July 31, 2006

Shell remains on track to meet GHG reduction target for base business emissions

Continued emphasis on greenhouse gas (GHG) management enabled Shell Canada to remain on track toward its 2008 target of 6% reduction in base business GHG emissions, the company says in its 2005 sustainable development report, Sustainable Choices, Stakeholder Voices.

GHG emissions across Shell's base business operations dropped to 7.6 million tonnes CO2 equivalent in 2005, 217,000 tonnes less than in 2004 and 5.6% below the 1990 baseline level. (The baseline has been adjusted to take into account the 1996 sale of Shell's chemicals business and its divestment of the Plains oil business in 1999.)

Emissions from the company's oil sands operations totalled 3.68 million tonnes in 2005. This was an increase of 11% over 2004 levels, driven by a 21% increase in the quantity of bitumen processed . However, notes the report, the emissions intensity (i.e. tonnes of GHG per thousand barrels of dry bitumen) declined from 67.6 in 2004 to 62.9 in 2005, a reduction of more than 3%.

Energy efficiency is the key to reducing GHG emissions, says the report, and Shell uses the Solomon Energy Intensity Index (EII, the refining industry standard) to gauge its progress. Noting that lower numbers equate to better energy efficiency, Shell reports that its overall EII has dropped from 110.6 in 1990 to 85.9 in 2005. This represents a 22% improvement and surpasses the Canadian industry's 2004 average of 89.1. Shell has set a target EII for 2008 of 85. Its refinery energy efficiency has shown a 12% improvement between 200 and 2005.

Sulfur dioxide (SO2) emissions rose slightly, from 56,000 tonnes in 2004 to 60,000 tonnes in 2005, with exploration and production activities accounting for the increase; SO2 emissions from oil sands and oil products operations were unchanged. The oil sands SO2 intensity, however (emissions per thousands of barrels of dry bitumen processed) showed a modest decline, from 0.14 in 2004 to 0.12 in 2005.

Effluent discharges from Shell facilities declined across the board in 2005, to 222 tonnes from 239 tonnes the previous year. Net consumption of fresh water by Shell facilities rose from 31.1 million cubic metres (m3) in 2004 to 35.6 million in 2005; again, increased oil sands production was the lead contributing factor.

Spills equal to or greater than one cubic metre declined in both number and volume between 2004 and 2005. Shell recorded 40 spills, with a total volume of 321 m3, in 2005, down from 53, with a total volume of 444 m3 in 2004. There were no priority spills (i.e. spills with the potential to affect the environment) in either year.

The company also retained a clear compliance record with regard to environmental charges and orders: neither were issued in 2005 or 2004. The number of environmental non-compliance incidents rose, however, from 31 in 2004 to 54 in 2005. The report shows that most of these related to administrative issues, with no impact on the environment.

Total waste generation was somewhat higher in 2005, rising to 23,200 tonnes from 19,500 the previous year. Non-hazardous waste accounted for the increase, including approximately 6,500 tonnes of waste soil coming from remediation activities, notably at Shell's Waterton gas plant. The report highlights waste management activities at the company's various operations, noting that in a 2005 audit to maintain Shell's ISO 14001 registration, its waste tracking practices were commended as among the best in the industry.

In 2005, Shell's environmental expenditures rose to $439 million. This includes operating, capital and restoration/reclamation costs. Capital costs made up more than half the total, including $242 million spent to prepare Shell's three refineries to produce ultra-low-sulfur diesel fuel to meet new legislated sulfur levels. Shell also spent $24 million on remediation of closed marketing sites.

Shell's 15th sustainable development report may be viewed on the company's Web site, www.shell.ca/gri.

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