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Former Shell Oil President John Hofmeister on whether shale oil could help achieve energy independence for the U.S.
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Kinds of energy we invest in and rely on what is the answer to US's energy independence sums it shakeout.
And that it's almost a done deal but my next guest says slowly down.
There's a lot and -- go wrong John -- -- the former.
Head of Shell Oil.
Welcome back to the show John we appreciate your time you were listening -- that last discussion how what do you think is -- motivation you're an energy guy.
Well I I don't know I really don't know I -- haven't talked anybody next slide and a couple of years.
But it is a big decision to be thrown out of an association.
That you've supported for a long time.
Yeah -- really interesting article let's onto shale which is what you're here to talk about.
Of shale as one of these at industries or are fracking really.
That has blossomed all on its own I mean -- -- these kind of subsidies that you're seeing happening.
In wind energy shale has just made an fracking has just made a lot of sense we've seen a crop up everywhere but you think that there -- some potential hurdles down the road like -- Well the biggest hurdle of all let me say it to start with -- a big fan of shale we should be investing seriously and continuously and shale formations.
It will produce a whole lot of energy that we otherwise wouldn't produce so I'm not negative at all on the prospect of -- But what I am concerned about -- people talk as though shale gas or shale oil is gonna somehow save the nation.
And deliver energy independence as a nation.
That's not gonna happen.
It's not gonna happen because.
There is such a decline rate that comes from the natural.
Movement of the molecules of oil or the molecules of gas.
Out of the Reza born in the first year that you have to continuously drill new wells.
In fact if you start increasing the production.
From oil shale and become dependent upon it.
And you face up to a 50% decline rate in the first year which is much the case.
Then you have to drill ever more wells to not just grow but to keep just to keep stable just to keep -- you were a year ago.
And so the industry doesn't have the capacity.
As it is currently structured.
To continue at a rate of increase drilling.
But you know year after year after year particularly facing the uncertainty.
That shale faces from the Environmental Protection Agency.
There is a study underway that nobody talks about because it's still under under study under a black out.
And the EPA is looking at the prospect.
Of whether or not it should.
Insert itself under the Clean Water Act the Clean Air Act now to be part of the per permitting process.
-- shale.
Projects.
On state or private land.
And there are a lot of this would -- that are worried about.
You have potential environmental damage because of fracking and shale has gotten way ahead of the EPA they weren't regulating it and there are a lot of complaints about that right now.
So it is realistic to think that they would at this point inject themselves into it.
You mentioned the natural decline you mention the regulation.
Another problem is infrastructure out there there isn't a lot of infrastructure to move around the new found energy because it is relatively -- expected.
So what is the downside if we've -- all the sudden we seen as Bim.
And if it doesn't grow as much as anticipated what is the potential downside and how -- we avoid it.
Well I think the -- will continue I don't see any reason to pull back it's just that you can't grow it.
As far or as fast as people would like to see it happen because of the lack of capacity remember trees don't grow -- the sky.
Production just doesn't increase miraculously.
Year over year when you face this kind of decline rate.
But what we have to do the -- in my opinion.
As we have to have a fully balanced portfolio.
There are huge huge opportunities offshore in areas that are off limits.
The administration's five year plan doesn't come close.
To opening up new access to new oil in new reservoirs which would then help augment the shale discoveries and to make it even a bigger play for the United States of America to reduce imports.
The president said last week it is that the in his acceptance speech.
That if we follow his plan.
We will be off imports -- one -- wanting.
That's -- nonsense statement there is nothing in the president's plan that would bring us anywhere close unless we reduce demand by continued recession.
A news ever less oil which is one of the reasons that we have changed the import relationship.
Reduce demand because people can't afford to buy oil in this day and age at these prices so they are reducing demand.
Seems he's -- Hard to imagine your your bottom line argument is that we shouldn't step off the gas in other development areas just because we think that all of this other supply is coming on board.
Is there evidence that that's what's going on.
No we've been emphasizing the shale -- because it's private land with state permits.
You know drilling on federal lands is down 40%.
Over the last three years we have.
Under federal jurisdiction while we've increase private and state jurisdictional.
Outreach and and so we've been growing the industry.
Fortunately because the federal government has been out -- away.
-- they haven't been involved thank goodness and that's what we can continue to do but now we get to the offshore we get the federal lands.
We have to have federal government leadership.
-- going to decrease imports by increasing production in those areas.
John hot rice and that's great information or to keep all that in mind the next time we hear the president.
Talk about how much drilling has increased under his administration John -- -- thanks for joining us.
Thank you.
