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Page added on September 2, 2015
Shell president: ‘Oil will be required for a long time’
The president of Shell Oil Co. said exploratory drilling off Alaska’s northwest coast is going well despite stormy weather last week that caused the company to halt operations for a few days.
And in an interview this week with The Associated Press Marvin Odum said he expects further protests against the company’s plans for Arctic drilling like the ones in Seattle and Portland where activists in kayaks tried to block Shell vessels.
Arctic offshore drilling is bitterly opposed by environmental groups that say a spill cannot be cleaned in ice-choked waters and that industrial activity will harm polar bears, walrus and ice seals already harmed by diminished sea ice.
In Seattle, Shell faced protests on the water by “kayaktivists” upset over the company staging equipment in the city. In Portland, Oregon, Greenpeace USA protesters hung from the St. Johns Bridge to delay a Shell support vessel, from heading to the Arctic.
“I think the right assumptions for me to make are, it’s not going to go away,” Odum said. “We saw quite a bit of very public opposition when we were in the Pacific Northwest.”
Odum said he’s “110 percent ready” to work with people who want to find ways to improve drilling.
“I do have an issue with those that oppose who use illegal means or put the safety of themselves or the safety of anybody associated with this operation at risk,” he said.
Odum said good progress is being made on the first well off Alaska’s northwest coast.
“We had a few days in the last week where we couldn’t operate because of the weather,” he said. “Now we’re coming out of that and it looks like we’re moving into a time period of good weather.”
President Barack Obama this week is in Alaska rallying support for measures to combat climate change, such as limits on carbon emissions.
Odum is staying in the same hotel as the president – the Hotel Captain Cook.
While environmentalists praise the president for curbing greenhouse gases, they pillory him for granting Shell permission to drill in the Chukchi Sea for the first time in 24 years.
The U.S. Geological Survey estimates the Chukchi and Beaufort seas hold 26 billion barrels of recoverable oil.
Oil will continue to be needed as the United States transitions to more renewable energy, Odum said.
“Oil will be required for a long time,” Odum said. “Let’s take a really close look at developing our own resources, control how it’s done and get all the benefits that go along with it.”
Shell in two years of exploratory drilling and with up to six wells hopes to confirm a vast reservoir of oil. If it’s found, Shell could apply for production permits and move oil by undersea pipe to the Alaska shore and then overland across northern Alaska to the trans-Alaska pipeline. That could take more than a decade.
Odum is confident exploration can be done safely, and the overriding factor dictating whether Shell completes an exploratory well this year will be safety.
Shell is operating under strict Arctic rules put in place after the Deepwater Horizon disaster in the Gulf of Mexico. Arctic offshore drilling has been scrutinized in the courts in lawsuits brought by drilling opponents, Odum said.
“It’s probably fair to say, this is the most scrutinized, analyzed project — oil and gas project — probably anywhere in the world. I’m actually sure of that,” he said.
All the scrutiny, along with Shell’s own internal review, have gone into safety considerations. It’s in the company’s best interest, he said.
“We can’t afford to have a problem here,” Odum said.
33 Comments on "Shell president: ‘Oil will be required for a long time’"
Makati1 on Wed, 2nd Sep 2015 7:35 pm
What is ‘required’ may not be available. Still tryin’ to keep the suckers on the line a while longer…lol.
penury on Wed, 2nd Sep 2015 9:38 pm
Clean oilsands in Utah, drilling in the Arctic, it looks like we have definitely passed cheap oil, Alberta is having problems with environmental issues, the world may be closer to a problem than TPTB would care to admit.
apneaman on Wed, 2nd Sep 2015 10:28 pm
Utah’s oil sands may be “clean”, but are they “ethical” like Alberta’s oil sands? I hear that Venezuela’s are both clean and ethical and someone even said they were warm N fuzzy too.
Mike989 on Wed, 2nd Sep 2015 11:06 pm
If the industry is dead in 10 years, it’s dead today. Shell will go bankrupt if it goes into the Arctic.
The thing about geometric growth is only a fool bets against it.
Most new products that hit the market have geometric growth curves. It’s not the outlier it’s the norm.
Solar and Wind now employ more people than the pollution industries. If your state wants job growth it expands solar and wind job opportunities.
The carbon industry has gotten away with free pollution for long enough, a bill they NEVER intend to pay.
