ones with these designs. More than two in three were third-party plants.

Making the most of rapid reactions Catalysts From plastic bottles to shampoo, many products we take for granted would not be affordable without catalysts to enhance the speed and efficiency of the chemical reactions necessary to make them. Today catalysts are employed in more than 80% of all refining and petrochemical processes. At Shell, catalysts play a key role in everything from our quest to unlock new sources of energy to our decades-old drive to improve everyday industrial processes. Take, for instance, the catalyst Shell developed to improve the efficiency of converting heavy grades of oil into useful products. In the process of refining crude oil, a thick residue is left over. The heavier the oil, the more residue there is. Until recently it was blended into low-value products like marine fuel, or required difficult and costly processing.

However, as the volume of heavy oil coming from places like Canada’s oil sands increases (see page 11), Shell has recognised the need for a cost-effective way to break down heavy feedstocks into lighter petroleum products. Shell’s new catalyst – small green pellets of aluminium oxide that are typically impregnated with nickel, molybdenum and other metals – provided the solution. By modifying tiny pores in the aluminium oxide, Shell scientists made the catalyst more efficient. For instance, it can process up to 35% more of the heavy crude from Canada’s oil sands than the catalyst used five years ago. Other Shell catalysts have steadily improved the production of ethylene oxide, an important building block for synthetic fabric, plastic bottles and anti-freeze. Today up to 90% of ethylene is converted into ethylene oxide when it is combined with oxygen at high temperature – compared to about 80% with the previous generation of catalysts. More efficient ethylene oxide production saves the chemical industry hundreds of millions of dollars. There are environmental benefits, too, through lower carbon dioxide emissions.

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Small steps to better chemistry Styrene monomer/propylene oxide Styrofoam cups, car bumpers and mattresses haven’t changed much on the outside over the past two decades. But thanks to step-by-step improvements, Shell has made the manufacturing process for the basic chemical building blocks of such products cleaner, more energyefficient and cheaper.

Taken together, the incremental advances since 1980 – when Shell started to commercially produce styrene monomer and propylene oxide – make a significant contribution in a world anxious to conserve resources and protect the environment. Shell’s newest plants use 35% less energy for every tonne of chemicals produced, while air emissions have been cut by 90%. Learning from experience, Shell researchers gradually introduced small improvements to the production process that were rolled out across factories. At Shell’s plant in the Netherlands, for example, computer analysis of how chemical components mix together inside the vessels where reactions take place led to a design change that both saved energy and increased output. The analysis found that installing baffles inside reactors broke up air bubbles and promoted better mixing. The improvement allowed ingredients to blend efficiently at lower temperatures, saving energy and cutting costs. The same technology was then introduced at Shell’s Seraya plant in Singapore. We also developed new wastewater treatment technology that recycles its own heat. Early this decade distillation columns were developed that could separate waste chemicals from the water. Heat released is re-used to warm other distillation columns. The technology is used in our latest plants. Almost 90% of liquid and solid waste is recycled or re-used for power generation at the Nanhai petrochemicals plant, a 50:50 joint venture with CNOOC in Daya Bay in Guangdong in China. The complex uses 25% less water than other styrene monomer and propylene oxide plants in China.

Carl Mesters – Chief Scientist Chemistry and Catalysis Carl is a leading innovator and authority on catalysis. He is active across many technical areas and has identified many business activities where his ideas can be applied. His work with catalysts shows how basic research can help create viable new commercial operations.

NONSTOP INNOVATION

Meeting Challenges

Some hurdles seem almost impossibly daunting, until a burst of inspiration or plain hard work opens a clear path around them. Shell has a long history of dedicating time and energy to solve the industry’s toughest technical problems – and we continue to do so. That’s just as true for large-scale challenges, like how to make cleaner use of the world’s abundant coal, as it is for local ones, like keeping corrosion at bay. At times, our efforts give impetus to major developments in the industry.

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Unlocking Canada’s oil sands The Athabasca project

Canada’s oil sands make it the world’s second largest potential source of oil after Saudi Arabia. New technologies now being used by Shell Canada have helped unlock their vast potential, increasing production volumes. The Shell Athabasca Oil Sands Project already provides more than 10% of Canada’s oil needs and has long-term plans to more than triple production to 550,000 barrels a day.

