News and Media Releases

Marvin Odum at Texas Forum in Grapevine

17/04/2008

Marvin Odum's remarks at the Republican Governor’s Association Texas Forum in Grapevine, Texas

Thanks, Commissioner. And, thank you to all the governors.

I can say it really is an honor and a privilege to be here today and I consider it an opportunity to address one of the most critical challenges that we face in the U.S. and that is ensuring affordable energy is available to fuel a thriving economy and that energy has to be provided in a social and an environmentally-responsible way. 

Shell’s success and any benefits that accrue from that success are a result, in part, of Shell and state governments working together. We work together to create jobs for our citizens, economic growth for our communities and new and much-needed infrastructure in our states. Now, Shell’s goal and my goal is to be the preferred partner when it comes to energy issues. I want us to be the company that you want producing resources in your state.

We’ve got some discussion time that the Commissioner described for us to cover a number of issues on the panel, but there are three things that I hope come up in those questions, and I just wanted to flag those here. And one is the magnitude of the energy challenge that the U.S. and that the world are facing and how do we go about educating the public and getting the right policies in place to deal with that challenge?

The second is security of supply, plain and simple. And the third is the environmental dilemma. As the world demands more energy, how do we deal with the environmental implications of more energy and what’s the role of renewables in that equation?

But, for the few minutes that I have up here today, I just wanted to touch briefly on some of the activities we have in several states. and I’ve chosen Alaska, Texas and Hawaii in this case, just to give a sense of the diversity of the portfolio and the issues that we’re working on and how we’re working with state governments to do that.

So, just briefly on Texas. Houston, of course, is the headquarters for Shell Oil Company. We employ about 14,000 people across the state. Our major facilities include the Deer Park Refinery, nearly 2,000 retail stations in the state and large natural gas producing operations in South Texas. But there are two I want to talk about in particular, because they represent expansion opportunities in the state, as we sit here today.

And, the first of those is the Port Arthur Refinery, where we’re talking about doubling production to 600,000 barrels a day. That makes us one of the largest refineries in the world, and we’re employing the very latest in technologies to do that. And what that allows us to do is double the fuels production from a facility like this, while lowering most emissions associated with its production.

And we impact a workforce of about 4,500 people at the peak of construction of this particular project, and it will create at least 300 new, high-quality, high-paying jobs in the state for the new facility. The economic impact of this expansion alone is estimated at something on the order of $17 billion, coming mostly through new jobs and through support services. To accomplish this, we’ve worked very closely with Governor Perry’s Economic Development Team, specifically addressing work force development issues and tax programs.

The second area in Texas I wanted to mention in terms of expansion is with wind energy, so let’s touch on the renewable side for a moment. Texas has become pretty famous in this area, and we’re happy to be part of that.

We currently have about 240 megawatts of production in West Texas, and what we’re looking at now is a three-gigawatt wind power expansion project with TXU in Briscoe County, Texas. For those of who may not be familiar with this, this will be in the Panhandle area, which just happens to be a terrific wind corridor for wind power.

The next step is we’re going to be working with the Public Utilities Commission in the state to get transmission lines built to an area like this, because often times where you can generate wind power is not, of course, where the customers are.  So, we’ll need transmission systems to get this wind to customers.

Currently, it appears that may be something on a three- or four-year permitting process, but we hope that working together, we can beat that time frame and bring this renewable source to the citizens of Texas as quickly as possible.

Now, I move to Alaska – if anyone in this room thinks in terms of billions of barrels of oil and trillions of cubic feet, then you think of Alaska because we believe that in the federal waters offshore Alaska (and the government believes) there’s something on the order of 25 billion barrels and 120 or more trillion cubic feet of gas.

These are huge resources that are going to be crucial to meeting the energy needs for the U.S. I believe the time is right for production offshore Alaska – and a lot of that is based on the very significant technology gains we’ve made over the last couple of decades and the Arctic work we’ve done, in particular, around the world.

It’s made it both physically possible and commercially feasible now to go out and produce this oil and gas, and we’re confident we can do this in a way that protects the environment and the residents of the North Slope of Alaska.

We’ve recently shown our commitment to that by buying $2.1 billion worth of leases in the Chukchi Sea here, just a month or two back. I think one of the very important elements to a project like this – and particularly to offshore production moving forward – is achieving state and community revenue sharing. Shell will continue to advocate that revenues generated in the federal offshore waters through oil and gas production be shared with Alaskans, as they’re currently shared in the Gulf Coast states, which you may be aware of. 

Now, before I leave Alaska, I’d just like to thank the Governor for her support for the Chukchi lease sale and also for her efforts to commercialize Alaska’s North Slope natural gas.

Now, finally and very briefly, I want to touch on Hawaii and I choose Hawaii in this case because it allows me to point at one of the newer aspects of the energy portfolio – and that’s exactly the way I think of energy – as a portfolio of options.  We do have a wind project there that we’re moving forward.

By the terms I just described in Texas, this project may sound modest at about 22 megawatts, but we’re talking about well over 10 percent of the power for that particular area in terms of total capacity, so it’s a very important project for the state and an important project for us.

But, the more unique side is around a new pilot project where we’re looking at to create biofuels from algae. It’s not big yet, but I think it points to the idea that, with new technology breakthroughs, there are a number of opportunities out there that are better environmentally and very good opportunities for places like Hawaii.

So, these are just a few of examples of the types of projects that Shell is involved with and how we’re partnering with states.  I very much look forward to the panel discussion.

Thank you.