LEADING-EDGE GREENHOUSE GAS MANAGEMENT

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					Leading-edge greenhouse gas management
Contents                                                                                                                           summary


                                                                                                                                   Shell, on behalf of the Athabasca Oil Sands Project, a joint venture among Shell Canada
                                                                                                                                   (60 per cent), Chevron Canada Limited (20 per cent) and Marathon Oil Sands L.P. 20 per
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 01
                                                                                                                                   cent), has been conducting development work on a carbon capture and storage (CCS)
Carbon Capture and Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02                                          project over the past several years to help manage CO2 from the Scotford Upgrader.
CCS and Public Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04                                      This work has led to the proposed Shell Quest project, which would capture CO2 from the
                                                                                                                                   Scotford Upgrader and permanently store it deep underground, preventing it from dispersing
Project Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 05
                                                                                                                                   into the air.
More Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
                                                                                                                                   Shell Quest is a fully integrated CCS project. It would capture and store up to 1.2 million tonnes of
                                                                                                                                   CO2 per year from the Scotford Upgrader and from the Scotford Upgrader Expansion, now under
                                                                                                                                   construction. The CO2 would be captured from the Scotford steam methane reformer units, which
                                                                                                                                   produce hydrogen for upgrading bitumen. The CO2 would then be transported by pipeline to an
                                                                                                                                   injection location near the Scotford Complex and stored approximately 2,300 metres underground
                                                                                                                                   in a deep geological formation. The CO2 could also be made available for use in enhanced oil
                                                                                                                                   recovery projects on a commercial basis.


                                                                                                                                   The first step for Shell Quest involves drilling three test wells. Shell plans to drill the first test well on
                                                                                                                                   property at Shell’s Scotford Complex. The locations of the other two wells are 10 and 60 kilometres
                                                                                                                                   to the northeast. Shell’s test well program is designed to answer technical questions about rock
                                                                                                                                   permeability, storage capacity and underground CO2 movement.

Disclaimer
                                                                                                                                   Depending on the data obtained from Shell’s test wells and other development work, Shell plans to
This document contains “forward-looking statements” based upon management’s assessment of the Shell’s future plans and             apply to Alberta Environment and the Energy Resources Conservation Board for regulatory approvals
operations. These forward-looking statements may include direct or indirect references to anticipated growth, growth strategy      in 2009. Pending regulatory approval, Shell and its joint venture partners would make a decision on
and long-term profitability, future capital and other expenditures, Shell’s plans for growth, development, construction and
                                                                                                                                   whether to proceed with the project. If approved, the project could become operational within three to
expansion, the viability and benefits of planned and future expansion projects, upgrading capacity, construction of
infrastructure, resources and reserves estimates, future production of resources and reserves, project schedules and execution,    five years. The development plan for Quest and the decision to proceed with the project will depend
development of new legislation and policy, and technology development.                                                             on the outcome of the test well program, regulatory permitting, the project’s ability to meet sustainable
                                                                                                                                   development criteria, economic feasibility, final project costs, and consultation with key stakeholders.
Readers are cautioned not to place undue reliance on forward-looking statements. Although Shell believes that the expectations
represented by such forward-looking statements are reasonable based on the information available to it on the date of this docu-
ment, there can be no assurance that such expectations will prove to be correct. Forward-looking statements involve numerous       The purpose of this document is to initiate the regulatory process for the Shell Quest project by
assumptions, known and unknown risks, and uncertainties that may cause Shell’s actions or decisions to differ materially from      commencing consultation related to the early development plans for the project with key stakeholders.
any estimates or projections of future performance or results expressed or implied by such forward-looking statements.
                                                                                                                                   While the utmost care has been taken to detail Shell’s proposed Quest project, the information presented
The forward-looking statements contained in this document are made as of the date of this document and Shell may not update        in this document is subject to change. The development plans and the exact timing for this project
publicly or revise any of the forward-looking statements contained in this document, whether as a result of new information,       depend on the timing and outcome of regulatory processes, the project’s ability to meet sustainable
future events or otherwise, except as required by law.                                                                             development criteria, market and legislative conditions and economic feasibility, final project costs
                                                                                                                                   and ongoing consultation with key stakeholders.