Oil sands are a blend of clay, sand, water and bitumen – a heavy, tar-like oil. Mined at the surface, the sands are treated with hot water so most of the heavy deposits settle out and the bitumen rises to the surface. The resulting mixture, called froth, is then treated with a solvent to further remove remaining sand and fine clay, producing clean, dry bitumen that can be upgraded into lighter synthetic crude oil products. Until recently, naptha was the commonly used solvent, but upgrading the resulting bitumen required a process known as coking to extract high-carbon components, leaving lighter, more easily refined oil. Coking, however,

reduces the volume of the final synthetic crude by 15%. A breakthrough came when Shell replaced naptha with a paraffin-based solvent that removes more water, fine solids and heavy carbon from the froth. In this cleaner state the bitumen can be upgraded in a different process, which adds hydrogen under pressure and at high temperature. The payoff is increased volume: for every 100 barrels of bitumen, upgrading yields about 103 barrels of synthetic crude, a 21% gain over traditional coking methods.

MEETING CHALLENGES

Getting the most from existing fields Enhanced oil recovery

When an oil field reaches the end of its normal life, two-thirds of its oil on average is still left in the ground because it is too difficult or too expensive to extract. But as global energy demand increases, so does the need to find ways of recovering more oil from existing resources.

A range of proven techniques can enhance recovery, adding significantly to the amount of oil extracted from mature fields. They involve injecting steam into reservoirs to reduce the oil’s viscosity and ease its flow, injecting gas to push oil out or to thin it, or injecting chemicals that free trapped oil. Shell pioneered the injection of naturally-produced carbon dioxide to boost oil recovery in Texas, USA, in the 1970s. Now we are investigating ways of using carbon dioxide captured from man-made sources such as power plants to do the same job. As well as increasing oil recovery, these methods reduce emissions of CO2 into the atmosphere (see page 28).

Steam injection has proved to be one of the most successful ways of boosting oil recovery. Shell pioneered this method in the 1960s in the large, complex Tulare reservoir of the South Belridge field in California, USA. To date more than a billion barrels of oil have been produced from this field – operated by the Aera joint venture – using steam injection. It is still one of the largest such projects in the world, with recovery rates as high as 70% in many parts of the field. Shell is currently working on several pilot projects with Petroleum Development Oman. At Qarn Alam, steam injection assists the gravity drainage system already in place by heating the oil to reduce viscosity. At Marmul, injected chemicals are expected to boost production by around 10%. And gas injection is used at Harweel to free trapped oil.

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Playful inspiration keeps oil flowing Swellable elastomers

The inspiration hit a Shell researcher when he visited a shop to buy a present for his children. Watching a toy dinosaur grow to three times its original size when soaked in water, he thought, ”If a toy can do this, why not a tool?”

His brainstorm is now helping Shell revolutionise the way it tackles a difficult problem facing all oil companies: how to limit the flow of underground water that eventually accompanies all oil production. Excess water can bring even the most productive oil wells to a premature end, sometimes within months of startup. As a well matures the amount of water produced with the oil increases, reducing profitability until finally the well is abandoned. To limit the flow of water, our toy-shopping researcher’s idea developed into what are known as swellable elastomers – synthetic rubber seals that expand on contact with water. Elastomers are fitted to the entry points of the steel pipes in the wellbore through which oil flows to the surface. If water starts to mix with the oil, they swell and seal off the route directly. Swellable elastomers, a Shell-patented technology, are cheaper and simpler than conventional methods of using mechanical seals or cement to isolate reservoir zones. Their rapid deployment from conception to use spanned just 18 months and is testimony to their value. They have been installed in wells in several countries, including more than 150 Petroleum Development Oman wells where they increased production by more than 1.5 million barrels of oil by the end of 2006. On average they paid for themselves in just one month.

MEETING CHALLENGES

Protecting the pipes CO2 corrosion inhibitors

It’s common knowledge that carbon dioxide is released by burning fuel for power generation and transportation. Less well known is how much corrosion CO2 can cause as a by-product of crude oil and gas production.

CO2 is highly acidic and can chew through pipelines and other metal infrastructure, disrupting production and damaging the environment. The oil industry already spends billions of dollars each year fighting corrosion, but the importance of protection is growing. Many new energy resources now being developed in extreme conditions, such as ultra-deep water, have high CO2 concentrations that corrode metal more rapidly. The escalating size of modern oil and gas projects means there are many more kilometres of infrastructure to protect – often in the Arctic or other fragile environments. Anti-corrosion technologies are common in the industry. Shell helped develop corrosion-resistant super-alloys, chemical additives that form a barrier between oil and metal, and a technique that intentionally forms a protective layer of rustlike scale on the surface of metals when they come into contact with oil and gas.

