IMO 2020 and beyond - GDA21

Shell Global Solutions International B.V.

Gurminder SinghDirector, Technology Licensing MENA

1December 5, 2018

Shell Global Solutions

IMO 2020 and beyond:Residue upgrading options for a competitive future



Definitions and cautionary note

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this presentation “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries 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 presentation refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations” respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ 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 presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves 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 regulatory measures addressing climate change; (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. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell’s Form 20-F for the year ended December 31, 2016 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this presentation and should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 23–25 October 2018. Neither Royal Dutch Shell plc 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 presentation.We may have used certain terms, such as resources, in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain this form from the SEC by calling 1-800-SEC-0330.

2December 5, 2018

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Agenda

◼ IMO 2020 – Implications for shipping

◼ IMO 2020 – Implications for refining

◼ Potential response options

◼ Planning your response

◼ Case study: Shell Pernis

◼ Key takeaways

3December 5, 2018Shell Global Solutions International B.V.


IMO 2020: Three options for the shipping industry

4December 5, 2018

Scrubbers

LNG

Low-sulphur fuel



IMO 2020: What it means for refiners

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IMO Rotterdam product cracks $/bbl

Source: Shell Trading Oil Markets Analysis


How will you respond?

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Factors that will influence your response include your:◼ Current configuration◼ HSFO pricing

premises◼ Available capex


IMO 2020: Refiners’ response options

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Residue conversion, %

HIGH CAPEX, MEDIUM–LOW ROI

MEDIUM CAPEX, MEDIUM–HIGH ROI

LOW CAPEX, HIGH ROI

Cap

ex

Delayed coker/flexicoker

Coker debottlenecking with SDA

SDA + ebullated bed HCU

Deep-flash VDU

SDA + residue gasification revamp

Crude flexibility

Slurry HCU (SHC)

Gasification

SDA + HCU revamp

SRU revampAdd vacuum flasher downstream VBU


Developing your response: The hydrocarbon master plan study

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Recommended configuration for maximising margins

Jointdevelopment

Customerled

Long-term vision

Screening and development options

Long list of identified options and ideas

Study premises


Planning your residue-upgrading journey with the Shell Global Solutions Pentagon model

Pentagon I Pentagon II

Pentagon III

Low capex, high ROI

High capex, medium-low ROI

Medium capex, medium-high ROI

December 5, 2018 9


Low-capex response option: Crude flexibility

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Lift current refining margin by up to$1/bbl

Shell Global Solutions International B.V. 11

Low-capex response option: Shell deep-flash vacuum distillation unit

Furnace

Schoepentoeter*

Wash oil section

Draw off trays

Empty spray sections

Revamping an 8.9-Mt/y (150,000-bbl/d) unit

can improve refinery margins by $7.8 million/y.

December 5, 2018

Unlock more hydrocracker feed

1–3%

25% lower energy costs

$46 million/y

1.5% better mechanical availability

customer value

more distillates


Low-capex response option: Latest-generation catalysts and reactor internals

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Handle heavier and

more difficultfeeds

Increase catalyst volume

Improve catalyst utilisation


Medium-capex response option: SDA+HCU revamp

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Mid

dle

dist

illat

es

Crud

e fle

xibi

lity

HSF

O

VR

CDU AR

Gasoline

UCO for potential LSFO blending

Kerosene/dieselDAO

VGOHVU HCU

Asphaltenes: bitumen

SDA

CCRNaphtha

The combination of SDA and DAO hydrocracking is one of the lowest capital cost options for residue conversion

50%


Shell Pernis proof point: Minimising fuel oil production and increasing crude flexibility

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Proposed residue processing scheme

VR

H2

Naphtha, distillates

Gasoline, distillates

Current residue processing schemeHVGOAR

Fuel oil

VR

H2


Gasoline, distillates

HVGO

FCC

Gasifier

AR


HVU HCU

FCC

Gasifier

HYCON

ROSEDAO HCU

HVU HCU

Incr

ease

d m

iddl

e di

still

ates

33%

fuel

oil

re

duct

ion

Impr

oved

cr

ude

flexi

bilit

y

High ROI

Shell Global Solutions International B.V. 15December 5, 2018

High-capex response option: Slurry hydrocracking (SHC)

◼ Offers near-total residue conversion (95%)

◼ Capex intensive

◼ Currently seen as high risk/reward

investment

◼ Technology evolution ongoing; for Shell

refining “de-risk” needed

◼ Shell’s gasification technology capable of

processing SHC residue


The Shell residue gasification process (SGP) offers feed and product flexibility

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SHC residue

Feedstock

Ebullated bed residue

SDA pitch

Vacuum residue

Vacuum flashed cracked residue

Ethylene cracker residue

Gasification and gas treating

Oxygen, steam

Sulphur

Liquefaction (Fischer-Tropsch)

Methanation

Power generation

Chemicals

Carbon capture and storage (CCS)

Steam, electricity

H2, ammonia, methanol, oxo-

alcohols

Synthetic natural gas

Transportation fuels

Greenhouses

Cleansyngas(CO + H2)

CO2


A European refiner’s journey demonstrates the SGP’s flexibility

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VR

VFCR SDAVFCR

VFCR90%

Pitch 10% Pitch 100%

Gasification unit started up on VFCR

New SDA with conversion of SGP to 100% asphalt

SGP operation proven with up to 30% SHC residue

Modified design available for 100% SHC pitch

2006

2008

2013

Future plan

VR VR

VBU

SGP

VBU

SGP

SHC

SGP

SHC

SGP-BQ

VBU


Residue conversion options will require an improved sulphur handling system: SCOT ULTRA

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1SCOT is a trademark owned by the Shell group of companies.2JEFFTREAT is a registered trademark of Huntsman Corporation or an affiliate thereof in one or more, but not all countries.


Where are your residue upgrading opportunities?

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Shell SCOT ULTRA or CANSOLV SO2Increase SRE

Reactor internals and catalystsIncrease bottoms conversion

Crude flexibilityIncrease margin by $1/bbl

Residue upgrading catalystsRaise conversion levels, process heavier feeds

Deep-flash VDUIncrease VGO lift

HydrocrackerIncrease feed and product flexibility

SDA + residue gasificationA low capital-cost option for residue conversion

SDA + DAO hydrocrackingA low capital-cost option for residue conversion


Key takeaways

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1There is no one-size-fits all solution to reduce or eliminate your residue exposure. Develop a master plan to identify the optimal responses.

3Shell and its partners have accumulated vast experience on how refiners can integrate their technology blocks for cost-effective solutions.

2The highest residue conversion technologies may not be the preferred investments; integrated solutions may provide better returns.


Questions and answers

21December 5, 2018

IMO 2020 and beyond - GDA21

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