                                                                                                                                                                                                                                                    01
     Ca rb o n C ap t ur e & s to r a ge


     CCS is a proven and safe four-step process that uses known technologies to capture, transport,          DEEP SALINE FORMATIONS                   ENHANCED OIL RECOVERY                       CO 2 STORAGE

     inject and store CO2 underground. Many international, government and environmental
     agencies have characterized CCS as an important greenhouse gas (GHG) management
     measure. A key feature of Alberta’s climate change strategy, CCS is an effective way to
     manage carbon dioxide produced by large industrial operations.                                              Offshore Platform
                                                                                                                                     Offshore
                                                                                                                                     CO 2 Injection          Oil Well   CO 2 Injection Facility
                                                                                                                                                                                                  Scotford Upgrader



     Shell Quest proposes to use deep geological storage – that is, injecting liquified CO2 roughly 2,300
     metres below Earth’s surface. Dense rock layers called cap rock which are located above the targeted
     CO2 storage formation would ensure that the CO2 stays underground. The transportation, injection
     and storage of CO2 in geological formations would use existing technology that has been practiced
     safely and reliably for many years by the oil and gas industry in acid gas disposal and enhanced oil
     recovery projects in Canada, the United States and around the world. This is discussed in more detail
     in the section entitled “Safety”.



     Other Large CCS Projects


     The oil industry has used CO2 to obtain incremental barrels from mature oil fields for many years.
     In Canada CCS has been used in the Weyburn oilfield in Saskatchewan since 2000. The Weyburn
     Project uses a 330-kilometre pipeline to transport carbon dioxide captured at the Great Plains Coal
     Gasification plant, which manufactures methane from coal near Beulah, North Dakota. Weyburn
     is one of four large-scale CCS projects in operation around the world and stores about 1.5 million
     tonnes of CO2 each year.


     The In Salah CCS project in Algeria extracts roughly 1 million tonnes of carbon dioxide each year
     from a natural gas stream and injects it deep underground. The injected CO2 helps maintain reservoir
     pressure, enabling the producer to recover more natural gas from the reservoir.


     The other two existing large CCS projects are located off the shores of Norway. The Sleipner project
     in the North Sea and the Snøhvit liquefied natural gas facility in Norway’s Arctic extract carbon
     dioxide from natural gas during production and return it to deep formations under the sea.




02                                                                                                                                                                                                                    03
     CCs a n d p u b L i C p oL i C y                                                                         p roJeCt d esCrip tion

                                                                                                              The proposed project would involve capturing up to 1.2 million tonnes of CO2 annually at
     United Nations’ Intergovernmental Panel on Climate Change (IPCC) and Canada’s
                                                                                                              the Scotford Upgrader, near Fort Saskatchewan, Alberta, compressing it into a high-quality
     National Round Table on the Environment and the Economy (NRTEE), have identified CCS
                                                                                                              CO2 stream and transporting it in liquid form via pipeline for storage in deep geological
     as an important and feasible measure for the management and control of GHG emissions.
                                                                                                              formations in the region or for commercial use in Enhanced Oil Recovery (EOR) by others.
     A report from the environmental group The Pembina Institute said, “Carbon capture and storage is one
     way to reduce greenhouse gas emissions associated with oil sands development, provided it is done
     in a responsible manner and efforts are also made to minimize the use of energy and promote energy
     efficiency in all aspects of an operation.”


     Given the importance of the fossil fuel industries to the provincial economy, the Government of
     Alberta has introduced public policy that supports the development of CCS as an important GHG                          TO 3 RD PARTY

     management tool. A provincial policy paper states, “Alberta has a unique opportunity to implement
                                                                                                                            E.O.R. FIELDS

                                                                                                                                                                                                PROPOSED SHELL
     carbon capture and storage to substantially reduce our greenhouse gas emissions..... Ultimately,                                                   Agrium Fertilizer
                                                                                                                                                                                              SEQUESTRATION SITE


     CO2 capture and storage technologies provide the province with the greatest potential to substantially
     reduce greenhouse gas emissions while, at the same time, retaining our ability to produce and provide
                                                                                                                 Sturgeon        Williams Prolylene                             Shell Chemicals
                                                                                                                                                                                                                   Town of
     energy to the rest of the world.”*                                                                            County        Splitter/Provident
                                                                                                                                                          Shell Scotford Upgrader
                                                                                                                                                                                                                   Bruderheim
                                                                                                                                   Frac. Facility



     Shell is supporting research and development of CCS along with governments and industry around the
                                                                                                                                                      Shell Scotford Refinery
     globe – in Canada, the United States, Europe, Australia and elsewhere. A leader in CO2 management
     and abatement, Shell views CCS as an important and feasible measure for the management and                                               Dow Chemicals

     control of GHG emissions.
                                                                                                                                Edmonton



                                                                                                                                            INDUSTR IAL HE ARTLAND
                                                                                                                                                   R E G ION




                                                                                                              Shell’s Scotford Upgrader is located in the Industrial Heartland approximately five kilometres
                                                                                                              northeast of Fort Saskatchewan. The Scotford Upgrader is part of the Athabasca Oil Sands
                                                                                                              Project, a joint venture among Shell Canada (60%), Chevron Canada Limited (20%) and
                                                                                                              Marathon Oil Sands L.P. (20%). Carbon capture and storage at the Scotford Upgrader could
                                                                                                              reduce direct CO2 emissions of the upgrader by up to 40 per cent from business as usual,
                                                                                                              significantly reducing the greenhouse gas footprint of the Athabasca Oil Sands Project.
     * Alberta’s 2008 Climate Strategy, Government of Alberta, January 2008.




