Shell president tells energy's story
By John Temple Ligon Temple@TheColumbiaStar.com

James L. Jones

The Columbia World Affairs Council held a luncheon in the Summit Club Monday, November 5. The featured speaker was John Hofmeister, president of Shell Oil Company of Houston, Texas.

The same afternoon, Hofmeister lectured at USC's Moore School of Business, where he was joined by Gen. James L. Jones, former Marine Corps Commandant and former military head of NATO. Jones is the CEO of the Institute for 21st Century Energy, part of the U.S. Chamber of Commerce.

Before being named president of Shell in 2005, Hofmeister was the group human resource director of the Shell Group, based in The Hague, The Netherlands. Hofmeister also held key positions in General Electric, Nortel, and AlliedSignal (now Honey- well International).

Hofmeister declared Americans do not enjoy insecurity. The nation's homeland security gets all the attention because most people want the security. After the dot.com bubble burst, further meas- ures for financial security were put into place. Most recently the sub- prime issues have surfaced and are being addressed at all levels.

John Hofmeister

Energy security is a necessary goal, but the USA is the only oil importing country that works so hard to prohibit oil exploration and development. For example, the outer continental shelf is 85 percent off- limits for oil exploration, leaving only 15 percent for drilling.

Current estimates allow for 110 billion barrels of oil in the outer continental

shelf.

Hofmeister laments the loss of the security and the energy prices of the 50 years after World War II. The world had it pretty good, according to Hofmeister, until the tipping point of around 2003. Then came Hurricane Katrina, which shut down 25 percent of the country's crude oil production and 25 percent of the country's refining capacity.

Then came Hurricane Rita, which shut down Texas.

Two- thirds of the country's crude oil is imported. President Nixon announced in 1973 during the Arab Oil Embargo that the U.S. would soon not be dependent on imported oil.

In Canada there is a trillion barrels of oil in its oil sands. In southeast Utah and southwest Wyoming there is another trillion barrels in oil shale. And another trillion barrels can be found in Venezuela's heavy oil.

Among the alternatives, clean coal gets plenty of discussion. But, says Hofmeister, there really is no such thing as clean coal. But there is gasified coal, which burns something like natural gas.

Santee- Cooper wants to burn pulverized coal in its new $1 billion power plant in the southern edge of Florence County. The plant is still in the permit stages, but already screams of protest are mounting in objection to the pollution expected from burning pulverized coal.

Gasified coal, on the other hand, would burn clean but would also cost another 20- 25 percent per kilowatt hour. As Hofmeister put it, if Santee Cooper planned on collecting eight cents per kilowatt hour, a charge of 10 cents per kilowatt hour should be expected from the gasified coal burning operation.

If, and it's a big "if", there were drilling offshore South Carolina, there still would be no refineries nearby because the economics of shipping crude to existing refineries instead of building new refineries would be the order of the day. In Port Arthur, Texas, Shell is building new refining capacity, but that's where they already have refineries. The permitting is more positive where refining is already under way.

On the matter of global warming, Hofmeister said the word is out and the word is clear: Carbon emissions are a problem. He and his company are looking for a national solution, just as they are looking for a national energy policy, which is missing emphasis in the presidential primary debates.

On one last note of irony and frustration, Hofmeister observed that the Energy Act of 2005 won't allow any drilling within 125 miles of the Florida coast, but the Cubans can drill for oil within 45 miles of the Florida coast.