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Associated Press: Shell head says oil industry should tap more domestic resources

DALLAS — Lawmakers and consumers can help make energy more affordable and plentiful by tapping into additional resources, Shell Oil Co. President John Hofmeister said.

“Energy security in this country is a sure bet, and energy security in this country will come from diversity,” Hofmeister told business leaders during the start of a 50-city nationwide tour to discuss energy policies on Friday.

He said energy supplies would improve and prices would drop if more domestic resources _ about 100 billion barrels of oil nationwide _ were tapped, particularly from places like the eastern Gulf of Mexico.

Energy could be further diversified by using alternative sources _ such as wind, hydrogen and biodiesel fuel, Hofmeister said. He stressed conservation in a supply and demand driven market that has prices well over $3 a gallon in some parts of the country.

Hofmeister, who leads the world’s third largest oil company, said a strong domestic energy policy is sorely needed.

The U.S. imports nearly 60 percent of its oil, according to the Energy Information Administration. But Hofmeister warned no one should confuse energy security with becoming independent of foreign resources.

“The days of going it alone are behind us,” he said. “We are an oil-based economy. Fossil fuels will remain the heart of our energy system.”

Hofmeister placed heavy emphasis on imploring policymakers to give oil companies the chance to explore long-restricted areas.

That has become the prevailing message among his peers at other major oil and gas companies, who want permission to produce oil from regions long deemed off-limits by lawmakers.

As the global supplies become tighter and geopolitical climate becomes increasingly dicey, domestic access becomes more important.

Since last fall, Shell has been beset with Nigerian militants kidnapping workers, and damaging oil loading platforms and pipelines to disrupt supply.

“We’ve been in crisis mode in Nigeria since kidnappings have occurred,” Hofmeister later told the Associated Press. “We rely entirely on the Nigerian government for security. The main underlying issue as we see it is the criminality that exists.”

Major oil companies such as Shell have the financial resources to increase domestic production, Hofmeister said. Shell posted a first-quarter profit of $6.89 billion.

He said the industry has proven its ability to extract oil safely when hurricanes Katrina and Rita produced no oil spills in the Gulf of Mexico.

“We have the technology; we have the science; we know how to responsibly manage outer continental shelf development as witnessed by last summer’s hurricane experience,” he said. “When the hurricanes hit, I think it was the first time many people outside the industry realized how much of our energy infrastructure is concentrated in a small area.”

Shell still is bringing back a major Gulf producing platform that was offline for more than 250 days. In the meantime, hurricane season has resumed and has already produced a tropical storm that moved through the Gulf of Mexico before hitting the Florida coast.

This time, the company is better prepared by having more spare parts for refineries and pipelines ready, Hofmeister said.

“What we’ve learned last year was that not having sufficient inventory slowed down our recovery,” he said. “You really need a replacement; you don’t have time to send them out and have them repaired.”


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