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1May 2010
CHALLENGES AND SOLUTIONS OF REDUCING GASFLARING IN IRAQ
Regional Forum on Gas Flaring and Associated Gas UtilisationMuscat, May 10th -11th 2010
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Mounir BouazizVice President Commercial, New Business, LNGMiddle East and North AfricaRoyal Dutch Shell Plc
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Disclaimer Statement
The companies in which Royal Dutch Shell plc directly or indirectly owns investments are
separate entities. In this presentation the expressions "Shell", "Group" and "Shell Group" are
sometimes used for convenience where references are made to Group companies in general.Likewise the words "we", "us" and "our" are also used to refer to Group companies in general or
those who work for them. The expressions are also used where there is no purpose in identifying
specific companies.
The information contained in this presentation contains forward-looking statements, that are
subject to risk factors which may affect the outcome of the matters covered. None of Shell
International B.V., any other Shell company and their respective officers, employees and agents
represents the accuracy or completeness of the information set forth in this presentation and
none of the foregoing shall be liable for any loss, cost, expense or damage (whether arising from
negligence or otherwise) relating to the use of such information.
All copyright and other (intellectual property) rights in all text, images and other information
contained in this presentation are the property of Shell International B.V. or other Shell
companies. Permission should be sought from Shell International B.V. before any part of this
presentation is reproduced, stored or transmitted by any means.
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Gas Flaring in Iraq
1.0
3
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Iraqs Gas Sector Fundamentals
70% of proven gas is associated gas
Supply highly dependent on oil production
Non-Associated Gas >15 tcf*
Limited gas infrastructure between regions (South Iraq holds 70% of gas)
Usable power capacity of ~5,000 MW*
Iraq needs in excess of 10,000 MW*
* Source: Energy Information Administration, Ministry of Electricity
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Current Status of Flaring in Iraq
Substantial volumes of Associated Gas is flared in Basrah Province
Of the ~1100 mmscf/day produced, greater than 700 mmscfe/day of gas flare
- This is equivalent to 560 mmscf/day of dry gas *, sufficient to generate
4500 MW * (the current operational power generation is 5000 MW)
- 4000 t per day of LPG * (equivalent to 320,000 LPG cylinders per day)
- 770 tons per day of Condensates *
- The current gas flare is releasing ~ 14 mtpa of CO2 per year *
Significant shortage in dry gas to fuel power plants
Significant shortage in LPG production forcing import of LPG
Loss of opportunity revenue from export of surplus LPG or dry gas
*Source: Shell estimates
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Flaring Will Increase Across All Licensing RoundFields
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
M
illionstandardcubifeetperday
Gas Production fromlicensing rounds(6 MMbbl/d scenario)
Current operationalGas processingcapacity
Gas
flare
d
*Source: Shell estimates based on current oil and products prices. A 4 bcf/day gas flare assumes no action is taken over the next 3
years
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Southern Iraq Gas Supply/Demand Scenario (LR data)
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
[bcf/day]
Domestic Demand for South Iraq Gas
LR1 + LR2 majors' bids
~4 bcf/day *
Gas demand Curve assumes: 10% annual growth in Power & Industry
The needed incremental Gas Gathering & Processing Capacity inplace
*Oil Production > 9 mbpd *
Significant Surplus
Gas
NAG & YTFPotential*
*Source: Shell estimates of gas production and demand
Assumes 80% of domestic demand for the whole of Iraq to be in the South of the country
LR :Licensing Round 1 & 2
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Basrah Gas Company:
A Gas Solution for South Iraq
2.0
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South Gas Joint Venture Key Facts
Shareholders:
South Gas Company (51%), Shell
(44%), Mitsubishi (5%)
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Khor Al-ZubairNGL/LPGPlant
Infrastructure Master Planning
Surplus Train
NGL train
LPG 3
NGL 1LPG 2LPG 1
NGL 2
West Qurna area
North Ramaila
South Ramaila
Zubair
LPG Terminal
Domgas
Domgas
New NGL trains
Export
LPG 4+
North RumailaNGL Plant
Existing operational capacity
Rehabilitated existingfacilities
Expansion / new facilities
Repair/Rejuvenation Plans in place and Development Plans ready for
implementation
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Gas Infrastructure Chain - Development andUtilisation
NGLExtraction
GasCompression
Stations
Gas TransmissionPipelines
NGL Extraction
Gas Treatment Plant
Oil Export
Infield
compression,degassingstations, pipelines
Domestic Gas
NGLs fordomesticand export
Shell has gained good insights into the current gas infrastructure and the
existing operational issues
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Shells in country activities and early gas capture
Development of Iraq Gas Master Plan together with MoO and Mitsubishi (2005)
First IOC to re-enter South Iraq in September 2008.
More than 700 site visits to oil & gas facilities in Basra province
To date, the South Gas Company and Shell have completed the following quick wins:
- Captured 135 MMscf/d (20% of total amount flared)
- Reduced CO2 emissions by some 4 MT/a
- $500mln/annum value created for SGC and $350mln one off savings*
- 18MW of power re-established and 52MW of new power in the pipeline
- Completed early social investment projects
*Source: Shell estimates
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Shells in country activities and early gas capture
(continued)
Quick Wins underway:
North Rumaila Compression Stations Upgrades target capture 90MMscf/d
- Compressor repairs and re-routing of LP gas to other station
- Sour Gas 1st stage gas capture
- Repair and replace the gas blowers in all stations
South Rumaila target capture 60MMscf/d
- Re-instate and repair compressors and re-route 1st stage gas
West Qurna compression & North Rumaila Plant target capture 150MMscf/d
- Complete gas pipeline to Rumaila plant, re-instate sweetening facilities at NR
plant- Construct compression booster station at North Rumaila plant
Zubair compression and KAZ Plant target capture 80MMscf/d
- Complete Zubair compression stations, and installations of pipelines to KAZplant
Total Quick Wins target of over 515MMscf/d* of flared gas and over 15MT/a CO2 **Source: Shell estimates
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Technical Quick Wins (under the HoA)
Joint work at KAZFrame 5 Procurement
K03 Compressor Repair Joint team at KAZ Plant
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Working Jointly with SGC
North Rumaila PlantShut Down Inspections
October 09
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Shell in Basrah since 2008
Stakeholder Townhall meetings inBasrah
1st Joint Mgt Com. inBasrah(outside the Shell Office)
Shell staff at KAZ Plant
Handover of refurbishedWorkshop to Vocational TrainingCenter
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Shell in Basrah since 2008
Shell solar-powered
street lightingproject
Celebration of QuickWins with South GasCo
Basra Oil TrainingInstitute
Vocational TrainingCentre
Training CertificatesAward in Basra
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Challenges and Solutions
3.0
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Q & A