Russ: This is a BusinessMakers WebXtra, a continuation of the radio broadcast of our interview with John Hofmeiser, former President of Shell Oil Company and now Founder and CEO of Citizens for Affordable Energy. Well, John, as we were transitioning out of radio, over here to the WebXtra, you had just given a great recipe for success that included development of all sources of energy. I'm particularly interested in – you also included coal there and I know those that are most concerned about our environment probably are most dismissive of that fuel because it is considered quite dirty. Share with us your perspective of utilizing coal, 'cause we've certainly got a lot of it.

John: Coal is a natural resource on this earth that has been a blessing for the 19th and 20th centuries. We've learned a lot about coal. We've learned what it does well and what it doesn't do well. What it does well is it produces a lot of heat when it's burned, which can be turned into electricity. What it doesn't do well is it pollutes the atmosphere in two ways – the excavation of the earth for coal is very polluting and the burning of coal is very polluting. I think what we've also learned is that we can put technology wrap-arounds on the use of coal, both from an excavation standpoint and from a burning of coal. In other words, I believe there's a future for coal if we have a sustainable excavation and mining process and I think mountaintop clearing is not a sustainable formula. You get rid of the whole mountain. I think we have to do better than that and I've been on coal sites in Australia and other places where they've reclaimed the land after the coal was mined, surface wise. It is reclaimable and I think there should be very tough standards on how coal is mined so that we have a sustainable form of mining coal.

Secondly, the technology for using coal should change from burning it to gasifying it. If you gasify coal, you have contained he molecules in a gasifier and you only release the molecules of that coal that you choose to release, which enables you to capture the nasty stuff. It enables you to capture the CO2, the sulfur, the mercury. You can then manage that instead of releasing it into the atmosphere. I believe you can bury it in various geologies around the nation, across the earth in which it is permanently taken out of circulation by putting it into geological structures. It's called clean coal with carbon capture and sequestration.

There are those who say clean coal is an oxymoron. I would say they don't know what they're talking about. They would probably say I don't know what I'm talking about.

Russ: Kay.

John: If you get into an ideological discussion, you'll never solve the problem. If you get into a technological discussion, then you can solve the problem. Clean coal with carbon capture and sequestration is, to me, a sustainable use of coal.

Russ: Kay. Let's move on to another interesting topic, now. There is certainly a major proposed legislation going through the United States Congress right now that focuses on an attempt at a solution for the carbon emission problem that many think we have and it's called cap and trade legislation. What's your perspective on that?

John: There's no question in my mind but what we have an environmental issue called gaseous waste, gaseous waste from manmade circumstances and the use of hydrocarbons or other different forms of energy. We're putting too much gaseous waste into the atmosphere. We need a system by which we can reduce that waste over time. Now, this problem didn't come up suddenly and it's not gonna be fixed suddenly. It's got to be a long-term plan. I happen to favor a cap and trade method of managing gaseous waste reduction. Why? Because I believe cap and trade is a system that creates value by offering an incentive to those who reduce their gaseous waste emissions. Yes, there's a cost associated with it, especially for those who don't want to change; who don't want to reduce their gaseous waste emissions and frankly, shouldn't they pay a higher cost because they're contributing to gaseous waste pollution in the earth?

I haven't mentioned climate change. I'm not gonna mention climate change because that's not the issue. The issue is manmade waste, whether it's physical or liquid or gaseous going into this earth, has to be managed and so I think cap and trade is an effective solution to incentivize a whole new industry. What's that industry called? It's called gaseous waste management. It needs construction. It needs infrastructure. It needs whole new introductions of technologies that work to change the amount of gaseous waste we put in the atmosphere. It's not impossible and I think the incentive is, let's go make money off of it. And isn't America pretty good at makin' money off of challenges?

That's what this offers. So the naysayers and the people who say, "Well, they just put a carbon tax out there." Carbon tax is like putting a sack of rocks on your back and running around with it all the time. It's no incentive to change. It's just a tax. Tax never gets anybody to do anything except just pay it.

Russ: Right.

John: But cap and trade is an incentive that people can make money off of doing what's good for society. I think that's how we should proceed. Now, the bills I've seen thus far don't get ya there.

