Nick Snow
Washington Correspondent
WASHINGTON, DC, Oct. 24 -- Shell Oil Co. Pres. John D. Hofmeister called for a broadly based US energy strategy that pursues every option from increased access to potential oil and gas resources to increasing energy efficiency and developing alternate fuels.
"For the short term, we must have responsible access to more domestic resources, and we must have streamlined regulatory requirements that will allow us to deliver new projects much faster," he told the National Press Club. "For the longer term, however, we must continue to develop new technologies such as those we are currently using to help extract more oil and gas from existing wells and those we are developing to tap unconventional sources such as oil shale in Colorado and oil sands in Canada."
He said that unlike other major oil companies, which dropped their oil shale programs in the early 1980s, Shell Oil has remained active and is currently trying to develop an in-situ process. This may include freeze-wall technology, which would freeze and contain produced water underground (OGJ, July 10, 2006, p. 18).
"We believe we'll be ready to make an oil shale investment decision in the next 3-4 years," Hofmeister said.
Royal Dutch Shell PLC's US subsidiary also is investing in coal gasification research and LNG terminals.
The company has interests in LNG terminals at Cove Point, Md., and Elba Island, Ga., and would like to do more, he said. It also is involved in overseas liquefaction projects.
Cellulosic ethanol
Shell also is a "major investor" in cellulosic ethanol, which Hofmeister called "an excellent way to extend this country's fuel market."
Use of corn stalks and switch-grass instead of corn and sugar to make ethanol appeals to Shell Oil because "if we are being blamed already for high oil and gas prices, are we ready to be blamed for higher food prices too?"
Although E-85 fuel—an 85-15 ethanol-gasoline mix—gets 25% fewer miles per gallon than gasoline, he said, "We are investing in it."
Noting General Motors Corp. and Shell Oil's hydrogen vehicle partnership, Hofmeister said hydrogen can become a commercial fuel for vans and trucks in 5-10 years.
He also emphasized conservation and energy efficiency. "We should teach our children energy efficiency so they grow up and design more efficient buildings and motor vehicles," he said. "If they don't, this mobility we have enjoyed for the last 50 years cannot be sustained."
Global warming
Efforts also should include programs to reduce greenhouse gases, Hofmeister maintained. "As far as we're concerned, the debate is over. When 90% of the world's reputable scientists and so many government leaders say that it's a serious problem, there's not time to argue about the methods used to reach that conclusion," he said.
Shell Oil favors a nationwide rather than state-by-state global warming strategy. "We have to lead by example for the developing world in reducing greenhouse gases," Hofmeister said.
On a separate issue, he said Shell Oil has reached a preliminary agreement with the US Minerals Management Service to pay royalties on Outer Continental Shelf leases it obtained in 1998 and 1999, when price thresholds were omitted from provisions for deepwater royalty relief. "We recognize that a mistake was made. Businesses make mistakes too," he said.
The agreement would not attempt to recover amounts that have not been paid so far but would establish payments after it becomes final, he explained.
Contact Nick Snow at [email protected].