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Summary of water quality observations/challenges in Shale Gas Development

Summary of water quality observations/challenges in Shale Gas Development. Bob Hendricks: Appalachia Groundwater Protection Lead Shell Water Team Lead UAU Marcellus Shale Coalition. Shale Network 2014 Workshop

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Summary of water quality observations/challenges in Shale Gas Development

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  1. Summary of water quality observations/challenges in Shale Gas Development Bob Hendricks: Appalachia Groundwater Protection Lead Shell Water Team Lead UAU Marcellus Shale Coalition Shale Network 2014 Workshop May 12 and 13, 2014 Atherton Hotel (State College PA) and Willard Building (PSU)

  2. DEFINITIONS AND CAUTIONARY NOTE The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate 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 in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this presentation, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) 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”, “intend”, “may”, “plan”, “objectives”, “outlook”, “probably”, “project”, “will”, “seek”, “target”, “risks”, “goals”, “should” and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this 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 potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this 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 factors that may affect future results are contained in Royal Dutch Shell's 20-F for the year ended 31 December, 2011 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, May 13, 2014. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all. We use certain terms in this presentation, such as discovery potential, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in 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 these forms from the SEC by calling 1-800-SEC-0330.

  3. Presentation Overview • Water Quality Investigations • Regulatory and/or Water Complaint Response • Scientific Studies/Evaluations • Collaboration • Types of Data for Evaluating Water Quality • Data Evaluation Challenges • Lines of Evidence for Evaluating Potential Water Impacts • Produced/Flowback Water • Gas Migration

  4. Primary Types of Data For Evaluating Water Quality • Groundwater • Pre Drill • Post Drill • Water Complaint/Response • Investigation • Produced/Flowback Wastewater • Waste Characterization • Investigation/Assessment • Gas • Production • Isotube Samples

  5. Summary of Key Data Evaluation Challenges • Determination of “Changed Condition” • Natural Variability in Water Quality • Seasonal • Weather Dependent • Water Use • Water Well Construction/Water Sources • Sampling and Analyses of Methane • Presence of Pre Existing Methane • Restricted Groundwater Flow Zone Chemistry • Variability within Appalachian Basin • Data Confidentiality

  6. Water Source sampling considerations • Surface Casing Installation • Multiple water bearing zones • Well Deepening for Storage • Water Usage At Time of Sampling • Well Maintenance

  7. Turbidity vs. Water level change

  8. Iron concentrations by sample date for daily samples Wells #1 to #7 (Nearby) 2 orders of Magnitude Change Reference: GES, SAIC, Chesapeake Presentation

  9. Strontium Concentrations by Sample Date Change from 3-15 mg/l in 2 days Reference: GES, SAIC, Chesapeake Presentation

  10. Headspace methane vs. water level change in 6 hours Water level drop; Headspace increase

  11. Changes in dissolved methane in groundwater at “medium” (5-15 mg/L) level locations KB: (5 mg/l – 21 mg/l) EH: (ND – 14 mg/l)

  12. compositions of water Types – Restricted Flow Zone 400 – 6100 (7800) 10 – 235 (330) 90 – 2,000 (2,500) 125 – 3,500 (4,600) 0.14 – 80 (1,600) 0.5 – 98 (36)

  13. Piper Diagram – General Water Quality Produced Water (NaCaCl type water) Predrill Groundwater >250 ppmCl- (NaCaCl type water) Predrill Groundwater <25 ppmCl- (CaHCO3 type water) Similar to Williams, 1998 findings on water quality types in Tioga County

  14. Pre-Drill – CHLORIDE vs. Well depth Higher salinity groundwater can occur at variable depths for different reasons

  15. Multiple Lines of Evidence for Addressing Challenges • Data evaluation process must consider various parameters • Evaluation of potential impacts from produced/flowback water • Plot of isotope of water using meteoric water line data for comparison: 18Oversus 2H • Radium isotopes: Ra-228/Ra-226 • Stable strontium isotopes: 87Sr/86Sr • % Modern carbon (14C) in dissolved inorganic carbon (DIC) • Stable 13Cof dissolved inorganic carbon (DIC) • Evaluation of potential impacts from gas migration incidents • Methane/Ethane Ratio • Isotopic Signatures • Isotopic Reversals