The real challenge, however, is to apply the most effective technologies to each project. Production conditions that determine the rate of corrosion – the amount of water produced with the hydrocarbons, the water’s salt content, and the concentration of CO2 and other impurities – evolve over the life of a field, which can stretch 30 years or more. Predicting those conditions and their impact on corrosion is the key to ensuring equipment will endure. In the 1980s, for example, Shell developed a corrosion-fighting system for the Thomasville gas fields in Mississippi, USA, which contain both CO2 and high concentrations of hydrogen sulphide, a toxic and acidic gas. Tests showed the gas was so corrosive it would eat through two inches of untreated steel a year. The technology Shell developed, a combination of corrosion inhibitors and a solvent to remove sulphur, is still protecting the field’s equipment 25 years later.

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Cleaning up an abundant resource Coal gasification

Coal is the world’s most abundant fossil fuel. But burning it releases greenhouse gases, toxic heavy metals, and sulphur, which is a main cause of acid rain.

Nations such as China, the USA and India have huge reserves of coal – often of poor quality with significant levels of polluting impurities – and a growing need for clean, secure energy. As global concerns increase over long-term hydrocarbon supply and the environment, coal gasification technology is helping expand the world’s range of cleaner energy alternatives. Shell technology can turn virtually any coal – even the lowest, dirtiest grades – into synthesis gas, a mixture of hydrogen and carbon monoxide that burns as cleanly as natural gas. It can power turbines to produce electricity, be turned into transportation fuel, or serve as a feedstock for chemicals and hydrogen.

To create synthesis gas, pulverized coal is mixed with oxygen and steam at 1,400-1,600°C (2,552-2,912°F). Shell’s technology uses compressed nitrogen to transport a dense stream of coal into the gasifier – a more efficient approach than the slurry of coal and water used by other techniques. Coal gasification emits less carbon dioxide and pollutants than traditional combustion. Moreover, the CO2 from gasification can be more easily captured than from smokestacks – potentially for storage underground (see page 28). During gasification, the high temperature melts mineral residue in the coal, which then falls to the bottom of the gasifier as slag. This can later be used as road-building material. Shell’s technology uses a protective layer of steam-filled pipes in the gasifier, which lasts the life of the plant and prevents molten slag from damaging the interior walls. In most rival processes, the brick gasifier walls are gradually eaten away by hot slag and must routinely be replaced, causing shutdowns that reduce efficiency. A 253-megawatt power plant using Shell’s coal gasification approach has operated in the Netherlands since 1994. The technology has been licensed for more than a dozen gasification plants, most of them in China.

Jose Bravo – Chief Scientist Physics and Physical Separations Jose is a world-renowned expert in separation technology. He is developing new equipment for refineries, chemical plants and gas operations. He believes part of his role as a chief scientist is to champion technology excellence.

MEETING CHALLENGES

Tapping trapped gas Tight gas

Recent technical advances have made it cost-effective for Shell to extract natural gas that is so firmly locked in rock it was once considered inaccessible.

In many places in the world, natural gas sits in tiny pores in rocks that must be broken open before it can flow to the well. One example is the Pinedale field in Wyoming, USA, which was discovered more than 60 years ago, but has hardly been developed. The U.S. Energy Information Administration estimates it holds enough resources to heat 10 million homes for 30 years. There are many challenges to extracting the gas. They include identifying where to place wells to maximise production, fracturing the rock to release the gas, and reducing the cost of drilling while at the same time lowering environmental impact. Pinedaleâ&#x20AC;&#x2122;s gas is held in rock about 1,000 times less permeable than the rock in a conventional gas field. To fracture it and open pathways, fluids are pumped into wells at pressures exceeding 1,000 bar (14,500 psi) â&#x20AC;&#x201C; 500 times higher than in normal car tyres. The paths are propped open by sand or man-made particles pumped in with the fluids.

As many as 25 fractures may be needed to produce gas from a single well. Shell reduced the average cost for fracturing by almost 60% by substituting sand for costlier man-made particles, working in 24-hour shifts to reduce equipment rental costs, and other measures. In reservoirs where gas flows readily through permeable rock, one or two wells per square mile (2.6 square kilometres) are sufficient to develop the field. But at Pinedale up to 65 wells per square mile are necessary because gas travels only a short distance, even after cracking the rock. To help make that concentration of wells viable, Shell lowered costs by shaving 24 days off the average drilling time, down to 41. For example, instead of dismantling rigs weighing about 900 tonnes to move them to the next drilling location, Shell fitted them with skids so they can be moved intact, in a process similar to moving an entire house.

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How low can we go? Deep water Imagine six Empire State Buildings stacked vertically. Now picture them stretching down beneath the ocean’s surface. That is the depth of water in which Shell is drilling for oil and gas.

