The following is a condensed version of the keynote presentation by David Lawrence at the RDC Annual Meeting Luncheon held on June 30. Mr. Lawrence is Executive Vice President, Exploration, Royal Dutch Shell. A video of the entire speech, as well as opening remarks by Senator Mark Begich, are available here.
What brings us here today is part
fascination and part transformation. I think
we all share a fascination with the secrets this
planet hides below the surface, and it seems
Alaska has more wonderful secrets than most.
I mention transformation because it
accurately acknowledges the ways in which
society has changed as a result of fossil fuels,
the new ways in which we find and extract
them, and the ways society must now change
to compensate for their use.
Not only do we need to find more sources
of energy to satisfy our growing thirst, it’s imperative that we acknowledge and mitigate
any associated future environmental impact –
all at a time when the world faces a recession.
But the transformation will have to be a gradual one – a balance: between energy security, economic development, societal needs and the environment.
At Shell, we have made the assumptions that wind, solar and biofuels will all grow much faster than traditional energy sources like oil and gas. But even then, it will take decades to get to materiality. Optimistically, we believe renewables could provide around 30% of the world’s energy by the middle of this century, up from 3% today.
Reaching 30% would mean unprecedented growth, but it also means it would take 40 years to get there and that fossil fuels and nuclear will supply the remaining 70%. But where will the other 70% come from? Places like Alaska, we hope. Why? Because the resource base is huge – another potential Gulf of Mexico scale resource – and in U.S. waters.
Unfortunately, Alaska, particularly the offshore, is ground-zero in the misguided effort to put us in an “either or” world – where fossil fuels play no role in the bridge to an energy future. For economic progress, revenue generation, jobs, energy security AND protecting our environment, it all needs to come together – oil and gas, renewables, biofuels, CO2 management – a world of AND.
No less than five of the largest environmental groups in the world have become rooted in Alaska and some will spare no expense or effort to ensure development of any kind does not take place in the offshore – not news to most of you.
Their strategy is simple: form local partnerships where possible to lend a “face” to the fight against energy development. Pure numbers are not important here but names are and that was never more evident than in April when the Washington D.C. Circuit Court ordered the Department of Interior to vacate its approved 5-year OCS leasing plan.
I won’t dissect the merits of this case but the resulting opinion could significantly impact offshore development in Alaska. The plaintiffs in that case include at least three international environmental groups and one local indigenous group. That local group might be hard-pressed to fill a table at this luncheon. But for arguments sake, let’s say they do fill a table.
As it stands, the table over there could strongly influence for Alaskans how the State will be prosperous when the Trans-Alaska Pipeline is shut down because no offshore oil is flowing through it. That table could influence an outcome for a country that already imports 60% of its oil – how quickly that number will grow to 80%. And that table in the back could drive the US Federal Treasury, (which could use some cash right now), to refund over $10 billion in lease bonuses because of a 5-year OCS leasing plan that was, in layman’s terms, voided on a technicality.
Now, let me be clear – one can argue the environmental groups represent thousands of people and they can’t be overlooked by the Court. And certainly that group at the table has others supporting them – maybe every table in this room. Yes, I could and would argue that.
But I would also point out that in many cases there is some missing logic in the piece. Some NGOs often employ a tactic of litigating development projects at every stage and use a “face” of a local community to provide weight behind their tactics. But the interests of many groups and international NGOs could not be more disparate.
If you don’t think so, ask individual members of many International environmental groups how they feel about harvesting whales - under any circumstances. If they are honest in their response, you will be even more intrigued at the partnerships they have formed in Alaska.
At Shell, our agenda is clear: make a case for oil and gas and develop the resources in a safe and environmentally responsible way that benefits our shareholders and the communities in which we work. If that sounds like a company line, that’s because it is the company line – and we live by it.
There is no better example of that than here in Alaska. I trust most of you know our story in Alaska by now. Shell has spent $3 billion in Alaska and to date we have no monetary return to show for it. We believe there’s oil here. We believe we are the company best suited to find and recover it, but I think it’s safe to say there has been nothing “easy” about it.
When we look at dilemmas like offshore oil and gas development in the Chukchi and Beaufort we look at constructive partnerships. How can we balance our energy needs with economic progress and sustainable development, community concerns and the environment? And the kind of constructive partnerships I am talking about are NOT those in which one party just simply has a strategy of “No, that’s impossible” and turns to the courts.
In the world of the three hard truths – increased demand, harder to find and produce energy, climate change and CO2 – this is simply opting out of the challenge. We need people, communities, government, regulators, and organizations to opt in. Let’s not talk about the 50 ways that something might not be able to work – let’s focus on the way that it can. Let’s show we can do it and do it right.
We believe there is possibly more oil and gas in offshore Arctic Alaska than there is remaining to be found in the Gulf of Mexico. It would be our privilege to find and produce it safely, with no harm to the environment, and in a way that meets the needs of the communities in which we work.
Alaska really is an enviable place to be. And hopefully, for a long time to come.
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