All Shell Sr10

download All Shell Sr10

of 40

Transcript of All Shell Sr10

  • 8/3/2019 All Shell Sr10

    1/40

    sUstAInABILItY RePoRtROYALDUTCHSHELLPLCSUSTAINABILITYREPORT2010

  • 8/3/2019 All Shell Sr10

    2/40

    contents

    IntRoDUctIon

    i ABOUTSHELL

    1 INTRODUCTIONFROMTHECEO

    oPeRAtInG ResPonsIBLY

    2 OURBUSINESSSTRATEGY

    3 OURPROJECTSANDOPERATIONS

    4 SAFETY

    5 ENVIRONMENT

    6 COMMUNITIES

    7 LIVINGBYOURPRINCIPLES

    secURInG DIVeRse eneRGY

    8 BUILDINGASUSTAINABLEENERGYSYSTEM

    9 KEYPROJECTS

    10 PRODUCINGCLEANERENERGY NaturalGas LiqueedNaturalGas

    14 DELIVERINGENERGYRESPONSIBLY DeepWater OilSands Iraq Nigeria TheArctic

    21 RAISINGLIVINGSTANDARDSTHROUGHENTERPRISE ShellFoundation

    22 MAKINGTRANSPORTMORESUSTAINABLE

    Biofuels FuelEfciency EnergyEfciency RoadSafety

    26 IMPROVINGOURPRODUCTS Chemicals Lubricants Sulphur Bitumen

    oUR PeRFoRMAnce

    28 2010INREVIEW Economic

    Environmental Social

    32 ENVIRONMENTALANDSOCIALDATA

    34 EXTERNALREVIEWCOMMITTEE

    36 ABOUTOURREPORTING

    37 ABOUTOURDATA

    KeY to sYMBoLs

    relatedinformationonline,suchasonwww.shell.com

    telephonenumber

    ABOUTSHELL

    shll i a glbal grup f rgy ad prhmialmpai mplyig 93,000 ppl i mr ha90 uri. our aim i hlp m h rgyd f iy i way ha ar mially,

    virmally ad ially rpibl.

    UPstReAM

    Upstreamconsistsoftwoorganisations,UpstreamInternationalandUpstreamAmericas.Upstreamsearchesforandrecoversoilandnaturalgas,extractsheavyoilfromoilsandsforconversionintosyntheticcrudes,liqueesnaturalgasandisactiveingas-to-liquidstechnology.Itoftenworksinjointventures,includingthosewithnationaloilcompanies.Upstreammarketsandtradesnaturalgasandelectricityinsupportofitsbusiness.OurwindpoweractivitiesarepartofUpstream.UpstreamInternationalco-ordinatessustainabledevelopmentpoliciesandsocialperformanceacrossthecompany.

    DoWnstReAM

    Downstreammanufactures,suppliesandmarketsoilproductsandchemicalsworldwide.OurManufacturingandSupplybusinessesincludereneries,chemicalplantsandthesupplyanddistributionoffeedstocksandproducts.Marketingsellsarangeofproductsincludingfuels,lubricants,bitumenandliqueedpetroleumgasforhome,transportandindustrialuse.Chemicalsmarketspetrochemicalsforindustrialcustomers.Downstreamtradescrudeoil,oilproductsandpetrochemicalsprimarilytooptimisefeedstockforourmanufacturingactivities.Thebusinessalsoincludesouractivitiesinbiofuels,anditco-ordinatesCO

    2managementactivities

    acrossthecompany.

    PRoJects & tecHnoLoGY

    Projects&TechnologymanagesthedeliveryofShellsmajorprojectsanddrivesitsresearchandtechnologydevelopmentprogramme.Projects&TechnologyprovidestechnicalservicesandtechnologycapabilitytotheUpstreamandDownstreambusinesses.Itoverseessafetyandenvironmentalperformanceandmanagescontractingandprocurementacrossthecompany.

    www.hll.m/abu

    VIDeo IntRoDUctIon

    FRoM tHe ceo

    Watchthevideointroductiontothisreportonlinebytypingthelinkintoawebbrowser.Alternatively,useasmartphonewithaQRreaderapptoscanthissymbol.

    www.shell.com/sustainabilityreport

    i ShellSustainabilityReport2010Introduction

  • 8/3/2019 All Shell Sr10

    3/40

    INTRODUCTION FROM THE CEO

    Welcome to the Shell Sustainability Reportfor 2010. In this report we show howconsideration for safety, the environmentand communities lies at the core of ouroperations and the development of ourfuture energy projects.

    The event that dominated the year for our

    industry showed the critical importance ofgetting our approach to safety right. The BPDeepwater Horizon incident in the Gulf ofMexico and the oil spill that followed willhave repercussions for many years to come.

    The incident became an environmentaldisaster that affected communities, but itbegan as a tragic accident: 11 peopledied, and others were seriously injured.Safety has always been the rst priorityat Shell. A major incident like this servesas a warning to all to guard againstcomplacency.

    It will take time for our industry to recovercredibility. But I believe Shells technicalexpertise, safety culture and rigorousglobal standards demonstrate that we arecapable of operating responsibly, howeverchallenging the conditions.

    SECURING CLEANER, DIVERSE ENERGY

    With the world now out of recession, energydemand is again increasing. All energysources will be needed to meet this demand,but in the decades ahead the bulk of theworlds energy is expected to continue tocome from fossil fuels. Producing oil andgas from deep waters will remain crucial.These resources are a vital part of the secureand diverse supplies of energy the worldwill need, as are energy resources fromother technically challenging environments.Shells responsible approach and continuedinvestment in technology and innovation willhelp us to deliver this energy.

    As an energy company we must meetour customers needs, and our abilityto work with joint-venture partners

    helps us to do this. In 2010 a numberof our major projects came on-streamor continued to perform well. Othersapproached completion for start-upin 2011. We continued to raise ourproduction of natural gas by far thecleanest-burning fossil fuel that willaccount for over half our energy output in

    2012. We believe natural gas will playan essential role in managing the carbondioxide (CO

    2) emissions caused by the

    worlds rising energy demand.

    Tackling climate change remains urgentand requires action by governments,industry and consumers. The UN climatechange conference in Cancun, Mexico,produced a more encouraging outcomethan expected. But with so many countriesinvolved, the process of addressing climatechange through international agreements isinevitably slow.

    At Shell we believe that in making ourcontribution, there is no time to waste. Weare working on what we can do today tocontribute to a sustainable energy future:producing more natural gas for powergeneration; focusing on sustainablebiofuels; helping to develop carbon captureand storage technology; and making ourown operations more energy efcient. Ouradvanced fuels and lubricants are helpingour customers save energy.

    SUSTAINABLE PRINCIPLES

    Delivering energy involves meeting othercomplex sustainability challenges. Strongprinciples and building trust underpinour approach. Respect for humanrights, for example, is embedded in theShell General Business Principles. Shellcontributed to the work of Professor JohnRuggie, the UN special representativefor business and human rights, whoseguiding principles were published in early2011. The grievance mechanism at theSakhalin 2 liqueed natural gas project inRussia formed part of Professor Ruggie's

    pilot work on grievance procedures. Weplan to introduce similar approaches forcommunities near other major projects andfacilities in the coming years.

    In Nigeria, Shell Petroleum DevelopmentCompany (SPDC) took a signicant stepforward in transparency for our industry.

    SPDC has set up a publicly accessiblewebsite to report on oil spills from thefacilities it operates. This allows the trackingof the response to every spill, whether itis operational or the result of sabotageor theft.

    I am proud to have signed up to the UNGlobal Compact LEAD, an initiative whichreinforces the commitment of business to theprinciples of the Global Compact. Shell wasa founding member of the Global Compactin 2000 and we support its principles inhuman rights, labour, environment and anti-

    corruption. The Sustainability Report 2010reports on our progress in these areas.

    I would like to thank the members ofthe External Review Committee for theirimportant contributions in producing theSustainability Report 2010. Once moretheir valuable insights have helped shapethis report.

    Finally, I invite you to send your commentson the report to:

    [email protected]

    Peter VoserChief Executive Ofcer

    AT SHELL WE BELIEVE THAT IN MAKINGOUR CONTRIBUTION, THERE IS NO TIME

    TO WASTE. WE ARE WORKING ON WHATWE CAN DO TODAY TO CONTRIBUTE TOA SUSTAINABLE ENERGY FUTURE.

    1Shell Sustainability Report 2010Introduction

  • 8/3/2019 All Shell Sr10

    4/40

    2 Shell Sustainability Report 2010Operating responsibly

    OPERATING RESPONSIBLY

    Sustainable development for Shell meansconsidering both short- and long-terminterests, and integrating economic,environmental and social considerations

    into our decision making. The companysreorganisation in 2009 helped to strengthenthis approach. Sustainable developmenthelps govern the way we develop newprojects and run our facilities, how wemanage our supply chains, and how weshare benets where we operate. It also helpsus to make better products for our customers.

    Sustainable development underpins ourstrategy. Our production of cleaner-burning natural gas is growing. We arealso investing in biofuels that are moresustainable, in technology to capture and

    store CO2, and in ways to improve theenergy efciency of our operations.

    Building strong relationships withcommunities, customers, governments andnon-governmental organisations (NGOs) all of whom have a role to play in buildinga sustainable energy system is fundamentalto how we approach our business.

    Our business strategy focuses on threeways to deliver more energy to meet theneeds of our customers: performance inthe near term; growth in the medium term;and further projects for the longer term.

    Today, we are continuing to improve theperformance of our operations, includingour approach to safety, communities andthe environment. Our net capital investmentin 2011 to bolster energy production willbe around $2527 billion.

    Between now and 2014, we will delivergrowth from new projects as they come on-stream. In our Upstream business, productionis expected to average 3.5 million barrels

    of oil equivalent (boe) a day in 2012, up6% on 2010, and 3.7 million boe a day in2014, up 12% from 2010. In Downstream,we will continue to pursue growth in

    emerging markets, in biofuels, and throughmajor integrated facilities such as our newpetrochemicals complex in Singapore.

