Meeting the Needs
of 9 Billion People
Marvin Odum
Director, Upstream Americas
The Academy of Medicine, Engineering and Science of Texas Annual Meeting
Houston, Texas
12th January 2012
Marvin Odum: Meeting the Needs of 9 Billion People
Marvin E. Odum is President of Shell Oil Company and Director Upstream of Royal Dutch Shell’s
subsidiary companies in the Americas.
Odum holds positions of board leadership and participation in the Business Roundtable and the
American Petroleum Institute. In addition, he is a member of the Dean’s Council of the John F. Kennedy
School of Government at Harvard University and the Advisory Board of the Cockrell School of
Engineering at The University of Texas at Austin. He also serves on the University Cancer Foundation
Board of Visitors for MD Anderson Cancer Center and is involved with several other Houston-area
charities.
Odum earned a bachelor’s degree in mechanical engineering from The University of Texas at Austin
and a master’s degree in business administration from the University of Houston. He began his Shell
career as an engineer in 1982, and has since served in a number of management positions of
increasing responsibility in both technical and commercial aspects of energy.
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Marvin Odum: Meeting the Needs of 9 Billion People
Introduction
Thank you very much and good
afternoon.
It’s a very great honor to have this
chance to share some thoughts with you,
and a little humbling, too.
My credentials for being in a room with
The Academy of Medicine, Engineering
and Science lend themselves more to
listening to what you have to say than
presuming to offer my own modest
insights.
Nevertheless, I’d like to take a few
minutes to suggest a way of thinking
about my business – the business of
energy -- in a way that might surprise
you, in a way that connects to the vital
work you are doing in your respective
disciplines.
Quaker State and Pennzoil. That’s not
surprising if you consider that Shell
actually has more branded retail sites
than McDonalds has restaurants.
But that’s just the very tip of what we do.
If you look out your seat window before
your next airline flight takes off, you
might well see a Shell truck pumping jet
fuel into your airplane – just one of about
7,000 aircraft we refuel at over 800
airports across 40 countries each day –
one every 12 seconds.
Admittedly, you’ll be less likely to see
Shell fuel and lubricant flowing into one
of the ships we service in more than 600
ports worldwide. And, you can’t see the
22 million tons of Shell chemicals that go
into products you use every day, from
detergents to packaging, from carpets to
computers.
Along the way, I’ll offer some
perspectives on why the enormous
human, environmental and economic
challenges of the 21st century cry out for
leadership from individuals who are at
the top of their game in the fields you
represent.
But even all these things represent only
one end of the value chain we manage.
Let me warn you right up front that I’m
going to close with a pretty heavy
proposition: namely, that the health,
security and sustainability of the world
our kids will be sharing with 9 billion
neighbors by 2050 depends on people
like us, working together now, on smart
answers to some tough questions.
Worldwide we use 3,000 tanker trucks
and 62 ships and barges to get product
where people need it – power plants,
airports, harbors, Walmarts, Jiffy Lubes,
gas stations.
In the U.S. alone we move more than
two billion barrels of crude oil and
refined products annually by way of
16,400 miles of pipeline.
If you look at my company – Royal Dutch
Shell – through a conventional lens you
will see the second largest oil and gas
business in the world.
And before we move it, we refine it –
turning natural gas and crude oil into
stuff people can actually use… to move
things – like cars, planes and ships… to
make things – like paints, shampoos,
plastics components for medical
equipment… and to power things – like
computers, washing machines, TVs and
X-box consoles.
Most people know us best through the
products we sell to consumers –
gasoline, diesel and engine oils like
In the U.S. Shell has the capacity to
refine more than 1.3 million barrels of
product every day using cutting edge
Shell and the global energy system
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Marvin Odum: Meeting the Needs of 9 Billion People
chemical, thermal and physical
reactions, running at temperatures and
pressures that rival any other man-made
process on earth.
But refining still only represents the
halfway step in a journey that links the
sources of energy to its use. That journey
