Shell Brochure Chemwater

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Water research Effluent treatment plant, Pearl GTL, Qatar

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Managing water as a global resource ................................................................5Collaboration is the key

Future energy challenges ......................................................................................9Energy, economy and environment | Availability, accessibility and acceptability of energy sources | Energy, water and food

Water a key enabler ......................................................................................... 13Active policy discussions | An integrated environmental strategy

Driving water-efficient energy operations ...................................................... 17Unlocking shale and tight oil and gas, and coal-bed methane | Heavy oil | Injecting steam from recycled water | Enhanced oil recovery | Improved waterflooding efficiency | Cleaning produced water | Floating LNG | Reed beds | Reducing the water footprint in product manufacturing | Gas-to-liquids production |

Delivering solutions through partnerships ..................................................... 27Collaboration with international oil companies | Collaboration with technology institutes | Collaboration with non-industry organisations | Water management in biofuel production

Preparing for future energy and water challenges ....................................... 33Emerging technologies

ManaGinG WaTEr as a GLobaL rEsourcE

DrivinG WaTEr-EfficiEnT EnErGy oPEraTions

fuTurE EnErGy chaLLEnGEs

DELivErinG soLuTions ThrouGh ParTnErshiPs

PrEParinG for fuTurE EnErGy anD WaTEr chaLLEnGEs

WaTEr a kEy EnabLEr

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shell Technology centre rijswijk, the netherlands

Global demand for energy,

water and food is expected

to grow by 30 - 50% over

the next 20 years

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Water is a vital natural resource and

one that is often taken for granted.

Today, there is strong evidence of

substantial and increasing pressure on

the worlds freshwater supply. There is

also a growing awareness of the stress

nexus: the relationship between

energy, water and food. Over the next

20 years, global demand for each of

these is expected to increase by 30-

50%1, which will result in greater

pressure on supply and environment.

This makes the management of water

resources an issue of concern to the

whole of society, including governments

and commercial organisations.

1 World Economic Forum, United Nations and International Energy Agency

Managing water as aglobal resource

biologist testing the quality of water

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ManaGinG WaTEr as aGLobaL rEsourcE

COllabOraTiOn is The keyAn increasing focus on good environmental practice has given society a clearer picture of the complex relationships between energy production, carbon dioxide emissions, water and food. Agriculture accounts for 70% of all fresh water consumed compared with 20% for industry and 10% for domestic use.

Globally, however, energy producers are among the largest industrial consumers of fresh water. Many industrial activities depend on access to a substantial and reliable supply of clean

water, and the oil and gas industry is no exception. For example, the water is needed in oil and gas facilities for drilling wells and for injecting into oilfields to maximise the recovery of hydrocarbons and for the refinery operations that transform crude oils into products such as fuels and lubricants.

Over the next few decades, countries and energy companies will have to find more energy while meeting the environmental challenge. Against the backdrop of ever-increasing demand for energy, there will have to be greater emphasis on developing

Over the next few decades, countries and energy companies will have to find more energy while meeting the environmental challenge

new energy sources, including unconventional gas, oil sands and renewable energy such as biofuels, wind and solar.

As part of this shift, key individuals and organisations in the oil and gas industry are taking a strategic view of water management. However, this is not an issue that any industry, government or organisation can solve in isolation. Many players in society will have to work together to plan and introduce legislation and policies that strike a balance between energy, water and food. Defining and implementing the most effective policies and methods will require a shared commitment to continuous improvement and to sustained and concerted action.

Water flow from irrigation system

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Water for food production

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Downstream, retail station

Success will be to deliver

more energy and produce

less carbon dioxide while

globally freeing millions of

people from energy poverty

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in energy, fresh water and food, the

world faces three interconnected

challenges. These are complex and

major global issues that will test

ingenuity and resourcefulness.

equally, they will test peoples ability

to work together.

The growing global population and rising affluence are pushing up demand, not only for energy, but also for fresh water and food. This rising demand puts added strains on the environment and increases the potential for conflict. Society will have to recognise and address these pressures and the interconnected challenges for future energy supply.

energy, eCOnOMy anD envirOnMenTBy 2050, the global population will be about 9 billion, up from just under 7 billion today. At the same time, economies will grow and more people will have a modern, consumer lifestyle. This change, already noticeable in the developing economies, will increase energy demand. By 2050, the projected energy gap will need bridging by a dramatic moderation of demand and a significant jump in energy supply.

Economic growth will also affect the environment. The consensus of governments is that carbon dioxide concentrations in the

Future energy challengesatmosphere should be limited to avoid levels of global warming with significant negative consequences. The choices society makes about economic development and energy use will determine whether those consequences can be avoided.

availabiliTy, aCCessibiliTy anD aCCePTabiliTy OF energy sOurCesAs energy demand rises, companies will have to find new sources of energy and develop the technology to harness them. Furthermore, this will have to be done in ways that take into account the views of consumers and communities.

One example would be switching energy sources for power generation. Giving natural gas a more prominent role in the energy mix and lessening reliance on coal will enable countries to reduce air pollution and greenhouse gas emissions.