Shell began research into deep water exploration and production in the 1960s and has led the industry at breaking depth records ever since. In 2004 we set a new world record of more than 2,300 metres (7,600 feet) at the Na Kika project for a subsea tieback – a system that connects a well on the seafloor by pipeline back to a centrally located floating production facility. Our deep water technologies have enabled us to unlock previously inaccessible oil and gas fields. The deep water environment is unforgiving, the challenges immense. Near-freezing temperatures on the seabed cause oil to congeal and gas to form ice-like hydrates, while pressure at these depths is so great that technicians must work using remotely operated vehicles. Waves and currents cause vibrations that place extreme stress on equipment. For more information, please visit www.shell.com/technology

Shell technology has been key to meeting these challenges. For instance, Shell inventions prevent gas hydrates and congealed oil from blocking underwater pipes. We developed new chemicals, based on fish protein, to prevent freezing. They are injected into the hydrocarbons in far lower doses than traditional chemicals, significantly lowering costs. So far they have saved millions of dollars at Shell operations in the Gulf of Mexico. Shell also invented pipe-in-pipe heating, using an electric current to warm the oil and gas inside an inner-pipe, which is insulated from the freezing water by an outer pipe. Going deeper requires new platform designs too. In the 1990s we used mass production techniques to dramatically reduce the cost of tension leg platforms. These platforms, which allow operations at water depths of more than 900 metres (3,000 feet), float on the surface and are secured to the seabed at four corners by groups of stiff tethers – tension legs – that eliminate virtually all vertical movement of the structure. The groundbreaking Na Kika project – designed, built and installed by Shell – used a new configuration to simultaneously develop six independent fields located offshore from New Orleans, USA. The fields are connected via underwater pipes to a centrally located host platform. This was the first time a centralised system, equipped with fluid processing facilities and pipelines for export to shore, had been used to exploit such a large cluster of dispersed fields, located up to 43 kilometres (27 miles) from the host. Named after the Polynesian god of the Octopus, this set-up has helped unlock small and medium-sized deposits that were uneconomic to tap individually. Shell’s newest projects continue to push boundaries. The Perdido development in the Gulf of Mexico, due to start production around the turn of the decade, will use a new system that clusters up to 19 wells on the seafloor, rather than having them dispersed across a large area. These will be connected to a spar - a type of platform that floats on the surface like a vertical can - with the capacity to drill, operate and maintain many more wells than traditional models. These improvements will reduce costs and the project aims to provide sustained production capacity of about 130, 000 barrels of oil equivalent a day.

MEETING CHALLENGES

From natural gas to cleaner diesel GTL Fuel

Road transport is one of the largest sources of carbon dioxide emissions and a major cause of smog-generating pollutants in cities. More vehicles on the road and tighter regulations increase the need for fuels with fewer harmful emissions.

One answer is Shell’s pioneering Gas to Liquids (GTL) technology, which produces a clean liquid fuel derived from natural gas – thereby helping to unlock the vast potential of the world’s gas resources and increase energy security. GTL products are colourless, odourless, biodegradable and virtually sulphur-free. They emit fewer polluting emissions than conventional fuel when burnt. Diesel blended with GTL Fuel produces less carbon monoxide and fewer unburnt hydrocarbons and exhaust particles. GTL products are manufactured in three steps. First, natural gas is partially oxidized at high temperature and pressure to convert it to synthesis gas, a mixture of hydrogen and carbon monoxide which will more readily react with catalysts. The synthesis gas is then chemically converted into a liquid. This liquid is refined into a range of products, such as GTL Fuel, naphtha, kerosene and base oils for lubricants.

Shell is building the world’s largest GTL plant in Qatar, with production due to start around the end of the decade and rise to 140,000 barrels of products a day. The Qatar plant builds on experience from the world’s first commercial GTL plant of its type, launched by Shell in 1993 in Bintulu, Malaysia. Improvements in the efficiency of the catalysts to be used in Qatar will enable greater productivity than currently possible. GTL Fuel blended with diesel is already available to motorists in Europe and Asia. Shell eventually plans to market pure GTL Fuel, initially to power bus and taxi fleets in heavily congested cities where the environmental benefits are needed most. Trials with public transport in London and Shanghai have already been successful.

