Royal Dutch Shell Plc  .com Rotating Header Image Shell president tours Alaska image

The company could face problems with development in the Chukchi Sea because of a pending federal decision to consider Alaska’s polar bears threatened. (KTUU-TV)

by John Tracy
Monday, Feb. 18, 2008

ANCHORAGE, Alaska — With a major move earlier this month, Royal Dutch Shell PLC is quickly becoming a leader in Alaska for oil and gas exploration.    

Shell recently spent more than $2 billion acquiring some 275 leases in the Chukchi Sea.    

Those leases could face restrictions based upon the health of Alaska’s polar bears, now being considered for threatened status under the Endangered Species Act.

Shell is also trying to develop it’s leases in the Beaufort Sea off Alaska’s North Slope but those are currently held up by the 9th Circuit Court of Appeals due to lawsuits over potential impacts of exploration on migrating bowhead whales.

Against that backdrop comes the president of Shell Oil’s U.S. Operations, John Hofmeister, who is visiting Alaska this week.

Monday, Hofmeister toured university of Alaska Anchorage’s Native Science and Engineering Program, to which Shell is a contributor.    

Tuesday, Hofmeister participates in an energy conference and then he and his wife are visiting four North Slope villages.    

During his visit, he says he hopes to learn more about the lifestyles in northern Alaska and help promote a relationship of trust between the company and Alaska Natives.

Hofmeister stopped by Channel 2 studios Monday.

Channel 2 News: Have you ever been to Alaska?

John Hofmeister: I was here some years ago. My wife and I visited and enjoyed ourselves immensely.      

Channel 2 News: How important is offshore Alaska to Shell’s portfolio?    

John Hofmeister: If you look at Shell’s portfolio around the world our specialty is outer-continental shelves. We’re very big in opening up Europe’s North Sea. We were the first and very big in opening up the Gulf of Mexico. We’re offshore in Nigeria and Brazil. So to be offshore Alaska is really playing to our strength.

Channel 2 News: Shell spent $2.1 billion for the Chukchi (Sea) leases. You didn’t pick up the phone and say, ‘You spent what?’    

John Hofmeister: No. This was a very big number but this looks to be very big play for the long-term future development of U.S. energy resources and for the state of Alaska.

Channel 2 News: You do not have the background of what we might expect from an oil man. You’re a political scientist by training and that could be useful as you try to move into increasingly sensitive areas.

Before you can proceed with drilling in the Beaufort (Sea), it seems you have to win the trust of the Inupiaq people. How’s that going?

John Hofmeister: We have been back in Alaska only for a short time. We keep listening with open ears and observing with open eyes. We have the deepest respect for the people of Alaska and for the people we work with around the world.

I will tell you we have a lot to learn. There are different languages at play here. Not just how we each manage the English language but in Shell with our engineers and technicians we have a very strong, technical language that can really be quite disturbing to those who don’t understand what the technology means. So the burden is on us to build the trusting relationships, to build the common understanding of the terms under which we will be operating and really to build relationships with one and other so we can all be successful.

Channel 2 News: Shell has a lot of experience in offshore drilling. The company is the primary operator in the Gulf of Mexico. But ice is a big factor in the Chukchi and Beaufort (Seas). Can you convince Alaskans you have the ability to operate safely in such a dynamic environment?

John Hofmeister: First of all we’re going to take it one step at a time. This is where the lessons learned in the Beaufort last summer were useful to all the players, including Shell.

I think we are not rushing this in the sense that we’re not trying to predict a year by which we will actually be drilling. We have ambitions that are internal but all of that is subject to discussions with all of our stakeholders across Alaska — the governor, the state Legislature, the federal delegation. We have to earn the respect of the communities of the North Slope and we have to demonstrate by our actions that they can rely on what we’re saying. That will take some time.

Over a period of time we do expect that we can win the trust, that we can operate successfully and safely and that we can demonstrate that environmental stewardship is part of our business model.

Channel 2 News: You have advocated for mandatory government caps on greenhouse gas emissions. That seems an unusual stand for an oil company president and one who is advocating for more offshore development. Explain that.

John Hofmeister: Ten years ago Shell took a very hard look at the future of oil, the future of the globe. We were influenced very heavily by world leaders, starting in the Rio convention of 1992, moving on to the ’97 Kyoto accords.

We took a hard look at what hydrocarbon companies must do to manage greenhouse gas outputs and we put our own plan together not to just talk about it but to do something about it. Shell has reduced its carbon footprint over the last decade and we hope to continue to do so.

We think it’s consistent with economic development that we build up more energy resources. If we’re going to do that with hydrocarbons it’s absolutely imperative that we manage the CO2 emissions. The Arctic is a great concern.

We’re active in the Arctic in Canada, in Norway and in Russia. We have to protect that climate. We only have one Earth on which we live and we have to protect that balance. 

Contact News Director John Tracy at [email protected]
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