    We are also working on the next generationof projects for growth to the end of thedecade. They include producing naturalgas trapped in dense rock known astight gas and liqueed natural gas, anddeveloping oil and gas resources fromchallenging locations such as deep waterand, potentially, the Arctic.

    As our business grows and production

    becomes more energy intensive, we expectour direct greenhouse gas emissions in thecoming years to follow an upward trendthat began with increased production in2010 (page 29). We continue to takeaction now to help build a sustainableenergy system for the future (page 8).

    Our research and development (R&D)programme helps us develop the advancedtechnologies to unlock energy resourcesmore sustainably, improve efciency andoffer customers better products. In 2010we spent $1.0 billion on R&D. Over thepast ve years we have spent $2.1 billionon developing alternative energies, carboncapture and storage, and on CO2 R&D.We work increasingly in partnership withscientic institutes and other companies todevelop sustainable energy technologies forthe future. For example, in 2010 we pledged$25 million to support a ve-year researchpartnership with Massachusetts Instituteof Technology. Projects include biofuels,nanotechnology and CO2 management.

    www.shell.co/strategy

    SUSTAINABLE DEVELOPMENT ANDOUR BUSINESS STRATEGY

    OUR GOVERNANCE AND

    STANDARDSOverall accountability for sustainabledevelopment within Shell rests with ourChief Executive Ofcer and ExecutiveCommittee. They set priorities andstandards in sustainable developmentthat help shape our business activities.The CEO chairs our Health, Safety,Security, Environment and SocialPerformance (HSSE & SP) Executive,which reviews how we manage oursustainability performance.

    Our business leaders those who

    manage projects or facilities areaccountable for delivering theirprojects and running their operationsresponsibly. To do this they work withcommunities, partners, NGOs andothers to address potential social andenvironmental impacts and sharebenets.

    All Shell companies and Shell-operatedjoint ventures are required to complywith the standards and requirementsset out in the Shell HSSE & SP ControlFramework. Our HSSE & SP specialists

    are responsible for implementingthese standards to help improve oursustainability performance. Thesespecialists are connected throughglobal discipline teams that focus onspecic areas such as process safety.

    The Corporate and SocialResponsibility Committee of the Boardof Royal Dutch Shell plc assessesour policies and performance withrespect to the Shell General BusinessPrinciples, Code of Conduct, HSSE& SP standards, as well as majorissues of public concern on behalfof the Board. The committee waschaired from 2005 to 2011 byWim Kok, former Prime Minister ofthe Netherlands. It is made up of fourNon-executive Directors, meets fourtimes a year, and in addition visitsShell facilities.

    www.shell.co/standards

    SHELL WORKS WITH PARTNERS, COMMUNITIES AND GOVERNMENTS TO HELP

    MEET RISING ENERGY DEMAND MORE SUSTAINABLY FOR OUR CUSTOMERS.

    THIS APPROACH HELPS US OPERATE IN ECONOMICALLY, ENVIRONMENTALLY ANDSOCIALLY RESPONSIBLE WAYS AND EMBED THESE ASPECTS IN OUR BUSINESS

    DECISIONS. OUR PRINCIPLES AND STANDARDS GOVERN THE WAY WE WORK.

  • 8/3/2019 All Shell Sr10

    5/40

    TESTImONIALI joined the Groundbirch projectteam as the sustainable developmentintegrator when Shell decided to growits gas operations in north-east BritishColumbia. The community near this

    project is primarily agricultural, andmany of our neighbours were lookingfor employment and contractingopportunities with Shell. I helpedthe management team producean economic development plan toencourage local hiring and buying.At workshops and public informationsessions I shared with potentialsuppliers the safety standards werequire and how our contractingprocess works. Some 150 supplierswere successful in bidding for contractsand getting jobs. We expect our local

    spend to continue to rise in 2011with ve First Nations businessesand other local enterprises replacingnon-local suppliers. Our suppliersare expected to support Shells localdevelopment objectives through theirhiring practices. I have seen a lot ofenthusiasm both inside and outsideShell for this approach, and it has beenrewarding to see local spending andhiring grow each year.

    Rebecca Nadel, Shellsustainable developentintegratorGroundbirch project, Canada

    3Shell Sustainability Report 2010Operating responsibly

    Project delays in the energy industrycan be due to factors such as lack ofsupport from local communities andlandowners, or the presence of a fragileecosystem. Incorporating early the views ofcommunities and recognised environmentaland social experts can help us design anddeliver projects with local support.

    OUR APPROACH

    Any major new business opportunity wework on follows a process that helps usplan and deliver the project. It includes vereview points at which we decide whetherto proceed with the project or not (seediagram below).

    Before we begin substantial work onmajor projects or existing facilities weassess regulatory, environmental andsocial impacts alongside commercialand technical considerations. Thisincludes conducting environmental,social and health impact assessments to

    help understand and manage risks andopportunities.

    We also consider the potential cost ofa projects CO

    2emissions in all major

    investment decisions, using a price of$40 per tonne of CO

    2.

    We consult communities, governments,NGOs and environmental experts tohelp develop our plans and inform ourapproach. Such early engagement hasled, for example, to re-routing pipelines,adjusting the schedule of seismic activities,and increasing our local contracting.

    We check that the recommendations ofthe impact assessment are being adopted

    throughout the project and the lifetime ofthe operation. We often publish impactassessments to share the information theyprovide more widely. For example, ShellPetroleum Development Company (SPDC) inNigeria published the impact assessmentsof its major projects on its website in 2010.

    BUILDING THE RIGHT mINDSET

    Throughout a project and during its

    operations, we assess the lessons learnedand share them systematically amongHSSE & SP specialists and business leaders.We incorporate these experiences in otherprojects and in a comprehensive trainingprogramme in sustainable developmentfor those who manage our projects andfacilities. This training draws on bestpractice examples and lessons learnedfrom outside Shell. In 2010, staff from19 countries completed this programme.We also train technical and commercialstaff in sustainable development throughother learning programmes, such as our

    Project and Commercial Academies. Allstaff can take part in online training inhow to approach sustainable developmentchallenges and CO

    2management.

    In particularly complex projects oroperations, we have started to appointspecialists in social and environmentalchallenges known as sustainabledevelopment integrators. An integratorinuences project planning and decisions,and helps gain local support and regulatoryapprovals. We have successfully pilotedthe use of such specialists in major projectsin Canada and the USA, and are workingto apply the approach globally.

    www.shell.co/sd

    SUSTAINABLE DEVELOPMENT IN OURPROJECTS AND OPERATIONS

    Through experience we have learned that we ust integrate early inour decision-aking the interests and concerns of others, including our

    neighbours. This helps us deliver better proects, securing uch neededenergy for our custoers and creating lasting benets for counities.

    CONCEPT

    SELECTION

    FEASIBILITY STUDYIDENTIFY

    OPPORTUNITY

    RAMP-UP TO

    FULL CAPACITY

    PROJECT

    SPECIFICATIONS

    CONSTRUCTION

    PROJECT DELIVERY REVIEW POINTS TAKE PLACE BETWEEN EACH STAGE OF THE PROJECT

  • 8/3/2019 All Shell Sr10

    6/40

    4 Shell Sustainability Report 2010Operating responsibly

    In the BP Deepwater Horizon explosion inApril 2010, 11 industry colleagues diedand a number were seriously injured. Theincident led to the largest offshore oil spill inUS history. The environment was damagedand peoples livelihoods suffered. Followingthe accident, Shell supported the responseeffort by providing equipment, technicalexpertise and facilities to BP. We also tookimmediate steps to conrm and reinforcethe safety of our offshore operations aroundthe world. Our review of deep-water

    drilling and safety procedures conrmedthat Shell's approach is robust.

    Our industry is determined to learn fromwhat happened to prevent somethingsimilar occurring again. We are reviewingrecommendations coming forward frominvestigations into the Deepwater Horizonincident and considering them against ourstandards and operating practices.

    Safety continues to be our top priority.Our goal is to have zero fatalities andno incidents that harm our employees,contractors or neighbours, or put ourfacilities at risk. We continued to makeprogress towards that aim in 2010 withour best safety performance to date(page 30).

    We manage safety across our businessthrough a combination of rigorous systemsand culture. This requires three behaviours

    from everyone working for us: complyingwith the rules; intervening in unsafesituations; and respecting people and theenvironment. Our global standards andoperating procedures dene the controlsand physical barriers we require to preventincidents. All Shell companies, Shell-operated joint ventures and our contractorsmust manage safety risks in line with theShell Commitment and Policy on HSSE & SP,

    local laws and the terms of relevant permitsand approvals.

    We are reinforcing a culture where safety isa core value, and each person understandstheir role in making Shell a safer placeto work. Everyone responsible for tasks

    that may carry safety risks is assessed forthe necessary training and skills. On ourannual global Safety Day for all employeesand contractors around the world, we askstaff to make personal pledges to workin a safer way. We continue to enforceour mandatory 12 Life-Saving Rules withour employees and contractors to preventserious injuries and fatalities. We havestarted to see improvement in areas such asroad safety (page 24).

    We continue to invest in maintainingprocess safety. For example, since 2006

    we have been engaged in a $6 billionprogramme to improve the safety of ourwells, pipelines and other Upstreamfacilities. In our Downstream business,we continue to improve the safety andreliability of our reneries, chemical plantsand distribution facilities, investing some$1 billion alone in 2010.

    www.shell.co/safety

    DEEP-WATER SAFETYDeep-water safety starts with ensuring people are trainedand competent. Shell drilling engineers undergo a rigorousprogramme that includes eld training, course work andmandatory examinations. We have continually updated thisinternationally recognised programme over the past threedecades.