A winning formula V-Power ® diesel

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A diesel-powered car winning one of the world’s toughest and most prestigious endurance races sounds an unlikely scenario. But on 18 June 2006 that’s exactly what happened. The race was the Le Mans 24 Hours, the car an Audi R10 TDI and its fuel Shell V-Power® diesel, a blend of diesel and GTL Fuel, a product synthesized from natural gas. The Shell-powered Audi had already made motorsport history by becoming the first diesel car to win a major race against gasoline-fuelled rivals at the Sebring 12-hour in Florida two months earlier. The Le Mans victory confirmed its success, showing that V-Power® diesel technology could combine remarkable power with greater fuel efficiency. In both triumphs the Audi needed only half

the refuelling stops of its competitors, while producing less carbon dioxide and other emissions than conventional diesel. GTL Fuel is a clear, virtually sulphur-free liquid hydrocarbon which burns more cleanly and efficiently than diesel fuel. Produced at Shell’s Gas to Liquids plant in Bintulu, Malaysia, GTL can be used alone or, more commonly, as a blend with diesel fuel. Its purity helps to keep fuel injectors cleaner than ordinary diesel.

Exploring New Horizons

Fossil fuels will remain the worldâ&#x20AC;&#x2122;s main energy source for many decades to come and we are looking for ways to tap largely untouched deposits, such as oil shale. At the same time, secure, sustainable energy sources will increasingly be needed to meet growing demand. Weâ&#x20AC;&#x2122;re developing sustainable alternatives such as biomass, solar and wind â&#x20AC;&#x201C; often by partnering with companies whose specialised know-how can accelerate the process. We aim to drive down the cost of alternative energy sources and help overcome other practical hurdles to them becoming more widely available.

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Capturing the power of North Sea gales Offshore wind Wind is one of the cleanest sources of energy available. It’s renewable and increasingly cost-effective as a means of generating electricity. Wind farm projects on land, however, can raise objections because of their visual impact or proximity to homes. At sea that’s less of a problem. It’s windier, too.

Shell’s first offshore wind farm will provide enough carbon-free power to supply more than 100,000 homes, starting in early 2007. Sited in the North Sea, 10 kilometres (six miles) off the Dutch coast, it will provide 108 megawatts of power from 36 turbines connected by cable to an onshore electricity substation. It’s a joint venture with electricity company Nuon. As the first wind farm to face the full force of North Sea gales, the Offshore Windpark Egmond aan Zee had to be built to last. Shell’s offshore technical experience with oil and gas platforms helped ensure that the 115-tonne turbines can withstand the harshest weather. They are mounted on 55-metre (180 feet) towers and bolted to mighty steel foundations driven into the seabed in 20 metres (65 feet) of water. The towers must be strong enough to cope with winds of more than 100 kilometres (62 miles) per hour and repeated battering from waves. The components are coated to protect against corrosive sea conditions for a lifespan of 20 years.

Our experience with these turbines, which are spread over 27 square kilometres (10 square miles), will enable Shell to improve the technology and lower costs for electricity produced from wind. Results from an extensive analysis of the project’s performance and environmental effects – including the monitoring of local bird movements and its impact on marine life – will be regularly published and shared with research institutes. The Dutch government provided backing for the project – the first offshore wind farm in the Netherlands – as one step towards its goal of securing 10% of the country’s energy needs from renewable sources by 2020.

Converting waste to... ... Cleaner diesel

Diesel cars and trucks emit less carbon dioxide per kilometre than their petrol or gasoline counterparts, but they produce higher emissions of other pollutants: fine particles, nitrogen oxides and carbon monoxide.

Now Shell and partner CHOREN Industries are developing a new process to produce fuel from a cleaner and more sustainable source of energy – woodchips, straw and other biomass – which reduces pollution from diesel engines while at the same time lowering overall carbon dioxide emissions. There are several steps to the production process. Biomass is gasified by heating it, first at low temperature to create a charcoal-like substance, then at high temperature to produce tar-free synthesis gas. The gas is then converted into sulphur-free synthetic fuel using Shell’s Gas to Liquids technology (see page 18). The fuel produced is identical to the GTL Fuel produced from natural gas and can be used alone or as a blend with conventional diesel. Running an engine on biofuel emits about as much CO2 as running it on fossil fuel. The manufacturing process produces some, too. However, since biomass absorbs CO2 as it grows, overall CO2 emissions are significantly lower. This “secondgeneration” biofuel is seen as an improvement on earlier biofuels because it is produced from waste, rather than food crops. One technical challenge to widespread availability of the fuel is the cost and difficulty of transporting bulky biomass to production plants. A possible solution may be to transform it into a liquid form near the source. Following successful pilot production, CHOREN Industries is now building a commercial plant planned to start up in 2007. Shell, as partner, is contributing investment and our synthesis gas conversion technology.

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In 1908, automotive pioneer Henry Ford designed his revolutionary Model T to run on either gasoline or ethanol. Gasoline has since dominated the transport sector, but today there is resurgent interest in ethanol as countries seek more secure and cleaner-burning alternative fuels.