starts further upstream, in reservoirs of oil
and gas: under the ground, under water,
under ice, in sand, and in layers of
shale.
The upstream infrastructure of our
business is the biggest, least visible, and
probably most misunderstood part of
what we do.
For example, one of our newest
upstream production platforms in the Gulf
of Mexico is one we call Perdido –
roughly 200 miles southwest of
Galveston.
When you think of Perdido, think of a
55,000 ton cork - nearly as tall as the
Eiffel Tower and weighing as much as
10,000 large family cars - bobbing on
the surface of an 8000 foot deep body
of water. Think of that cork holding a
crew of professionals operating miles of
piping, thousands of valves, hundreds of
electronic safety sensors.
roads. And more than 6 million
businesses, small and large.
So imagine the number of Perdidos
required to keep our economy running
and to maintain our lifestyles, to secure
our future, to create jobs.
And just in case you thought that was
finally the end of the story, it’s not.
Because to keep all that energy flowing -to meet a demand for energy in 2050
that will be double what it is today -- we
need to keep finding more of it,
exploring in more and more difficult
places, using seismic technologies that
require the world’s biggest
supercomputers to process.
The picture I hope is forming is of a
massive, complicated, expensive, global
energy system that stretches from the
most remote corners of this planet to the
humblest kitchens, classrooms and shops.
One in which Shell, alone, invests close
to 30 billion dollars of capital every year
to grow and maintain.
By the way, for all that boastful-sounding
description of Shell’s size, the actual
fraction of the world’s oil and gas my
company produces amounts to a grand
total of less than 3 percent.
Think of that cork tethered to a network
of well heads and separators on the sea
floor, linked to 107 miles of gas and oil
pipelines, alongside species of marine
life that no human being had ever seen -before our remotely operated underwater
vehicles snapped their photos.
You have to multiply the scale of Shell by
33, through dozens of major public and
private energy companies, hundreds of
service and engineering companies and
thousands of logistics companies to
account for all the energy that the world
consumes every day.
Perdido has the capacity to pump
roughly 100,000 barrels of crude oil
every day. That sounds like a lot, and it
is. It’s enough to meet the energy needs
of about 2.2 million American
households.
To keep this massive system running
safely, responsibly and reliably is a
technical challenge that rivals space
travel for its sheer, breathtaking scale.
But there are 130 million homes in
America. And 250 million cars on our
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This audience is better equipped than
most to imagine just how technically
demanding it is to find, produce, make,
move and sell hydrocarbons – working
Marvin Odum: Meeting the Needs of 9 Billion People
at temperatures that range from 160
degrees below zero Celsius to liquefy
natural gas, to more than 800 degrees
Celsius to transform crude oil into useful
products … at pressures more than 200
times the weight of the air in this room.
Energy for Life
The theme of your conference this year –
“Energy for Life: From Human
Metabolism to Powering the Planet” –
got me thinking.
It occurred to me that the enormously
complicated energy system we’ve built
over the last 100 years or so… that we
use to run our cities, factories and
economies… is not even as sophisticated
as the energy system of a simple, single
human cell.
Nature has designed an energy plant a
tenth the diameter of a strand of hair that
takes proteins and amino acids and
oxygen and converts it through the Krebs
cycle with perfect efficiency into the
energy we use to work, think, play, and
stand up in front of an audience
speaking.
And nature has managed to produce –
and reproduce – a nearly infinite number
of these microscopic energy plants to fuel
life of every sort – from exotic lichens in
Antarctica, to beef cattle in south Texas,
to 500 year-old Sequoia trees in
California.
And it further occurred to me that if we’re
going to stand any chance of meeting
the energy needs we’ve created for
human societies – a need that will only
increase for future generations – we’ll
need to find ways of creating systems
that take at least a few, crude, manmade steps closer to the self-sustaining,
perfectly efficient, zero-waste ideal that
nature has managed to produce.
So how do we do that?
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Well, it starts by reducing the amount of
energy we throw away every day. That