    Preventing incidents is critical to deep-water safety. Before workbegins on drilling a well, we undertake a detailed and lengthyplanning process to be sure that the right equipment and themost robust procedures are in place. We use what is known as asafety case approach. It requires us and our drilling contractorsto clarify accountabilities and to thoroughly assess, documentand decide on ways to mitigate risks before drilling begins.

    We have strict standards for designing and drilling deep-waterwells. They require wells to have at least two independentphysical barriers to minimise the risk of a blowout, which could

    cause an explosion or spill. We have a series of safeguards in

    place to minimise the likelihood of a safety or environmentalincident (see diagram). We also use sophisticated sensors sothat our wells can be monitored in real time by specialists at ourglobal operations centres 24 hours a day.

    All our installations have detailed plans to respond to aspill in an effective and timely manner in the unlikely eventthat multiple barriers fail and a spill occurs. We are able tocall upon signicant resources such as containment booms,collection vessels and aircraft. We conduct emergency responseexercises throughout the year to ensure these plans remaineffective.

    Shell is part of an industry consortium building new underseacontainment equipment for use in the Gulf of Mexico. Weare also involved in work with members of the InternationalAssociation of Oil and Gas Producers (OGP) on improvements tothe industrys global spill response capability.

    SAFETY CASE

    MANAGEMENT

    OF MAJOR

    RISKS

    SAFE

    BEHAVIOURS

    AND CULTURE

    TRAINED AND

    COMPETENT

    EMPLOYEES AND

    CONTRACTORS

    TECHNICAL

    STANDARDS

    AND

    PROCEDURES

    AT LEAST TWO

    INDEPENDENT

    PHYSICAL

    BARRIERS [A]

    SAFEGUARDS MINIMISE THE LIKELIHOOD OF A SAFETY OR ENVIRONMENTAL INCIDENT

    EQUIPMENT

    TESTING AND

    CERTIFICATION

    ZERO SAFETY OR

    ENVIRONMENTAL

    INCIDENTS

    SAFETYEvents in the Gulf of mexico in 2010 served as a stark reinder of why

    we invest so uch tie and effort to plan and execute our operationsresponsibly. This eans preventing incidents that har people and theenvironent, and preparing to deal effectively with any that ay occur.

    [A] Independent physical barriers can include blowout preventer, cement, plugs, casing and drilling mud.

  • 8/3/2019 All Shell Sr10

    7/40

  • 8/3/2019 All Shell Sr10

    8/40

    6 Shell Sustainability Report 2010Operating responsibly

    SHARING BENEFITS

    Being part of a community means sharing arange of benets with those around us. Theyinclude local jobs and training, contractsfor goods and services, and the investmentswe make in community programmes.

    We hire and buy locally to supportdevelopment in countries where we work.In 2010, more than 90% of Shell staffworldwide were nationals. We recruit andtrain local staff in countries with lower

    incomes where we operate. In some cases,governments require us to do this. But inmost cases it is our voluntary policy.

    We spent over $13 billion on goodsand services in 2010 from companies incountries with lower incomes. We alsoincreased our sourcing of goods andservices in China, India and Russia wherewe have teams in place to assess potentialsuppliers. Our major contracts includerequirements to follow the Shell GeneralBusiness Principles, Code of Conduct andHSSE standards.

    More than 400,000 contractor staff anda huge number of suppliers work withShell. To help local suppliers competefor contracts, we provide training in ourglobal tendering and contract managementprocess and support in achieving thestandards we require. In Nigeria, forexample, Shell Petroleum DevelopmentCompany has had a dedicated teamsince 2007 to help local businesses,entrepreneurs and young people wincontracts. By the end of 2010, they hadtrained nearly 2,000 service providers inthe contracting process, and more than3,000 people in a range of skills includingentrepreneurship, project management,catering, scaffolding and welding.

    We have invested in communityprogrammes for many years, and areworking to put our funds and resources tomore effective use. Our social investmentprojects aim to benet society in tangibleways and be sustainable beyond Shellssupport. In 2010, we updated our globalsocial investment strategy, which supports

    initiatives that benet society and relateto our business activities, such as roadsafety and local enterprise development.More than 1.3 million people are killedon the worlds roads every year. We haveput considerable effort into preventingroad accidents in our operations and areworking with industry, governments andnon-governmental organisations to helpaddress this challenge globally (page 24).

    We also work in partnerships with local

    and national governments to help buildskills that meet development needs. Throughthe Shell LiveWIRE programme activein 21 countries we support youngentrepreneurs in setting up businesses(see opinion).

    BUILDING TRUST

    Our business success depends more thanever on our neighbours trust. Listening toand engaging with our neighbours helpsus identify and respond to concerns, andimprove how we operate. For example,we hold open days and community

    engagement sessions when we plan anddevelop new projects. At most of ourreneries and chemical plants, we workthrough local advisory panels to discuss ouractivities and any issues of concern (page25). We also conduct community surveysto better understand our impacts and ndout what matters most to local people.For example, in 2010 we interviewed300 residents near our Scotford renery,upgrader and chemical plant in Canada.The responses helped us better understandconcerns so we could respond moreeffectively.

    We continue to build the skills of staffwho regularly interact with communities.In 2010 we launched mandatoryglobal requirements for managing howwe perform in our relationship withcommunities our social performance.We have clear rules and expectations forhow we work and engage communities thatmay be affected by our operations. This caninclude, for example, minimising our impacton indigenous peoples traditional lifestyles(page 20) and cultural heritage areas,

    and where possible avoiding involuntaryresettlement. We also require all our majorfacilities and new projects to have in placea specialist on social issues responsiblefor assessing impacts and nding ways to

    mitigate them.

    In 2010, we trained around 250 specialistsin our new social performance requirementsand will expand our efforts in 2011. Wealso established exchange programmes forthese specialists to share their experienceswith others in Shell and with our joint-venture partners.

    www.shell.co/society

    Shell-sponsored road safety training,Jakarta, Indonesia.

    COMMUNITIESWherever we operate we are part of a counity. Our energy proectsand facilities bring obs and other benets, but they can also raise concerns.

    We work with counities to help develop local econoies and iprovehow we operate.

    OPINIONBefore I joined Shell LiveWIREbusiness coaching, I could only sell50 litres a month of my cholesterol-freecooking oil Sahara, which is madefrom locally-sourced coconuts. Fromthe coaching session I learned a lotabout how to market my product, reachcustomers and manage cash flow.Media exposure through LiveWIREmeans many people know my product,which has also helped me to grow mybusiness. Now I can sell at least 1,000litres a month across 12 big cities inIndonesia, and demand for my productis increasing remarkably.

    Ridho Arindiko, winner of ShellIndonesia LiveWIRE BusinessStart-Up Award 2010Yogyakarta, Indonesia

  • 8/3/2019 All Shell Sr10

    9/40

    7Shell Sustainability Report 2010Operating responsibly

    We were one of the rst global companiesto state and share our beliefs when wepublished the Shell General BusinessPrinciples in 1976. Our principles requirecompliance with all applicable laws andsupport for human rights. They forbidbribery and anti-competitive behaviourand include our commitment to contributeto sustainable development. All Shellemployees and contractors are expected toapply these principles. In joint ventures thatwe do not control, we use our inuence to

    encourage our partners to adopt and applyprinciples consistent with our own.

    Our Code of Conduct describes thebehaviours expected of our employeesand contractors and how they relate toour business principles and core values.It covers areas such as ghting corruptpractices, national and international trade,and safeguarding information and assets.All staff must complete training in ourCode of Conduct.

    www.shell.co/values

    HUmAN RIGHTS

    Governments have a duty to protect humanrights. Companies have a responsibilityto respect human rights when doingbusiness. Our business principles requireus to respect the human rights of ouremployees and to support fundamentalhuman rights in line with the legitimate role

    of business. Our employees are expectedto understand human rights issues that mayexist where they work and to follow Shellscommitments, standards and policies inthis area.

    Environmental, social and health impactassessments are conducted withexternal experts before we start majornew projects. We also consider specichuman rights aspects.

    We are active in efforts to improveunderstanding of the relationship betweenbusiness and human rights. We took partin consultations with Professor John Ruggie,the UN special representative on businessand human rights, as he developed theProtect, Respect and Remedy framework.We worked with Professor Ruggies team inpiloting community grievance mechanismson Sakhalin Island (page 17).

    The Voluntary Principles for Security andHuman Rights (VPSHR) guide the humanrights aspects of security arrangements

    for our operations. We provide trainingfor relevant employees and contractorsglobally on how they should apply theseprinciples. All new security contractscontain a clause to comply with the VPSHR.We aim to have this clause included in allsecurity contracts by 2012.

    www.shell.co/huanrights

    REVENUE TRANSPARENCY

    In the interests of transparency andaccountability, we believe in the disclosureof revenues that extractive industriespay to host governments. In 2010, Shellpaid $15.4 billion in corporate taxes,and $2.2 billion in royalties globally.

    We collected $81 billion in excise dutiesand sales taxes on our fuel and otherproducts on behalf of governments.We are a founder and board memberof the Extractive Industries TransparencyInitiative (EITI). Shell companies have beendirectly involved with governments, NGOsand industry peers in EITI implementationin Cameroon, Gabon, Iraq, Kazakhstan,Nigeria and Norway.

    www.shell.co/payents

    ANTI-BRIBERY AND CORRUPTION

    Fighting bribery and corruption is anintegral part of living by our core values.Any Shell employee or contractor whois found to be giving or taking bribes,participating in money-laundering activitiesor any other acts of corruption, will besubject to disciplinary action, up to andincluding dismissal.

    We co-operated fully with the USgovernment during investigations intoimproper payments to customs ofcialsin Nigeria made by Panalpina, a sub-contractor for Shell and other companies.

    As part of a wider settlement relating toPanalpinas activities, seven companieswere ned a total of $236 million, withShell agreeing to pay $48 million.Separately, Shell also agreed to pay$10 million to the Nigerian authorities.We conducted an extensive internalinvestigation leading to disciplinaryactions, including dismissal of staff.

