Shell Oil President says pace of federal permitting is improving

Shell Oil president Marvin Odum said Wednesday that he believes the pace of federal permitting for deepwater oil and gas drilling in the U.S. "may have turned a corner" by the end of 2011, in the nearly two years since a temporary moratorium was put in place in the wake of the BP oil spill. Odum, speaking at the annual meeting of the Louisiana Mid-Continent Oil and Gas Association in New Orleans, said Shell now has five floating drilling rigs working in the Gulf of Mexico and will soon add two more.

"We're working hard to make up for what we lost," he said. "Shell has always had confidence that we'll get back to where we need to be."

A day after President Barack Obama outlined his domestic energy policy in his third State of the Union address -- a speech in which he cited projections that developing natural gas could support more than 600,000 jobs by the end of the decade and touted jobs created by federal investments in renewable energy -- Odum offered a similarly optimistic outlook for the natural gas industry in Louisiana.

"For the state, we see even more opportunity in technology that turns natural gas into liquid products, like diesel fuel and lubricants," Odum said, adding that developing such technology would create jobs and give the state an economic boost, but also "fulfill a critical need for domestic, secure supply of transportation fuels for the U.S."

Odum said Shell has drilled about 350 vertical and horizontal wells in the Haynesville Shale natural gas field the field since 2008, and has reduced its drilling costs by 50 percent and completion costs by 45 percent, which he described as "real tangible costs."

Last year Shell announced plans to build a 72-office building complex to service its workforce in the area, where it had a working interest in several hundred thousand acres.

The state Department of Natural Resources announced last week that 39 rigs were drilling off Louisiana's coast, the most since May 2010. That is almost twice the number of rigs that were operating in the area at the start of 2011, but less than the average rig count of about 42 that were working there in the three months prior to the Deepwater Horizon disaster.