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October 22, 2004

GOM Outlook Energy Summit 2004 Greg Guidry Exploration Manager – GOM Nearfield Shell Exploration and Production Company. October 22, 2004. Disclaimer.

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October 22, 2004

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  1. GOM OutlookEnergy Summit 2004Greg GuidryExploration Manager – GOM NearfieldShell Exploration and Production Company October 22, 2004

  2. Disclaimer This presentation contains forward-looking statements that are subject to risk factors associated with the oil, gas, power, chemicals and renewables businesses. It is believed that the expectations reflected in these statements are reasonable, but may be affected by a variety of variables which could cause actual results or trends to differ materially, including, but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, the risks of doing business in developing countries, legislative, fiscal and regulatory developments including potential litigation and regulatory effects arising from recategorisation of reserves, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates.

  3. Gulf of Mexico - Attractiveness

  4. Gulf of Mexico Business Environment A • Regulatory • Currently 3 annual Lease Sales • Competitive bidding/auction • 5-10 year leases • Access issue +/- 50% off limits • Commercial • Hyper- competitive – 70 plus Operators • 3 mile sq. leases drive complex JV’s • Tax royality – stable terms

  5. Shell BP Amoco Exxon CVX BHP 1983 1990 1995 2000 2003 Paradigm - “No sand beyond the shelf edge” Ram Powell (1985) – 1st discovery, Auger (1987) – 1st DW Hub, Mars (1989) – Giant Field Declining field sizes in discovered plays New Play Models - Atlantis (1998), Thunder Horse (1999) – Giant Fields New Plays - Frontier areas with technical challenges Great White (2002) – opens Perdido play Gulf of Mexico - Exploration Frontlines Ram Powell Deep Shelf Gas Mars Thunder Horse Brutus Auger Tahiti Holstein Diana Hoover Atlantis Mad Dog Great White

  6. Gulf of Mexico – Creaming Curves Deepwater Gulf of Mexico 2002: America’s Expanding Frontier – OCS Report MM 2002-021

  7. Gulf of Mexico Deepwater resource added by Industry 16,000 14,000 12,000 Transition to new plays 10,000 Discovery Volumes (mln boe) 8,000 Capture the satellites 6,000 Success in amplitude play 4,000 Shell Share 6 bln boe – 40% 2,000 - 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Industry Deepwater GoM >1500' (source MMS)

  8. New/Emerging plays (largely sub-salt) Gulf of Mexico Plays Conventional Amplitudes (above salt) Mineral Management Service 2004 estimate: - Shelf ultimate recovery 65 bln boe Yet-to-find - 15 bln boe (Deep Shelf - Gas) - Deepwater ultimate recovery 71 bln boe Yet-to-find - 56 bln boe

  9. 1500' 4000' 6000' 8000' 10000' Significant Gulf of Mexico Wells in 2004 Legend Newfield WC 77 P & A Drilling Discovery Planned McMoRan Hurricane Shell Joseph El Paso Rich Mtn. Kerr McGee Essex ChevTex Poblano LLOG EI 113B Millennium EI 190 Dominion W. Raptor McMoRan Deep Tern Exxon W. Blackbeard Amerada Wembley Spinnaker Minute Man Dominion Thunderhawk Millennium EC 299 Spinnaker Jed Shell Boreas Unocal Sequoia Devon Big Bend Kerr McGee Chilkoot Shell Caesar Shell Cheyenne Kerr McGee Ticonderoga BP Mad Dog Deep Unocal St. Malo Unocal Sardinia BP Diamondback ChevTex Silver Tip BP Das Bump Shell Great White ChevTex Jack Unocal Tobago Exxon Hadrian GP040139.PPT DAF 10/13/04

  10. East. GOM Deep Shelf Gas Miocene Perdido Paleogene 2004-5 Expiry 2006 Expiry 2007 Expiry 2008 Expiry GOM Lease Expiry Outlook 2,400 leases expire from 2005 through 2008 – 600/yr vs 250/yr historical avg.

  11. Ultra - Deepwater Rig Requirements 40 40 Forecasted 5th Gen Rig Requirements Additional Short Term Demand Known Term Projects 35 35 Currently Contracted Rigs Additional 30 30 Rig Supply Short Term Demand 25 25 20 20 Rigs Known Term Projects 15 15 10 10 Currently Contracted Rigs 5 5 0 0 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D 2004 2005 2006

  12. Big Cats planned for 2005and 2006 GoM 2005: 5 2006: 5 Norway 2005: 2 2006: 3 Denmark 2005: 1 UK 2005: 1 2006: 2 Brazil 2005: 2 2006: 3 Brunei 2005: 1 2006: 1 • 2005-06 GOM Plan • 25% of global Big Cats Nigeria 2005: 4 2006: 2 Egypt 2005: 2 Malaysia 2005: 1 2006: 3