    We implemented improved requirementson anti-bribery and corruption across Shellin 2010. This included strengthening duediligence of suppliers, contractors andgovernment intermediaries.

    ANTITRUST

    We expect all employees to competefairly and ethically and in compliancewith antitrust laws in all the markets wherewe do business. We have had a globallyco-ordinated antitrust training programmesince 2000. Failure to comply with antitrustlaw will result in disciplinary action, up toand including dismissal.

    www.shell.co/integrity

    Shell employees and partner company staf f at the Ormen Lange gas plant, Norway.

    LIVING BY OUR PRINCIPLESOur business principles govern how we operate. We expect everyone

    working for us to uphold our core values of honesty, integrity and respectfor people. We continue to nd practical ways to respect huan rightsrelated to our business activities.

  • 8/3/2019 All Shell Sr10

    10/40

    8 Shell Sustainability Report 2010Securing diverse energy

    SECURING DIVERSE ENERGY

    Energy powers economic growth, raisingliving standards and lifting millions frompoverty. Demand for energy is increasing,but so are the global environmental stresses

    linked to meeting this demand: risingCO

    2emissions and pressure on natural

    resources, such as water (page 5).

    Increasing global population and rapideconomic growth in the developing worldare driving the surge in energy demand.China has now overtaken the USA as theworlds largest consumer of energy. By2050 there are expected to be around9 billion people, over 2 billion more thantoday. Energy demand by then could havedoubled, according to the InternationalEnergy Agency (IEA).

    A transition to a sustainable energy systemis beginning, but it will take decades. Fossilfuels provide around 80% of the worldsenergy today and they are expectedto remain the cornerstone of the globalenergy system for many years to come.Even with continued long-term governmentsupport, renewables and nuclear powermay account for around a third of theglobal energy mix by mid-century. Newtechnologies can take 30 years to achievejust 1% of the global market wind power,for instance, is expected to reach this pointin the next few years.

    LImITING CO2

    EmISSIONS

    The need to tackle climate changeremains urgent. At the UN climate changeconference in Cancun, Mexico, more than190 nations agreed that to avoid the worsteffects of climate change, the world mustlimit the rise in global temperature by mid-century to 2C. Greater energy efciencywill help, but the challenge is to nd waysto produce more energy with signicantlylower CO

    2emissions. All forms of energy

    will be needed to meet demand, includingcleaner fossil fuels and more renewables.

    Shell believes the best way to secure a more

    sustainable energy future is to take actiontoday. We are producing more cleaner-burning natural gas for use in powergeneration (pages 1011); focusing onsustainable biofuels to cut CO

    2emissions

    from road transport fuels (pages 2223);developing technology to capture andstore CO

    2emissions (page 11); and

    working to improve the energy efciencyof our own operations (pages 24 and 29).The advanced fuels and lubricants wedevelop help our customers use less energy(page 24).

    The use of more natural gas for power is acritical pillar of a new sustainable energysystem. A third of the worlds CO

    2emissions

    come from power generation. Given thatthe power sector is such a vital part of theenergy system that helps economies grow,we believe it must be the top priority forcutting global CO

    2emissions. Generating

    power from natural gas produces 5070%less CO

    2than a coal-red plant. Combining

    natural gas with carbon capture andstorage could reduce CO

    2emissions by

    90% compared to coal. Replacing ageingcoal-red power stations with new gas-red plants could therefore signicantlyreduce CO

    2emissions from the power

    sector. Natural gas is also abundant, with250 years of supplies at current productionrates. Natural gas will account for over halfour total production in 2012.

    Many governments are already developingnational, regional and sector-based CO

    2

    regulations. These practical approachescould eventually link to form a globalmarket that would provide the most effectiveway of tackling climate change. Such a

    market would encourage the adoption oflower-CO

    2approaches that are faster to

    implement and less costly such as naturalgas instead of coal for power generation.This would discourage governments fromfavouring technologies that need supportfrom subsidies. It would also create anincentive to develop commercially viabletechnologies to reduce CO

    2emissions.

    Shells own scenarios, updated in early2011, describe the profound developmentsexpected in the worlds energy systemto 2050. They call for heightenedcollaboration between civil society,public and private sectors to address the

    economic, energy and environmentalchallenges the world is facing.

    HELPING TO BUILD COmmUNITIES

    Communities will also play a vital role.Creating a sustainable energy systemmeans nding ways to share the benets ofenergy to improve life for as many peopleas possible, especially those living close toour operations. A lack of access to energy,for example, traps hundreds of millionsof people in poverty. Their communitiesstruggle to create jobs, raise standards ofeducation and improve health.

    Shell is working on ways to help overcomethese challenges. Wherever we operatewe aim to train and employ local peopleand to buy goods and services fromlocal suppliers. In many cases this helpscommunities develop successful businessesand creates job skills that will improve long-term employment prospects.

    We are looking at how, through ouroperations, we can support the provisionof electricity to local communities. Forexample, in Nigeria we have made itpossible for communities to be connectedto power supplies near the Gbaran-Ubieproject (page 18) and close to the BonnyIsland LNG plant (page 12).

    Our approach also includes helping tomake cleaner-burning cookstoves availablethat will signicantly reduce the indoor airpollution that kills nearly 2 million people ayear in the developing world (page 21).

    www.shell.co/newenergyfuture

    www.shell.co/scenarios

    SHELL TAKES A RESPONSIBLE APPROACH TO SECURING DIVERSE ENERGY FOR OUR

    CUSTOMERS. WE ARE PRODUCING MORE CLEANER-BURNING NATURAL GAS AND

    USING ADVANCED TECHNOLOGIES TO DEVELOP NEW RESOURCES. WE ALSOWORK TO MAKE TRANSPORT MORE SUSTAINABLE WITH LOW-CARBON BIOFUELS

    AND MORE EFFICIENT FUELS AND LUBRICANTS. WE WORK WITH PARTNERS,

    COMMUNITIES AND GOVERNMENTS TO DELIVER THIS ENERGY MORE SUSTAINABLY.

    BUILDING A SUSTAINABLE ENERGY SYSTEM

  • 8/3/2019 All Shell Sr10

    11/40

    SCHOONEBEEK

    GJA

    AOSP EXP 1KASHAGAN PH 1

    WEST QURNAMAJNOON

    GUMUSUT-KAKAPSINGAPORE CHEMICALS

    NORTH RANKIN 2

    SASAMAL STEAMHARWEELQARN ALAM

    BAB

    BONGA NWGBARAN-UBIE PH 1

    BC-10 PH2

    CORRIB

    NORTH AMERICATIGHT GAS

    PORT ARTHUR

    PEARL GTL

    QATARGAS 4

    GORGONPLUTO (WOODSIDE)

    PERDIDOMARS B, WEST BOREAS& SOUTH DEIMOS

    KEY PROjECTS POST FINAL INVESTmENT DECISION

    Start-up

    Project

    Country

    Shell interest

    (%)

    Peak production

    100% (kboe/d)

    LNG 100%

    [A] capacity (mtpa) [B] Category

    Shell

    operated

    On-stream as of

    March 31, 2011

    20102011 AOSP expansion 1 Canada 60 100 Heavy oil/EOR [C]

    Gbaran-Ubie phase 1 Nigeria 30 250 Integrated gas Gja Norway 12 105 Traditional

    North America tight gas USA/Canada Various ~150 [D] Tight gas

    Pearl GTL Qatar 100 320 [E] Integrated gas

    Perdido USA 35 100 Deep water

    Pluto LNG T1 (Woodside) [F] Australia 22 140 4.3 Integrated gas

    Qarn Alam Oman 34 40 Heavy oil/EOR

    Qatargas 4 LNG Qatar 30 280 7.8 Integrated gas

    Schoonebeek Netherlands 30 20 Heavy oil/EOR

    Shell Eastern Petrochemicals Singapore 100 [G] Rening/Chemicals

    20122013 Amal Steam Oman 34 20 Heavy oil/EOR

    1.8 Bab Thg & Hb2 UAE 9.5 80 Traditional

    BC-10 phase 2 Brazil 50 30 Deep water

    Corrib Ireland 45 55 Traditional

    Gumusut-Kakap Malaysia 33 135 Deep water

    Harweel Oman 34 40 Heavy oil/EOR

    Kashagan phase 1 Kazakhstan 16.8 300 Sour oil/gas

    Majnoon FCP/West Qurna IPT Iraq 45/15 >30 [D] Traditional

    North Rankin 2 Australia 21 268 Integrated gas

    Port Arthur Renery Expansion USA 50 325 Rening/Chemicals

    SAS Abu Dhabi 9.5 115 Traditional

    2014+ Bonga North West Nigeria 55 45 Deep water

    Gorgon LNG T1-3 Australia 25 440 15 Integrated gas

    Mars-B, W. Boreas & S. Deimos USA 72 100 Deep water

    [A] Thousand barrels of oil equivalent a day.

    [B] Million tonnes per annum.

    [C] Enhanced oil recovery.

    [D] Shell share.

    9Shell Sustainability Report 2010Securing diverse energy

    KEY PROJECTS

    KEY

    nDeep water

    n Rening/Chemicals

    n Heavy oil/EOR

    n Integrated gas

    n Sour oil/gas

    n Tight gas

    n Traditional

    On-stream as of March 31, 2011

    [E] Pearl GTL is expected to produce 140 thousand barrels a day of GTL products and 120 thousand barrels of

    oil equivalent a day of natural gas liquids and ethane.

    [F] Shell's indirect position via its 24% shareholding in Woodside.

    [G] Shell Eastern Petrochemicals is expected to produce 800 thousand tonnes a year of ethylene.

  • 8/3/2019 All Shell Sr10

    12/40

    10 Shell Sustainability Report 2010Securing diverse energy

    NATURAL GAS

    Shell has a number of major natural gasprojects around the world. For example, theShell-operated Ormen Lange development(Shell interest 17%) off the coast of Norwayis one of the worlds most complex gasprojects. It sends gas by pipeline directlyfrom the seabed 120 km to an onshoreprocessing plant. The gas is then piped

    across the North Sea to the UK throughthe worlds longest offshore gas pipeline.Ormen Lange supplies around 20% of theUKs gas needs.