Russ: Kay.

John: So whether you call it Waxman-Markey or Kerry-Boxer, I don't think they get us there. The runway is too short. They're not looking at this over, say, the next 20, 30, 50 years. They're looking at how can they punish certain industries. If you wanna go out and punish industries, then just tax 'em, and they'll go out of business and we'll lose jobs, but if you wanna do it as an incentive, you need a longer runway, a glide path for a plane to take off that doesn't go straight up in the air but it lumbers its way up into the air. We've been 100 years creating this problem. I think we take the next 50 years to fix it and we'll like the consequences. If we try to fix it in 20 years, forget it. We're become uneconomical, the US loses jobs to the rest of the world, which is not gonna take the position we're taking. They're gonna pollute because they believe that economic development is their right. I don't dispute their right to economic development, but what I do dispute is that we should not disadvantage American companies; that we have to approach this problem globally; and by rushing it in the US, we only hurt ourselves; and I think that's wrong the way the bills are structured today.

Russ: Sounds very logical. Okay, well let's move on to another interesting topic. I think that the oil and gas companies, the fossil fuel companies, have gotten such a bad reputation in the world that a lotta people don't really understand some of the incredibly cool technologies that these companies are utilizing and developing today and I would like to hear your perspective on that.

John: Well I think if you look at some of the technologies that are used on the excavation side, the fact that we can be drilling for oil under 10, 000 feet of water and then another five miles under the surface of the earth and we can move those drills horizontally; we can move 'em in a fishhook-like fashion; there's all kinds of technology under the earth to reliably and sustainably and affordably produce all kinds of reserves that are still out there to be discovered is amazing. I think if you look at the other end of the spectrum, the manner in which we can put various kinds of additives into gasoline or diesel to make it cleaner, more efficient in the use of that product, such as the sulfur reductions in diesel; such as the hotter-burning gasolines, which emit a much less gaseous waste than previously. We've gotten rid of lead for all practical purposes. Not in every country in the world, but certainly in this country. So there's a whole future of clean fuels; a whole future of nanotechnology in the manner in which we mine and develop those natural resources under the earth. The technology that has led to releasing natural gas from tight gas formations has, you know, incredibly increased our reserve potential for natural gas in this country. So there are fantastic technologies and every year, there are new and better technologies to be able to use these fuels more efficiently, more affordably, and more cleanly.

Russ: You know, your first comment about going down so deep in the earth and tapping into these reserves – there always seems to be a debate about how much reserve, how much fossil fuel remains below the surface in the earth – and it continues to seem like we find more and more. What's your perspective on that.

John: Well, I'm not a peak oil theorist in the sense that we have or are at near peaking. I do think there will be peak oil but it will be because we choose other sources of energy, rather than lack of supply of crude oil. Now when I define crude oil, I'm not just talking conventional oil and gas, I'm also talking unconventional oil and gas, which includes tight gas and includes oil shale, oil sands and heavy oil, as it's called, let's say in Venezuela. You know, in the North American continent alone, there's probably some 3 trillion barrels of unconventional oil. That's many times the amount of conventional oil in the Middle East. We'll never need all that unconventional oil because we'll move on to other technologies. But I think for the next 50, 70, 100, 150 years, there's plenty of crude oil, conventional and unconventional, to be developed. I think young people today who are thinking about careers in oil and gas will have lifelong careers in oil and gas as will their grandchildren, have lifelong careers in oil and gas and so it's a question of what do we want technology to do for us. I don't think it's a natural resource issue. It'll be more difficult; it'll be somewhat more expensive but if we really do the unconventional oil in environmentally sustainable ways, I think we will have as much hydrocarbon energy as we will need until such time as we don't need any of it because we've moved on to different technologies.

Russ: John, I really appreciate you, you sharing some of your time with us.

John: Thank you. My pleasure.

Russ: You bet and I encourage you to definitely keep doing what you do.

John: Thank you. I will.

Russ: You bet. That's John Hofmeister, former President of Shell Oil Company and Founder and CEO of Citizens for Affordable Energy. And that wraps up this morning's WebXtra. You're listening to the BusinessMakers Show, heard here and online at the BusinessMakers.com.