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David Hone
Climate Change Adviser, Shell Group

David Hone

David Hone is the climate change adviser for the Shell Group and vice chairman of the International Emissions Trading Association. He also works closely with the World Business Council for Sustainable Development.

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The case for offshore development

The oil spill in the Gulf of Mexico is a tragic event, no one can deny that. While the immediate responsibility lies with BP, the impact will be industry wide both short and long term. In the short term, industry resources are on hand to assist in stopping the leak and cleaning up. Industry participants, including Shell, will also be relooking at their operations to see what improvements can be made -- even before the investigation into this event gets underway and the root cause is identified.

When such an event occurs it is also important to put it in perspective. For directly affected individuals and families there may be little or no consolation possible and seeing that will remind us all again of the tragic nature of this accident. But incidents of this magnitude are incredibly rare, not just in the U.S., but globally as well. Onshore and offshore production operates in many parts of the world all day and every day almost without incident, delivering the 80 million barrels per day of oil production that the world needs for transport (while oil is clearly an energy resource, much of it is now used in the transport sector in one way or another). U.S. oil production stands at about 8 percent of this total or 6.7 million barrels per day in 2008. As demand has continued to rise, offshore production has become an increasingly important component of total production. Whereas oil and gas production started its life onshore over 150 years ago in places such as Pennsylvania and Azerbaijan, today about a third of global production is offshore. Big production areas such as the Gulf of Mexico and the North Sea have made a significant difference and many new major finds are offshore as well, such as the areas opening up off the coast of Brazil. As global oil demand continues to rise in the medium term, even as vehicle efficiency, electrification, hydrogen and bio-fuels change the nature of the transport sector, offshore access and production will be necessary not just to meet demand but to bridge the gap created by declining onshore fields.

But putting facts and figures to one side, the longer term effect on the offshore industry and the potential expansion of offshore drilling into new areas may well be where the impact of the current event is really felt. The immediate human instinct is to say "stop", "no more", "put an end to it", but that will have consequences as well. These won't be felt tomorrow or the day after, but price pressure will grow over time as demand rises - even as alternatives and efficiency begin to have their impact. For the U.S., continued offshore development, in tandem with a much more aggressive approach to vehicle efficiency in particular, are the country's most immediately effective ways to increase energy security, reduce import payments, increase revenue for the Federal Government, and create thousands of good paying jobs.

Looking at the numbers again, current U.S. oil production is some 6.7 million barrels per day, but consumption is nearly 20 million barrels per day. That is a very significant gap, which means the U.S. cannot be oil independent any time soon. Production has dropped by nearly a third since the peak in early 1970s (when U.S. demand and production weren't that different) and continues to do so, despite growing offshore production. Even assuming no growth in personal transport demand, a rapid shift to transport electrification (say 50,000 vehicles in 2011 growing rapidly such that all new vehicles are electric by late 2020s), a target new internal combustion vehicle fleet average efficiency improving by 2 mpg per annum and no change in marine, aviation, chemicals or other uses of oil, it wouldn't be until well into the 2030s that demand might equal supply again, assuming of course that supply can be maintained.

By David Hone  |  May 5, 2010; 12:36 PM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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You work for Shell Oil Mister Hone. I'd say your opinion is biased. "Short sighted" is the DEFINITION of the Oil Industry. It is an antiquated, dirty and dangerous technology that must be completely eliminated. ExxonMobil could take their billions in profit and single-handedly create a renewable energy infrastructure in this country. One company! But it would be less profitable. In the United States doing the right thing will always take a back seat to profit. And as long as that is reality our species has virtually no chance for long-term survival.

Posted by: bahbahwahwah | May 9, 2010 11:11 PM
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Spills like this are rare because drilling at such extreme depths are rare. A blow-out through a well at over 15000 feet below the sea involves pressures 100 times greater than drilling at 100 feet. The only precaution against a blow-out was the installation of a BOP which could not be tested onsite to see if it could in fact prevent a sudden release of high pressure gas. There was not even a remote indicator that could have given the men on the floor of the rig a one minute warning that a blow-out was in progress - possibly saving their lives.