Natural gas can be the fastest and lowest cost way for countries to manage their carbon dioxide emissions as they meet growing energy needs; according to the International Energy Agency, the world now has enough technically recoverable gas resources to last 250 years at current levels.

seoul Tower and seoul city centre at night, showing high energy use

Future energy challenges are unprecedented and will require a new level of collaboration and leadership amongst governments, businesses, scientists and others

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fuTurE EnErGy chaLLEnGEs

Transport fuel is another area of focus. The need for greater energy diversity and the drive to reduce carbon dioxide emissions from the burning of fossil fuels have prompted many countries to include electric mobility, hydrogen and biofuels in their transport plans.

The energy in biofuels is derived from carbon in the biological carbon cycle (biomass) rather than from fossil carbon sources (e.g. oil, gas and coal). Bioethanol, for example, is an alcohol made by fermentation, mostly of the carbohydrates in sugar or in crops such as corn and sugar cane. The ethanol can be used as a vehicle fuel in its pure form in specially modified vehicles, but it is more usually added to gasoline to increase octane and improve vehicle emissions. Bioethanol is widely used in the USA and in Brazil; all gasoline sold in the latter country must include 20-25% ethanol.

Growing biofuel crops and processing them requires water. However, in south-east Brazil, sugarcane cultivation for the production of ethanol uses less water than the production of other types of biofuels and, equally important, is predominantly rain irrigated.

Downstream biofuels - virent, usa

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sakhalin Energy, Grand aniva LnG ship, sakhalin, russia

energy, WaTer anD FOODIn recent years, governments and commercial organisations have gained a clearer understanding of the nexus between the worlds energy, freshwater and food needs.

Growing populations will raise demand for food and greater affluence will see people consume more food, including more meat and dairy products, which will require much more fresh water to produce.

Meeting the increased water and food needs will, in turn, contribute to a rise in energy demand. Modern agricultural methods are energy and water intensive and require extensive use of fertilisers, which are mostly derived from fossil fuels. Large amounts of energy are required to process, transport, desalinate or recycle water for consumption. Equally, producing this energy requires water, for example when drilling wells, injecting water into reservoirs or refining crude oil.

The actions that society takes today will determine whether it succeeds in tackling these challenges. Ultimately, success will be to deliver more energy and produce less carbon dioxide while freeing millions from energy poverty and not compromising water and food supplies.

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Shell is working with the

World Business Council for

Sustainable Development

to explore the water use

associated with different

energy types

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The remaining 25% is for upstream operations: those associated with oil and gas exploration and production.

Shell is playing an active role in policy level discussions. For example, we have recently started work on a project to explore the growing stresses on the worlds energy, water, food and climate systems. We are also working with The Nature Conservancy, Wetlands International and the International Energy Agency.

The rising global population and the

rapid industrialisation and commercial

progress in developing economies are

the driving forces behind the surge in

global demand for energy. by 2050,

society could be using two-thirds more

energy than it does today. energy and

water are intrinsically linked. Producing

energy requires a reliable water supply,

so managing water resources even

more effectively is firmly on the agenda

for the worlds energy companies.

aCTive POliCy DisCussiOnsAs global freshwater supplies come under increased pressure and demand for energy increases, the energy sector is seeking to understand and improve its water use. Shell has been addressing the role that water plays in oil and gas processes for many years and is committed to assessing and managing its water footprint. Within Shell, the manufacturing of oil products and chemicals accounts for about 75% of freshwater use.

Water a key enabler

shell Technology centre bangalore, india

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WaTEr a kEy EnabLEr

Shell also is participating in various global initiatives guiding sustainable water management in the private sector. With the World Business Council for Sustainable Development, Shell is leading a multi-stakeholder project to create further insight into the water-energy nexus.

Driving the development of innovative solutions in energy technology is vital to Shell. An overall research and development spend of more than $1 billion in 2010 underpins this, with water playing a roll in our overall research activity. Through our teams in Houston, USA; Amsterdam and Rijswijk, the Netherlands; and Bangalore, India, we are also working on technical solutions to various aspects of the water management challenge.

Shells global technology centres in Houston, USA; Amsterdam and Rijswijk, the Netherlands; and Bangalore, India, are working on technical solutions to various aspects of the water management challenge

shell Technology centre amsterdam, the netherlands

an inTegraTeD envirOnMenTal sTraTegyParticipation in various specific initiatives and Shells response to the water challenge are in line with a wider environmental strategy that has a three-strand framework: compliance, improvement and preparation.

We continuously sharpen our focus on environmental management in our projects and operations. Our work with leading environmental experts is helping to improve our approach.

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For water use in the oil

and gas industry,

technology is a key

differentiator

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Most energy cannot be produced

without access to reliable supply

of water. in addition, oil and gas are

becoming more challenging to extract.

This involves increasing freshwater use.

The industry will have to improve water

efficiency across the value chain,

from well to refinery and beyond.

Shell is exploring new working methods and developing and deploying water-efficient technologies throughout its up- and downstream facilities.

The following sections describe some of the significant and successful techniques that Shell has applied to maximise water recycling and minimise waste-water production and freshwater use. These sections follow the value chain from finding and producing new resources through to refining and processing them.