Converting waste to... ... Ethanol Ethanol, or grain alcohol, has been commercially available in gasoline blends for decades in countries such as Brazil and the USA. It helps to reduce overall greenhouse gas emissions in two ways: by reducing the amount of fossil fuels consumed by cars and because plants used to make it absorb CO2 as they grow.

New, powerful enzymes are used to separate the cellulose from the rest of the plant. A pre-treatment step increases the surface area of the plant fibre for the enzymes to act upon. And the plant’s lignin, which is an excellent fuel, is burned to drive the entire process by generating steam and electricity – eliminating the need to use fossil fuels such as coal or natural gas.

Shell has long been involved in the production, storage and distribution of ethanol and is now developing greener ways of producing it that are more energy efficient. Cellulose ethanol is an advanced biofuel. While traditionally ethanol is fermented and distilled from foods such as corn, sugar cane and potatoes, cellulose ethanol is made from plant fibre such as corn stalks, straw and potentially from woodchips and does not compete for the world’s food supplies.

Shell has partnered with Iogen Energy to build and operate the first cellulose ethanol demonstration plant in Ottawa, Canada, that entered production in 2004. The end product can easily be integrated into the existing ethanol fuel distribution system because the molecules of cellulose ethanol are exactly the same as those of conventional ethanol.

Charlie Williams – Chief Scientist Well Engineering and Production Finding solutions to real-world problems is what matters to Charlie. He has held numerous engineering, technology and operational management positions within Shell. The Mars Hurricane Recovery Project in the Gulf of Mexico, which he oversaw, was nominated for the Offshore Energy Achievements Awards.

Speeding up nature’s process Oil shale Imagine unlocking a new hydrocarbons source estimated by the US government to be one trillion barrels, equal to the world’s known conventional oil reserves. The energy scene would be transformed. This is a prospect raised by Shell’s pioneering tests to realise the potential of oil shale in the state of Colorado, USA. Shell is gradually heating the rock in the Green River Basin to accelerate the conversion of kerogen, an organic material, into high-quality liquid hydrocarbons lighter than ordinary crude oil. What would take nature millions of years to accomplish, we hope to achieve in less than five.

Previous attempts to unlock these vast resources involved mining the rock, crushing it and cooking it in airtight kilns, called retorts. Large amounts of water were used and the process produced mountains of spent shale. The oil produced was a heavy tar, requiring intensive refining and processing. Shell’s new technique, called in situ conversion, requires no mining and consumes less water. It recovers the hydrogen-rich part of the kerogen, which is easier to refine and will produce high-quality fuels such as naphtha, jet fuel and diesel. Electrical resistance heaters are lowered into drillholes to slowly heat the rock to more than 300°C (572°F), turning the kerogen trapped inside to light hydrocarbon liquids and gas with virtually no residue. >>>

Harold Vinegar – Chief Scientist In situ Conversion Processes Harold is one of the principal inventors of Shell’s in situ conversion processes and his research led to the formation of Shell Unconventional Resources Energy (SURE) in 2001. He has contributed to more than 50 external publications and earned some 150 patents across a variety of fields.

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Shell is working to find an environmentally acceptable way of producing oil from shale. A freeze wall – formed by pipes containing chilled, compressed liquid which turn the rock surrounding the heated area into barriers of ice – will prevent water entering the heated zone and oil leaving it. Shell is also investigating options to reduce the impact of carbon dioxide emissions from the process.

Economic questions remain too: how to get the oil out more efficiently, ensure quality and strike the right balance between the energy needed for recovering the oil and the amount obtained. Shell hopes the Colorado tests will provide enough answers to justify a commercial operation. Extracting oil from shale – which is found in more than 20 countries – would provide a major boost to the world’s energy security and supply.

DID YOU KNOW?

Shell Technology India was established in Bangalore in 2006. Its staff could eventually grow to more than 1,000 people.

Putting a by-product to good use Surplus sulphur

Oil and gas fields increasingly contain a high concentration of sulphur, a chemical which has widespread industrial uses. This increase, coupled with tighter regulations about sulphur content in fuel, has led to a rising global surplus of sulphur.

Shell Canada has developed new ways to help absorb this surplus. One is sulphur pellets which can be mixed with bitumen asphalt to make road surfaces more durable â&#x20AC;&#x201C; yet cheaper to build. Several trials have been successful and the first roads using this product are being built in China. Another is to add minute particles of sulphur to fertilisers, which not only lowers costs but can boost crop production by at least 12%. Shell has also developed a new sulphur concrete. It is more durable than the traditional variety and also more affordable because it uses a cheaper chemical modifier. Unlike normal concrete, this new product has a smooth, plastic-like surface that readily accepts pigment, making it ideal for use in construction and even for domestic applications such as garden tiles. It is expected to go on commercial trial in the Netherlands in 2007 before being marketed more widely. Before sulphur can be used in these and other industrial processes it must be separated first from hydrocarbons, then from toxic hydrogen sulphide gas using a chemical treatment that includes a Shell catalytic conversion process. The result is elemental, or pure, sulphur.