Mike989 on Wed, 2nd Sep 2015 11:08 pm
Maybe it’s time to end the the natural gas boom/bust cycle caused by the tax code:
1. Intangible Drilling Costs (IDC):
When an oil or gas well is drilled, a great number of expenses may be deducted immediately. These expenses are deductible due to the fact that they offer zero salvage value to the well even if it is later declared to be a dry hole. Examples of these types of expenses would be drilling rig time, drilling fluids, labor etc. IDC’s generally represent 65 to 85% of the overall well cost. Investors generally put up the drilling portion of their investment before drilling operations begin, and the investor’s portion of the intangible drilling costs are generally taken as a deduction in the tax year in which the intangible costs occurred. The accounting technique implemented however could impact the deduction period. [See Section 263 of the Tax Code]
The tax payer pays for the DRILLING!
Shock.
Fat Lady on Wed, 2nd Sep 2015 11:19 pm
How much will it cost per barrel in the arctic region? This oil must be cost prohibitive. This region of the world is 24 hr darkness half the year. What are these Shell oil people thinking?
GregT on Wed, 2nd Sep 2015 11:44 pm
“The thing about geometric growth is only a fool bets against it.”
The thing about growth is, only an idiot doesn’t understand that it will not continue forever.
Davy on Thu, 3rd Sep 2015 4:45 am
Mike9 and his buddy Kenz green loving comments are an example of a green agenda. It is generally true with agendist that the scenario is an exclusive one with “either or”. The other scenario is qualitative one with good or bad. These guys are green agendist. Oil is bad and AltE good. Only AltE can provide more jobs. The carbon industry is polluting but the AltE does not.
The inconvenient truth is AltE is polluting because it vital component is a fossil fuel society utilizing fossil fuel industry, with materials which have fossil fuel as an embedded component. Some of the worst waste streams are the exotic resources that go into high tech devices. In this scenario AltE pollutes and to say it doesn’t is being deceptive, delusional, or plain uneducated. There is no way one can say AltE provides more jobs then fossil fuels when all jobs rely on fossil fuels as a foundational component.
The other misconception is AltE as a transitional energy source to replace fossil fuels. Everything I have learned on the subject from 10 years of looking at the issues is AltE is not a plan B energy source. AltE will not scale in size, macro affordability, attitudes, or time.
We are at a paltry single digit penetration of the energy complex with 10 solid years of effort. The sweet spots have been utilized. The grid in its current non adaptive form is nearing its capacity load for intermittent power source without expensive upgrades. Society is not capable or able to utilize AltE in its intermittent form. Ideally society would adapt some of its lifestyle to an intermittent power source making AltE more effective. When you are at such a low EROI every bit of tweaking helps. Large AltE sources are potential stranded assets in a power down situation of grid instability. AltE cannot replicate itself in its current form because of manufacturing realities, scaling, and timing issues. One must remember it is not only energy issues we face it is economic descent issues also. Have you ever seen a cradle to grave AltE source without fossil fuels as a component? OK, in a Mike9 wet dream.
AltE is an absolutely essential as a part of the process of mitigating and adapting to the coming societal energy gradient descent. Many aspects of our complex global society can work better on AltE. It will provide sustainability and resilience in the correct applications. In the best sweet spots per AltE type they are the best application longer term. This is especially true where they can be applied to the end user as an individual or small community.
AltE as an investment by society is always better than the laundry list of malinvestments of society. Here is a multiple choice question: Which is the best application of scarce resources for a society facing an economic crisis and energy descent? A: a new football stadium. B: a new highway to increase traffic flow. C: a new outlet strip mall. D: A state that puts solar power at all vital emergency service points.
We are inching closer to a point where we need honest discussion. Mike9 is as bad as the carbon whores of Wall Street in regards to accuracy. At this point in our descent phase we do not need false claims, blame games, and irrational policies. What we need is honesty with effective policies. We must first question the societal narrative of growth and progress of which the green cornucopians are as guilty as the carbon whore cornucopians.
Real green is going back to the land with natural sources of solar energy within a renewable nutrient cycle, animal and human labor, localized seasonal food choices, and slow living. Our complex world cannot last and AltE is not an either or option. It is a component of multiple plan B’s for mitigation and adaptation to a dangerous consumption descent and population bottleneck. This descent has no solutions but we can make a difference in some small ways while we have time with correct choices. We are too close to failure for bad choices.
Plantagenet on Thu, 3rd Sep 2015 6:30 am
Its funny watching Obama say he’s against global warming while he simultaneously gives permits to Shell to drill for oil in the Arctic Ocean
Is it possible Obamais is so stupid that he doesn’t understand that more oil drilling means more CO2 emissions and more global warming?
Cheers!
shortonoil on Thu, 3rd Sep 2015 6:44 am
“The U.S. Geological Survey estimates the Chukchi and Beaufort seas hold 26 billion barrels of recoverable oil.
