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Arizona Republic: Shell Oil chief pushes alt-fuels, oil exploration: *Hofmeister worried Shell could cause food shortages

Mark Shaffer
Oct. 13, 2006 12:00 AM

The president of Shell Oil Co. said that the company is no longer researching alternative fuels in edible plants because of fears that mass production could lead to food shortages in this country.

“We are already criticized for high gas prices,” John Hofmeister said. He is speaking to business leaders at stops across the country, hoping they will apply pressure on political leaders to take steps to ensure the country’s energy supply.

“Do we also want to be criticized for high food prices and causing shortages of foodstuffs?” he asked.

Instead, Hofmeister said, the nation’s third-largest oil company has been spending tens of millions of dollars in research on biomass and is now concentrating primarily on plans to develop ethanol from cellulose sources, liquefied gas and coal, hydrogen cells and wind power with both German and Canadian partners.

The Shell president also said he expects to announce a compact soon to make fuel from the straw of hayfields in Idaho.

But Hofmeister’s main purpose in speaking at an Arizona Biltmore luncheon to the Phoenix Forum was to make the case that the country is facing a dire situation by importing 60 percent of its oil while not being permitted to explore the outer continental shelf for what are believed to be abundant oil deposits.

Hofmeister noted that the East Coast was only “24 hours away from panic buying” in the aftermath of Hurricanes Katrina and Rita last year when storm damage put a halt in production of about 25 percent of the petroleum infrastructure.

“They got the power up just in time for us to dump 300,000 barrels in the pipelines to the Southeast,” Hofmeister said. “Look at your own situation with the Kinder Morgan pipeline break (in 2003). How long did it take for a sense of panic to happen at Phoenix gas stations?”

Hofmeister said that the federal government, now more than a year after the hurricanes, still has not come up with even one public-policy change to address similar situations in the future.

Hofmeister also said that exploration in oil shale in the continental United States and the so-called oil sands of Canada could provide a windfall of petroleum supplies.

“We estimate that there are 1 trillion barrels of oil in the shale of Colorado, Utah and Wyoming,” Hofmeister said. “That would definitely give a lot of security to Arizona, having a pipeline built across the state from that area to California.”

Hofmeister said that Shell, which had a 36 percent jump in second-quarter profits over a year ago, was not concerned about threats to oil supplies in Iran, Iraq and Venezuela.

“We have our own relationships in those countries that go back nearly 100 years, and we don’t get caught up in political wrangling,” he said. “We really want to do business in Iraq, but we need security, an invitation and adequate judicial support to enforce contracts. But we’ve been working with numerous Iraqi petroleum engineers who want to go back to the country.”

Hofmeister also said he has doubts about how recent huge petroleum finds beneath the Gulf of Mexico can be extracted.

“They are four miles under the surface and another 1 1/2 miles under the water,” he said. “The complexity of doing that is going to be high on the scale.”

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