Joe Powell â&#x20AC;&#x201C; Chief Scientist Chemical Engineering Joe is excited by the recent boom in the application of chemical process principles to solve energyrelated problems. He believes that experimentation is the key to discovery. His achievements in the process development field have been rewarded with more than 30 patents.

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A little energy goes a long way Eco-marathon

Breadcrumbs or bamboo, ethanol or electric power: future scientists and engineers use all manner of fuels and materials as they compete to drive home-grown vehicles the maximum distance using the minimum of fuel in the Shell Eco-marathon.

The Eco-marathon was born in 1939 as a competition between Shell scientists in Illinois, USA. Since then similar events have taken place almost every year in various countries. The European Eco-marathon, first held in France in 1985, now attracts more than 200 teams from 20 nations.

In 2006 French students powered a car with biofuel made from their school canteenâ&#x20AC;&#x2122;s leftover breadcrumbs. Others used bamboo in their carâ&#x20AC;&#x2122;s chassis. And a pioneering Danish fuel cell converted 100% of its hydrogen into electricity, compared to the usual 95%.

Though over 60 years old, the challenge is highly contemporary. Traditional hydrocarbon reserves are finite but transport needs and environmental concerns grow relentlessly. The Ecomarathon challenges teams of ingenious students to design, build and run the ultimate fuel-efficient vehicle.

Alternative fuels are ever more prevalent: sunflower and soybean oil, solar and electric power, ethanol and hydrogen vie with petrol, diesel and LPG. Fifty-two teams used alternative fuels in the 2006 European competition, up from 21 in 2005.

In 1939 the winner drove the equivalent of just 21 kilometres per litre of petrol (49.4 miles per U.S. gallon). By 2004, the record for a petrol-fuelled vehicle had risen to 4,079 kilometres per litre (9,594.4 miles per U.S. gallon).

Putting a lid on CO2 Carbon capture and sequestration

A significant challenge facing the energy industry is how to meet growing demand while managing emissions of carbon dioxide, a major greenhouse gas.

Carbon dioxide has long been injected into the ground to coax more oil from reservoirs. Now Shell is working to develop costeffective technologies to capture man-made carbon emissions – from power plants and refineries, for example – and store them safely underground. CO2 is already captured for use in some industrial processes, but the high cost and substantial extra energy required present serious hurdles to widespread use. Moreover, questions remain about whether CO2 stored underground could eventually leak out. Shell is working with industry and government partners to find the most cost-effective solutions to the technical challenges involved.

store CO2 captured from a power plant, due to be completed by 2010, which will use Shell’s coal gasification technique to generate electricity (see page 15). Shell is also engaged in a plan to inject CO2 captured at a proposed gas-fired power plant to boost oil recovery at the Draugen field off the coast of Norway (see below). Other possible options under study include storing CO2 in coalbeds too difficult to be mined, where it will not only bond durably to coal but also displace natural gas that can be used as fuel. Converting CO2 into solids by inducing reaction with minerals is another. The solids could be used in construction materials.

Several storage possibilities exist. Storing CO2 in old oil and gas reservoirs, where non-porous rock contained the hydrocarbons for hundreds of millions of years, is a likely option. Vast underground saltwater deposits known as saline aquifers, in which the CO2 dissolves, are another. In 2007 Shell and partners are due to start research in Germany where CO2 will be injected into a saline aquifer below a depleted gas field over several years. And in Queensland, Australia, Shell and partners are exploring sites to

Closing the carbon loop Draugen

A joint project in Norway could become the world’s biggest operation to capture carbon dioxide from an onshore power plant and store it offshore. Shell and Norwegian firm Statoil plan to capture more than two million tonnes of CO2 a year at a proposed gas-fired power plant and pipe it 150 kilometres (over 90 miles) to the Shell-operated Draugen oil field offshore Norway. There it will be injected into the reservoir to help recover significantly >>> more oil.

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When Draugen’s oil reserves are depleted – perhaps after a decade – the captured CO2 will be diverted to the nearby Statoil-operated Heidrun oil field to boost production there. In each case some of the injected CO2 will be produced again with oil, but this will be re-injected so that none of the captured CO2 is released into the atmosphere. The proposed power plant, to be operational from 2010-2011, will use gas produced at Heidrun to generate electricity equal to the needs of several thousand homes. As a bonus, electricity to operate the Draugen and Heidrun fields will come from the power plant, ridding them of the need for gas turbine generators.

