http://www.newsobserver.com/104/story/501206.html 

John Hofmeister, president of Shell Oil Co. in Houston, is on a two-year, 50-city tour promoting the benefits of offshore drilling and other forms of oil exploration that now are banned in this country.

Shell officials believe that volatile energy prices make the time ideal to persuade the public of the need for more domestic sources of oil.

Hofmeister's message: Big oil companies don't set crude oil prices, they don't set prices at the gas pump, and they don't control world energy markets.

Hofmeister began his promotional tour in June and visited Raleigh on Friday. He spoke with staff writer John Murawski.

Q: What does Big Oil want?

A: We believe there is such a prolific abundance of resources in the United States that it's going to be more economical over time to develop America's natural resources rather than relying on expensive imports. What's happened in the period of time from the '70s until now is we've had restrictions on access to resources in this country. There was a time when we were exploring oil reserves off the California coast. We are prohibited from doing that. We've been prohibited from exploring on the East Coast and in the Eastern Gulf of Mexico. If the government changes the policy, we believe the oil companies can safely and environmentally extract oil that's right near our markets without having to bring in as much oil from overseas.

Q: Short of offshore drilling, what other kinds of oil production would your company like to be doing in the United States?

A: If you get into oil shale, we estimate there's more than a trillion barrels of oil, which is five times Saudi Arabia's conventional oil and gas reserves. Oil shale has not yet matured to the point of being liquid. It is still locked in as hard carbon deposits in shale rock. If nature took its course, in the next couple hundred million years, it would become liquid. There's two ways of getting it out. Our preference is to heat the rock "in situ," in place. We drill a hole, put a heater down into the hole, drill a number of holes around it, and we heat the rock with another form of energy, which currently is electricity, at 700 degrees. It accelerates the natural maturation process of the oil in the rock to the point that, after about a three-year period, it begins to drip. And it releases gas molecules as well, so we can pump natural gas and newly refined oil out of the ground. We've proven the technology. What we're now trying to prove is the environmental safekeeping of that heating process.

Q: Are global oil reserves being depleted?

A: The theory of peak oil is that we will not be able to increase the supply on [a] daily production basis because we've used up too much and there's no more to be had. Shell does not subscribe to that theory of peak oil. We are deliberately limiting ourselves to available easy oil. That's a public policy choice.

Q: How much domestic oil do you estimate remains untapped?

A: On the East Coast, along the coasts of Florida, the eastern Gulf of Mexico, the whole coast of Alaska and the whole western region of the country, we believe, well, API [American Petroleum Institute] will tell you 112 billion available barrels of known oil and gas reserves that we're unable to tap. That's 30-40 years of today's demand. Over a trillion barrels of probable reserves in Colorado, Utah and Wyoming. The public policy issues are the No. 1 barrier that the oil industry has yet to crack to find more oil.

Q: What's been driving oil prices upward?

A: The main cause for the oil price getting into the $70s was incessant global demand. That hasn't stopped, but there has also been a geopolitical tension factor that somehow affects the trading price. People worry about the continuity of oil supply. In addition to that, like any commodity, you've got traders who are trading based upon their own efforts to either buy, hold or sell. What we've seen in recent weeks, we've seen what's considered an easing of geopolitical tensions, we've seen a lot of people who were holding oil now selling their oil, and that's the price from $70-something down to the high $50s.

Q: What's the future of oil prices?

A: It'll head up and down. It always had. It's a commodity. Only 10 years ago, it was $10 a barrel. Our job is to get as much supply as demand requires.