“How much will it cost per barrel in the arctic region? This oil must be cost prohibitive. This region of the world is 24 hr darkness half the year. What are these Shell oil people thinking?”
This is what they are thinking. At $45/ barrel, 25 Gb is worth $1.2 trillion. That gives Shell an asset it can borrow against; even though there is no way that oil can be taken out of the ground at $45. If the financial industry backed a loser like shale, it will certainly back Shell. Its executive staff will pull their 6 figure salaries for years, even though the company is going down the tubes. It is how the cannibalization process will go forward. Society will burn their houses in winter to stay warm, and to keep the oil flowing!
http://www.thehillsgroup.org/
BobInget on Thu, 3rd Sep 2015 9:41 am
“Permission” for Shell to follow up on four Billion already spent on Arctic E&P is perhaps the biggest ‘tell’ of this young century.
The Obama Administration is risking the fate of the planet, perhaps, on certain knowledge,
industry, without plentiful petroleum, we can’t feed, medicate or house burgeoning (over) populations. We can’t even seek Global Warming remediation like major construction projects.
If a person never followed day to day news,
if she closely examined Obama’s arctic drilling permission she would get a good picture of oil’s role for the remainder of the century.
All the while, the same government maintains
the same sentence (most oil in storage in 80 years) week after week for the obvious reason
of economic boosterism.
Arctic drilling will be expensive, it already is.
Without Arctic E&P oil prices will go beyond reach of the majority of the world’s people.
The big ‘tell’? ‘We’ve looked everywhere else”.
Kenz300 on Thu, 3rd Sep 2015 9:46 am
It is time to end the OIL monopoly on transportation fuels and begin to reduce our use of fossil fuels.
Electric vehicles and bicycles are better transportation options.
penury on Thu, 3rd Sep 2015 9:59 am
Kenz300 said “It is time to end the OIL monopoly on transportation fuels and begin to reduce our use of fossil fuels.” I agree 1000 per cent. If you have a viable alternative I would ove to invest \,we would be trillionaires immediately. At the current time there is to my knowledge no viable alternative to liquid fuels for transportation, include manuf, dist, constr, maintanance, and economics, but if you can provide the info i would be happy,
apneaman on Thu, 3rd Sep 2015 10:56 am
Fossil Fuel CEOs Bonus Pay Helps Sink the Climate, Report Says
New study shows how executive compensation encourages short-term, and climate-damaging, corporate behavior.
http://insideclimatenews.org/news/01092015/fossil-fuel-industry-ensures-CEO-executive-pay-bonues-sink-climate
shortonoil on Thu, 3rd Sep 2015 11:42 am
“Arctic drilling will be expensive, it already is.
Without Arctic E&P oil prices will go beyond reach of the majority of the world’s people.”
It is getting very close to that level already:
http://www.thehillsgroup.org/depletion2_020.htm
Maximum Affordability is now in the high $60s. Maximum Affordability is a calculation that determines the maximum amount of economic activity that a barrel of oil can power for the end consumer. The end consumer is anyone not involved in the petroleum production process.
As a matter of note, if an economic analysis is used to derive that number it comes up to about $100/ barrel. The discrepancy arises because economic analysis does not take into consideration waste heat. A minimum of 29% of the energy in a unit of oil must be lost to the environment for the process to go forward. That energy does no work. Economists have traditionally been ignorant of that requirement.
http://www.thehillsgroup.org/
apneaman on Thu, 3rd Sep 2015 12:24 pm
Shell will have an ever growing amount of open water to maneuver in. It’s all good.
5 Trillion Tons of Ice Lost Since 2002
http://www.slate.com/blogs/bad_astronomy/2015/09/03/ice_loss_greenland_and_antarctica_lost_5_trillion_tons_since_1992.html
BobInget on Thu, 3rd Sep 2015 12:41 pm
Shortonoil cheerfully ignores inflation.
$100. US doesn’t have the same buying power it did in 2008, even 2014.
(or does it? depends which side your on)
Today the USD is at year 2000 highs with oil just coming off multi year lows.
http://www.macrotrends.net/1335/dollar-gold-and-oil-chart-last-ten-years
As we can see USD may be overvalued.
OK, the US is still by far the world’s largest economy. As long as we are tops, USD remains THE International Currency.
Does anyone see a coloration with a strong buck and breaking old ‘Peak Oil’ Barriers?
http://www.macrotrends.net/1329/us-dollar-index-historical-chart
Hotly denied but there’s strong evidence unless a trillion dollars in finance comes back into ‘repetitive, stress drilling’ the US dollar may be due for a fail.
