Continuing the dialogue

Shell’s Hofmeister talks about his visit to Alaska North Slope communities

Alan Bailey

Petroleum News

When John Hofmeister, president of Shell Oil Co., spoke at the Alaska’s Energy Challenge summit meeting in February, he was about to set out on a visit to communities on Alaska’s North Slope. Hofmeister talked about Shell’s need to address the concerns of communities in Alaska, following the company’s return to the Alaska oil and gas industry.

“We can only be successful if we earn and keep the trust of the people of Alaska, which is how we set out on this Alaska re-entry journey several years ago,” Hofmeister said.

Shell is planning to embark on exploratory drilling in some of its Beaufort Sea leases and in February established a major Chukchi Sea lease position in the MMS Chukchi Sea lease sale, as part of a company strategy to seek oil and gas in Arctic regions.

“We believe, as many others do, that the most prolific remaining conventional oil and gas resources are in the Arctic or sub-Arctic, because we’ve pretty much developed the geologies south, whether that’s in the United States or whether that’s in Europe or Asia,” Hofmeister told Petroleum News after the February summit.

But North Slope communities have in the past opposed offshore oil and gas development because of concerns about potential impacts to subsistence hunting and the natural environment.

Continuing dialogue

The purpose of the visit was to assure people about the seriousness with which he and Shell views its future in Alaska, Hofmeister said.

Hofmeister said that he visited Barrow and several villages, including Nuiqsut, Point Lay and Wainwright. He met a wide variety of people including villagers, whaling captains and mayors, to demonstrate respect for who the people are, what they do and how they live. Shell wants to work together with North Slope communities to find solutions for the development of the natural resources that Shell hopes to find, he said.

While staying in each village the Shell contingent participated in “virtually the life of the village,” including evenings spent with the communities, Hofmeister said.

Hofmeister said that he assured people that Shell’s Alaska program is “a long-term play” and that natural resource development would take many years to accomplish. In fact during visits to elementary schools in Nuiqsut and Barrow it was interesting to note that many of the youngsters could be among some of the first employees that would be working on platforms, perhaps in the Chukchi Sea, he said.

Shell made a significant contribution to the Ilisagvik College in Barrow for the development of Inupiat language skills, Hofmeister said.

Open discussion

“We requested the village leaders to gather who they would like, so that we could meet and greet and have a discussion about the issues that they were concerned about,” Hofmeister said.

The meetings focused on how Shell’s plans would come together and what benefits there would be to the people of the North Slope. There were discussions about both short-term job possibilities and the outlook for jobs in the longer term.

“I talked at great length about Shell’s keen interest in advocating for revenue sharing, such that revenue sharing would benefit both the state and the affected villages,” Hofmeister said.

Shell talked about training requirements and the importance of math and science education in preparation for oil industry work, he said.

“I came away with a sense that there was a desire to receive the benefits of economic development,” Hofmeister said.

There was also a sense of resignation to the inevitability of offshore oil and gas development to meet the energy needs of the nation, he said. That led to discussions about the pace of that inevitability, and how Shell’s plans could be compatible with maintaining the local lifestyle. There was ongoing concern that the traditional way of life be protected and that it should be integrated into Shell’s activities.

“We had lots of discussion about the environmental impacts of things like drilling and platforms and maneuvering of ships and so forth,” Hofmeister said. “We had discussions about wildlife and the mitigation that’s required to operate in the Arctic.”

There was also discussion about the use of traditional knowledge in Shell’s plans, he said.

Every village raised questions about the impacts of climate change, and the importance to the traditional way of life of adapting to nature. Hofmeister said that he described Shell’s approach to carbon dioxide management and the company’s view that appropriate legislative action can manage carbon dioxide emissions downward while also enabling the production of hydrocarbons necessary to sustain the economy.

Met the governor

“This is a totally new frontier for the future of Alaska,” Hofmeister said. “Governor Palin was delighted to see the manner in which Shell is going about it. … She was encouraged to see we were committed to the hiring of Alaskans.”

Hofmeister said that he also visited the University of Alaska Anchorage and met with Chancellor Fran Ulmer. In the course of a meeting with Herb Schroeder of the university’s Department of Civil Engineering, Hofmeister discussed with students possible future career opportunities with Shell.

“We had very interesting meetings with a number of students in that regard,” Hofmeister said.

And the timing of Shell’s program?

Hofmeister: U.S. must open federal lands, allow Americans access to new oil, gas

In the course of answering questions from reporters during an April 8 teleconference, John Hofmeister, president of Shell Oil Co., linked high fuel costs in Alaska and elsewhere to the withdrawal of federal lands from oil and gas exploration. Lack of new oil and gas supplies in the United States is driving prices higher, he said.

“This is the consequence of a deliberate, in my opinion callous, policy of the federal government of the United States to deny access to new hydrocarbons to the American people for more than 30 years,” Hofmeister said. “The moratorium on 85 percent of the outer continental shelf of the Lower 48 … has denied U.S. oil companies the opportunity to produce more hydrocarbons.”

The nation needs short-term, medium-term and long-term solutions to its use of energy, and will remain dependent on hydrocarbon fuels for decades to come, he said.

“This nation needs an energy strategy. It needs a federal policy. Those policies must deliver more access. … Shell would be interested in seeing how the opportunities present themselves and at the same time … we … approach the operating opportunities as and when we can also manage the social and the environmental and the cultural (issues).”

It is necessary to balance all of the issues involved in oil and gas development and production, by managing and mitigating the effects on wildlife and by managing the integration of traditional cultures, he said.

And Hofmeister slammed people who litigate against oil and gas development.

“I think those who use litigation efforts … to try to prevent development of Arctic or Alaska gas and oil are in a sense being unfair on the entirety of the American people and to the State of Alaska because of their parochial concerns,” Hofmeister said.

The people of America really do need more energy, he said.

—Alan Bailey