The project between Shell and partner Statoil still faces several challenges. These include further work on lowering the cost of capturing CO2 from the plant’s exhaust gas and the need to show that CO2 can be stored effectively underground at both Draugen and Heidrun. The Norwegian government is also seeking assurances that sequestering CO2 is a secure long-term solution. In 2007 Shell and Statoil plan to decide on the CO2 capture technology to be used. A final investment decision by both companies is expected in 2008.

Solar power: the next generation CIS technology

When it comes to energy, itâ&#x20AC;&#x2122;s easy to be a sun worshipper. Solar power converts the sunâ&#x20AC;&#x2122;s abundant rays into quiet, emission-free energy. Those are compelling qualities in a world of booming energy demand, anxiety over fossil fuel supplies and environmental concerns.

But solar is still too expensive to be a viable widespread electricity source. So Shellâ&#x20AC;&#x2122;s research focuses on one major goal: driving down cost. Shell has pioneered CIS (copper indium diselenide), a new generation of solar technology. Copper, indium and selenium particles are coated onto a glass sheet in layers 20 times thinner than a human hair, and are heated to form a compound that converts the power of the sun into electricity for consumers. CIS solar modules use 100 times less raw material in the electricityproducing layer than their crystalline silicon counterparts. Lower material and manufacturing costs mean the CIS modules promise to be cheaper in high-volume production. They have a smooth black exterior, which makes them particularly suitable for integration into walls and roofs of buildings. The biggest European application to date is in Wales, a striking 85-kilowatt installation that forms an entire side of an innovation and business centre. Shell and leading glass-maker Saint Gobain have formed a joint venture for largescale production and commercialisation of CIS solar technology.

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Renewable energy boosts gas recovery Monotowers

For decades the North Sea has proved a fertile source of oil and gas. But as the fields reach depletion, remaining hydrocarbons are found in ever-smaller deposits, making them costly to access.

To overcome this, Shell and a partner have built two singleleg unmanned platforms, called monotowers, powered by renewable energy from wind turbines and solar panels: a zeroemission way of extracting natural gas. These monotowers cost less than a third of most designs used a decade ago and are cheaper to operate, making it economically viable to tap smaller reservoirs. Each 95-metre-high (311 feet) steel monotower runs on just 1.2 kilowatts of power, less than it takes to boil a kettle. That compares to as much as 30 kilowatts â&#x20AC;&#x201C; supplied by cable, diesel generator, or gas engines â&#x20AC;&#x201C; for a typical unmanned platform with a helipad and emergency shelter. A fully-equipped, manned platform may need 40,000 kilowatts. The monotowers stand in 30 metres (98 feet) of water in the southern North Sea fields Cutter and K17. Each construction has two wind turbines and two banks of solar panels, with a back-up battery. Engineers can monitor production by radio signal from operation centres on land. Maintenance visits are needed only once every two years, adding to the low cost. Shell plans to install four more monotowers running on renewable energy in 2007 in the North Sea and may install them in other parts of the world.

Sergio Kapusta â&#x20AC;&#x201C; Chief Scientist Materials Sergio played an instrumental role in developing some of the corrosion control programmes that have allowed Shell to safely produce and transport hydrocarbons. He has published more than 70 papers in professional journals and at international technical conferences. In 2004 Sergio was honoured with a NACE Technical Achievement Award.

EXPLORING NEW HORIZONS

This document 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’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ 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 Report, 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, project delay or advancement, approvals and cost estimates; and (m) changes in trading conditions. All forwardlooking statements contained in this document are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forwardlooking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 2005 20-F (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 document, January 2007.

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 document. 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, such as “Oil reserves” that the 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. All references to “Group” are to Royal Dutch Shell plc (“Royal Dutch Shell”) together with all of its consolidated subsidiaries. References to “Shell”, “Group”, “Shell Group” and “Royal Dutch Shell” are sometimes made for convenience where references are made to the Group or Group companies in general. Likewise, the words “we”, “us” and “our” may also used to refer to Group companies in general or to those who work for them. These expressions may also used where no useful purpose is served by identifying the particular company or companies Royal Dutch Shell plc Carel van Bylandtlaan 30 2596 HR The Hague The Netherlands Registered Office: Shell Centre, London SE1 7NA Copies of this report are available via: www.shell.com/technology ECCN: Not subject to EAR VMS, The Hague, H6053

W W W. S H E L L . C O M / T E C H N O L O G Y

January 2007