04                                                                                                                                                                                                                              05
     s he L L p r op os es to d ev e L o p Q u e s t i n fo u r s ta ge s :                                             test WeLLs

                                                                                                                        As part of the front-end development for Quest, Shell is proposing to drill three test wells. The
                                                                                                                        first test well will be on Shell’s Scotford property. The other two test wells are expected to be
                                                                                                                        about 10 and 60 kilometres northeast of the Scotford Complex. Shell is planning to inject
                                                                                                                        small volumes of CO2 into the test wells in order to gather data on the permeability and other
                                                                                                                        geological information that is critical to the design of a full-scale program. The CO2 for the
                                    1. PRELIMINARY PROJECT DEVELOPMENT                                                  test well program will be supplied by truck.

       This includes locating deep, sub-surface geological formations in which injected CO2 can be stored.




                                              2. PROJECT DEVELOPMENT


       Shell will continue to advance development work, consult with the public and prepare detailed
       engineering designs and plans, incorporating public input.

                                                                                                                                                                                                                         Smoky Lake
                                                                                                                                              Thorhild



                                                                                                                                                                                                                   Smoky Lake



                                  3 . R E G U L AT O R Y A N D I N T E R N A L A P P R O VA L S                                                                              N
                                                                                                                                                                                 or
                                                                                                                                                                                    th
                                                                                                                                                                                         Sa
                                                                                                                                                                                           ska
                                                                                                                                                                                                 tch
                                                                                                                                                                                                    ewa
                                                                                                                                                                                                       n   River



       Shell will seek regulatory approvals from the Government of Alberta, investment approval from the                                        Redwater   Redwater South
       Athabasca Oil Sands Project owners and satisfy its own internal governance process.
                                                                                                                                                                                                                   Andrew
                                                                                                                                  Gibbons

                                                                                                                                                                Bruderheim
                                                                                                                                  Scotford Complex
                                                                                                                                                                       Lamont




                                                   4. CONSTRUCTION

                                                                                                                                              INDUSTR IAL HE ARTLAND
       If all approvals are received with satisfactory conditions, construction would take approximately three years,
       and could be followed by project commissioning and start-up approximately three to five years later.
                                                                                                                                                     R E G ION




06                                                                                                                                                                                                                                    07
     pro J e C t C om p onen ts                                                                                      Quest p roCess sChematiC



       Capture: Shell is proposing to install facilities at Scotford that would capture CO2 from all
       three of the Upgrader’s hydrogen plants. The hydrogen plants combine steam and natural
       gas (methane) to produce hydrogen used for upgrading. A major by-product of this process is
       concentrated CO2, which is ideal for CO2 capture. The CO2 would be compressed into liquid                         SCOTFORD UPGRADER

                                                                                                                         (EXISTING)
       form, allowing for pipeline transportation.                                                                                                             SYNTHETIC CRUDE           To Market


                                                                                                         Oil Sands                                             HYDROGEN
                                                                                                         Bitumen                                SMR

                                                                                                                                           1
                                                                                                                                                                                            QUEST FACILITY
                                                                                                                                                SMR
       Transportation: The liquid CO2 would be transported by pipeline from the Scotford Upgrader                                                                                         ( PROPOSED FACILITIES )


                                                                                                                                                                                                                    4
       to the injection location(s), which have yet to be selected but would be at a distance of                                                                     2                     3                            CO2 Pipeline
                                                                                                                                                                          MDEA Unit
       between 10 kilometres and 60 kilometres from Scotford. The pipeline would run northeast from                                                                      (CO2 Absorber
                                                                                                                                                                                               Compressor
                                                                                                                                                                                                                    4
                                                                                                                                                                            Vessel)
                                                                                                                                                                                                                        CO2 Pipeline
       Scotford and would follow existing right of ways to the greatest extent possible and would be                     SCOTFORD UPGRADER EXPANSION 1


       designed and constructed to the latest technical and safety specifications. The pipeline system                   (UNDER CONSTRUCTION)



       could be extended to supply CO2 for third-party enhanced oil recovery depending on the                                              1                                                                                           5
                                                                                                         Oil Sands
       outcome of commercial discussions.                                                                Bitumen                                SMR
                                                                                                                                                              HYDROGEN



