North America
Canada
We have more than 1,800 mineral leases in Canada, mainly in Alberta and British Columbia. We produce and market natural gas, NGL, synthetic crude oil and bitumen. In addition, we have significant exploration acreage offshore.
Shales
We continued to develop fields in Alberta and British Columbia during 2015 through drilling programmes and investment in infrastructure to facilitate new production. We own and operate natural gas processing and sulphur-extraction plants in Alberta and natural gas processing plants in British Columbia.
Synthetic crude oil
Synthetic crude oil is produced by mining bitumen-saturated sands, extracting the bitumen from the sands and transporting it to a processing facility where hydrogen is added to produce synthetic crude. We operate the Athabasca Oil Sands Project (AOSP) in north-east Alberta as part of a joint arrangement (Shell interest 60%). The bitumen is transported by pipeline for processing at the Scotford Upgrader, which we also operate and is located in the Edmonton area.
We also have a number of other minable oil sands leases in the Athabasca region with expiry dates ranging from 2018 to 2025. By completing the Alberta Department of Energy’s prescriptive development requirements prior to their expiry, leases may be extended.
Carbon capture and storage
The Quest carbon capture and storage project (Shell interest 60%), which is expected to capture and permanently store more than 1 mtpa of CO2 from the Scotford Upgrader, began operations in late 2015.
Bitumen
Bitumen is a very heavy crude oil produced through conventional methods as well as through EOR methods. We produce and market bitumen in the Peace River area of Alberta.
Offshore
We have a 31.3% interest in the Sable Offshore Energy project, a natural-gas complex off the east coast of Canada, and other acreages in deep-water offshore Nova Scotia and Newfoundland. We have a 50% interest and operatorship in the Shelburne exploration project offshore Nova Scotia. We also have a number of exploration licences off the west coast of British Columbia and in the Mackenzie Delta in the Northwest Territories.
USA
We produce oil and gas in deep water Gulf of Mexico, heavy oil in California and from shales in Pennsylvania, Texas, West Virginia, and Louisiana. The majority of our oil and gas production interests are acquired under leases granted by the owner of the minerals underlying the relevant acreage, including many leases for federal onshore and offshore tracts. Such leases usually run on an initial fixed term that is automatically extended by the establishment of production for as long as production continues, subject to compliance with the terms of the lease (including, in the case of federal leases, extensive regulations imposed by federal law).
Gulf of Mexico
The Gulf of Mexico is our major production area in the USA, and accounts for over 62% of our oil and gas production in the country. We have an interest in approximately 400 federal offshore production leases and our share of production averaged around 253 thousand boe/d in 2015. Producing assets are Auger, Brutus, Enchilada, Mars, Mars B, Perdido, Ram Powell and Ursa, which are Shell operated, and Caesar Tonga and Na Kika, which are non-operated. In Ursa and Perdido-Great White, production is supported by water injection. Efforts are ongoing to reinstate water injection in Mars.
We also secured 17 blocks in the central Gulf of Mexico lease sales in 2015.
Onshore
We have significant shale acreage, centered on Pennsylvania and West Virginia in north-east USA, in the Delaware Permian Basin in West Texas, and in the Haynesville shale gas formation in East Texas and Northern Louisiana.
California
We have a 51.8% interest in Aera Energy LLC (Aera), which operates in the San Joaquin Valley in California. Aera operates approximately 15,000 wells, producing around 130 thousand boe/d of heavy oil and gas.
Aera fields Belridge, Lost Hills, Cymric, McKittrick, Coalinga, Midway Sunset, Ventura and San Ardo are all operated under a combination of water and steam injection.
Alaska
We operated for almost 50 years off the coast of Alaska, including in the Cook Inlet, and the Beaufort and Chukchi seas, until 1998. Between 2005 and 2012, we acquired 416 federal leases for exploration in the Beaufort and Chukchi seas. Partial relinquishments and natural expiration reduced this number to 339 federal leases by the end of 2015. With the exception of 23 leases in Harrison Bay in the Beaufort Sea held by a Shell (40%), Eni (40%) and Repsol (20%) joint venture, all federal leases are 100% Shell. We hold an additional 18 state leases in North Slope Beaufort coastal waters, where we have a 100% working interest.
In September 2015, we safely drilled the Burger J well in the Chukchi Sea to a depth of 2,073 metres. The well was deemed a dry hole, and the result rendered the Burger prospect uneconomic. The well was sealed and abandoned in accordance with regulations.
We have since relinquished all but one of our federal offshore leases in the Chukchi. This action reflects the outcome of the Burger J well, and the high costs associated with the project. In addition, while we support regulation that enforces high safety and environmental standards, the unpredictable federal regulatory environment for the Alaska outer continental shelf makes it difficult to operate efficiently.
In the summer months of 2016, we will remove remaining equipment from our drilling sites in Alaska. Separate evaluations are underway for our federal offshore leases in the Beaufort Sea. Operatorship of the Harrison Bay JV has been transferred to Eni, which operates the adjacent Nikaitchuq field. We are also assessing our state offshore leases and our interest in more than 1.2 million of Alaska Foothills acreage we acquired from BG earlier this year.
We continue to believe Alaska and the broader Arctic have strong exploration potential, and are areas that could ultimately be important sources of energy to the State of Alaska, the USA, and the world.
Rest of North America
We also have interests in Honduras.
