Daily GPI / NGI All News Access

Shell Plans to Produce More Gas Than Oil in 2012

Shell Oil Co. plans to produce more natural gas than oil in 2012, company President Marvin E. Odom told a major gathering of energy executives and policymakers Tuesday.

"It's [worth] procuring and it will be a preferred fuel," he said at the Energy Information Administration's annual conference in Washington, DC. "Just a few years ago North America's natural gas production was believed to be in decline," but that was before the discovery of prolific shale gas plays.

It's now estimated that more than 22,000 Tcf of natural gas is available worldwide, of which more than 2,500 Tcf is in North America, according to Odom. At current production levels there's enough supply to meet the world's demand for 250 years. "We have enough just in the U.S. for 100 years," he said.

In the last decade Shell Oil has invested more than $17 billion in natural gas exploration and development, Odom said. He further noted that the Houston-based producer is active in six tight gas plays in North America, representing about 3.4 million net acres and 40 Tcf of natural gas.

"We're still waking up to the fact that we have this enormous energy resource [shale gas] in our backyard," Odom said. And he believes that shale gas can be developed through hydraulic fracturing without posing risks to public health or the environment. "Make no mistake; it can be done without harming the environment. Anything less is unacceptable," he told the audience.

An increase in supply is a certain way to build a "stable energy picture," Odom said, "but our political climate doesn't always make that easy." Energy decisions in Washington are often made based on "rhetoric and hyperbole rather than on facts."

Politicians often pick the winners and losers among the energy sources and "relegate compromise to the back road," he said. This is "one of the reasons people are so disappointed in their leaders right now."

Asked if he believed an Alaska pipeline to the Lower 48 states (see Daily GPI, April 21) would ever be constructed, Odom indicated that the discovery of abundant shale resources has dampened interest in the long-line system. "You need a strong commercial driver that connects that gas resource with the Lower 48. With the number of resources [shale gas] discovered recently in North America, you can see why that presents quite a challenge to the commercial driver."

Shell has been blocked at every turn to develop the resources off the coast of Alaska. The producer has abandoned plans to drill in Alaska's offshore this year but hopes to restart the long-delayed project in 2012 (see Daily GPI, Feb. 4). It's estimated that offshore Alaska contains 120 Tcf of gas.

In early January Alaska Native and conservation groups successfully challenged the air permits that the Environmental Protection Agency had issued to Shell's exploration unit to drill and operate in the Chukchi and Beaufort seas (see Daily GPI, Jan. 5). Shell, the leading acreage holder offshore Alaska, has been working for several years to secure federal and various state approvals to drill three exploratory wells in the Arctic seas.

As for the Gulf of Mexico, Odom said he believes "hands down things are better than they were before" the Macondo well blowout, which led to the explosion and sinking of the Deepwater Horizon rig last April. He said the construction of a containment system was a "significant" step toward a more safe environment in the deepwater. However, he says more attention needs to be paid to blown out capping a well.

©Copyright 2011 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1231
Comments powered by Disqus