Former Shell Oil CEO's Moratorium Warning

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This is a rush transcript from "Hannity," June 25, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: There is breaking news out of the Gulf Coast where they may need to brace itself for another catastrophe. Now the latest satellite images show that a storm is brewing in the Caribbean. In fact, the National Hurricane Center is calling it the first tropical depression of the 2010 hurricane season.

Now the storm is currently moving west-northwest and it continues to strengthen. Now it could head into the Gulf of Mexico where it would certainly complicate the oil spill response.

Now Admiral Thad Allen confirmed earlier today that a storm would disrupt oil containment efforts and it would take days to mobilize evacuations.

Now there is also developing news tonight in the battle over the oil drilling ban. The Obama administration is now delivering on its promise to reinstate the moratorium and we are learning tonight that it is just asked an appeals court to delay a judge's ruling that lifted the original deepwater drilling ban.

Now Governor Bobby Jindal is wasting no time taking on team Obama's attempt to put the moratorium back in place.


GOVERNOR BOBBY JINDAL, R-LA.: It's not right that thousands of Louisianans are going to lose their jobs because the federal government has failed to do its job.

I think there's a fundamental misunderstanding among some in Washington about how this industry works. These rigs aren't going to just turn on and turn off a switch. They're not going to simply just sit there for six months or longer and then be able to resume production.

Here's the problem: Once those rigs go we're going to lose activity for years in the Gulf. We don't want an unemployment check, we don't want a BP check. We want to go back to work. Get out of our way.


HANNITY: All right, but that's not the only battle for the state of Louisiana. There are residents continue to fight the federal government just to clean up their state. Now Plaquemines Parish president Billy Nungesser who is heading up efforts to install sand berms to protect the Louisiana coastline is fuming about the administration's latest intervention.


BILLY NUNGESSER, PLAQUEMINES PARISH PRESIDENT: Damn it, it took us long enough to get the permit. Now they are going to continue to throw rocks at us until they destroy this coastline.

They all ought to rot in hell for this. We got idiots up there making decisions because of what they think, and some brilliant individual said, well, you know, we think a mile out might not be enough. It may scar the island. The island may start to subside or whatever. So let's go and make it two miles, but that sounds like a good. Let's shut them down until they do it.


HANNITY: And joining me now with analysis the former CEO of Shell Oil, also the author of the book, "Why We Hate Oil Companies," John Hofmeister.

John, good to see you. Thank you.


HANNITY: You - I got to give you a lot of credit. You have been a real, real voice of reason throughout this entire, what, eight-week, you know, crisis that still is not being solved here.

Here's where I'm frustrated and I want your thoughts on this. Building barriers and berms and using booms and skimmers. You know all of this was offered, assistance, 13 countries. We haven't done it. I do not understand why. I don't get it.

HOFMEISTER: There's a political battle going on here, Sean. This isn't being discussed by anybody. This is an East Coast anti-drilling mindset and a West Coast anti-drilling mindset against the drilling mindset of the Gulf Coast.

The Gulf Coast has not supported this administration in elections, so why should they care? Why should they care about how many Texans, Louisianans, Mississippians are affected or laid off? And so what we have is sort of a neglectful approach which appears to be doing thing but in effect is not doing what needs to be done.

HANNITY: But even if they didn't really care or they thought that this wasn't their electoral base and they're beholden to the environmental movement, which they are, you would think for pure political reasons that when people see their pristine beaches being destroyed and fishermen on TV saying that their livelihood is gone, perhaps now for a generation, that that would motivate them to action.

HOFMEISTER: You would think so. But then that would require a decision such as appointing somebody in charge of the entire Gulf region, not just the Coast Guard commander, because he's doing a pretty decent job. But somebody in charge of all the federal agencies to cut through all of the bureaucratic nonsense that the governor was talking about just now.

HANNITY: All right. All right. We're eight weeks in. You tell me. Are we doing what we should be doing at this point in time? Because it doesn't look like it to me.

HOFMEISTER: On the surface of the ocean I think we are doing a miserable job. You got 30,000 people with shovels waiting on the beach. Why don't we take the oil off the ocean before it gets to the beach? Scale this thing up with suction pumps and barges and tankers and get that oil off the ocean?

HANNITY: Look, you're the former head - CEO of Shell. I mean, I figured that out, you know, in week one. You would think that, you know, somebody would have figured it out. Poor Bobby Jindal is pulling his hair out trying to get the attention of the administration and the help. It seems like basic simple leadership skills they're missing here.

HOFMEISTER: There is little operating experience at the federal level. They know how to regulate. They know how to write rules, they know how to check boxes, they know how to enforce rules. But when it comes to practical common sense judgments in terms of operating, there is nobody there that's been in a business.

There's nobody who knows how to run logistics. Nobody knows how the supply chain works. Nobody knows how to manage people so that they're motivated and encouraged to do the right thing.