                                                                                                                                                               SYNTHETIC CRUDE           To Market
                                                                                                                                                                                                                                           CO2 for CO2 for Enhanced
                                                                                                                                                                                                                                           Storage   Oil Recovery

       Storage: Shell proposes to inject the CO2 deep underground into a geological formation known
       as the Cambrian Basal Sands at a depth of 2,000 – 2,500 metres. This formation is deeper than
       the oil and gas deposits in the area and is roughly 2,000 metres below any freshwater aquifers.
       The injection sites are anticipated to be within 60 kilometres of the Scotford Complex.
                                                                                                                     The Process
                                                                                                                     Taken together, these processes will prevent more than 1 million tonnes per year of CO2 from being
                                                                                                                     released into the atmosphere.
       Monitoring and Verification: Shell Quest would use new technology measuring, monitoring
       and verification systems to observe the CO2 storage wells and geological formations.                          1    The Shell Quest CCS project will capture CO2 from three hydrogen-manufacturing units (two existing and
       This would provide assurance that the injected CO2 had remained deep below ground in                               one now under construction) at the Scotford Upgrader. These are called steam-methane reformation units, or SMRs.
       the target formation.
                                                                                                                     2    An absorber vessel will use chemical amines (called activated MDEA) to capture the CO2 from the
                                                                                                                          process stream; the CO2 will be released from the amine through steam stripping.

                                                                                                                     3   In a compressor unit, CO2 will be compressed into its dense phase (a super critical liquid) for safe pipeline transport.

       Enhanced Oil Recovery Opportunities: CO2 captured from the Scotford Upgrader could                            4   The liquefied CO2 will travel by pipeline to nearby storage sites.
       be made available for use in EOR projects in Alberta depending on the outcome of commercial
                                                                                                                     5    The CO2 will be injected into deep underground formations for storage and could be used for enhanced oil recovery.
       discussions. The CO2 would be stored permanently in these oil fields, which would also be
       required to use sophisticated measuring, monitoring and verification systems.




08                                                                                                                                                                                                                                                                    09
     Public Engagement and Design                                                                                              Safety and the Environment


     Shell began its formal public engagement program in late summer 2008. Shell has conducted                                 Capture: Shell proposes to construct and operate CO2 capture infrastructure on the Scotford Upgrader
     preliminary engineering and design studies, which contribute to the regulatory approval and                               project site. Shell has an existing ERCB approved Emergency Response Plan (“ERP”) for the Scotford
     public consultation process. Feedback gained through public engagement meetings, open houses,                             Upgrader. If the CCS project is approved, the construction and operation of the new infrastructure will
     workshops and discussions would be considered in the final project design.                                                be incorporated into Shell’s existing ERP.


     Detailed engineering plans will cover the key components of the project – CO2 capture,                                    Pipeline Safety: Thousands of kilometres of CO2 pipelines are in safe and reliable operation in North
     compression, transportation, and storage, and will meet or exceed industry standards use best                             America today, mostly in the United States. Shell is familiar with both the construction and operation of
     practices and take into account lessons learned from other CCS project related to health, safety,                         CO2 pipelines, which have been in use since the early 1970s in the enhanced oil recovery industry in
     and environmental considerations.                                                                                         the United States.


                                                                                                                               The pipeline for Shell Quest would be designed to meet all of the latest pipeline technology and
     Schedule                                                                                                                  safety specifications, including isolation and automatic shut-off in the event of an emergency.


     Depending on the outcome of the test well program and other development work, Shell intends to                            Injection Safety: The injection wells would use several casings of corrosive-resistant steel pipe to
     seek regulatory approval from Alberta Environment and the Energy Resources Conservation Board for                         ensure the CO2 enters only the deep rock formations, and would not leak or enter shallower
     Quest in 2009. The company will seek public input at various stages throughout the regulatory process.                    areas underground. These construction techniques will ensure protection of groundwater aquifers
                                                                                                                               and other overlying formations such as oil and gas reservoirs.
     Construction could begin following receipt of Energy Resources Conservation Board and Alberta
     Environment approvals, and could be completed within three to five years. The timeline for project                        Safety in Storage: The CO2 storage formations proposed are roughly 2,300 metres deep, and are
     development is subject to change and could depend on a variety of project and market factors.                             located below layers of impermeable, continuous and thick cap rock which keep the CO2 isolated
     The decision to proceed with the project and the exact timing for Shell Quest depend on the outcome                       and prevent any upward migration. The CO2 is trapped within the tiny pore spaces of the rock
     of regulatory processes, the ability to meet sustainable development criteria, market conditions and                      formation that it is injected. Some forms of rock formations have securely trapped fluids, including
     economic feasibility, final project costs and consultation with key stakeholders.                                         CO2, for millions of years. The CO2 would be far below the surface, separated from usable
                                                                                                                               groundwater by almost 2,000 metres and with thick impermeable barriers of dense rock between
                                                                                                                               the near surface potable water aquifers and the deep CO2 storage formations.