Driving water-efficient energy operations

athabasca oil sands Project, alberta, canadaPinedale, Wyoming, usa

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DrivinG WaTEr-EfficiEnT EnErGy oPEraTions

fluid leakage into drinking water sources through fractures made in the deep shale reservoir is remote. When a well is designed and constructed with great care, groundwater will not be contaminated. To mitigate potential health and environmental implications from hydraulic fracturing, strong and fair regulations, that everybody has to adhere to, are needed. Hydraulic fracturing operations require more water than conventional gas production processes, but Shell reuses much of the water that is produced with the gas for the treatment of new wells. Depending on the amount of water recovered from the wells during clean-up and production, this approach can significantly reduce the volume of fresh water needed for the fracturing process, which may translate into saving a few million litres of water for each well completed. This will benefit the environment by reducing the source freshwater intake and minimising the disposal quantities. To achieve these objectives, water-treating technologies are tested and qualified in the field at our US projects. Increasingly, sources include non-fresh water, waste water and recycled formation water.

In 2010, for example, we agreed to fund a water recycling plant for Dawson Creek, Canada. The plant will treat waste water from the city so that it can be reused in our operations and for other industrial and municipal uses, such as watering local sports fields.

According to various studies, including one done by the Massachusetts Institute of Technology in the US, the water intensity of shale gas ranks among the lowest of all fuel sources. Across its lifecycle, shale gas-fired power still uses only half the volume of fresh water per MWh compared to power produced from coal and nuclear.

By 2012, natural gas is expected to make up more than half of Shells hydrocarbon production. Today, most of Shells natural gas production comes from conventional gas fields with production levels for shale and tight gas rising.

Economic development of tight and shale gas resources presents several technical and environmental challenges, as the formations are characterised by extremely complex structures of small pore, often narrower than a human hair.

In all cases, fracture stimulation is required to create large-surface-area, high-permeability pathways to enable the gas to flow into the well because of the poor flow properties of the gas-bearing rock. Key enablers to economic tight and shale gas development were the significant technological advances in horizontal drilling in the last two decades.

Oil and gas companies have used hydraulic fracturing for more than 60 years and it has been applied safely in hundreds of locations worldwide. It is a reservoir stimulation technique that relies on initiating and propagating fractures in the hydrocarbon-bearing rock by pressurised fluids injected at high rates. Hydraulic fracturing fluids typically are 99% water and sand, and around 1% chemical additives. We release information about chemicals used in our hydraulic fracturing operations (to the extent allowed by our suppliers) and support regulation to require suppliers to release such information.

However, as production of tight and shale gas increases, some people have expressed concern over the fracturing process. A report from the U.S. Department of Energy that looked at the potential health and environmental implications of hydraulic fracturing shares the prevailing view that the risk of fracturing

Developing shale and tight oil and gas resources and maximising field recovery are vital for meeting global energy demand. At the same time, managing the water footprint is essential.

unlOCking shale anD TighT Oil anD gas, anD COal-beD MeThane

natural gas is the cleanest-burning fossil fuel and, with new discoveries of conventional hydrocarbons likely to have peaked, tight and shale gas, and coalbed methane resources are playing an ever-more important role. This typically referred to gas from unconventional sources, includes tight-sands gas, shale gas, coal-bed methane and gas hydrates. The world has vast amounts of these gas resources but their economical recovery faces specific challenges owing to the characteristics of the formations where the gas is stored.

Marcellus shale operations, Pennsylvania, usa

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We are further reducing our environmental footprint by re-using the water of drilling and fraccing operations. At both Groundbirch and Pinedale, we reuse gas-processing water for fraccing, reducing the water in-take by 50%.

In Chinas Shanxi Province, where we are developing the Changbei field, we funded the construction of 240 underground water-storage tanks and 12 water-pumping stations, providing almost 3,000 people better access to drinking water.

heavy Oil

in a world with increasing energy needs, oil sands are becoming an important resource. Current oil sands extraction methods are water-based and require responsible management of water use to minimise withdrawals from fresh resources. shell is developing new technologies and processes to reduce the use of fresh water by increasing water treatment and recycling.

At the Athabasca oil sands project in Canada, Shell uses 2-3 barrels of water to extract 1 barrels of bitumen. We recycle all the water recovered from this extraction process, but need fresh

water to replace the water that evaporates. The government allocates about 2.2% of the Athabasca Rivers flow to the oil and gas industry. We have a permit to use 0.6% of the flow but we only used a small fraction of our allowance in 2010.

Water is necessary to separate the oil from the clay and sand. When oil is extracted from oil sands, a mixture of water, coarse sand, silt, clay and a little oil remains. This mixture, known as tailings, is stored in a pond near the oil sands mine. None of this water is released directly into the environment. The water from our tailings ponds is monitored, controlled and reused.

Tailings ponds, athabasca oil sands Project, alberta, canada

Shell has strict worldwide company standards for its well and facility designs and operating procedures. Equally, it has decades of experience in hydraulic fracturing. Our shale and tight gas onshore operations adhere to five operating principles. These provide a tested framework for protecting water, air, wildlife and the communities in which we operate. One of these principles is to conduct operations so that groundwater is protected and water use is reduced to an as low as reasonably practicable.