means ever more efficient cars, trucks,
aircraft, factory robots, laptop computers
and light bulbs. Everything from kitchen
toasters to supertankers will need to
consume less energy per unit of work
than they do today.
It also means designing better ways of
organizing our lives.
By 2050, three out of every four people
on this Earth will live in cities. That’s up
from 50 percent today. That means the
equivalent of a new city of a million
people every week for the next 30
years. So we have people at Shell
working with the planners of some of the
biggest, densest urban areas of the
world to understand how to design cities
that more efficiently and productively
provide for human work, education,
mobility, education and culture.
But in case you’re thinking that I’m
shifting the burden to someone else –
that it’s all about more efficient cars and
lifestyles – let me hasten to point out that
companies like mine are rolling up their
sleeves as well.
At Shell, we take our responsibility to
help address the energy challenge
seriously. We’re actively addressing
future energy needs and helping
customers consume and emit less.
In addition to delivering breakthrough
fuels and lubricants, we’ve developed
driving tips for motorists to help them use
less fuel. We’ve actually trained more
than 200,000 people across the globe
on fuel efficiency.
We’ve developed a new type of
bitumen – a petroleum product – that
requires much less heat and energy to
pave a road than more traditional
asphalt.
Marvin Odum: Meeting the Needs of 9 Billion People
We’re constantly introducing better
lubricants to reduce waste heat and
friction in engines and heavy machinery.
Fuel efficiency also derives from
producing and moving it more efficiently,
too.
We’ve adopted, for example, operating
principles for how we produce natural
gas from tight sands and shale
formations.
These principles cover:
 Designing, constructing and operating
our wells and facilities safely and
responsibly;
 Protecting groundwater and reducing
our water use in the process;
 Protecting air quality and controlling
emissions – including greenhouse
gases that cause climate change;
 Reducing the physical footprint of our
operations;
 And engaging with communities on
the social impacts of our operations…
helping them take advantage of the
economic benefits these developments
can deliver.
Although we’ve designed these particular
principles for our onshore gas business,
they are similar to the way we operate
everywhere from the Gulf of Mexico, to
oil sands in Canada, to our Arctic
exploration in Alaska.
We’re also finding ways to be more
efficient in finding and producing oil and
gas – using new techniques that can
only be described in highly technical
terms, like “really cool.”
For example, researchers from Shell and
HP will work together on tiny “nano”
motion sensors – a thousand times more
sensitive than those in the Wii electronic
game – to create sharper pictures of
underground rock formations.
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At the other end of the scale is new
Floating Liquefied Natural Gas
technology that includes vessels six times
the size of the biggest aircraft carriers
that can reduce the volume of gas by a
factor of 600 and send it on its way to
markets anywhere in the world.
But I can guess the question that is still on
the tip of many of many of your tongues:
“Why only fossil fuels? Great that you’re
working to minimize the impact of
fracking and oil sands and offshore
drilling, but what about alternatives?
Hydrogen? Biofuels? Wind? Solar?”
Well, the answer is that those
alternatives are tremendously exciting.
The answer is that they will be – that they
must be – a significant part of our energy
system.
And the answer is that we’re actively
working on them.
For example, last year we formed a $12
billion joint venture in Brazil producing 2
billion liters of biofuels every year. The
sugar-cane based ethanol we’re
producing there is the most sustainable,
least carbon-intensive biofuel available
anywhere at such a scale.
What’s more, our JV could be a platform
for commercializing far more technically
advanced – so-called next generation –
biofuels that we’re working on with
partners in the U.S. and Canada.
You’ve already heard from Dick Williams
this morning about the potential we see
in wind.
We’re exploring how best we might
someday bring hydrogen fuel to our
retail markets when the auto industry is
ready for it.
Solar, nuclear, geothermal and tidal
power will all be part of the world’s
future energy portfolio, too. We’ll need
Marvin Odum: Meeting the Needs of 9 Billion People
them all. And Shell could make a
contribution to more of them than you