    The Shell-operated Corrib project (Shellinterest 45%) in north-west Ireland willproduce natural gas from wells over80 km off the coast. Gas from Corrib isexpected to replace about two-thirds ofthe gas Ireland currently imports. In 2010consultations with the local community ledto an agreed plan awaiting approvalin 2011 to route the pipeline through a

    tunnel built beneath a bay, further away

    from homes and settled areas. The Corribproject has created jobs for local people.It has also provided around $5.4 millionso far in funding for a range of communityprojects including health support groupsand a scholarship programme.

    Tight gasJust a few years ago, North Americas

    gas production was expected to decline.Instead, production has increasedsignicantly due to advanced technologiesthat are able to unlock gas trapped indensely packed rock deep underground.Improvements in drilling and productiontechnologies over the past decade havemade it more economical to producethese resources, known as tight gas(see diagram).

    We are active in six major tight gasprojects in the USA and Canada, andare currently producing enough tight

    gas to meet the needs of nearly 5 million

    US homes. In 2010, we made severalacquisitions of tight gas resources in theUSA that will contribute to our growingglobal production of natural gas. Wealso produce tight gas in China and aredeveloping new projects there. We are inthe early stages of assessing potential tight

    gas resources in Australia, Europe andsouthern Africa.

    Developing tight gas poses technicaland environmental challenges, but themethod used has been rened over morethan 60 years and applied safely aroundthe world. A process known as hydraulicfracturing forces the gas out of the rockusing a uid consisting of more than 99%water and sand with a small amount ofchemical additives. This mixture is pumpedinto deep formations under high pressure,fracturing the rock and freeing the gas.

    The additives used in the uid are in lowconcentrations. Shell supports moves inthe USA and elsewhere to require drillingcontractors to disclose these additives to oiland gas regulatory authorities.

    As production of tight gas increases,some local communities are becomingconcerned over fracturing and thepossibility of ground-water contamination.The tight gas we produce typically liesover a thousand metres below fresh-wateraquifers. We prevent fracturing uid fromcoming into contact with ground water

    by lining the wells with multiple steel and

    WATER

    DELIVERED

    LINED RECYCLING

    PIT

    WATER TREATMENTFRACKING FLUID

    INJECTION

    TIGHT GAS PRODUCTION

    0 _

    500 _

    Metres

    Water table

    Fractures caused by thepressure of fluids pumpedfrom the surface Gas flowing

    into well

    casings

    cement

    Sand keepsfracture open

    1,000 _

    1,500 _

    2,000 _

    2,500 _

    4 20,000 m3 of waterare required per well.Water is typically treatedand re-used.

    drilling mud

    We use sophisticatedtechniques to monitor thefracturing process.

    Our wells are lined withmultiple layers of casingand are cemented fromthe surface to below thewater table.

    PRODUCING CLEANER ENERGYCleaner-burning natural gas is essential in eeting deand as the worldbuilds a sustainable energy syste. Natural gas for power generationsignicantly reduces CO2 eissions copared to coal and produces fewerpollutants. most of Shells natural gas production coes fro conventional

    elds. But our production of gas trapped in dense rock tight gas isrising rapidly. Shell is a leading supplier of liqueed natural gas. We applyinnovative technology to help us use energy and water ore efciently.

    We also work with partners to help build local skills and businesses.

  • 8/3/2019 All Shell Sr10

    13/40

    1Shell Sustainability Report 2010Securing diverse energy

    concrete barriers. We also use advancedunderground sensors to monitor thefracturing process.

    Studies by the US Environmental ProtectionAgency (EPA) and the Ground WaterProtection Council have shown that

    hydraulic fracturing is safe. We havedecades of experience with this processand we continue to follow strict measuresto protect drinking water supplies.

    Fracturing uses more water thanconventional production processes. Butwe recover some of this water for reuse for example, typically 2040% atGroundbirch, one of our tight gas projectsin Canada. Increasingly it comes fromsources other than local water supplies,such as treated waste water from nearbycommunities.

    Developing tight gas resources can alsoinvolve drilling hundreds of wells comparedto the few needed for conventional oil and

    gas elds. Where possible we cluster wellsin a small area to limit our footprint.

    Gas trapped in deep coal seams is alsoa form of tight gas. In eastern Australia,Arrow Energy (Shell interest 50%) plansto convert coalbed methane (CBM) into

    liqueed natural gas for export to Asias fastgrowing gas markets. We are also involvedin producing CBM from the North Shiloueld in China.

    www.shell.co/tightgas

    WIND

    Wind has a growing role to play in a diverseenergy mix. Our wind energy business ismostly in North America, where we areinvolved in a number of onshore projects.Currently, Shells share of the energycapacity from wind-power projects amounts

    to 550 megawatts. We are also consideringsome potential new developments.

    www.shell.co/wind

    mANAGING WATER USE AT GROUNDBIRCHThe hydraulic fracturing process used to produce tight gas needs water. Sometimeswater supplies are scarce in areas where we are operating. Trucking water to remotesites can raise local concerns about safety, trafc and emissions. At our Groundbirchtight gas development in north-east British Columbia, Canada, we are nding waysto reduce the amount of fresh water we use from local sources.

    We built and started operating a water storage and recycling facility in 2010 to storefracturing and gas processing water for reuse. Pipelines transport the water to whereit is needed in the eld, limiting truck movements. Shell is also studying the size andquality of deep saline aquifers in the area to possibly reduce the need for fresh-waterresources in the future.

    In 2010 we agreed to fund a water recycling plant for the nearby city of DawsonCreek. We will provide C$9.75 million towards the cost of the project and the citywill provide C$1.75 million. The plant will treat water so that it can be reused in ouroperations and for other industrial and municipal uses, such as water for sports elds.

    CARBON CAPTURE ANDSTORAGE (CCS)A wide-scale capability to capturecarbon dioxide from industrial plantsand store it deep underground will becrucial to reducing CO

    2emissions.

    Rapid deployment of CCS by 2020could account for 19% of the total CO

    2

    reductions needed by 2050, accordingto the International Energy Agency.

    For CCS to be widely adopted,the support of communities will beessential. Government support is alsovital as demonstration projects todevelop CCS technologies are costlyand generate no revenue for industry.One of the positive steps taken at theUN climate change conference inCancun was to encourage technology

    growth by making CCS demonstrationand development projects eligiblefor support under the UN CleanDevelopment Mechanism.

    Technologies needed for CCS areproven, but work is under way toadvance them further. Shell is involvedin a number of CCS research anddemonstration projects. For example,with partners and government supportwe are helping to develop an advancedtest centre at Mongstad, Norway.

    We are also involved in plans forfull-scale CCS projects. The GorgonLNG project (Shell interest 25%)will include the worlds largest CCSproject. It will capture nearly 3.8million tonnes a year of CO

    2produced

    with the natural gas, and store it morethan 2 km underground. The CCSproject has received A$60 million innancial support from the Australiangovernment.

    In Alberta, Canada, the federal andprovincial governments have pledgedC$865 million to the Quest projectto capture and store over 1 milliontonnes of CO

    2a year from our Scotford

    Upgrader, which processes heavy oilfrom our oil sands operations. In late2010 we led a regulatory applicationfor Quest. Moving ahead will dependon factors including the outcome of thisapplication, economic feasibility andcommunity support.

    www.shell.co/ccs

    Working at Groundbirch, Canada.

  • 8/3/2019 All Shell Sr10

    14/40

    12 Shell Sustainability Report 2010Securing diverse energy

    LIQUEFIED NATURAL GAS (LNG)

    Some of the worlds largest resources ofnatural gas lie far from customers who needcleaner energy to power their homes andbusinesses. Transporting it by pipeline wouldnot be practical. But by cooling the gas to-162C we turn it into liquid and shrink its

    volume by 600 times, enabling us to shipit around the world. At its destination, theLNG is turned back into gas for piping tocustomers. Shell helped pioneer the supplyof LNG more than 40 years ago. Today weare one of the worlds largest LNG supplierswith facilities in Australia, Brunei, India,Malaysia, Mexico, Nigeria, Oman, Qatar,Russia and the USA. Construction continueson other LNG projects in Australia.

    The Gorgon LNG project (Shell interest25%) at Barrow Island off WesternAustralia will produce 15 million tonnes a

    year of LNG for around 40 years around8% of current global LNG capacity andenough to power 38 million homes a year.Gorgon will include the worlds largestcarbon capture and storage (CCS) project,reducing the projects overall CO

    2emissions

    by around 40%. CO2

    will be separatedfrom the natural gas and injected into asaline rock formation deep underground.

    We aim to share benets with thecommunities close to our LNG plants, andwork to protect the local environment. InNigeria, for example, regular power cuts

    disrupt businesses and restrict activities inschools and hospitals. Shell companieshave helped set up a local utility companythat supplies affordable and reliableelectricity to the community near theBonny Island LNG plant operated byNigeria LNG (NLNG, Shell interest 26%).Power generated by gas turbines at theNLNG plant and an oil export terminalon the island operated by Shell PetroleumDevelopment Company is sent to a grid thatserves businesses and homes in the area,benetting thousands of people.

    In India we have helped replant mangrovesnear the Hazira regasication terminal toimprove coastal ecosystems and countersoil erosion (page 13). We continueto work with experts to help protectendangered Western Gray Whales closeto the Sakhalin 2 LNG plant (Shell interest27.5%) in Russias far east. Followingadvice from independent scientists on theWestern Gray Whale Advisory Panel, weshut down seismic survey operations offSakhalin Island several times in 2010 whenwhales were nearby.