The tight gas that Shell produces comes from rocks a thousand or more metres below the aquifer that contain potable water. We will not operate wells where isolation of our completion and production activities from such groundwater is unachievable. Fracturing fluids are kept separate from this freshwater aquifers by lining the hydraulically fractured wells with multiple steel and concrete barriers. We do not hydraulically fracture wells unless we have pressure tested the wellbore for integrity.

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DrivinG WaTEr-EfficiEnT EnErGy oPEraTions

Our new tailings demonstration project, Atmospheric Fines Drying, that combines enhanced flocculation with dynamic filtration, is designed to accelerate water removal from tailings and to make it available for further reuse. Since 2006, we have invested more than $98 million in research that also helped to develop this new technology.

injeCTing sTeaM FrOM reCyCleD WaTer at schoonebeek in the netherlands, we are injecting steam from recycled water to extract oil. in january 2011 our joint-venture nederlandse aardolie Maatschappij (naM) resumed operations.

It receives water from a plant specially constructed at a nearby waste-water purification facility (NieuWater). The plant takes in treated sewage water from the facility and purifies it further to produce up to 10,000 m3 of ultra-pure water daily. The plant incorporates some of the most advanced water purification technologies.

enhanCeD Oil reCOvery

On average, primary and secondary recovery processes can extract only 30-35% of the oil in a reservoir. enhanced oil recovery (eOr) goes beyond this to maximise the proportion of hydrocarbons produced from a field and plays a key role in meeting increased energy demands.

Since the first waterflooding programmes in the 1930s, the oil and gas industry has gained a much clearer understanding of the effects that injected water has on a reservoir. Equally, it has a much better understanding of how the decisions on maximising

For EOR technologies, our research efforts focus on boosting oil recovery while meeting disposal standards and solving environmental challenges

schoonebeek, the netherlands

Towards the end of 2010, the seven oil sands mining companies in Canada signed a landmark agreement to create the Oil Sands Tailings Consortium. All the companies agreed to remove monetary and intellectual property barriers and to collaborate on future tailings research and solutions. An unprecedented step, the consortium reflects the companies commitment to socially and environmentally responsible operations and to respond to challenges for the industry to accelerate tailings reclamation.

In Shells view, this new relationship is a key step towards tailings solutions that will enable it to accelerate the pace of reclamation using the most advanced environmental measures.

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oil recovery will influence the volume of source water required for the programme, the quality of the water produced in the proces and the options for its disposal.

Injection fluids for EOR require chemical components, which, in turn, will be back-produced with the formation water, i.e. the water found naturally in the rock. In the EOR environment, produced water may contain chemicals such as the surfactants used to improve oil recovery and corrosion inhibitors, where these have been added to protect the facilities.

In oil and gas provinces around the world, environmental regulations are more stringent and complex than ever before. Operators must assess, manage and minimise the amount of dispersed oil and dissolved hydrocarbons in water and observe tight limits on the use of chemicals.

Shell has pursued a vigorous research and development programme in EOR and has devised a range of new technologies to boost oil recovery. For these new EOR technologies, our research efforts focus on enhancing oil recovery while meeting disposal standards and solving environmental challenges.

There are strict regulations on chemical EOR concerning the disposal of the oil, polymers and surfactants produced from thereservoir. Produced water may also be technically difficult tode-oil owing to the oils high viscosity and small droplet size. The best option may be to reinject produced water into the reservoir, but reinjection takes into account the effects of the residual oil on injectivity and how the residual chemicals will affect subsurface performance.

Shell is pursuing an innovative way of raising oil recovery rates by tailoring the properties of the injected water to maximise the recovery of oil from the reservoir

schoonebeek, the netherlands

Increasingly, three key water objectives are shaping EOR decisions: improving recovery by injecting conditioned water; minimising impact on the environment; and maximising the proportion of water that is recycled.

iMPrOveD WaTerFlOODing eFFiCienCy

For decades, the industry has been injecting water into its reservoirs to recover more oil. in recent years, shell and other operating companies have realised that a greater focus on the condition of the injected water and a clearer understanding of its chemical composition can help to boost oil recovery.

Waterflooding efficiency can be markedly improved by lowering the salinity of the injected water. The less salt in the water, the easier it is to dislodge the oil from the pores in the reservoir rock. With this in mind, Shell scientists are working onlow-salinity waterflooding (LSF).

The LSF approach enables operators to adjust the salinity and ionic composition of the injection water to suit a specific reservoir formation by taking into account, for example, the tendency for clay minerals to swell and for the reservoir to sour. Essentially, Shell is pursuing an innovative way of raising oil recovery rates by tailoring the properties of the injected water to maximise the recovery of oil from the reservoir.

Recently, various LSF trials have been held in oilfields in the Middle East. One Middle East location demonstrates the tremendous potential of the technology by an observed reduction of more than 10% around the wellbore. Along withour joint-

venture partners, we are working to further develop and scale upthe technology.

A central part of our on-going LSF research is to improve our understanding and control of flooding processes at the sub-porescale. One of the biggest challenges facing the development team will be to replicate laboratory successes onthe reservoir scale.

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DrivinG WaTEr-EfficiEnT EnErGy oPEraTions

For offshore environments, Shell is working with a vendor on plans for a special seawater desalination vessel that will supply water to support its LSF technology. A detailed study has been conducted into its suitability for improving oil recovery from new and existing fields in the deepwater Gulf of Mexico.

