Relations between the oil industry and the Obama administration may be strained in many regards, but there is agreement on at least one issue: the strategic importance of developing resources offshore Alaska, Shell Oil President Marvin Odum said in an interview aired Sunday.
While the industry has criticized the administration of slow-walking permit applications for the Gulf of Mexico in the wake of the 2010 Deepwater Horizon disaster, Shell has been successful in getting approval for its plans to drill exploratory wells in the Chukchi and Beaufort seas.
"You see a lot and you hear a lot about it being a very stressed relationship, and that's real," Odum said in an interview with the TV energy program "Platts Energy Week," which was scheduled to air on Sunday. "We should just be honest about the fact that that's real."
Odum said the industry disagrees with the administration on how quickly some renewable-energy sources can be brought to market in a reliable, affordable way.
"I think there are differences of opinion ... in terms of what is the energy mix and how quickly can it shift," Odum said. "What we're still in the process of doing is converging to this point of understanding what does the US energy picture in the future really look like."
Odum said more work needs to be done to understand when renewable sources of energy can "come into the US energy mix as an affordable source of energy, and then being realistic about how quickly that can be scaled up."
But Odum said Shell and the administration are closer together when it comes to developing Arctic energy resources.
"I think Alaska is a good example where you would say the strategic importance of Alaska is understood, because we wouldn't be where we are today otherwise," Odum said.
"It's recognition of how strategically important Alaska is and offshore Alaska is to the US and to US energy security," he said.
Odum noted that government estimates put potential for oil off Alaska's coasts at around 25 billion barrels.
"That could be oil for the US. That could be energy security for the US as well as the jobs and the economic benefits that go along with that," Odum said. "I think what we see in the administration is a recognition that this is a strategic resource and it's one that, if we're convinced we could do it the right way, it should be developed. And now we're finally to that point."
Odum acknowledged that the industry could do a better job of addressing concerns over the use of hydraulic fracturing to open vast new areas of natural gas onshore.
"I can look back ... and I can say, we as a company, we as an industry could have done a lot more to get ahead of some of these issues, and I wish we had," Odum said. "But we are where we are, and we are doing quite a bit now to point to the reality and the science behind what onshore gas development looks like."
Odum said Shell last year developed and published a set of principles to guide its own development of onshore gas resources. The document addresses the four major concerns typically expressed about hydraulic fracturing: protecting water sources, minimizing the amount of water used in the process, minimizing emissions and minimizing the footprint of gas drilling operations.
"It becomes a blueprint for how a development like this should be done," Odum said. "And the end result of this is we would actually like to see that type of blueprint move right into the regulations, which we think will give people more confidence about this kind of development."
"Platts Energy Week" airs Sundays in Washington at 8 a.m. on WUSA and in Houston at 4 p.m. (both local times) on the PBS channel KUHT. The show is also available online at www.plattsenergyweektv.com.
