THE WALL STREET JOURNAL: Shell: Only Half Of UK N Sea Oil, Gas Exploited So Far: “Royal Dutch/Shell Group strongly reaffirmed its long-term commitment to the maturing U.K. North Sea fields Thursday, saying there was at least 50% more oil and gas to be produced.” (ShellNews.net) 11 Nov 04

DOW JONES NEWSWIRES

November 11, 2004

ABERDEEN -- Royal Dutch/Shell Group (RD, SC) strongly reaffirmed its long-term commitment to the maturing U.K. North Sea fields Thursday, saying there was at least 50% more oil and gas to be produced.

Shell's chief executive of European exploration and production, Tom Botts, said the company didn't have any plans to abandon the North Sea reserves for at least 9-10 more years.

"Ten years from now, the U.K. will still be a valuable part of our energy portfolio. We don't have an exit strategy for the U.K.," he said.

Botts said European oil and gas production was now 1.2 million barrels of oil equivalent a day - a level Shell believes can be held for the next 9-10 years.

"We must be more factual about what crude is left in the North Sea," Botts said at the opening ceremony of the Goldeneye gas project in the North Sea.

"The idea that everybody wants to leave the North Sea and turn off the lights is wrong. There's at least as much crude left in the U.K. (Continental Shelf) as has already been produced. It comes in smaller packages and at a higher cost to develop, but these are challenges that Shell is trying to take on."

He said Shell's equity holdings in the U.K. North Sea accounts for 500,000 boe/d.

Europe is about one-third of Shell's global oil and gas production portfolio, Botts added.

Shell will keep its production levels up by expanding to fields next to existing operations, said Kieron McFadyen, technical director of Shell exploration and production.

Shell will also look at deepwater fields on the margins of the North Sea and Atlantic stretching from the North Norwegian Sea through the Shetland Isles to west Ireland, McFadyen said.

Shell just boosted its U.K. holdings, buying another eight North Sea blocks. It's also developing the Ormen Lange and Corrib Island gas fields in off Norway and Ireland respectively.

Shell's commitment to the UK Continental Shelf comes amid evidence of an accelerating decline in oil and gas volumes.

Combined oil and gas production was 3.17 million barrels a day in August, according to the most recent data available. This represents a decline of 11% from July and a fall of almost 10% from August 2003, said the Royal Bank of Scotland in a monthly survey.

Once dominated by Shell and rival BP PLC (BP), the UKCS has transformed itself over the past decade. Junior oil companies, particularly from Canada and the U.S., have become big investors in the basin, attracted by steady asset divestments, a relatively stable tax regime and a favorable government investment policy.

Company Web site: http://www.shell.com

-By Norval Scott, Dow Jones Newswires; +44-20-7842-9344; norval.scott@dowjones.com

(Michael Wang in London contributed to this article).