John D. Hofmeister, President of Shell Oil Company, spoke at Texas A&M today at the invitation of the Dwight Look College of Engineering. I had the option of going to this or my Engineering Ethics lab, and since I find energy sources interesting both politically and technically, it was an easy decision.

I wasn’t sure what to expect beforehand (and had actually forgotten all about it until I saw it on my Palm Treo’s calendar today). Oil companies definitely have a negative stereotype these days, and I’ve heard from friends who’ve interned at them that their workplace culture isn’t as conservation-friendly as their PR department likes to pretend. Still, I understand they’re a company whose responsibility is return on investment and overall company value. The fact that they are profitable should hardly be cause for shame. It is clearly in their best interest to continue to invest in their current business, primarily oil collection and refinement, while exploring other sources of energy to maintain long-term viability. The”obscene profits” of these companies gives them a unique opportunity to fund such research, which at least Shell appears to take seriously.

Hofmeister, who happens to make more in a year than I probably will in the next twenty, was very articulate and did a great job of addressing the issues that the oil industry faces. He spoke for about forty minutes and took questions for another twenty, which he handled very well. So I was impressed with his delivery and organization. But what did he have to say?

He began by explaining how Shell defines “energy security.” According to Hofmeister, Shell’s strategy is to be a leading energy provider “forever.” Naturally, such a strategy must look beyond finite resources such as oil and natural gas, and as such Shell has economic motivation for exploring and investing in renewable sources of energy. The rest of his speech detailed the ways in which Shell is working to both effectively meet current energy demands while seeking to expand their capacity in new and improved ways.

His first main topic was conventional oil. He quoted a recent study that says America has roughly 110 billion barrels of oil in its coasts and federal land. According to the National Resources Defense Council, America currently consumes about 20 million barrels of oil a day. So while 110 billion barrels of oil won’t meet our growing demands forever, drilling in these fields would allow us to largely remove ourselves from the highly competitive world oil market which has driven oil prices to levels roughly 9 times that of a decade ago. The problem, of course, is that current laws prevent access to much of this oil, thus maintaining our foreign dependence and encouraging rising prices.

He then discussed nonconventional oil resources, including oil located in shale and sand in Colorado and Alberta, Canada. The oil there is in the trillions of barrels, but is much more difficult to access (particularly in Colorado). Still, it’s an area that companies like Shell are investigating for obvious reasons. He mentioned natural gas as having significant growth potential, though it too faces political opposition. Gasification of coal is another source of significant amounts of energy, and can be accomplished very cleanly with minimal environmental impact. He also addressed current renewable sources of energy such as wind and solar. Both are unlikely to become major energy producers due to dependence on variable conditions and low output per surface area used. Still, wind makes sense in certain areas and solar technology is becoming more efficient, so it’s another area that any energy provider should be involved in. Shell owns several wind farms and is considering constructing the largest in the world in Texas.

Finally, he talked about Shell’s involvement in developing sources of energy such as biofuels and hydrogen. The problem with current trends in ethanol production is that they come from foods (like corn, an especially inefficient source) and thus competes with the food industry, raising their prices. Other options include sorghum, non-food parts of plants such as corn stalks, and other organic wastes. The primary obstacles preventing hydrogen’s widespread acceptance are distribution infrastructure and large-scale production since a lot of energy is required to produce hydrogen fuel cells. Still, General Motors is running a pilot test of an all-hydrogen powered vehicle in limited regions, and Shell is involved in providing hydrogen fuel stations in those areas.

Clearly, Hofmeister’s chief objective with this talk was to combat the negative reputation that “big oil” has amid the furor over global warming and accusations of price gouging. He addressed their supposedly obscene profits and pointed out that their profits have been relatively average in terms of percent of overall revenue, and that they used a lot of that profit to reinvest in exploration and research. He also highlighted the importance of educating future generations on the subject of energy, since it is what drives our economy and lifestyle.

In all, I found Hofmeister’s talk very interesting. Sure, he’s biased and probably exaggerated a bit in describing the supererogatory aspects of their efforts. But there’s no question that it’s in their interest to invest in renewable and efficient sources of energy since energy is their business. It’s also clear that widespread ignorance (especially in Washington) about energy are largely to blame for high gas prices today and America’s troubling dependence on foreign nations for our energy. The bottom line is that America has massive energy needs. To realistically meet those needs in the short-term, we must pressure our lawmakers to allow more domestic oil drilling. In the long term, environmentally-friendly alternatives such as cost-effective ethanol, hydrogen, gasified coal, etc. should be explored so that we can steadily transition to cleaner, more efficient uses of energy, both renewable and not, that will enable the continued growth and development of our world.