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Aleklett: Jorma Ollila, Chairman of the Royal Dutch Shell
Kjell Aleklett, Aleklett’s Energy Mix
Jorma Ollila has a very successful career as CEO (1992-2006) and Chairman of the Board of Directors for Nokia in Finland. This success made the Royal Dutch Shell in 2006 to appoint Jorma Ollila as the first Chairman outside the industry and outside UK and the Netherlands. As Chairman of Shell he has to tackle questions that are of fundamental important for the climate and production of food for the global population. Now three years into his position as Chairman of the Royal Dutch Shell he has accepted to make a detailed interview in English by Mr. Juhana Rossi, staff writer for Helsingin Sanomat. The interview took place in The Hague on March 4th, 2009 and is now available for anyone to read. (Read the interview with Jorma Ollila.)
His answers are very interesting and the tone is different then you should expect and it will be interesting to follow the future of Shell. I would appreciate to have a discussion in English about this interview on my blog Aleklett’s Energy Mix.
(8 March 2009)
Dr. Kjell Aleklett is president of ASPO International president and an EB contributor. An excerpt of the interview mentioned by Kjell is below.
Interview with Jorma Ollila, Chairman of the Royal Dutch Shell
Juhana Rossi, Helsingin Sanomat
This an abridged, edited and verified transcript of an interview of Mr. Jorma Ollila, the Chairman of the Board of Royal Dutch Shell, plc…
Question: There was a man called M. King Hubbard employed by Shell. How do you view his intellectual and scientific legacy, i.e. the peak oil theory which proved to be broadly true for the continental United States.
Answer: I think the peak oil theory has a certain explanatory power for individual oil fields. But if you take a global view with all technological opportunities and oil reserves which have not been discovered, the theory’s explanatory power is more limited. I don’t think we have seen the peak point in oil production globally. There is more oil to be discovered through exploration and more oil to be produced due to new technologies.
Q: The International Energy Agency predicted in its most recent World Energy Outlook that the demand for oil in 2030 will be 106 million barrels per day (bpd). Two years ago the United States Energy Information administration predicted that the demand for oil in 2030 will be 118 million bpd. At same the time many analysts predict that the production of crude oil will peak within the next couple of decades around 95 million bpd. This view has been publicly expressed by Mr. Christophe de Margerie, the CEO of the French major oil company Total. What’s your take on this theme? How much oil the world will need in 2030? How much oil it will be able to produce?
A: I have read the speech in which Mr. Margerie expressed his view, but I don’t know its foundation. All I can say is that if we look at the forecasts for both demand and supply, I think most forecasts have not tended to be particularly accurate. What we are clearly seeing now is a situation where technology does influence the supply of oil and the capability to produce it. Advances in technology are continuing. So we haven’t seen the end of potential opportunities.
If we look at the demand side, surprises tend to be more a norm than an exception. What we are seeing now are not only the advances in renewables and the impact they will have, but also the impact of public policy. The subsidies for alternative sources of energy, particularly for biofuels and also other opportunities such as the electric car, will be very defining on what the demand for the alternatives for the hydrocarbons will be. There are also factors relating to public policy in automobile industry. What sort of CAFE requirements will be established in the United States? I think the Congress is debating that.
Then there is the recession, the length and depth of it. It’s not certain when we will return to economic growth and rising demand for oil again. We’re in a little bit of fog right now. So I think there is every reason to be very, very cautious.
There is a quite strong likelihood that not only the number 106 is on the high side for the demand as well as the supply number 95 is on the low side. But what we have also seen is that the market tends to clear any imbalance, i.e. there is a price mechanism which brings signals to the supply and to the demand side, and they will meet. This is what has happened with other natural resources, and oil is no exception.
(7 March 2009)
Long interview.
AAPG President Scott Tinker and Peak Oil
Kjell Aleklett, Aleklett’s Energy Mix
At the end of last week, I got an email from Harry Lynch, who is a documentary film-maker from Austin, Texas. One of the main people in the film that he is currently working on is Dr Scott Tinker, the president of the American Association of Petroleum Geologists (AAPG) and director of the Bureau of Economic Geology.
It turned out that we would all be in Aberdeen at the same time and that Scott Tinker and his hosts would be coming to listen to my presentation. Later that evening they wanted to film a round dinner table discussion on the world’s future energy supply and I was invited to participate in the discussion.
As preparation I did an internet search for Scott Tinker’s views on Peak Oil. It took a bit of work but eventually I found a debate article in the Dallas Morning News from 25 June 2005. The following quote summarises his opinion:
“All of this might be entertaining were it another Hollywood film, but it has become almost a subculture (and cottage industry). For those who wonder whether the global production of oil will peak and begin to decline someday, the answer is yes.”
In May 2005 Colin Campbell predicted that Peak Oil would cause a future economic crisis. We who study global oil production in detail now see as a result of our analyses that it is highly probable that we are currently on a plateau of maximal production, Peak Oil. If we examine production month by month we see that highest production occurred in July 2008 at 87 mb/d. The high oil price was one of the reasons that the finance market crashed when people could not cope with all their expenses.
We know that Colin Campbell’s thoughts were not the manuscript for a new Hollywood film but, rather, for our current reality.
When I arrived in Aberdeen I found out that Scott Tinker was to deliver a presentation on global energy supply and my hosts quickly took me to his presentation. Since I intend to concentrate on Peak Oil and future oil production I will only comment on this part of his speech. (In a letter to President Obama there is a summary of his views.)
Future oil production was described as “demand driven” and production would be flat at below 90 mb/d until 2030. If we choose 87 mb/d this means 32 billion barrels per year and, from this year until and including 2030 (22 years), gives a sum of 700 billion barrels of oil. The question is what reserves we have in 2030 and how much we will find in the next 20 years. I did not see any details but according to our calculations this production is not possible. Despite that it is interesting to note that he does not support the IEA and its prediction of 106 mb/d in 2030.
It was very enjoyable to have Scott Tinker in the audience when I presented and I will return to that lecture later.
The evening concluded with a discussion over dinner and everything was filmed. It remains to be seen how much will be shown when the editing is done. I suggested, among other things, that we should jointly develop a presentation and where we had different views that we should analyse why. Scott Tinker thought that it was a good idea and finished the evening by inviting me to become a member of the AAPG, which I naturally accepted.
When I spoke with Colin Campbell today he told me that he had just received a letter from Scott Tinker due to the fact that Colin has been a member of the AAPG for 50 years. It is completely impossible that I will be a member for that long. Tomorrow I will celebrate my birthday with my family and, if I remain in good health, my years of membership can maybe make it to double digits.
(7 March 2009)
Chevron seeks new Mid-East reserves
Ed Crooks, Financial times
Chevron, the second-biggest US oil company, will in the next few months begin large-scale testing of a production technique that could unlock tens of billions of barrels of reserves across the Middle East.
The technique, for producing heavy oil that cannot be extracted using conventional methods, will be used in the partitioned neutral zone between Saudi Arabia and Kuwait.
Chevron’s plans follow its success in extending its licence from the Saudi government to operate in the neutral zone for a further 30 years.
(8 March 2009)
