Scope and Outcome per ORP Phase

The Identify Phase commences upon an agreed mandate between BOM and DE.

The intent of the WORK period is to identify potential hydrocarbon accumulations through rigorous subsurface evaluation methods / practices that test different geological models and quantifying the range of subsurface uncertainty and risk. We then test the robustness of appropriately scaled (i.e. high level and simple) development concepts (with supporting high level costs and schedules) to the volume range in order to understand and quantify value through economic models. The work will identify potential hydrocarbon Basins, Plays and / or Prospects, and new Development volumes depending on the level of maturity of evaluation that, when aligned with appropriate commercial agreements, may become potential capital projects upon discovery and/or acquisition of potentially commercial quantities of hydrocarbons.

At the end of the IDENTIFY Phase, opportunities that meet agreed commercial criteria (DG-1) move to the ASSESS Phase.

Exploration is fundamentally focused on four phased business outcomes:

1. Getting access to prospective resources (PR) / Contingent Resources (CR) via Country, Basin, Play, Bid Round entries and Data Room Deals that have the potential to deliver value to Shell.
2. Acquiring relevant data to study and mature prospective resources (PR).
3. Maturing PR to Contingent Resources (CR) via the drill bit (discovering potentially commercial high value hydrocarbons).
4. Setting the venture up for end-to-end success with discoveries transitioning to Development to enable fast monetisation.

The subsurface evaluation of sedimentary Basins, Plays and Prospects in the Identify Phase is an iterative workflow. Affordability targets should be generated early on through notional and high-level reverse-calculated economics, that determine the minimum threshold volume ranges required to deliver value, given possible green or brownfield development concepts when there is often little data and high uncertainty.

This phase of the PMF is relevant to those businesses that have an Upstream component e.g. COG, IG, DW, NBD with Exploration Focus, but is not intended for Unconventionals or for downstream/manufacturing etc.

The objective of the Assess phase is to demonstrate that the opportunity is feasible. Feasibility means that there is a high enough likelihood of successful delivery with value realised for Shell across all Technical, Economic, Commercial, Organisational and Political (TECOP) outcomes. A successful Assess phase determines whether the right opportunity is being matured. Feasibility is assessed against a set of established feasibility criteria, which are approved by the Decision Executive (DE) and documented in the Opportunity Charter. Key questions that can help to assess the feasibility are as follows.

• Is the business case compelling enough to continue?
• Is the opportunity frame (scope) correct?
• Have the significant risks been identified and are mitigation plans in place?
• Are the remaining risks after mitigation understood and are they manageable?
• Can decisions be made based on the remaining risk profile?
• Are the right resources available, e.g. people and money?
• Is a stakeholder relationship plan in place?

The scope of the Assess phase is about understanding and quantifying the key levers that impact value and identifying where a more detailed understanding is required during the Select phase. It is not to understand all possible outcomes to the same level of detail. Work in Assess should be conducted at a relatively high level using appropriately scaled coarse models.

The Assess phase commences following a positive decision at Decision Gate 1 (DG1): ‘Do we understand what we are starting?’ At the start of the Assess phase, adequate planning is critical.  This includes alignment with a mandate and framing, quantifying and understanding the key uncertainties, stakeholders, risks, decisions and assurance needs. This sets the foundation for the subsequent work period.

Framing is much broader than just a workshop, covering a fit-for-purpose period of work to understand, align and plan what the team will deliver. It builds a shared vision amongst the team with respect to what the opportunity is and what it is not; understanding and ranking the value drivers and setting affordable and competitive targets. Analysis of available data and initial identification of data gaps for uncertainty reduction is an important early activity.

Integrated decision-based planning at the start of Assess helps to build a work plan focussed on making quality decisions and provides the detail of the opportunity roadmap. Depending on the size and complexity of the opportunity, the start period (including the framing workshop) can take from as little as a few days to a number of weeks. The start of Assess concludes with opportunity teams meeting the intent of the controls and the Expected Practice themes, all supported by appropriate assurance.

The intent of the work period is to think ‘wide’ and, by the end of the phase, to have narrowed the competitive solution space to a limited number of feasible concepts.

The team defines the minimum functional requirements for the opportunity and the Minimum Technical Scope (MTS) to deliver these functional requirements built on the targets set at the start of Assess. The MTS is the barebones, least complex, feasible scope and operating model for the opportunity. It sets the foundation for option evaluation.