IOW’s we are locked into a rinse and repeat cycle only increasingly risky finance sustains.
The verdict is in. Unless we pump more digital zeros into E&P, oil shortages are built in.
Obviously, adding zeros is inflationary… Right? Maybe. So far ‘The Fed’ has added
googles of zeros with little effect.
Just perhaps, it’s because some balance of payment bleeding has been staunched with
‘fraccing tourniquets’ AKA ‘American ingenuity’.
Saudi Arabia’s plan, if there ever was such a thing, to put ‘tight oil’ out of business, failed.
When, not if, shale refuses to give up enough oil to keep pump’s electric bill paid, we will be on to some other hydro-carbon, natural gas.
apneaman on Thu, 3rd Sep 2015 1:06 pm
Catch a Cancer by the Toe
“If anyone tells you that humans are the most intelligent species on the planet, please ask them what they mean. I’m sure they’ll boastfully remind you of our technology and landing on the moon, and you remind them that the only really intelligent agent on the planet is molecular RNA by using information and building tools successfully for billions of years without destroying their environment. Humans seem repulsed by their biological natures and the fact of death, wanting to distance themselves from life and striving to become technologically immortal. But technology is mortal too, and hasn’t found a way to interact benignly with the environment, recycle materials or reproduce itself. Civilization in its current form is a cancer run amok with a terminal prognosis.”
http://megacancer.com/2015/09/03/catch-a-cancer-by-the-toe/
idontknowmyself on Thu, 3rd Sep 2015 1:18 pm
Banks poised to squeeze Canadian oil companies into forced asset sales
http://business.financialpost.com/news/energy/banks-poised-to-squeeze-canadian-oil-companies-into-forced-asset-sales-to-avert-bankruptcy
While anning meat sauce and chicken for the winter just in case shortage of all kind of goods start to develop,I found this.
https://www.youtube.com/watch?v=0vrDIFYuc4Q&index=9&list=PLq6pbQUzThcTY-WwrJco2jtqifo7Vy_vh
apneaman on Thu, 3rd Sep 2015 2:27 pm
POTUS be looking out for the nation….er I mean Shell…..same thing really. At least from the suicidal last apes standing view point.
Obama calls for more US Coast Guard icebreakers in Arctic
http://www.straitstimes.com/world/united-states/obama-calls-for-more-us-coast-guard-icebreakers-in-arctic
shortonoil on Thu, 3rd Sep 2015 3:08 pm
“Shortonoil cheerfully ignores inflation.”
Our calculations are based on how much energy a dollar will buy at any point in time. Inflation does not come into the calculation. Thus, there is no need to use it. Inflation is a tool for economists who attempt to compare “dollars” over time. Since energy units do not change with time using inflation adjusted values would give erroneous results. Energy units are constants that have not changed since the Universe began; and will not change until it ends.
Dredd on Thu, 3rd Sep 2015 4:28 pm
“Shell president: ‘Oil will be required for a long time’”
Not that long.
You get my drift (Peak Sea Level – 5).
Nobody “needs” to die.
BC on Thu, 3rd Sep 2015 4:43 pm
short: I don’t know if you saw the post on another thread or if I made the point sufficiently, but to support your point and also give a nod to Bob indirectly, the value of US oil production per capita adjusted for US debt-money supply (but no reference to CPI or “inflation”) is lower than it was in the 1950s-60s and back to the levels of the Great Depression.
Put another way, despite multiples of times of growth of debt-money supply and reported GDP output, we are producing no more oil than we produced in the 1930s-60s for a given about of debt-money created in the meantime.
Said in a different context, had the growth of US oil production from 1900-20 continued at the trend rate per capita up to 1970-85, US oil production would be 20 (since 1985) to 50Mbd (since 1970) instead of 9.6Mbd.
Therefore, it costs us ~100% to 420% more in debt-money terms for the same bbl of oil produced domestically to sustain an economic system in which the top 1-10% receive 20-50% of US income and own 40-85% of financial wealth.
That is to say, in terms of oil-based net energy, the US economy’s organic, sustainable, domestic capacity less debt-money and its attendant debt service costs is at the level of the 1930s-50s, whereas the vast bulk of the income received, and “wealth” owned by, the top 0.001-1% to 10% is in the form of fiat, digital, debt-money credits in computer accounts, not in actual sustainable net energy-equivalent purchasing power of subsistence goods and services for the bottom 90%.