HANNITY: I contend - and you have more experience as CEO of Shell. I contend that the environmental movement controls and the Democratic Party is beholden to and they adhere to whatever the environmentalists are saying, am I right?

HOFMEISTER: There are some special interests out there that have a very strong grip on the ideological positions of what the administration should be doing. And when you put ideology in the midst of a crisis like this, you get what we see, which is wrong. We should not have ideologists running or making decisions on this.

HANNITY: All right. Was the president of the United States telling the American people the truth, that we didn't have enough oil reserves in shallower waters or inland? Because I contend that that was not true.

HOFMEISTER: There is a misquote being used by the president and the administration through the campaign and to today. When they say the U.S. only has two percent of the world's oil reserves and uses 20 percent, we can't dill our way to energy independence, that is a myth. Because proven reserves is a narrow technical definition by SCC that doesn't include probable reserves.


HOFMEISTER: We have more oil in this country than the Middle East if we count all of the -

HANNITY: Stop, stop, stop. We have more oil in this country than the Middle East? So what the president said to the American people is the reason we were drilling 5,000 feet out in the ocean, the most difficult drilling, he wasn't telling us the truth?

HOFMEISTER: We are not allowed to drill in the western Colorado -

HANNITY: He says there is no oil there?

HOFMEISTER: Well, there's oil shale. It's called the Piceance Basin.


HOFMEISTER: There are the trillion barrels of oil in the Piceance Basin.

HANNITY: This is Colorado, Utah, Wyoming.

HOFMEISTER: That's right.


HOFMEISTER: On the Alaska offshore, on the West Coast, on the eastern Gulf of Mexico, the East Coast, 100 billion barrels of conventional oil.

HANNITY: So we could dill at ANWR, all right? We have proven reserves there which was originally designated for drilling and set aside for drilling. We could drill off the coast of California. We could drill off the eastern seaboard.

HOFMEISTER: And don't forget the Bakken in North Dakota which may have as many as 500 billion barrels. A trillion barrels in Colorado. We have more energy than we will ever use in this country.

HANNITY: Why does the president tell us we are running out of energy?

HOFMEISTER: Because it's his constituents, his base.

HANNITY: The environmentalists.

HOFMEISTER: His base including the environmentalists -

HANNITY: OK. How many times did environmentalists sue you at Shell?

HOFMEISTER: Well, it was an ongoing -

HANNITY: Battle.

HOFMEISTER: - process. I mean I can't count the times.

HANNITY: All right. You mentioned in a piece that you've written, the Daily Caller, was it?

HOFMEISTER: The Daily Beast.

HANNITY: The Daily Beast, OK. About this now is becoming the moratorium, because we're going to lose a lot of jobs here and we're going to increase our dependence on foreign oil. You're comparing it to Katrina. Explain.

HOFMEISTER: I think that once the cleanup is done and we will clean it up. I mean it's hard now but we will clean it up when the well is shut.

I think the moratorium - the moratorium that the president has imposed and they now are appealing the judge's decision, the moratorium will be Obama's Katrina. Why? Because I don't think administration understands how you have to continue to drill for future domestic production.

And the million barrels a day that those wells that are shut in now would have produced, by 2011, 2012, into 2013, will lead to a dramatic rise in the gas price, the crude oil price then the gas price, and by 2012 election this nation is looking at $1.50 to $2 more per gallon than we're paying today.

HANNITY: So $4.50, $5 a gallon?

HOFMEISTER: That's my prediction.

HANNITY: Wow. That's pretty - how do we stop the flow? Because - do you see any hope when nothing's working?


HANNITY: That's one thing I can understand that they're having difficulty. I think we can contain it, and we can suck it up. How do we stop that picture? I'm sick of seeing that.

HOFMEISTER: Everybody is.


HOFMEISTER: I think the relief wells have to be given a shot because the step beyond the relief wells is very risky.

HANNITY: Blowing it up.

HOFMEISTER: Blowing it up, imploding it. Actually not blow it up, but blow it in.

HANNITY: Blow it down. Yes.

HOFMEISTER: And that step carries inherent risk.

HANNITY: All right. You're going to be on next week and we're going to talk specifically just about solutions. And some are saying we need a nuclear explosion down there?

HOFMEISTER: That's what Matt Simmons believes.

HANNITY: What do you think?

HOFMEISTER: And he's an authority. He's a very bright man. I'm still at the conventional stage. I'm not at the nuclear stage.

HANNITY: All right. Well, you have been a voice of sanity, John, in this whole crisis.

HOFMEISTER: Thank you, Sean.

HANNITY: I wish they'd listen to you.

HOFMEISTER: Thank you.

HANNITY: We'd all be a lot better off.

HOFMEISTER: Thank you.

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