The system would optimise the treated seawater to reservoir conditions and help to increase the total oil recovery by 5-10%. This would be achieved without using chemicals, only seawater. In a slightly different configuration (water treatment and recovery), the vessel could be used to treat produced water and

ensure that it meets or exceeds stringent standards before being discharged to the sea. A separate concept is under study whereby the seawater desalination vessel would be used to store and mix special chemicals (surfactants and polymers) with water for injection into the reservoir to help maximise the increase in oil recovery.

Cleaning PrODuCeD WaTer

Produced water is the primary waste product from the separation of oil, gas and water at production facilities. it is typically a mixture of formation and injection process water containing oil, salts, chemicals, solids and trace metals. innovative treatment technologies help oilfield operators to clean waste water for recycling or safe disposal.

In its upstream activities, Shell produces more water from its reservoirs than oil. The relevant authorities closely regulate the discharge of produced water to the environment. Shell is developing and applying new chemical, physical and biological separation methods to clean produced water and enable it to be safely introduced into the natural environment as an alternative to disposal by injection into isolated underground formations.

FlOaTing lng Floating liquefied natural gas (FLNG) production is a revolutionary technology that enables the development of offshore gas fields that would otherwise be too costly or difficult to develop. Shells Prelude FLNG project is the worlds first such development and will be located off the Australian coast.FLNG technology reduces the impact on sensitive coastal habitats, as it avoids the need for pipelines to shore, dredging and jetty works, and uses product carriers that will be far from coastal reefs and whale migration routes. At the same time, the technology includes some innovative solutions for water management.

Hydrocarbons in produced water are either dispersed droplets or in solution. For gas production facilities, dissolved hydrocarbons are the main challenge. To meet the World Bank and International Finance Corporations environmental, health and safety guidelines for overboard disposal of produced water, the Prelude FLNG facility will be fitted with systems to remove dispersed oil and aromatic hydrocarbons.

floating LnG

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This approach uses advanced technology and is part of a commitment to minimise the volume of hydrocarbons for discharge. As a further benefit, the small volume of hydrocarbons extracted from the separation process can be regenerated and added to the product stream.

reeD beDs In Oman, Petroleum Development Oman (PDO, Shell share 34%) has created the worlds biggest commercial reed-bed water-treatment plant, a 235-ha facility that is treating water from the Nimr oilfield.

In parts of Oman, fresh water is extremely scarce, but nearly five barrels of produced water are brought to surface for every barrel of oil and this water has to be disposed of. The produced water contains small amounts of salts and oil, and is typically pumped back in the well.

In 2008, PDO engaged German company Bauer Resources to build a water-treatment plant at the Nimr oilfield that uses reed beds to clean contaminated water. Since its start-up late in 2010, the plant has been cleaning about 47,000 m3 of contaminated water every day. This approach saves cost and energy for reinjection, and has the potential to make water available for use by local communities.

The plant includes an upstream oil separator and a bio-based treatment facility that uses microorganisms to eliminate the contaminants. Biomass is also produced and can be used as an energy source. The treatment plant does not require any additional energy supply.

In 2011, Bauer Resources received the Global Water Award for Industrial Water Project of the Year for the innovative reed-bed water-treatment plant. PDO plans to double the plants water capacity, so that it can eventually treat 95,000 m of contaminated water a day.

nimr reed beds, oman

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DrivinG WaTEr-EfficiEnT EnErGy oPEraTions

reDuCing The WaTer FOOTPrinT in PrODuCT ManuFaCTuringWater use reduction has long been a priority in the downstream sector. In its refineries, Shell has introduced best available technologies to increase energy efficiency and reduce water consumption. Using less steam in manufacturing, for example, means a lower volume of water is necessary for heating and cooling.

Shell is constantly looking for ways to reduce water consumption. In the refining sector, this involves techniques such as recycling cooling water, steam-condensate recovery and developing (full) effluent reuse methods.

The next challenge in the manufacturing/downstream sector will be enhanced removal of trace components to meet planned and increasingly stringent environmental standards. Throughout its global downstream operations, Shell has focused on water management, reduction of water sources, general housekeeping and appropriate hardware for water-treatment facilities.

In project design, the greatest challenge is to integrate plans for energy, water and carbon dioxide footprint reduction into our proposals. In its new plants, Shell strives for an integrated solution that balances footprint reduction with the demands of operational reliability and lifetime costs. This utility-led design philosophy has shown that such approaches can also yield good economic results. gas-TO-liquiDs PrODuCTiOn

The water challenges that shell faces around the world come in all shapes and sizes, but few are on a bigger scale than the operations at the worlds largest gas to liquids (gTl) plant. it will

produce gTl kerosene for blending into a cleaner burning aviation fuel; gTl gasoil, a cleaner-burning diesel-type automotive fuel; gTl base Oils for premium lubricants; gTl normal Paraffin for detergents; and gTl naphtha, a high-paraffin feedstock for the petrochemical industry.

clarifier and bioreactors effluent treatment plant, Pearl GTL, Qatar

The water-processing facility at the mega-scale Pearl GTL plant is the largest in the world. It will recover andtreat industrial process water for reuse, at a volume comparable to that for a town of 140,000 people

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Pearl GTL, Qatar

Effluent treatment plant, Pearl GTL, Qatar

Construction of the Pearl GTL plant in Qatar has gone a long way towards meeting the worlds growing demand for high-quality liquid hydrocarbon products. A joint development by Qatar Petroleum and Shell, the plant will process about 3 billion barrels of oil equivalent over its life. The gas will come from the North field, which is the worlds largest single non-associated gas field and stretches from Qatars coast into the Gulf.

