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14 Shell Investors’ Handbook
Upstream
EXPLORATION
Our exploration strategy is designed to
deliver new resources that grow production,
creating substantial value to Shell. We have
extensive acreage in high-potential basins
around the world and have had significant
success discovering resources in them.
We draw on our extensive geological
knowledge, deploy innovative
technologies, get early access to new
licences and focus on material opportunities
– both near existing infrastructure and
in promising new basins and plays. We
continue to focus on cost-efficiency and
making early decisions regarding a
prospect’s potential.
DISCOVERIES
Our exploration performance has been
robust. Over the past five years, we have
added discovered resources averaging
more than 1.9 billion boe per year.
Between 2009 and 2011 we added 7
billion boe including tight-gas resources.
During 2011, we participated in 417
successful exploration and appraisal
wells drilled outside proved fields. They
comprised 30 conventional and 161 tightgas
and tight-oil wells, and 226 appraisal
wells near known fields. New proved
reserves have been allocated to 197 of
these wells.
Eleven notable new discoveries and
appraisals were made during 2011. These
are in Australia, Canada, China, French
Guiana, Nigeria, the UK and the USA.
TECHNOLOGY
Shell continues to build on a strong
legacy of innovative technology for
exploration in deep water, near existing
fields or infrastructure and – increasingly
– in new tight-gas and liquids-rich shale
opportunities. Our research centres develop
concepts, algorithms and tools that are
integrated with leading-edge technologies
from the external market to enable the
identification, appraisal and development
of hydrocarbons in deeper and more
complex geological settings with lower risk
and cost.
We are a leader in the acquisition of
seismic data in deep water by means of
wide-azimuth surveys and ocean-bottom
sensors. These technologies, when
combined with proprietary processing
algorithms, interpretation software and
ever-greater computing power, allow
us to create sharper seismic images of
rock formations. We can then locate
drilling targets in the formations more
accurately. For onshore seismic acquisition
in support of tight-gas and liquids-rich
shale opportunities, we are developing
innovative fibre-optic and magneto-electric
sensor systems.
Advances in onshore well technology, such
as Shell’s proprietary light land rig and
lower drilling costs, allow us to develop
and produce resources that were previously
uneconomic. We have extended the
concept of a light drilling rig to offshore
operations, where we also have taken
advantage of automation to reduce the rig
crew’s exposure to hazards.
We have an outstanding safety record
in drilling deep-water wells. We brought
that expertise into the establishment of
the Marine Well Containment Company,
which provides containment systems for
deep-water wells in the US Gulf of Mexico.
In the shallower waters of Alaska, we will
have a dedicated oil-spill capping and
containment system designed to deal with
Arctic conditions.
We are locating and draining previously
stranded hydrocarbons near our existing
offshore field infrastructure with recordsetting
wells that extend laterally for
several miles from the drilling rig. We
are also developing new techniques to
understand and predict the distribution of
heterogeneities in tight gas and liquidsrich
shale reservoirs. This will enable us
to confidently identify productive “sweet
spots”.
ACREAGE ADDITIONS
Since 2007, Shell has acquired exploration
rights to some 360,000 km 2 . In 2011
alone, we secured rights to more than
140,000 km 2 of new exploration acreage
including approximately 12,000 km 2 of
positions in liquids-rich shales. Recent
significant additions are specified below.
ALBANIA
In February 2012, Shell signed an
agreement with Petromanas Energy to
become a partner in two onshore blocks.
This agreement is subject to governmental
approvals.
ARGENTINA
In 2011, Shell became partner in
three blocks in the Neuquen Basin. The
transactions were formally approved in
January 2012.
AUSTRALIA
In November 2011, Shell and Woodside
Petroleum Ltd (Woodside) were awarded
three blocks in the Canning Basin in the
offshore North West Shelf. The area covers
about 23,000 km 2 . Through the acquisition
of Bow Energy by Arrow Energy LNG, Shell
also added acreage to its Queenslandbased
coalbed-methane joint venture with
PetroChina.
BRUNEI
In June 2011, Shell became partner in the
offshore Block CA2, which has an area of
about 5,000 km 2 .
CANADA
During 2011, Shell acquired additional
liquids-rich shale acreage in British
Columbia and Alberta. In January 2012,
Shell was also the successful bidder for four
deep-water blocks offshore Nova Scotia.
The blocks were awarded in March 2012.
CHINA
In January 2012, Shell signed an
agreement with Ivanhoe Energy to acquire
its interest in the Zitong block in the
Sichuan Basin. This agreement is subject to
governmental approvals.
COLOMBIA
Shell was awarded Block 27 in the middle
Magdalena Basin, and it additionally
farmed into Blocks 28 and 3.
FRENCH GUIANA
In February 2012, French authorities
ratified Shell’s entry into the Guyane
Maritime block comprising about
25,000 km 2 of deep-water acreage, and
Shell assumed operatorship.
MALAYSIA
In March 2012, Shell signed exploration
PSCs and joint operating agreements in
offshore Sarawak for Blocks 2B and SK318
adding some 9,200 km 2 to our Malaysia
position.
NEW ZEALAND
In August 2011, Shell became partner
in two blocks in the deep-water Great
South Basin with a total size of about
32,000 km 2 .