    LNG innovationCooling natural gas in a hot climate takesmore energy than in colder areas. Wehave found innovative ways to reducethe energy needed for LNG operations inregions with high temperatures, and otherswith low temperatures. Our joint-venture

    LNG facilities in Oman, for example, useseawater for cooling, reducing the powerneeded to refrigerate the gas. These plantshave lower CO

    2emissions than other LNG

    plants in hot climates.

    At Sakhalin 2, the cooling processes takeadvantage of subarctic temperatures thatcan plunge to -35C in winter. A two-stageliquefaction process cools the natural gasusing a special refrigerant mix and an air-cooling process. Sakhalin 2 uses 6% lessenergy than a similar Shell facility in theMiddle East and 9% less than a Shell LNG

    plant in the Asia-Pacic region.

    We have also developed an advancedliquefaction technology, where heat can berecovered and used for process heating andpower production. We plan to incorporatethis technology in designs for future onshoreLNG plants, where suitable.

    Floating LNGMany offshore gas elds are too small ortoo remote to be accessed economically.Shell is developing oating LNG (FLNG)capability to reach these resources. Gas

    is extracted to a oating facility abovethe eld, then processed and liqueedon board. It can then be immediatelytransferred to a carrier and shippedto markets. This eliminates the needfor pipelines and onshore processing

    plants, reducing the impact on theenvironment.

    In 2010, we received environmentalapproval for our proposed Prelude FLNGproject off the north-west coast of Australia.If we proceed with building this FLNG

    facility, it will be around 480 metres longand 75 metres wide, and would be mooredin water around 250 metres deep. ThePrelude development would be one ofthe rst deployments of FLNG in the world.

    www.shell.co/lng

    WORKING WITH OUR PARTNERS

    Building strong relationships with ourpartners, contractors and suppliers isessential to delivering new projects andrunning our operations. Our partnershipsin Qatar and Oman are good examples of

    how we work in joint ventures to produceenergy for our customers. Such partnershipshelp develop local skills.

    Qatargas 4 (Shell interest 30%) shippedits rst LNG cargo in early 2011. It hasopened up a new market for Qatari LNGin Dubai, adding to existing markets thatinclude China and the USA. In Dubai,LNG can be used to replace some of theoil normally burned to generate powerfor businesses, water desalination plantsand air conditioning. Qatargas 4 Shellsrst involvement in Qatar s LNG sector

    produces gas from the worlds largest singlegas eld, the North Field, which holds morethan 900 trillion cubic feet of gas. Shellhelped develop the Qatargas 4 plant inRas Laffan, an industrial zone on Qatarscoast. Our partner is Qatar Petroleum

    The Oman LNG facility.

  • 8/3/2019 All Shell Sr10

    15/40

    13Shell Sustainability Report 2010Securing diverse energy

    RESTORING mANGROVESIN INDIAHazira, in north-west India, is one ofthe countrys major industrial hubs andbiggest ports. Heavy industry such asmanufacturing companies, steelmakersand power plants have set up business

    there. But rapid development in recentyears has affected the environment. Forexample, the wide tidal mudats alongthe coast are devoid of the plantsand trees that once grew. An LNGregasication terminal (Shell interest74%) at Hazira supplies natural gas tomany of the industries in the area andto homes and businesses farther aeld.As part of efforts to rejuvenate the localenvironment we have been workingwith village communities, the regionalgovernment, NGOs and academicinstitutes to revegetate the mudats of

    Haziras coast by planting mangroves.These play an instrumental role insustaining healthy coastal ecosystemsand countering soil erosion. In turn,this helps sh thrive and can help localshermen earn a living.

    Over the past seven years, we haveorganised in partnership with localvillages the planting of around1,100 hectares with more than6 million mangrove trees. Activeinvolvement by people living in thearea has helped the mangroves tothrive. This programme helps buildskills and create jobs by trainingworkers in mangrove planting andmaintenance. As a result of our workat Hazira, the Indian Ministry ofEnvironment and Forests invited usto join an IUCN initiative to monitorthe growing and maintenance ofmangrove forests in India to protectcoastal habitats.

    www.shell.co/hazira

    WORKING WITH EARTHWATCHFor over 10 years, Shell has worked with international environmental charityEarthwatch to help our employees improve their understanding of major sustainabilitychallenges. By the end of 2010, more than 450 Shell employees had participated inEarthwatchs global research and conservation projects for up to two weeks at a time.In 2010, 49 Shell volunteers worked on projects that ranged from ecosystems researchin the mangrove forests of Kenya to monitoring how Arctic ecosystems in Canadaare responding to climate change. These experiences help employees gain a greaterawareness of the sustainability impacts of their work. The programme helps to reinforceShells sustainable development culture as employees actively share their experienceswith colleagues and communities outside the company.

    To extend this approach, we co-founded the Business Skills for World Heritageprogramme with Earthwatch and UNESCO in 2009. It pairs Shell employees withWorld Heritage Site managers for one year. Site managers learn business planningskills and ways to better manage natural areas, while Shell employees improve theirunderstanding of sustainable development. To date, the programme has been heldfor managers from nine sites in South-East Asia. For example, at Puerto PrincesaSubterranean River National Park in the Philippines, World Heritage Site managersworked with their Shell partner to develop a ve-year management plan to helpmaximise tourism benets while protecting the sites natural resources. In 2011, theprogramme will be run for managers from six sites in Africa. We are also funding aresearch project on biodiversity with Earthwatch scientists in Danum Valley, Malaysia,where training for the Business Skills for World Heritage programme has taken place.

    www.earthwatch.org

    with a 70% interest. Shells developmentprogrammes are helping Qataris moveinto technical and commercial leadershippositions within the venture.

    Shell, with a 30% interest, has beeninvolved with Oman LNG since the project

    started in 1994. The Oman Governmenthas a 51% interest and other privateindustry partners have 19%. Shipmentsof LNG go mostly to Japan, South Korea

    and Europe. As with all joint ventures wedo not operate, Oman LNG applies aset of business principles and HSE policymaterially equivalent to our own. In 2010,Oman LNG implemented Shells Life-SavingRules, which contributed to 1.5 millionhours worked without an injury that led to

    time off work.

    Oman LNG also uses our guidelines foremploying and developing local staff.

    Almost 90% of its workforce are Omaninationals and most of its top managementpositions are lled by Omanis. In 2010,the company spent more than $5 millionon the training and development of staff.Over the last 10 years, Oman LNGssocial investment programme has spent

    $90 million on more than 270 projects ineducation and health.

    World Heritage Site staff assisting in eld research at Danum Valley, Malaysia.

  • 8/3/2019 All Shell Sr10

    16/40

    14 Shell Sustainability Report 2010Securing diverse energy

    DELIVERING ENERGY RESPONSIBLYThe worlds easy-to-access oil is becoing ore scarce. To help eetrising energy deand, we are exploring in and increasing productionfro locations that can pose coplex technical, environental and socialchallenges. We also use advanced technology to extract ore fro existing

    elds. We work with partners, counities and governents to accessenergy resources responsibly.

    DEEP WATER

    Shell has been in the forefront of deep-water exploration and production formore than 40 years. We have a strongrecord of operating safely (page 4).We use innovative technologies tounlock resources off the coasts of countriesincluding Brazil, Malaysia and Nigeria,and in the Gulf of Mexico.

    Our Gumusut-Kakap deep-water project(Shell interest 33%) off Malaysia is dueto start production in 2012 using a largesemi-submersible platform anchored in morethan 1,200 metres of water in the SouthChina Sea. We have helped to build jobskills among local people and encouragegrowth in local businesses that will sustainlong-term success for them and for us. AShell-sponsored welder training programme,for example, seeks to address a regionalindustry shortage in this critical skill.Gumusut-Kakap was the rst deep-watersemi-submersible platform built in Malaysia.

    OPINIONWe share the same objective asShell, which is to ensure the safety ofall people working on our projects.The Shell Life-Saving Rules are integraland visible in our management ofsafety, from onshore ofces andconstruction sites to the eet of marineunits worldwide. We will continue toensure that the safety message doesnot diminish, but is robustly driven andexecuted for the continuation of a safeworking environment throughout all ofour operations.

    Tony mace, CEO of SBm OffshoreSchiedam, the Netherlands

    As well as community development, wesupport environmental conservationprogrammes in Malaysia. These includeresearch and conservation projects inDanum Valley, through our relationshipwith Earthwatch (page 13), and a dolphinconservation programme along theSarawak coast.

    More than 100 km off the coast of Brazil,

    our Parque das Conchas project (Shellinterest 50%) was producing around70,000 barrels of oil a day at a depthof 1,800 metres of water by the end of2010, its rst full year of production. Theproject achieved a number of technologicalrsts and provided many opportunitiesto build local expertise. We workedin partnership with Petrobras, Brazilspart-national oil company and anotherpioneer in deep-water technology. Mostof the major undersea equipment andmachinery used was built in Brazil. Weare moving ahead with a second phase of

    Perdido, the worlds deepest offshore oil drilling and production platform of its type, Gulf of Mexico.

    Parque das Conchas to bring another eldinto production. We are also involved inindustry organisations seeking to increaselocal hiring and buying of local services infuture projects.

    Some of the deep-water service companies

    we work with have adopted Shell safetyprogrammes across their operations. Forexample, in 2010 one of our contractorsat Parque das Conchas, SBM Offshore,launched life-saving rules across thecompany based on ours (see opinion).

    The Gulf of Mexico continues to be essentialfor energy supplies and we expect it toremain a signicant part of our production.Our Perdido platform (Shell interest 35%)is moored in nearly 2,500 metres of water,making it the worlds deepest productionplatform of its type. It was built and installed

    without a serious injury recorded. Perdidobegan producing oil and gas in 2010 andis ramping up to full production. Gumusut-Kakap, Perdido and Parque das Conchaswill contribute more than 300,000 barrelsof oil equivalent (boe) a day to the worldsenergy supplies.