  13. Gulf of Mexico - Technology

  14. Technological Advance

  15. GOM Development Milestones – A Step Change Host: 6340 ft SS: 7600 ft

  16. Shell Hubs Shell Satellites Mars Basin New Orleans 130 miles Ursa Mars Place a Mars TLP photo in this chart – left side Shell Hubs Shell Hubs

  17. Mars Field - “Just In Time” Expansions Production record 209,000 bbl/d (1/1/03) 230 mmcf/d (9/20/01) 2001 220 kbbl/d 2000 200 kbbl/d 1999 170 kbbl/d Total Gross Oil Production 200 1998 140 kbbl/d 150 Actuals 1993 Original Design 100 kbbl/d kbbl/d 100 50 Original forecast 0 '96 '97 '98 '99 '00 '01 '02

  18. Major Projects – Shell Gas & Power • LNG – Gulf Landing Terminal • 38 miles offshore Louisiana • A concrete, gravity-based structure, which will be floated to the site and lowered to rest on the seafloor in about 55 feet of water. • The facility will include a berth for mooring LNG carriers, LNG storage and regasification facilities, and pipelines to connect with existing natural gas pipeline systems in the Gulf of Mexico. • Gas output will be delivered into as many as five major interstate pipelines serving Louisiana and parts of the US Southeast, Midwest, Northeast and Mid-Atlantic.

  19. Sakhalin Sakhalin Sakhalin EPE Europe EPE Europe EPE Europe Canada Canada Canada Rocky Rocky Rocky N.O. N.O. N.O. Egypt Egypt Egypt Mountains Mountains Mountains Morocco Morocco Morocco Houston & Houston & Houston & S. Texas S. Texas S. Texas Current Contracts Venezuela Venezuela Venezuela Nigeria Nigeria Nigeria Potential Future Brazil Brazil Brazil Opportunities Real Time Operations Center - New Orleans Vision: • Provide State-of-the-art well visualization • Efficiently drill and complete wells • Achieve lowest unit technical cost (UTC) Achievements: • 17% reduction in trouble time during 2003 • RTOC savings exceeds investment • Global Reach

  20. Gulf of Mexico - Access

  21. Federal Lands Open to Energy Leasing Federal Lands Closed to Future Energy Leasing Offshore Planning Areas Closed to Future Energy Leasing OCS Planning Areas Access: Key to the North American Energy Potential Atlantic Coast: 28 Tcf + 2 BBO Pacific Coast: 19 Tcf + 11 BBO Eastern Gulf: 24 Tcf & 4 BBO

  22. Eastern Gulf of Mexico • Access Challenges • NIMBY • Industry image • NGO opposition • Education • Political support • Environmental concerns Sale 181 Proposed Sale 181 Actual Clinton (1998) Moratorium

  23. Sustainability in the Offshore Health and Safety Engaging stakeholders • Technology • Minimizing our impact Education and research Environment

  24. BACKUP

  25. Access: Key to the North American Energy Potential • Environment • Shift to unconventional • Demand growth downgraded • Supply growth difficult • Short term spare capacity • Frontier supply – LNG faces major hurdles Alaska 300 Tcf Canadian North 225 Tcf Canadian Rockies 250 Tcf • Challenges • NIMBY & industry image • NGO’s and education on access U.S. Rockies 300 Tcf Gulf of Mexico 300 Tcf Source: NPC Draft Report 11/16/99 GRI Baseline Projection 2000 U.S. Gas Supply is migrating to more remote, technically challenging sources

  26. 1500' 4000' 6000' 8000' 10000' 2004 Exploration – Gulf of Mexico Frontier New Hub Near Field E&A Ram Powell G Joseph  Appraisal DB2 Coulomb Deimos Cheyenne Tahiti Tobago Plesiosaurus Great White

  27. Major Projects - Nakika • First deepwater semi-sub host for Shell • Deepest permanent moored semi-sub • World’s largest pipe in pipe risers • First gas lift risers in the GoM • First electrically heated flowlines/risers • One dual frac pac SMART well • Three triple frac pac SMART wells • Excellent ramp-up & up-time

  28. Public Policy • Issues: • Domestic energy second largest contributor to Federal Treasury • Access to off-limit areas of the U.S. is good for the country and Louisiana • MMS has been a great steward of our offshore resources • Coastal states competitiveness with OCS, especially in regard to Shelf Deep Gas • GOM getting squeezed with no access on the Mexico and Florida flanks • Canada, Mexico and U.S. cooperation on cross border resource • Provides growth and stability for each countries economy and citizens • Technology key to unlocking plays & reducing footprint

  29. Public Policy • What can we do? • Grass-roots programs in the coastal states. • Provide input into the MMS’s next 5-year plan (’07-’12) this winter • Revenue sharing options with coastal states that support responsible development. • Stakeholder engagement strategy • Congressional and Executive Moratoria changes when Public Opinion changes.

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