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OMAN WATER & ENERGY

A. Halpern-Lande

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februari 2015

9.5 billion people, 75% living in cities in 50 years time

(2.5 billion more than today)

Over 2 billion vehicles

(800 million at the moment)

Hundreds of millions of people will rise out of poverty; with higher living standards energy use rises

Energy demand could be 80% more over the next 50-60 years .... while CO2 emissions must be a quarter of today’s to avoid serious climate change

Twice as efficient, using half the energy to produce each dollar of wealth

Up to 4 times more energy from renewable sources by 2060

RISING ENERGY DEMAND, SUPPLY PRESSURE, CLIMATE CHANGE

THE ENERGY CHALLENGE

The outlook from Fatih is very recognisable to us (Shell)

We have explored these issues and shared our insights through the Shell scenarios looking at the energy system in detail to 2060 and the environmental pressures to the end of the century.

We share his main conclusions on a fast-changing energy world

The scale and timescales of the global energy system sometimes mask shifts in the underlying tectonic plates.

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GLOBAL ENERGY TRANSITION – GREATER DIVERSITY

Mountains

Oceans

100%

80%

60%

40%

20%

100%80%60%40%20%100%

80%

60%

40%

20%

RE & nuclear

oil & gas

coal

18501900

1950

1920

2050

2100

-0.10

0.10

0.30

0.50

0.70

0.90

1.10

-0.10 0.10 0.30 0.50 0.70 0.90 1.10

1970

2010

3December 2014

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SHELL SCENARIOS DRIVEN BY THREE TENSIONS

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RESULTS: MOUNTAINS AND OCEANS

Mountains

Return of the state

Oceans

Churn and Turbulence

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RETURN OF THE STATE, LONG VIEW

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ROOM TO MANOEVURE

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GROWTH, DISRUPTION, CHURN, INNOVATION, REFORM

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OMAN HAS AN EXCELLENT SOLAR RESOURCE FOR PV• The Omani solar resource is amongst the

world’s highest.

• The best sunlight levels are at the higher altitudes, but this is relative – the whole country has a world-class resource.

• Yield = 1630 kWh/kW per year +- 10%

• PVs work best when cool so although coastal areas have lower insolation, the overall yield benefits from the cooler temperatures

• PV power plants consume virtually no water and need no cooling water

Source: A. Gastli, Y. Charabi, 2009

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OMAN HAS RICH AND POTENTIAL DIVERSIFIED ENERGY BASE

Oman is twice blessed

Opportunity for optimization across mutliple energy sources

Significant opportunity for the country across a range of fronts: Industry, Jobs, and other ways

SIGNIFICANT OPPORTUNITY FOR OPTIMIZATION

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OMAN – OPTIMIZATION OF THE ENERGY SYSTEM

Power

G

Gas Export (LNG)

Gas

Steam Generation

SolarPower Generation

Oil export

Saved gas

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BASED ON DIFFERENTIATED WATER APPROACH

Base case:• Produced water to be re-injected• Make up water from existing aquifers

or disposed water

Additional options:• Make up water from wastewater• Storage of brine• Managed aquifer recharge (fresh water

lenses on storage)• Decentralized wastewater treatment

using wetlands• Agriculture

Water in, out to disposal• Water from existing aquifer• Storage from existing aquifers• Disposed of in existing aquifers/

offshore

Issues:• Gulf environment at risk• Aquifers at risk• Shallow subsurface could be better

used• No benefit from existing water use

beyond the oil field

Traditional approach to produced water mgmt.

Differentiated approach

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FOCUS – DIFFICULT WATER AND VALUE ADDED DISPOSAL

Integrated water re-use concept

Oasys ZLD plant - China

• Access to technology for difficult water situations ..

• Where ZLD is called for• Where water cannot otherwise

be managed except by deep water disposal

• At lower cost, where Shell has worked to ensure sourcing sustainable model

INCREASE LICENSE

TO OPERATE AT LOWER

COST

GENERATE VALUE

THROUGH WATER

DISPOSAL

• Optimize two parameters – water disposal and value

• Use water to generate value• Gas related – process water, GTL• Lower salt produced water

• Identify value generating concepts and potential partners

• Increase license to operate, reduce operating costs, generate ‘free’ social and environmental benefit

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OPTIMIZED ON WATER DISPOSAL AND VALUE VIA INTEGRATED CONCEPTS THAT USE MULTIPLE CROPS, SOME WATER CONSUMING, OTHERS HIGH VALUE ILLUSTRATIVE

% of total value generated

% water utilized

46%

<1% Flowers

16%

Crop 1

Forage 11%

5%

54%

The integrated concept remains robustly attractive across a range of sensitivities

Tornado Chart: Integrated ConceptPareto Chart: Integrated Concept Using 11K m3/d

30%

39%

Trees

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APPLICATION OF A DIFFERENTIATED APPROACH TO WATER RE-USAGE HAS POTENTIAL TO CREATE MORE VALUE THAN DEEP WELL DISPOSAL

Options for Key Assets

Deep Well Disposal

Integrated Concept

Scenario Description

Single Deep Well Disposal + Pipeline

Capex $ Mln

15

NPV $ Mln (15)

VIR NA

Scenario Description

Integrated Concept 3

Capex $ Mln

7.5

NPV $ Mln 23.4

Delta NPV to Deep Well Disposal

53

VIR 2.5

CONFIDENTIAL