Additional scope to the MTS is only considered if it offers sufficient value or reduces risks and remains within the affordability target. A complete understanding of the environmental, social, safety and community health impacts needs to be integrated in the feasibility assessment. Meeting the intent of the controls and the Expected Practices in the work period, supported by appropriate assurance, provides focus for the team on risk mitigation and the desired outcomes.

At the end of the Assess phase, the feasibility work closes with an understanding of all of the alternatives and their trade-offs between cost, value, risks and other drivers across the TECOP dimensions. The building of value/cost/risk staircases promotes discussion on which elements to include in the competitive scope, and which scope options are to be regretted. The demonstration of at least one technically and economically feasible concept is conducted against the range of TECOP outcomes and uncertainties.

All required data needs to be in hand, which quantifies and reduces the uncertainty range, demonstrates feasibility of the opportunity and supports the ability to select a concept in the next phase. The value/cost/risk trade-off staircase, the feasibility demonstration, supported by the applicable assurance focussed on the controls and intent of the Expected Practices, prepares for a decision at DG2 on whether to proceed, recycle or halt the opportunity.

The objective of the Select phase is to select the best integrated concept, which meets most of the Technical, Economic, Commercial, Organisational and Political (TECOP) requirements and delivers the right value promise for Shell and stakeholders. The complex Select phase is where most of the strategic decisions for a project are made and where much of the value is generated.

The Select phase is ambiguous and full of dilemmas yet clear decisions are required in order to freeze the scope at Decision Gate 3 (DG3). Involvement, alignment and understanding of the key risks and decisions made by the DE, DRB and the opportunity team are critical for success. The key is for transparency in quality decision making through value/cost/risk trade-offs.

The Select phase starts with (re-)evaluating the frame and updating it to reflect changes as a result of new data acquisition. The remaining uncertainties, stakeholder relations activities, risk management and assurance planning require agreement. Building a shared vision amongst the team on re-confirmed affordability and competitive targets and on the ranked value drivers are critical for success.

Continuation of integrated decision-based planning is also critical to success and helps to build a work plan focussed on quality decisions, which is aligned with the roadmap. Definition of a decision framework, including the hierarchy and inter-dependency of those decisions, is an enabler for quality decision making. Assurance of meeting the intent of the controls and Expected Practice steps at the end of the start period provides timely support for the team.

The work period in Select consists of two main activities, which are separated by the concept select milestone, about 60% of the way through the phase.

The intent of the work up to concept select is to generate a safe, competitive and affordable concept selection, so that no re-cycling occurs in later phases of the Opportunity Realisation Process (ORP). The work activities from the Assess phase are, in effect, repeated but at a higher level of detail and resolution to help make quality decisions to support concept selection.

Continuation of the competitive scoping mind-set is critical in the Select phase to deliver a competitive and affordable concept. Incremental scope on top of the Minimum Technical Scope (MTS) is only included if value is improved or risks are reduced. A transparent understanding of the value/cost/risk trade-offs is key for the opportunity leadership, DRB and DE at concept select. The HSSE & SP risks and hazards for the considered concepts are identified and assessed, and their impact is integrated in the concept selection.

After concept select, the Basis for Design (BfD) and the Project Execution Strategy (PES) are developed. Delivery of a Field Development Plan (FDP) is required for upstream projects with sub-surface and wells scope and is often a regulatory requirement. Demonstration that the HSSE & SP risks linked to the selected concept can be managed to ALARP is required. The execution strategy integrates all aspects of execution including technical and non-technical elements.

Meeting the intent of controls and the Expected Practice in the work period, supported by appropriate assurance, provides focus for the team on risk mitigation and the desired outcomes. Whilst the FEDM is accountable for the technical integration and delivery of the Select phase up to DG3, a Project Manager (PM) designate needs to be in place. The Project Manager advises on the deliverability of the technical solution before leading the project in the Define and Execute phases.

At the end of the Select phase, the execution planning work results in an early design and proposed execution strategy. All work necessary to enable an efficient start to the Define phase needs to be completed. A demonstration needs to be made of selecting the right concept, its competitiveness, transparency on the risk profile and its value to all stakeholders and the readiness to commit to a project, prepare for a decision at DG3 on whether to proceed, recycle or halt the project.  Assurance focussed on the controls and intent of the Expected Practices supports the decision.