Water is in short supply in Qatars desert climate. It may be surprising to learn that the Pearl plant not only uses water but will produce as much water as GTL products. The chemical reaction that occurs when synthesis gas passes over catalysts in the plant produces water as well as the building blocks for GTL products. When fully operational, the amount of water that Pearl GTL produces is expected to make it possible to run the plant without drawing on Qatars scarce natural freshwater resources or on seawater.

Shell will use all this water as part of a strategy to prevent any liquid waste discharge from the plant. The water-processing facility at the Pearl GTL plant that will recover and treat all the industrial process water for reuse will be one of the largest in the world. With the capacity to treat 280,000 barrels of water a day, this facility will have flotation units, biotreaters, ultra-filtration units, reverse osmosis units, evaporators and crystallisers, and will be comparable to a plant for a town of 140,000 people.

After cleaning to remove hydrocarbons, inorganic contaminants and solids particles, most of the water will be used for steam make-up, cooling and utilities and a small amount of pure water will irrigate landscaped areas at the plant.

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Shells technology strategy

for water management is

based on open innovation

and active partnering

with governments and

academic institutions and

alliances with other

commercial organisations

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We are constantly seeking new and

innovative ways to reduce the need for

fresh water. effective water

management schemes are rooted in

co-operation and collaboration with

other stakeholders. around the world,

shell is forging technical and

commercial alliances and working with

local communities to address the water

challenge.

Shell works with many different companies, knowledge institutes and universities on water management issues. This includes participating in the Petroleum Environmental Research Forum (PERF) collaboration between international oil companies and research programmes with, among others, TNO, KWR Watercycle Research Institute, UNESCO-IHE Institute for Water Education and a range of universities, consultants and technology providers. Technology partners often rely on Shell for access to process facilities when conducting pilot studies.

In areas where there is potential competitive advantage, Shell will seek to develop proprietary technologies. In other

fields, Shell will seek to develop the technology it needs through collaboration with third parties or through the purchase of commercially available systems.

Shell works with water technology vendors in two ways: first, by helping to influence the development of tools and methods that it can apply in its operations and, second, by providing vendors with an industrial test bed. For Shell, the main objectives in these open collaborations are to find the best technologies and then to apply them in most effective ways to enhance oil and gas operations and minimise water use. A prime example is the full effluent reuse system applied at the Pearl GTL project in Qatar. The system was based on inputs from and extensive pilot test work at refineries and GTL sites with major water technologycompanies such as Veolia Water, GE/Zenon and Ondeo Industrial Solutions.

Delivering solutions throughpartnerships

construction northern water plant and Geelong refinery, australia (courtesy of barwon Water)

construction northern water plant and Geelong refinery, australia (courtesy of barwon Water)

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DELivErinG soLuTions ThrouGhParTnErshiPs

Shells technology strategy for water management is also based on open innovation and active partnerships with governments and academic institutions as well as with other commercial organisations. The open innovation route generally focuses on fundamental research and offers the potential to give universities the rights to publish some of the results that arise from the work conducted under the agreement.

COllabOraTiOn WiTh inTernaTiOnal Oil COMPaniesPERF is a research and development joint venture whose members are corporations engaged in the petroleum industry that recognise the importance of a clean, healthy environment and are committed to supporting co-operative research and development. It provides a vehicle for experts from the worlds leading international oil companies to exchange ideas and experiences in the field of environmental research and to conduct joint research projects on topics of shared interest. Shell has acted as a host for PERF events in recent years and has participated in several joint-industry projects.

COllabOraTiOn WiTh TeChnOlOgy insTiTuTesShell works with technology institutes such as the Wetsus Centre of Excellence for Sustainable Water Technology and the Institute for Sustainable Process Technology (ISPT) to develop sustainable water technologies for different sectors of the process industry.

Wetsus is an established international network of companies, universities and water knowledge institutes that focuses on researching and developing entirely new concepts and breakthrough improvements in existing water technologies. The projects are demand-driven. The approach is the integration of various knowledge disciplines such as membrane separation, microbiology, electrochemistry, crystallisation and adsorption.

To meet the current and future demands for fresh water and water reuse, sustainable desalination of seawater, groundwater and wastewater is required. Shell is involved in research on desalination and on the biofouling of membrane treatment systems. Biofouling is the accumulation and growth of microorganisms on the membrane surface and leads to an increase in the required feed pressure. The challenge is to develop membrane systems that are less susceptible to biofouling.

ISPT is a collaborative partnership of Dutch industries, universities and knowledge institutes. Its research programme covers aspects from fundamental research to technology implementation. Gravitational settling is a traditional technique for the separation of oilwater mixtures from oil wells, but using a new swirling flow technique for separation could significantly reduce the space requirements. Shell is providing guidance and test facilities for research students working on the development of such a device. This technology should have applications for dealing with rising water cuts on offshore platforms because it will offer a compact and flexible solution.