might expect.
But replacing any meaningful fraction of
today’s fossil fuel system with alternatives
will require major technological
breakthroughs, investments, infrastructure
changes, public education and intelligent
policy frameworks.
Most current projections show that
roughly 30 percent of our energy will
come from alternatives to oil and gas by
the middle of this century.
Frankly, I think that figure ought to be
much higher. But just as frankly, I don’t
yet see how we get there.
So we continue to work on all fronts,
making sure that we don’t sacrifice the
best solutions available today to the
ideal solutions we imagine for tomorrow.
We continue to work on getting a few
steps closer to that ideal energy system
nature designed into the human cell.
And we continue to expand our thinking
about the role that energy – and energy
companies – play in the bigger scheme
of things.
Because just as that human cell is a
system within much larger systems that
add up to our ability to think, and feel,
and work and metabolize; so is our
industry a system within a much larger
integrated system that adds up to the
ability of the planet and its resources to
support our communities and economies.
The water/food/energy nexus
We need to take an especially close
look at the nexus between water, food
and energy. There is a powerful
interplay between the three.
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Increasingly it takes energy to produce
dwindling supplies of fresh water. It
takes water – and lots of it – to produce
certain kinds of energy. And it takes
both water and energy to produce food
in the increasing quantities needed to
support a growing population.
We could let the need for those three
resources compete with each other or we
could work with governments, partners
from other industry sectors, and
customers to innovate smarter ways to
optimize the supply and use of water,
food and energy.
That’s why at Shell we’re actively
developing innovative new technologies
for reducing the water we use in our
drilling and production operations. It’s
why we’re developing biofuels only in
places where they don’t compete with
food and water supplies, and learning
ways to produce tomorrow’s biofuels
from agricultural waste.
And it’s why we’re so focused on ways
to tackle CO2 emissions that drive
climate changes that could radically
affect future availability of water
supplies, agricultural patterns, and
demand for energy.
Conclusion
Which finally brings me to the
proposition I threatened you with at the
beginning of this talk… and that is that it
will take the integrated leadership of
people like you and me -- in professions
as diverse as medicine, engineering,
science and business -- working together
across sectors and disciplines, to tackle
the enormous challenges and
opportunities confronting us in this stillnew century.
And there’s enough of Texas in my DNA
to further suggest that there are few more
logical homes for that kind work and
thinking than right here, supported by
Marvin Odum: Meeting the Needs of 9 Billion People
organizations like this Academy. That’s
not just a Texas swagger. That’s
recognition of this state’s responsibility in
the world as a big place, with big
ideas, big resources, big appetites and
a big heart.
powering the planet – they ought to find
some of the best answers right here.
We are, in my view, the energy capital
of the world, and when the world looks
for ways to tackle the challenges of
energy – from human metabolism to
###
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Ladies and gentlemen, thanks for all that
you do and thanks for your attention this
afternoon.
Marvin Odum: Meeting the Needs of 9 Billion People
RECENT SPEECHES BY SHELL’S SENIOR LEADERSHIP

9 billion reasons to address the world’s energy challenge now, Peter Voser

Changing direction towards a new energy future, Jorma Ollila

Canada: a proving ground for responsible oil & gas development, Marvin Odum

New upstream risks and opportunities: the natural gas revolution, Malcolm Brinded

An effective regulatory environment starts with collaboration, Marvin Odum

An era of volatility and opportunity: the outlook for CFOs in the energy industry,
Simon Henry

The energy challenge and the need for new talent, Hugh Mitchell

Shell won’t exit refining, Peter Voser

Shell chief warns of era of energy volatility, Peter Voser

The natural gas revolution: transforming Asia’s energy landscape, Malcolm Brinded

Meeting our future energy needs, Peter Voser

Clear roles, clear responsibilities, clear results, Marvin Odum

The future of energy and mobility, Peter Voser
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