    We have a further 100,000 boe-a-daycapacity deep-water platform developmentunder construction in the Mars basin in theGulf of Mexico.

    www.shell.co/deepwater

  • 8/3/2019 All Shell Sr10

    17/40

    1Shell Sustainability Report 2010Securing diverse energy

    ENHANCED OIL RECOVERY

    It is estimated that on average only abouta third of a reservoirs oil is normallyrecovered. But by using enhanced oilrecovery (EOR) techniques, we can extractmore from existing resources, extendingthe life of declining elds. The International

    Energy Agency estimates that 300 billionbarrels of oil could be unlocked globally byusing techniques such as injecting steam,gas or chemicals to recover more oil fromthe ground. Shell has been at the forefrontof EOR development since the 1930s,when we rst applied steam recovery inCalifornia. In Texas in the 1970s we werealso one of the rst companies to inject CO

    2

    to enhance oil recovery.

    We conducted successful eld trials inSyria with an EOR technique that involvesinjecting low-salt water to alter the rocks

    properties, including its permeability. Oilrecovery has increased 14% since thesetrials began in 2008, and our joint venturein Syria is now using this technique toproduce more oil from large projects.

    In Oman, where some of the elds are40 years old, Petroleum DevelopmentOman (PDO, Shell interest 34%) will re-inject sulphur-rich gas produced with oil atits Harweel development to boost recoveryof more oil. In its rst phase this EOR projectwill add 18,000 boe a day to Harweelsoutput.

    Our Smart Fields technology can increasethe amount of oil recovered from a eldby 10%, and gas by 5%. It can also boostthe rate of production. We use sensorsand bre-optic cables to relay digitalinformation on temperature, pressure andother eld conditions to our control centres.Engineers continuously monitor the ow ofoil to maximise production.

    We are applying this advanced technologyin Oman. In the Natih eld, Smart Fieldstechnology enables PDO to better controlthe ratio of oil and gas coming from thewells. As a result, over the past two yearsPDO has reduced the production of thisgas that was previously ared by over300,000 cubic metres a day. PDO hasbeen able to stop aring in the Natih eldwith no loss in oil production.

    www.shell.co/eor

    CONSERVING WETLANDS IN THE GULF OF mEXICOAround 90% of the erosion of all coastal wetlands in the USA is taking place inLouisiana. Overshing, rapid development and pollution have added to the impacton the coastline of ood control projects for the Mississippi River. These projects havereduced the natural replenishment of marshes and estuaries that comes from silt inood waters.

    A healthy Gulf Coast ecosystem is critical to the communities who live and work there.South Louisiana is home to some of our reneries, ofces, pipelines and more than4,000 employees. We have long worked with universities, NGOs, governments andothers to raise awareness of the loss of Louisianas wetlands and support conservation

    efforts. We have supported The Nature Conservancy (TNC) since 1990, contributingover $2.5 million toward environmental restoration projects and other initiatives.

    Restoring oyster reefs is such a project. With Shells nancial support, TNC is installingarticially engineered oyster reefs along nearly 8 km of Louisiana coast. These reefswill not only protect the shoreline from wave erosion and storm damage, but also manysquare kilometres of adjacent marshland that is home to sh, shrimp and crabs. Theoysters lter water when feeding, with a single oyster ltering up to 190 litres of watereach day, improving its quality and clarity.

    Scientic monitoring will assess the projects short- and long-term success by measuringreef establishment and shoreline changes. The goal is to encourage the use of oysterreefs as a sustainable way of protecting the shoreline.

    www.nature.org

    Restoring oyster beds in the Gulf of Mexico.

  • 8/3/2019 All Shell Sr10

    18/40

    16 Shell Sustainability Report 2010Securing diverse energy

    OIL SANDS

    Canadas oil sands are one of the worldslargest potential sources of crude oil.If developed responsibly they can makean increasing contribution to meeting theworlds energy needs. But developingand processing oil sands is energy and

    water intensive.

    At our oil sands operations we are tacklingthese challenges by nding ways toimprove our energy efciency and limitfresh-water use through recycling. Weare also working to develop a large-scalecarbon capture and storage (CCS) project.We work with neighbouring communities,supporting local and aboriginal businesses.By the end of 2010, we had contractednearly $1 billion of business to aboriginalcompanies since 2005. We also workwith aboriginal groups to gather and

    incorporate traditional ecologicalknowledge into our operations.

    Oil sands contain bitumen, a heavy oilmixed with sand, clay and water. At theAthabasca Oil Sands Project (AOSP, Shellinterest 60%) we use giant shovels andtrucks to extract oil sands at our MuskegRiver and Jackpine mines. We separate outthe heavy oil with warm water, then diluteit with a solvent for piping to the ScotfordUpgrader and conversion into syntheticcrude oil. AOSPs production capacity was155,000 barrels of oil equivalent (boe)

    a day in 2010. This will rise by 100,000boe a day following an expansion project,Jackpine Mine, that started operations in2010 and an expansion of the ScotfordUpgrader due to come on-stream in 2011.In 2010, we produced around 21,000 boea day from in situ operations where thebitumen is too deep to be mined. At somesites steam is injected into the reservoir toheat the bitumen, allowing it to be pumpedto the surface.

    Our share of production from oil sandswas 2.7% of Shells global oil and gasproduction in 2010.

    Greenhouse gas eissionsProcessing oil sands takes more energy thanfor some lighter crude oils found aroundthe world. Taken as a whole from miningto processing to use in transport fuels CO

    2emissions from oil sands are 515%

    higher than from conventional crude oil,according to Cambridge Energy ResearchAssociates (CERA). Heavy oil from ourmining operations is at the lower end ofthis range as a result of energy-efciency

    measures integrated into our design. In2010, direct emissions from our mining,upgrading process and in situ operationswere 3.7 million tonnes of CO

    2equivalent.

    This was around 4.9% of Shells globaldirect greenhouse gas emissions from thefacilities we operate.

    We are taking a number of steps to manageCO

    2emissions from our operations. We

    are using technology that saves energy inprocessing bitumen. We are piloting a new

    blend of diesel in some of our large trucksto improve their fuel efciency. We are alsoinvestigating the potential for large-scalecarbon capture and storage through ourproposed Quest project (page 11).

    WaterSeparating bitumen from oil sands useswater. While Shell has permits to withdrawabout 0.6% of the Athabasca Riversaverage annual ow, we used less than0.1% in 2010. During the year, 74% ofthe water used in the bitumen extractionprocess at the Muskeg River and Jackpinemines was recycled. No process water isdischarged into the external environment.We are involved in work with aboriginalgroups, NGOs, government and other oilsands operators to reduce the combinedimpact of the industry on the AthabascaRiver. This approach encourages new waysto manage water use, particularly duringwinter low-ow periods.

    Tailings and land reclaationProcessing oil sands generates tailings,a mixture of water, sand, clay and residual

    hydrocarbons that remain once the bitumenhas been removed. They are stored intailings ponds until we can dry them outfor use in land reclamation. In late 2010,Shell and a number of other companiesagreed to work together to improvetailings management. We have sharedour tailings research and technology withthese companies and will collaborateon future research to make earlierreclamation possible.

    The tailings ponds at the Muskeg River andJackpine mines cover an area of 24 km 2.Tailings contain concentrated naturallyoccurring chemicals that are toxic so wecontinually monitor, assess and managethem to protect the surrounding groundand surface water. We also operate aradar-based system, similar to that usedat commercial airports, to detect ocksof migratory birds and deter them fromlanding on the tailings ponds.

    When dried, tailings are used in theprocess of reclaiming the mined area.Normally this process takes several years.But we have invested more than C$100million in research that has led to a newtechnology to speed up the drying oftailings from years to weeks. This involvesadding chemical additives to tailings on asloped surface to improve water extraction,with the water then being recycled. In2011, we expect this pilot project toproduce 250,000 tonnes of sand and claysuitable for use in reclamation.

    www.shell.co/oilsands

    Giant trucks used to mine oil sands, Canada.

  • 8/3/2019 All Shell Sr10

    19/40

    1Shell Sustainability Report 2010Securing diverse energy

    IRAQ

    After years of conict, many people inIraq have to manage with just a few hoursof electricity a day. They are in need ofmore jobs, clean drinking water, workingsewage systems, better health facilitiesand functioning schools.

    With the development of the Majnooneld in southern Iraq, one of the worldsbiggest oil elds, Shell is contributing tothe countrys recovery. Greater revenuesfor the government from oil production areexpected to help regenerate the countrysinfrastructure, including power grids. Moregas supplies will also help produce moreelectricity. Access to reliable power will helpthe people of Iraq rebuild their communities.

    Shell is the operator at Majnoon with a45% interest. Our partners are Petronas

    (30%) and Iraqs state-owned MissanOil Company (25%). We are working toraise production from 45,000 barrels ofoil equivalent (boe) a day in mid-2010 to175,000 boe a day by 2012. The aim isto raise production in the coming years to1.8 million boe a day. By the end of 2010,Majnoon was producing 66,000 boe aday.

    Unemployment, especially among theyoung, is high, and security remainsa challenge. We are working with ourpartners to create opportunities for

    local and national contractors and tobuild job skills. In 2010, we trained15 environmental specialists workingfor Iraqs South Oil Company in how toconduct environmental, social and healthimpact assessments. We also hired localspecialist companies working under strictsafety procedures to clear unexplodedordnance from the surface of the Majnoonoil eld before work started.

    Shell is helping to restore local amenities.We worked with local contractors and theNGO Mercy Corps to install solar lightingand refurbish a park in Al Nashwa, thenearest community to Majnoon. The lightingwill help make the towns streets safer atnight. We also provided funds to help buyequipment and train medical staff in theAl Nashwa health clinic.

    The development of Majnoon posessocial and environmental challenges. Forexample, road trafc through local townsand villages will continue to increase. Weare working with a local womens group todevelop a road safety awareness campaign

    aimed at students, teachers and parents.The drivers who work for us are trainedin line with our global approach to roadsafety (page 24).