Makati1 on Thu, 3rd Sep 2015 8:19 pm
BC, I often wonder what the world would be like after a solar flare erases all of those ones and zeros designating ‘wealth’ and ownership. That I could live to see the day…
BC on Thu, 3rd Sep 2015 9:24 pm
Mak, excellent point.
http://science.nasa.gov/science-news/science-at-nasa/2014/02may_superstorm/
A large-scale CME is likely to be a higher-probability catastrophic event for human ape civilization than Peak Oil, overshoot, climate change, or nukes. It’s a matter of when and how bad, not if one occurs.
Like the REALLY BIG one for the PacNW, Californication, or Yellowstone, we’re due, and the clock is ticking.
https://www.youtube.com/watch?v=ckY-LmBItUc
You have something in common with Art Bell, who used to live in the Philippines. 🙂 My lovely sister-in-law is from Cebu. 🙂
rockman on Thu, 3rd Sep 2015 11:16 pm
Fat Lady – What is Shell thinking? They think there is an acceptable risk to reward profile for Arctic exploration. This is what exploration companies have done for 100+ years. They might succeed…they might not. But they understand the probability far better then anyone on this site.
Danlxyz on Fri, 4th Sep 2015 4:46 am
There is almost no limit to what we don’t know about Shell’s reasons for drilling these wells. There might be some geopolitical aspect that is not being discussed. Russia is claiming a large part of the arctic and is proving up their claim by drilling offshore wells. Maybe the US is trying to establish its claim too. We really don’t know what is going on.
Meanwhile China is also expanding its claim to the South China Sea by building up islands and populating them.
shortonoil on Fri, 4th Sep 2015 7:19 am
“the value of US oil production per capita adjusted for US debt-money supply (but no reference to CPI or “inflation”) is lower than it was in the 1950s-60s and back to the levels of the Great Depression.”
Populations grow, resource bases don’t!
All the hype about reserve growth that we have been subjugated to over the years is just that; hype! The petroleum industry has been very successful at instilling the belief that no matter how many people it has to serve, and no matter how much oil they extract they will always be able to supply the demand. That has been the Fairy Tale that we have based an entire civilization upon. A species that moves to La La Land, and breeds like rabbits will discover that the Fox came with them!
Kenz300 on Fri, 4th Sep 2015 9:17 am
Climate change is real and will impact all of us.
It is time to reduce our dependence on fossil fuels.
World Moves Toward 100 Percent Renewable Energy – First Electricity, Then Heating/Cooling, and Finally Transportation – Renewable Energy World
http://www.renewableenergyworld.com/articles/2015/07/world-moves-toward-100-percent-renewable-energy-first-electricity-then-heating-cooling-and-finally-transportation.html
shortonoil on Fri, 4th Sep 2015 9:19 am
“There is almost no limit to what we don’t know about Shell’s reasons for drilling these wells.”
In this case it is what we do know that is applicable; they can’t get oil out of the Arctic for $45/ barrel. They can’t get oil out of North Dakota for $45/ barrel. North Dakota winters make the Arctic look like a Sunday stroll in the park.
Most likely this about posting reserves, even if they are P2 reserves. Shell has had problems maintaining reserves since 2004 when the then CEO Phil Watts had to come out and tell the world that Shell’s reserves were 20% less than stated. The following year he had to downgrade them again. Shell’s stock took a massive pounding as a result.
Since executive bonus are usually tied to stock prices, and corporate borrowing rates are tied to net worth, it is probably cheaper for Shell to drop a few $billion in some ice cube infested skating ring than to do nothing. Simply put, they are in the Arctic because there is no where else to go.
Shell will tell the bankers that when prices go back up they can pump billions of barrels of oil. What they are are not going to tell them is that prices will never go that high again:
http://www.thehillsgroup.org/depletion2_022.htm
But – business is business!
apneaman on Fri, 4th Sep 2015 10:21 am
short is right. What the environmentalists don’t know is that the oil boys will just as easily fuck their investors and lenders as the environment.
Fat cat pay at fossil fuel companies drives climate crisis – report
Huge CEO salaries at US firms incentivise expanding carbon reserves but not moves towards clean energy, says thinktank
http://www.theguardian.com/environment/2015/sep/02/fat-cat-pay-at-fossil-fuel-companies-drives-climate-crisis-report
Kenz300 on Sun, 6th Sep 2015 12:03 am
And how many millions does a President of an OIL company make………. Seems like enough to be a constant cheerleader until the end…….
The transition to electric vehicles can’t come soon enough……..
Boat on Sun, 6th Sep 2015 2:46 am
short,
Shell will tell the bankers that when prices go back up they can pump billions of barrels of oil. What they are are not going to tell them is that prices will never go that high again:
I think they disagree with you on that short. At some point they see $150 oil and higher. As with most people.