DELIVERY & GROWTH FIVE-YEAR FACT BOOK - Shell

UPSTREAM
EXPLORATION
Shell’s exploration strategy is designed to replace production and
to build a strong new development portfolio for future growth. We
focus on major geological basins with known hydrocarbons. We have
had success accessing highly attractive acreage and built a worldclass
portfolio of new opportunities in the most attractive basins
around the world. We are focused on keeping our cost structure low
and competitive. Our application of technology, unique geological
knowledge, integrated gas positions, and early access to acreage help
deliver success for us.
DISCOVERIES
Shell has shown strong exploration performance over the past eight
years, with average additions of resources of over 1 billion boe Shell
share each year. In 2008 our exploration success rate was around
60%, adding 1.2 billion boe in resources from drilling and further
volumes from associated appraisal and development activities.
During the year we participated in 45 successful exploration and
appraisal wells and made discoveries in all our operating regions.
Notable discoveries in 2008 included tight gas in Alberta and
Louisiana, gas in Western Australia and oil in Kazakhstan and
Nigeria. Our exploration finding cost averages $2–3/boe over three
years, a competitive rate.
FAST APPRAISAL AND NEAR-FIELD EXPLORATION
Discoveries are brought on-stream as quickly as possible – in 2008
some 75,000 boe/d were produced from discoveries less than five
years old. In many cases we use ready-built infrastructure, allowing
us to bring about half our near-field exploration wells on-stream
within a year of discovery.
In 2008 we drilled 17 successful wells near existing fields. Three
examples – Brunei (MLJ2-06), the US Gulf of Mexico (Mars-A8)
and the Netherlands (L09-FA-103) together already contribute
about 8,000 boe/d production.
EXPLORATION RESOURCES ADDITIONS
billion boe %
2.0
100
1.5
1.0
.5
2001 2002 2003 2004 2005 2006 2007 2008
Oil
Gas
Success rate (%)
32 Shell Financial and Operational Information 2004–2008
75
50
25
INCREASING EXPLORATION FOCUS ON OECD
% exploration resources additions
100
75
50
25
OECD
Non-OECD
ACREAGE ADDITIONS
Since 2004 Shell has acquired exploration rights to over
350,000 km 2 of acreage. In that time our focus has shifted towards
the OECD and areas with political stability and benefits from price
upside. Approximately 75% of our 2008 discovery volumes were
within the OECD compared to 20% in 2004.
In 2008, Shell acquired exploration rights to some 40,000 km 2 of
new acreage mainly from exploration licences in Australia, Canada,
Colombia, Libya, Sweden and the USA (Alaska, Gulf of Mexico
and onshore Louisiana). In late 2008 we added further new acreage
in Brazil, Italy and Guyana for which agreements were finalised in
early 2009.
Shell has now built a very strong position in under-explored
acreage and we expect that in 2009 we will concentrate on drilling,
with lower spending expected on new acreage.
TECHNOLOGY
Shell uses appropriate technologies at different stages of evaluation.
We integrate our own technologies with the best from the external
market to reduce risk in our portfolio of potential developments.
We use these technologies to create value from assessing the scale,
risk, and resource potential of the geological basin to that of the
reservoir. In addition, we use technology to optimise the costs
and development scenarios required to bring the discoveries
into production.
As an example, Shell has invested over $100 million in highperformance
computer software that allows us to apply proprietary
seismic processing techniques. We combine this with technology
that places seismic sensors directly on the seabed and allows us
to better see exploration prospects beneath complex features like
salt bodies deep below the seabed. We have been working on subsalt
and deep complex imaging in the Gulf of Mexico, the North
Sea, and in Brazil. Fully integrating technology in our exploration
programme enables us to identify the most attractive opportunities,
manage risk and uncertainty, improve our success rate, and lower
our unit finding costs.
2001 2002 2003 2004 2005 2006 2007 2008