    Production from Majnoon involves thecontinuous aring of natural gas produced

    with the oil. In 2010, aring from Majnoonaccounted for around 1% of the global directgreenhouse gas emissions from the facilitieswe operate. We expect this aring will riseas production increases in line with ourcontract with the Iraqi government. With our

    partners, we are assessing the most effectiveways of capturing this gas for use, possiblyin power generation.

    We have also been working with the oilministry to establish a joint venture betweenShell and the South Gas Company. The

    joint venture would gather, treat andprocess gas produced with oil in severalelds, which is currently ared. It wouldbe available for the export and domesticmarkets, and could help boost powersupplies to communities.

    LISTENING TO OUR SAKHALIN NEIGHBOURSSakhalin 2 in eastern Russia is one of the worlds largest oil and gas operations.On Sakhalin Island, the development and operation of this project was estimated toimpact directly or indirectly nearly a quarter of a million people almost half of thepopulation including some 3,800 indigenous people.

    To help identify and address concerns among neighbours and community memberson the island, the operating company Sakhalin Energy (Shell interest 27.5%) adoptedan innovative community grievance mechanism. Sakhalin Energy publicised throughleaets, advertising, company community liaison ofcers and public libraries theopportunity to le a complaint or a concern. The company committed to addressing allthe grievances in a fair, transparent manner, and within a set time frame.

    In the last ve years, more than 330 individual complaints have been received andinvestigated. Many complaints centred on the impact of construction which ended in2008, such as trafc noise and restricted access to farm land. Sakhalin Energy actedon the concerns raised.

    The Sakhalin grievance mechanism contributed to Professor John Ruggies UN

    framework for the role of businesses in human rights (page 7). In the coming years,we plan to pilot similar community grievance mechanisms at other locations, using ourexperience from Sakhalin.

    www.sakhalinenergy.co

    Engaging with Nivkh community members at the traditional Fishermen Day festival on Sakhalin Island.

  • 8/3/2019 All Shell Sr10

    20/40

    Mutiu Sunmonu

    18 Shell Sustainability Report 2010Securing diverse energy

    The Niger Delta experienced relativestability in 2010. A continued governmentamnesty for militants who had beenattacking oil facilities in recent years helpedimprove security. This allowed importantprojects to move forward. We were able torenew infrastructure, such as pipelines, andbuild facilities to collect gas produced with

    oil that is normally burned, or ared.

    SPDC supplies around 70% of Nigeriasdomestic gas, which is mostly used toproduce power. Our major new energyproject at Gbaran-Ubie in Bayelsa Statebegan to help meet this need by providinggas to generate electricity, and for export.This project has created 300 permanentjobs and helped many to develop skills suchas welding and scaffolding. A related socialinvestment scheme is under way to connect200,000 local people to the electricity gridfor the rst time. SPDCs Afam VI power

    plant in Rivers State continued to contributealmost 20% to the countrys total electricitygenerating capacity.

    Such progress is welcome. Yet seriousproblems remain. Although the numberof violent attacks on our employees andcontractors fell in 2010, they sti ll occur.

    Gangs kidnapped 26 SPDC employees andcontractors in 2010, and one contractor waskilled in a related assault. People remaintrapped in poverty in the delta. Criminalgangs continue to steal oil from pipelines atan estimated rate of 100,000 barrels a day.Theft and illegal rening cause extensive

    environmental damage. Sabotage and thefttogether accounted for more than 80% of thespill volume from SPDC facilities in 2010.

    In the face of such difculties people askme many questions. What has SPDClearned over the years? What are we doingdifferently to bring improvements? Can theproblems in the delta ever be solved?

    I tell them that SPDC creates a great dealof value for Nigeria, but it operates in anextremely challenging environment. Wehave made mistakes, but we listen and

    try to learn from the past to improve ourperformance today and in the future.

    Take our actions in just three areas. In recentyears most spills from SPDC facilities havebeen caused by sabotage and theft. Butsome are operational spills due to equipmentfailure or human error. No operationalspill is acceptable and we recognise thatwe have to improve our performance inthis area. We are investing in an ongoingmaintenance programme. For example,in 2010, SPDC completed construction ofa $1.1 billion replacement pipeline, the

    97-kilometre Nembe Creek Trunkline. Weare also determined to be more transparentin our response to oil spills. In January2011, we launched a public website whichtracks our response to, and investigationand clean-up of, every spill from SPDCfacilities, whether operational or the resultof sabotage.

    Another example is gas aring. We regretthat SPDC has been unable to meet targetsto end continuous aring. Militant violencehad prevented safe access, and a lackof funding from our government partnerdelayed progress. Once conditionsimproved, however, we began work in

    early 2010 to install more equipment thatwill reduce gas aring from SPDC facilities.This drive to replace sabotaged facilities togather gas, or to install new equipment, willhelp us reach our goal of ending continuousaring. It will cost over $2 billion, inaddition to $3 billion previously spent toreduce aring. Progress will depend oncontinued government partner fundingand a stable security situation.

    SPDCs better approach to fundingcommunity projects is a third example.Community involvement in the way these

    projects were developed used to be limited.Some projects failed partly because of this.In 2006 SPDC began to let communitiesdecide on and develop these projects forthemselves. The results are encouraging.

    Only concerted action by all parties willovercome the deep-rooted challenges inthe Niger Delta. Government must leadthe way. The best contribution SPDC canmake is to grow and sustain our businessin a responsible way: this will maximiserevenues to the government, protect tensof thousands of jobs, provide valuable

    contracts to Nigerian companies, anddevelop industry skills. We must remainresponsible in dealing with the challengesour business faces, making sure we learnfrom them to improve our performance. Iam hopeful that if improvements in securityand funding can be maintained, we willcontinue to make progress in 2011.

    SHELLS ECONOmIC CONTRIBUTIONShell Petroleum Development Company of Nigeria Ltd (SPDC) isthe operator of a joint venture between the government-ownedNigerian National Petroleum Corporation (NNPC, 55%), Shell(30%), Total (10%), and Agip (5%). Partners fund the joint venturebased on their ownership share. Since the government-ownedNNPC owns 55%, the joint ventures activities depend on thegovernment providing this share.

    Shell Nigeria Exploration & Production Company (SNEPCo)operates and has a 55% interest in the offshore Bonga eld,Nigerias rst deep-water project. Shell also has a 26% interestin Nigeria Liqueed Natural Gas (NLNG), which exports LNGaround the world.

    $31 billion: revenues from SPDC to Nigerian governmentfrom 2006 to 2010.

    $3.5 billion: Shell share of royalties and taxes paid to theNigerian government in 2010.

    95%: share of revenue after costs that goes to the NigerianGovernment from each barrel of oil SPDC produces.

    $947 million: value of SPDC and SNEPCo contracts awardedto Nigerian companies in 2010.

    6,000/35,000: estimated direct/indirect jobs created by SPDCand SNEPCo in Nigeria.

    90%: proportion of employees that are Nigerian. $161.1 million: SPDC and SNEPCo funds to the Niger Delta

    Development Commission in 2010 (Shell share $59.8 million). $71.4 million: 2010 contribution from SPDC and SNEPCo to

    community development projects (Shell share $22.9 million).

    An open letter fromMutiu Sunmonu,Chairman of ShellCompanies in Nigeria

    and Managing Directorof Shell PetroleumDevelopment Companyof Nigeria Ltd (SPDC).

    NIGERIA

  • 8/3/2019 All Shell Sr10

    21/40

    Continuous gas flaringSince 2002, aring from SPDC facilitieshas fallen by over 50%. This declinehas been due to our work to collect thegas produced with oil, as well as lowerproduction as a result of militant violence.As security in the Niger Delta improved

    and production rose in 2010, the volume ofgas produced and ared rose accordinglyfrom SPDC facilities. In early 2010, SPDCbegan work on new projects to install gas-gathering equipment at 27 gas separationfacilities. This will extend the proportionof potential SPDC production where wecan gather gas to over 90%, increasingthe gas available for the domestic marketand for export. Progress on these projectsdepends on continued stability in the deltaand funding from partners. SPDC is lookingat possible solutions for the remaininggas, including supplying communities and

    businesses that need gas for local powergeneration or industrial uses.

    Theft and illegal refiningCrude oil theft and illegal rening arewidespread in the mangrove swamps ofthe Niger Delta. At hundreds of sites, stolencrude is heated in barrels to produce rawfuels that are sold locally. The land andwaterways around these sites are pollutedby oil, and res are common. In an areawith few jobs, this dangerous activity isseen as a way to earn money. It devastatesthe environment because the thieves spill oil

    and discard residues from illegal reneries.But it is only part of a wider problem ofhighly organised crime worth hundreds ofmillions of US dollars a year. SPDC believesthat until organised large-scale oil theft andillegal rening are stopped, there can beno lasting solution to the pollution of someareas of the Niger Delta.

    www.shell.co/nigeria

    ImPROVING COmmUNITYINVESTmENTEach year SPDC and its partnerscontribute hundreds of millions ofdollars to development in Nigeria.Some of this is required by law, for

    example our contribution to the NigerDelta Development Commission. SPDCalso invests directly in health care,roads, water projects, small businesses,training, education, and other socialinitiatives.

    In the past, communities did not alwayshave the opportunity to plan andexecute such projects. As a result somewere abandoned and others failed toprovide the intended benets. In 2006,SPDC introduced a different approach,known as a global memorandum

    of understanding (GMOU), to putcommunities at the centre of planningand implementation. Communitiesidentify their own needs, decide howto spend the funding provided by SPDCand its joint-venture partners, anddirectly implement projects. By the endof 2010, SPDC had GMOUs in 244communities.

    In Port Harcourt the GMOU modelwas used to launch the Niger Deltasrst community health insurancescheme. More than 8,000 peoplehad signed up by the end of 2010.Many have now received previouslyunaffordable medical treatmentincluding vaccinations, maternal careand operations. Annual premiumsare around $50, with GMOUfunding subsidising half that amount.This compares, for example, to the$300-350 women in the NigerDel