Shell president, K-State alumnus address alternative forms of energy in Landon Lecture

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Alternative energies are the opportunity for future energy sources in the world, said the president of Shell Oil Company Friday morning during the 145th Landon Lecture.

Liquefied natural gas, carbon-free coal, the sun, wind and hydrogen are the future of energy, and Shell currently is working on developing these energies, John Hofmeister said to an audience of about 900 people in McCain Auditorium.

“By developing more national resources in this country, America faces greater prosperity, greater access to oil and gas to support the economic infrastructure of the country,” Hofmeister said.

Hydrogen offers the most promising technological advancement in energy, Hofmeister said. A hydrogen pump exists at a Shell retail station in Washington, D.C., and the company also is working on hydrogen highways between Washington, D.C., and New York, and Los Angeles and San Francisco, he said.

“There are some technological breakthroughs that we still need, particularly in the storage and distribution area, but also in the vehicle itself,” Hofmeister said of the advancements. “We have some work to do in order to find the solutions, and we will.”

Hofmeister said he was able to walk around on 1 trillion barrels of oil shale in the Colorado, Wyoming and Utah area two weeks ago. The 1 trillion barrels are five times the known oil reserves in Saudi Arabia, and Shell believes it is recoverable between the prices of $30 to $40 a barrel, Hofmeister said. He said Shell is working with the Bureau of Land Management and U.S. Congress and hopes to make a financial decision by 2010.

“As we look ahead, we have an expression in Shell, which we like to use, and that is ‘just as the Stone Age did not end for the lack of rocks, the oil and gas age will not end for the lack oil and gas, but rather technology will move us forward,'” Hofmeister said.

Hofmeister joined Shell Oil Company in 1997 as director of human resources and was appointed president on March 1, 2005. He received his bachelor’s and master’s degrees in political science at K-State in 1971 and 1973, respectively. He is the fifth K-State graduate to deliver a Landon Lecture since the series’ start in 1966.

The current oil prices are the result of two dynamics, Hofmeister said. The first, he said, is a result of $10 a barrel for crude oil in the late 1990s, which caused a lack of investments to be made on future oil situations.

“In the oil business, it takes seven to ten years for decisions to be recognized because of the time span that it takes to move projects forward,” Hofmeister said. “We are suffering the shortage of not having made decisions seven years ago, which are being felt today.”

The second dynamic affecting oil prices is the threat of demand exceeding supply, Hofmeister said. The world produces 85 million barrels of oil a day, but it uses more than 84 million barrels a day with no surplus capacity, he said.

“Any tension in the system, any disruption of supply, causes the world trade community … to be nervous, and it moves the price up,” Hofmeister said. “If, tragically, something were to happen in the world that somehow reduces supply, we could see a return to much higher costs of oil very quickly because the demand is out there.”

Hofmeister said Shell offers no discounts to its employees on oil and gas prices.

“We don’t like the high prices any more than you do,” he said. “We pay the same – we feel the price at the pump, as you do.”

High oil prices also are the result of high geopolitical tensions in the Middle East, Hofmeister said. Shell has been in the Middle East for 100 years and is currently working to find gas in Saudi Arabia, he said. The company also is ready to work in Iraq, as soon as security and rule of law are established, and invitations are extended, Hofmeister said.

“The reason for Shell’s success in the Middle East over 100 years is we talk to everybody,” Hofmeister said. “Shell does not answer the politics of nations, but Shell is there as a citizen to offer its view, and our view is we should all be talking to each other.”

Despite all possibilities in alternative energies, Americans need to adapt a culture of conservation in their values and behaviors, Hofmeister said.

“What we need is a culture of conservation in which the minds of our technologists and our engineers are shifted towards the design of homes, the design of vehicles … in which energy is used differently,” he said. “Absent a culture of conservation, all the alternatives I’ve described will not be enough for the security of energy for our children, our grandchildren and their grandchildren.”

Charles Reagan, Landon Lecture series chairman, said Hofmeister’s lecture offered insight to the current oil and gas situation.

“I found it was the clearest, more coherent statement of what our present energy situation is that I have ever heard,” Reagan said.

Ashley Boldt, Student Senate chairwoman, said she had previously seen Hofmeister speak in the K-State Student Union and enjoys his informal speaking style.

“Obviously, with gasoline prices, to hear the perspective of someone who has something directly with it is interesting,” said Boldt, senior in family studies and human services. “You learn more about things you already know, but you also see it from a totally different perspective.”

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