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Digital Rock, EOR projects to boost recovery, extend life of oil and gas fields

Shell and Schlumberger join R&D forces to better understand earth's subsurface. Shell and Schlumberger today announced a multiyear research technology cooperation agreement focusing on improving the recovery factor of oil and gas reservoirs and extending the life of existing oil and natural gas fields.

· Goal is to speed development of oil and gas resources to meet increasing demand

· New generation of tools is needed to extract higher percentage of oil and gas from existing reservoirs

· High-performance computing and scanning technology to better track flow of fluids miles inside the earth


"This agreement marks another step towards executing our technology strategy by driving delivery of energy solutions through open innovation. The cooperation will enable us to continuously improve recovery factors while at the same time lowering unit costs," said Gerald Schotman, chief technology officer for Royal Dutch Shell.

The combination of Schlumberger formation evaluation and reservoir characterization knowledge with the subsurface laboratory and reservoir expertise of Shell will result in the development of better tools and methods to obtain improved field data, better and more efficient numerical models, and enhanced field development methods. The research collaboration is an expansion of the joint work on several fronts Shell and Schlumberger already conduct together, and it will initially focus on two specific projects: Reservoir surveillance for enhanced oil recovery (EOR) projects, and Digital Rock for detailed numerical modeling of reservoir rocks.

"With much of the world's existing reserves only producible through enhanced recovery techniques, this joint approach aims to unlock these resources in a smart and efficient manner and to shorten time to full field development," said Ashok Belani, president, Schlumberger Reservoir Characterization Group.

The key target of the cooperation is to shorten development cycles, increase production, and enhance ultimate oil and gas recovery. To achieve this, the Surveillance project will explore the design, development and testing of a new generation of tools specifically focused on EOR applications. These new surveillance tools and techniques are expected to deliver more accurate field data and to accelerate EOR feasibility studies and pilot projects.

The Digital Rock project targets development of better methods to forecast displacement and recovery at the macroscopic pore scale, as well as methodologies to scale up core and pore-scale work to reservoir level for both sandstone and carbonate fields. The related work builds on recent developments from Shell and Schlumberger in the areas of novel laboratory scanning technology, fluid dynamics modeling, and high-performance computing.

"As most of the easily accessible oil and gas is gone, both projects are highly relevant for the oil and gas industry. To meet future demand more hydrocarbons have to be produced from existing fields and to do so, it requires the combination of advanced science, innovation potential, and a track record in technology delivery." said Jeroen Regtien, vice president, Hydrocarbon Recovery Technologies in Shell. "The combination of Schlumberger's and Shell's strengths covers all of these requirements."

As part of this joint cooperation agreement, Schlumberger and Shell research scientists will work closely together in several research facilities in the US, UK, Russia, Oman and the Netherlands.

Cautionary Note
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this press release "Shell", "Shell group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ''Subsidiaries'', "Shell subsidiaries" and "Shell companies" as used in this press release refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this press release, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 24% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This press release contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'', ''intend'', ''may'', ''plan'', ''objectives'', ''outlook'', ''probably'', ''project'', ''will'', ''seek'', ''target'', ''risks'', ''goals'', ''should'' and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this press release, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this press release are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell's 20-F for the year ended December 31, 2009 (available at www.shell.com/investor and www.sec.gov - opens in new window). These factors also should be considered by the reader.  Each forward-looking statement speaks only as of the date of this press release, December 10, 2010. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this press release.

The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions.  We may have used certain terms in this press release that SEC's guidelines strictly prohibit us from including in filings with the SEC.  U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov - opens in new window. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

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