                                                                                                                               Shell is also involved in development work for numerous CCS projects around the world, and can
                                                                                                                               bring forward the resources required for the successful design, implementation and operation of
      TASK                               2008        2009          2010        2011        2012        2013        2014        an integrated CCS project in Alberta. Shell would use its industry-leading expertise in subsurface
                                       Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4   Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
                                                                                                                               geological mapping of deep reservoirs to ensure that the proposed CO2 sequestration formation
     Development & Public Engagement                                                                                           would meet all the requirements for safe and permanent storage of CO2.

     Regulatory Approval


     Engineering & Construction


     Start-up




10                                                                                                                                                                                                                                         11
     Sustainable Development and Public Consultation                                                             more inf ormation

     Shell Canada’s commitment to sustainable development is integrated throughout the life of a project –
     from design and operations through to reclamation. The sustainable development commitment, which            Shell contacts:                                                       Corporate Head Office
     is to balance economic, environmental and social considerations in its decision making, has resulted in                                                                           Shell Canada Limited
     the implementation of numerous new practices and technologies for Shell’s Oil Sands operations that         Margit Phillips                                                       400 – 4th Avenue S.W.
     have reduced air emissions, water use and waste production.                                                 margit.phillips@shell.com                                             Calgary, Alberta
                                                                                                                                                                                       T2P 0J4
     Public consultation raises issues and concerns related to a proposed development from those that may        Jon-Paul Jepp                                                         Phone     403.691.3111
     be directly affected and provides new ideas on how to make projects more viable or acceptable. Shell        jon-paul.jepp@shell.com
     has operated in the Scotford area for almost 30 years, and has a long history of community relations                                                                              Corporate Mailing Address

     and communication in the region. Shell strives to ensure that project plans adequately address the                                                                                Shell Canada Limited

     concerns of local communities.                                                                              Web       www.shell.ca/Quest                                          P.O. Box 100 Station M
                                                                                                                 Email     quest-info@shell.com                                        Calgary, Alberta
                                                                                                                 Request information by voicemail:   1.800.250.4355                    T2P 2H5
     Shell will undertake public consultation in a variety of ways, including workshops and open house
     forums, for example, and one-on-one meetings with those living nearby. In addition the company will
     distribute and otherwise make available information, such as this Public Disclosure Document from the
     Energy Resources Conservation Board, and other third-party information about CCS.


     Shell encourages the public to participate in the consultation process, since such participation provides
     the avenues by which concerns can be expressed and appropriate actions taken. This results in more
     successful projects.
                                                                                                                 sheLL invoLvement With CCs eLseWhere
                                                                                                                 Below is a website listing of some of the CCS ventures with which Shell is currently involved:



                                                                                                                 Integrated CO2 Network (ICO2N)                                        CO2 CATO
                                                                                                                 Alberta                                                               Netherlands
                                                                                                                 www.ico2n.com                                                         www.co2-cato.nl


                                                                                                                 Plains CO2 Reduction Partnership (PCOR)                               CO2 CRC
                                                                                                                 North Dakota                                                          Australia and New Zealand
                                                                                                                 www.undeerc.org                                                       www.co2crc.com.au


                                                                                                                 Carbon Capture and Storage Association                                CO2 Sink
                                                                                                                 United Kingdom                                                        European Union
                                                                                                                 www.ccsassociation.org.uk                                             www.co2sink.org


                                                                                                                 CO2 Capture Project                                                   WESTCARB
                                                                                                                 (Leading global energy companies)                                     USA
                                                                                                                 www.co2captureproject.org                                             www.westcarb.org




12                                                                                                                                                                                                                 13
                                        Shell Canada
                                  400 - 4th Avenue S.W.
                                 Calgary, Alberta T2P 0 J4



Shell Quest is part of the Athabasca Oil Sands Project, a joint venture among Shell Canada (60%),
              Chevron Canada Limited (20%) and Marathon Oil Sands L.P. (20%).