  16. isotopic distribution OF2H and 18O IN SURFACE WATERS - US The Global Meteoric Water Line is an equation that states the average relationship between hydrogen and oxygen isotope ratios in natural terrestrial waters, expressed as a worldwide average. Meteoric groundwater is derived from rainfall and infiltration within the normal hydrological cycle. It is generated from sea water by evaporation and deposition Groundwater originating as sea water and entrapped in the pores of marine sediments since their time of deposition is referred to as connate water. This is saline water encountered at great depths in old sedimentary formations. It is groundwater that has been removed from atmospheric circulation for a significant period of geological time. Reference: “Distribution of oxygen-18 and deuterium in river waters across the United States”, Carol Kendall and Tyler B. Coplen; US Geological Survey, Menlo Park, CA 94025, USAUS Geological Survey, Reston VA 20192, USA HYDROLOGICAL PROCESSES, Hydrol. Process. 15, 1363–1393 (2001)

  17. PA Local Meteoric Water Line Local Meteoric Water Line Brine Data: Dresel P., Rose A. (2010); "Chemistry and Origin of Oil and Gas Well Brines in Western Pennsylvania", PA Geological Survey, Open-File Report OFOG 10-01.0 Well Water Data (<250ft): "Natural Gases in Ground Water near Tioga Junction, Tioga County, North-Central Junction, Tioga County, North-Central Pennsylvania—Occurrence and Use of Isotopes to Determine Origins", 2005, U.S. Department of the Interior, U.S. Geological Survey, Scientific Investigations Report 2007-5085, Table 5 (In cooperation with the Pennsylvania Department of Environmental Protection) Surface Water Data: Coplen TB, Kendall C (2000); "Stable Hydrogen and Oxygen Isotope Ratios for Selected Sites of the U.S. Geological Survey’s NASQAN and Benchmark Surface-water Networks", USGS, Open-File Report 00-160 Restricted and unrestricted GW samples plot on line

  18. Radio-isotope Evaluation – Radium 228/226 ratio 18 • USGS 2001 Study: Ra-228/Ra-226 ratios in produced water from the Marcellus Shale are most commonly less than 0.3 (median 0.16), and samples from non-Marcellus reservoirs generally have Ra-228/Ra-226 ratios greater than1 (median 1.1). (Rowan et.al,, USGS Scientific Investigations Report 2011–5135, 2010) • Water Well Investigation • Well - Ra-228/Ra-226: • 2.09 pCi/l/2.32 pCi/l = 0.90 • Background in Tioga County Water Wells (USGS Study) • Well 486: Ra-228 (1.7 pCi/l) and Ra-226 (1.4 pCi/l) = 1.21 • Well 498: Ra-228 (13 pCi/l) and Ra-226 (17 pCi/l) = 0.76 • Flow back/Produced Water from Shell Marcellus Operations • Ra 228/Ra 226 – < 0.1

  19. Strontium Isotopes: 87Sr/86Sr Water Well Produced Water -1 Produced Water -1 (Duplicate) Produced Water -2 Normalized to Seawater The well water has a much higher normalized strontium isotopic value than the produced water supporting different water origins. The normalized values are also different for other PA counties (10 to 45).

  20. 14CDIC pmC versus 13CDIC‰ PDB in Water Samples • More modern carbon is expected in domestic wells that have surface recharge. Produced water is commonly millions of years old and should have low to no 14C (half-life of 5,730 years). • Surface and shallow groundwater tend to be lsotopically lighter in DIC as compared to formation brines and produced water High pmC and negative13 C values in near surface groundwater Depleted/absence of pmC and heavily enriched 13 C values in the produced water 14CDIC pmC 13CDIC‰ PDB

  21. Methane to ethane ratio vs. 13C-methane • Predrill water sources: >1000 • Production gas: <100

  22. Fingerprinting isotopes: 13C and 2 h of methane

  23. Isotope reversal – regional differences Western PA Northeastern PA Vertical Depth Lateral after ~5000 ft Lateral Production Gas: > ~4500 to 5500 ft No reversal in the Marcellus Reversal in the Marcellus

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