To justify a sloppy operation and an untested system because we need oil doesn't make sense. If damage of the magnitude of this event is the price we have to pay for deep-well drilling, I say let's construct a power grid, and switch to clean-coal technology to generate electricity for electric vehicles rather than risk another mess like this one.

Posted by: loyalsyst | May 9, 2010 9:03 PM
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Drill-Baby-Drill Politicians defeated Safety Regulations Requiring Secondary Relief Wells, Remote Acoustic Triggers for Shut Off Valves, corrosion resistant Carbon Fiber Reinforced pipes, and High Quality Cement Sealing requirements; many of which are standard safety requirements in Canada, Brazil, and Norway.

We must develop Alternatives to Oil and Coal and Create Jobs in other Industries for the benefit of our Economy and National Security. Using 25% of the Worlds Oil while only owning 3% only benefits Oil Industry gouging of the public while Gulf Coast Drillers enjoy both Public Subsidies and Tax exempt status as they pay their royalties then sell the Oil on the Open market.

Require Drillers to be Insured for Worst case Scenario ($50~100 Billion to start from the looks of this accident). If you cannot get insurance the way you are doing it now, or because you are using Halliburton Cost cutting low quality Cementing, then you shouldn't be in our waters.

The Oil Spill Liability Trust Fund supported by industry fees should be raised from $1 Billion to $50 Billion.

Current Drillers should be subject to new Insurance and Safety Regulation requirements. No more Oil Drilling exemptions from detailed Environmental Impact Studies

Posted by: liveride | May 9, 2010 3:38 PM
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You give us the predictable Big Oil speak Mr. Hone, and Big Oil loves to constantly remind us, the American public, just how small and dependent we are on you oil people with your pumping and importing millions of barrels per day of petroleum. I'd love to send Big Oil back to the stone ages where they (you?) belong by proving your point completely false. We need to level the playing field for alternative fuels and strict conservation measures (which you allude) in this country by thwarting the stranglehold of lobbying efforts of Big Oil. Let's finally open the door to sensible policies for alternative energy development full tilt and let it compete fairly on the open market by ending huge subsidies for fossil fuel extraction.

Posted by: citizen4truth1 | May 9, 2010 2:59 PM
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This guy just makes me want to spit. Let him eat oil.

Posted by: csockey | May 9, 2010 5:44 AM
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This type of opinion by corporate flunkies like David Hone makes me want to throw up. They way they so politely and graciously diminish the true repercussions of these sort of events calls for someone to grab these ass#oles and force them to clean the mess themselves one lick at the time.

Not EVEN a month ago another tanker spilled tons of oil all over the Great Barries. And Valdez is STILL not clean. Dig in ANY beach and less than a foot underneath is all oil.

Posted by: Mighty7 | May 9, 2010 3:23 AM
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In response to goheen1, this is nowhere near the largest spill in history, at least to date.

The largest spill was following the first Gulf War, the second was the Ixtoc-1 well in the Gulf of Mexico in 1979, also a blowout on an offshore rig which caught fire and sank, and leaked a total of 3.4 million barrels of oil over a nine month period.

http://news.bbc.co.uk/2/hi/uk_news/magazine/8664684.stm
http://en.wikipedia.org/wiki/Oil_spill

Posted by: flwehr | May 8, 2010 7:37 PM
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A spill of this magnitude is extremely rare so it's okay not to worry? Of course it's rare. It's the largest of its kind in history, so it's so rare, it's only happened once.

What irrationality! What an outrageous use of illogic to make a case for continued unregulated drilling.

And this faulty logic is perpetrated by the "climate change adviser for the Shell Group and vice chairman of the International Emissions Trading Association"

Look at who's positing this position! Prima facia, his position at Shell make this argument suspect, at best, and given his fallacious logic, unreliable and intentially misleading.

Posted by: goheen1 | May 8, 2010 12:07 PM
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We are an energy based economy. No poppycock about global warming is going to change our dynamic economies requirement for energy production to maintain and increase our economic sectors. Increase safety requirements with a guaranteed minimum of three environmental protection factors in the drilling process and this will not happen again.

Posted by: virgin12 | May 8, 2010 11:25 AM
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