David Varney, managing director for downstream oil at Shell U.K. Ltd., is fed up with woolly green sentiments.
"Two fundamental misunderstandings flaw current environmental debate," he told delegates at a Freight Transport Association conference in London.
"The first is an unwillingness to recognize the limitations to our understanding of the environment and of the technologies that affect it. The second is the widespread belief that major environmental improvements can be achieved at little cost."
Varney cited fears of global warming. Scientists have not yet measured the effects thoroughly or even agreed there is a greenhouse effect. Yet "the environmental debate is conducted in the starkest of terms, with little qualification or reservation."
NO EXCUSE
Lack of complete information is no excuse to do nothing, Varney said. Oil companies spend millions of dollars on the basis of seismic echoes and results from a few wells.
"But we make those investments with a clear understanding of how little we know and in the expectation that we will have to modify our plans as we learn more. That is how we should approach the environment."
More difficult for environmentalists to accept will be Varney's opinion that true costs of environmental measures are not adequately debated.
"Many people, I fear, believe the notion 'the polluter pays' means companies will somehow settle the bills from some internal piggy bank."
SPENDING
European Commission requirements to reduce sulfur levels in diesel fuel to 0.05% by 1996 will mean refiners have to invest 3.5-5 billion ($5.95-8.5 billion). Proposed measures to reduce hydrocarbon emissions and lower sulfur levels in fuel oil and bunkers would cost 6-8 billion ($10.2-13.6 billion). If all suggestions were taken up in fuel specifications alone, European refiners might have to spend a further 25 billion ($42.5 billion).
The average gross margin for European refiners this year has been less than 1.5/bbl ($2.55/bbl), which gives a total margin for the industry of 7.5 billion ($12.75 billion), out of which, in addition to such environmental expenditures, refiners have to pay their operating costs, invest for the future, and make a return to their shareholders.
"The sums clearly cannot and do not add up," Varney said.
Scientific uncertainty is no reason to hold back measures that prevent irreversible environmental damage. But society has to set priorities and goals.
"If we try to tackle every environmental problem at once, we will end up achieving nothing," Varney said. "Choices have to be made."
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