Geelong refinery, australia

29

oMEGa pilot plant at shell laboratories

30

DELivErinG soLuTions ThrouGhParTnErshiPs

COllabOraTiOn WiTh nOn-inDusTry OrganisaTiOns

in australia, we are collaborating with a regional water authority on building a water-treatment plant near our geelong refinery. This plant will recycle water from the refinery and sewage from neighbouring areas to make it suitable for industrial use and community sports grounds.

Construction of the $90 million plant is due to finish late in 2012; commissioning will be mid 2013. When operational, the plant is expected to save the 5% of the Geelong regions potable water, which Shell currently uses in refinery processes. The Australian and Victoria governments, Barwon Water and Shell are jointly funding the project, with Shell being the main contributor.

The SAPREF refinery in South Africa, in which Shell has a 37.5% interest, the company has an agreement with the local water authority that allows it to use recycled household waste water for industrial purposes.

We also apply advanced technology to help reduce freshwater use in our chemicals manufacturing operations. For example, the monoethylene glycol plant at our petrochemicals complex in Singapore makes use of Shells proprietary OMEGA technology. This uses 20% less steam and generates about 30% less waste water than a traditional monoethylene glycol plant.

WaTer ManageMenT inbiOFuel PrODuCTiOn

rising fuel demand, increased environmental regulation and greater urbanisation are key challenges to delivering more sustainable transport products. Transport fuels are a crucial part of the picture and biofuels will help to keep the worlds road transport networks moving in the period between hydrocarbon reliance and a new, low-carbon economy. by 2030, 9% of road transport fuels is projected to come from biomass.

Shell is one of the worlds largest distributors of biofuels. It has also invested in the production of the most sustainable and cost-competitive of todays biofuels: Brazilian sugar-cane ethanol. In 2011, we formed the multibillion-dollar Razen joint venture with Cosan. Razen is Brazils largest producer of ethanol and has significant growth plans.

We are continuously improving the recovery and the recycling of water, including waste water, from communities near our operations

shell and cosan joint venture, razen cane farming trucks, brazil

31

The water intensity of biofuel crops is highly variable. Some biofuels may require a lot of water, but freshwater resources must be viewed in their local context. In some areas, using fresh water for biofuels production may have limited impact on the domestic use of water and be sustainable. Concentrating on biofuels with low freshwater needs and producing biomass feedstocks in areas of low water stress will minimise the potential water risks of biofuel.

In south-east Brazil, sugar cane needs virtually no irrigation because of the high seasonal rainfall. With recycling, Cosans current production process uses about 10 litres of water to produce each litre of ethanol. In 2010, Cosan recycled about 90% of the water used in 19 of its 24 mills, and there are plans to install the same technology in the remaining mills by 2013.

Shell is a member of several multi-stakeholder sustainability standards, including BonSucro, the Roundtable on Sustainable Biofuels, the Roundtable on Responsible Soy Association and the Roundtable on Sustainable Palm Oil. Best practice water management principles are embedded in the principles and criteria of these sustainability standards.

Our objectives are to further develop our understanding of current water accounting methodologies for biofuels and to apply these methodologies across Shells biofuels portfolio. We work with Texas A&M University in the USA on hydrology modelling to assess the risks and impacts in more detail at the watershed level.

offshore waterflooding, sulphate removal unit, ursa, usa

32

nigeria solar-powered water scheme, umuokwa, igbo, Etche, nigeria

Across the oil and gas

industry, the issue of water

use is firmly on the agenda

and is certain to stay there

33

The oil and gas industry is moving

towards a future of increasing

challenges in oil and gas extraction and

processing. This will almost certainly

result in greater demand for process

water and a larger volume of

wastewater. sustained investment in

technology, the introduction of new

working practices and collaboration

with a range of water stakeholders will

be necessary to achieve sustainable

water management.

In the upstream sector, the focus will remain on minimising the volumes of water that are produced with oil and gas, and continuously finding more effective technologies to clean oilfield water for reuse. In addition, the focus will be on safeguarding freshwater supplies and ensuring that any water produced or used in relation to our operations meets and exceeds the legal requirements for purity if it is to be released into the natural environment. This enables Shell to achieve important business

objectives such as taking a full EOR capability to the offshore environment and developing shale and tight gas deposits.

The need to develop advanced and cost-effective water technologies to monitor, control and treat water for reuse to minimise the impact on environment requiring continuous effort across the entire oil and gas industry. There is a requirement to develop integrated engineering solutions that enable operators to effectively decrease their unwanted water production and manage the challenges stemming from produced water. In the downstream sector, the emphasis will be on recycling and, where appropriate, finding waste-water streams that can be used to support industrial operations.

Preparing for future energy and waterchallenges

nimr reed beds, omannimr reed beds, oman

34

PrEParinG for fuTurE EnErGy anD WaTErchaLLEnGEs

For Shell, water management has become a central consideration for every operation, particularly in those areas of the world where the supply of fresh water is constrained

Partnerships with governments, the water industry, nongovernmental organisations and local communities are important parts in the industrys objective to meet its commitments for ever more sustainable operations.

