Shell Oil exec urges policy change

Oil companies need the government's cooperation to develop energy alternatives, a top executive of one of the world's leading gas producers told Montgomery business leaders Thursday.

 

The president of Shell Oil Co., John Hofmeister, said public policy determines whether companies can afford to develop energy alternatives. Current policy, he said, does not.

For example, Hofmeister said, the federal government restricts oil exploration in much of the Gulf of Mexico. Local governments are opposed to regassification plants that would expand the supplies of natural gas. All levels of government erect barriers to nuclear energy.

"Energy security here in America is predicated on an enabling public policy, which allows oil and gas companies to make a difference in the future," Hofmeister told members of the Montgomery Area Chamber of Commerce.

Hofmeister predicted gas prices will continue to increase unless supply or demand pressures are relieved.

He said an energy crisis is on the horizon because crude and natural gas are more costly and harder to obtain, and petroleum from nontraditional sources, such as oil shale or oil sands, can't meet demand.

He said that shortage will make way for alternative energy sources, such as biofuels, wind, sun, hydrogen cells and nuclear power.

Shell Oil, the U.S.-based affiliate of Royal Dutch Shell, is working to create cellulosic ethanol, or fuel alcohol, from non-grain plants, such as corn stalks, grass, wood chips and pond algae.

Hofmeister, however, said his company is years away from developing refining techniques to mass produce such fuels.

Shell Oil, Hofmeister said, began investing in alternative fuel processes a decade ago in an era of lower gas prices. That research is paying off, but slowly. Ethanol fills only 2.5 percent of the motor fuel demands.

Even at full production and demand, current technology would allow ethanol to fill just 10 percent of motor fuel demands, he said.

Companies need the government's cooperation, Hofmeister said, if they are to succeed in developing and marketing alternative fuels.

"We will squander our technology," he said. "We will leave our resources undeveloped and become more reliant on other suppliers."