For Shell, water management has become a key consideration for every operation, particularly in those areas where the supply of fresh water is constrained. The response from Shell is twofold. The first part is to adopt policies that define and measure our

performance. Freshwater use, for example, is now part of Shells detailed sustainability scorecard. The second part is to identify, develop and apply tools and techniques that reduce our water consumption while enabling us to safeguard the integrity of operations and meet other environmental targets.

Across the oil and gas industry, the issue of water use is firmly on the agenda and is certain to stay there.

Pinedale, USA

Groundbirch, Canada

Raizen, Brazil

Heavy oilWater project examples: EORDownstream Tight gasConventional gasGTL Biofuels

Shell global technology centres

Bangalore

Sapref, South Africa

Schoonebeek, the Netherlands

Pearl, Qatar

Omega, Singapore

FLNG Prelude

Nimr, Oman

Geelong, Australia

AOSP, Canada

Amsterdam

Houston

Rijswijk

shells global innovation and technology centres |shell water project examples

eMerging TeChnOlOgies

shells emerging technologies team actively collaborates with other shell teams and external organisations on research and development projects that address key water management challenges. This work includes fundamental research to obtain a clearer understanding of the physical and chemical aspects of water challenges and active participation in developing technologies to meet them.

The key challenges for the oil and gas industry are reuse of industrial water, upgrading water for agricultural or domestic purposes and removal of finely dispersed oil, particulate matter, trace metals, harmful dissolved components and salt.

We invite organisations or individuals who own potential breakthrough technology to discuss opportunities for collaboration. The most promising ideas may find support from the Shell GameChanger group, which invests in novel, early-stage energy-related proposals to help them achieve proof of concept.

To meet the future more-stringent requirements for water reuse, traditional gravity-based separation technologies, such as hydrocyclones, are inadequate at removing finely dispersed oil from water. Shell is, therefore, working to develop and apply new advanced technologies that will achieve this. These initiatives include a collaborative project with the University of Twente in the Netherlands on a new type of membrane for selectively collecting and removing tiny oil droplets, and work with MIT in Boston, USA, to develop super-hydrophobic materials that will collect hydrocarbons from water.

35

nanotechnology

Water research

At the contaminant levels of parts per trillion that will be required to confidently reuse industrial water, more fundamental understanding of the behaviour of material surfaces at the nano-scale will be required. For example, in cooperation with the Advanced Energy Consortium of the University of Texas, USA, Shell is investing in nanotechnology research on characterising surfaces and interfaces and then applying this improved understanding to optimise existing or develop new industry methods.

To deal with the challenges of further reducing the level of oil in produced oilfield water, we need to break the stability of emulsions. In the Netherlands, Shell is collaborating with Wageningen University to develop an energy-efficient magnetic emulsion-separation technique. This research combines the universitys understanding of complex emulsions, Shells oil and gas industry knowledge, and a shared interest in nanotechnology.

Extracting oil from oil sands is a highly water-intensive process. Shell is working with joint-venture partners to develop a novel extraction method based on a hydrocarbon solvent process, i.e. essentially replacing water with naturally occurring light hydrocarbons that are recycled as part of the process. This approach is likely to deliver a significant reduction in water use footprint and may offer other environmental benefits.

DisClaiMerThe companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this brochure Shell, Shell Group and Royal Dutch Shell are sometimes used for convenience where references are made to Royal Dutch Shell plc and itssubsidiaries in general. Likewise, the words we, us and our are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. Subsidiaries, Shell subsidiaries and Shell companies as used in this brochure refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as associated companies or associates and companies in which Shell has joint control are referred to as jointly controlled entities. In this brochure, associates and jointly controlled entities are also referred to as equity-accounted investments. The term Shell interest is used for convenience to indicate the direct and/or indirect (for example, through our 34 percent shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest. This brochure 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, ormay be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on managements 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 managements 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 brochure, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Groups products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f)loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments, including potential litigation and regulatory effects arising from recategorisation of reserves; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval

of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this brochure are expressly qualified intheir entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shells 20-F for the year ended December 31, 2009 (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 brochure, October 2011. 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 brochure. The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, todisclose only proved reserves that a company has demonstrated by actual production orconclusive formation tests to be economically and legally producible under existing economic and operating conditions. Weuse certain terms in this brochure that SECs guidelines strictly prohibit us from including infilings with the SEC. US investors are urged toconsider 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. Royal Dutch Shell plc, Carel van Bylandtlaan 30, 2596 HR The Hague, The Netherlands. Registered Office: Shell Centre, London, SE1 7NA.

Any supply of the technology is subject to agreement on a contract and compliance with allapplicable export control regulations.

ECCN: Not subject to EAR Publicly Available

The copyright of this document is vested in Shell International Exploration and Production B.V., The Hague, The Netherlands. All rights reserved. Neither the whole nor any part of this document may be reproduced, stored in any retrieval system or transmitted in any form or by any means (electronic, mechanical, reprographic, recording or otherwise) without the prior written consent of the copyright owner.

Published October 2011. All rights reserved.

Copyright 2012 Shell Global Solutions International B.V. The copyright of this document isvested in Shell Global Solutions International B.V., Rijswijk, The Netherlands.

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