?This month, the American Association of Petroleum Geologists will give its highest honor, the Sidney Powers Award, to Marlan W. Downey, the renowned geologist, professor, author and consultant who led two major, international oil companies, and still is chief executive officer of his family-owned E&P company.

Raised in Nebraska during the Depression, Downey entered local Peru State College at age 16 and received a bachelor’s in chemistry in 1952. After a U.S. Army stint in Korea, he entered the University of Nebraska and earned bachelor’s and master’s degrees in geology. He began his career at Shell Oil Co. in 1957 and, in 1969, became Shell’s youngest chief geologist. He retired after 30 years, serving by 1987 as president of Pecten International, a Shell unit.

In 1987 he formed Roxanna Oil Co., the Dallas-based family company that is still involved in U.S. and international exploration. It consults to private and major E&Ps. Downey has been following the gas shales—both here and in Europe—with a lot of interest.

In 1990, meanwhile, he joined Arco, rising to president of Arco International. After retiring a second time in 1996, he was the Bartell professor of geoscience at the University of Oklahoma and chief scientist at the University of Oklahoma’s Sarkey Energy Center, stepping down in 2002. He found time to be president of AAPG in 2000-01.

Today he divides his time between a home in Dallas, a ranch north of the city, and Cornwall, England. He is a licensed blacksmith with forges in Texas and Cornwall. “I took it up because, as a CEO, a lot of your work involves people’s foibles and problems…but pounding iron is therapeutic.” Recently he forged a pair of spurs for another legend, Herbert Hunt, at whose ranch he speaks during an annual, no-holds-barred private conclave of 20 energy experts. One of their conclusions: The U.S. needs to incentivize people to use natural gas vehicles.

Downey has not slowed down. He teaches every other semester at Southern Methodist University in Dallas, is on the board of the AAPG Foundation and consults to municipalities on how they can secure low-cost, local energy from sawdust, landfills or other alternative sources. He is on the board of privately held Object Reservoir, Foundation Energy and Matador Resources. “This isn’t too busy if you’re having fun,” he says. “I don’t answer any phone calls until 9:30 a.m., and that’s what I call retirement.”

Investor Tell us about your debate in London in March.
Downey I was at the so-called Barbican energy conference that’s held every four years. Peter Gaffney (CEO of Gaffney Cline & Associates) and I debated: Are national oil companies (NOCs) the future of the petroleum industry? Peter, an accomplished debater, spoke for the international oil companies (IOCs) but was kind enough to allow me to take the easiest side, the NOCs.
They have nearly all the reserves now. It used to be that the IOCs had all the talent, the capital and the technology, but that’s no longer true. Petrobras doesn’t need to go to Shell to handle deepwater technology. Abu Dhabi is awash in capital. Many great engineers are available. The world has changed and all we can do is wish them well—we helped them get to this point. We had our turn.

Investor What is Roxanna focused on?
Downey I am “the gray eminence” in the background. I have a tremendous president in my daughter, Julie, who left Marathon after 22 years to run it. We drill a few wells a year and we do a fair amount of consulting. As far as I know we are the only consulting firm that, when we recommend a deal, takes a working interest alongside them if they take it, on the same basis as they do. We hold small interests in 600,000 acres, including the Barnett, Woodford, Marcellus and some other plays.
I see 1 quadrillion cubic feet of recoverable gas from shales in the U.S. and, given time, we could probably double that with better technology. But my main interest recently is to look at the economics and the reality of unconventional energy supplies.

Investor What do you conclude about alternatives?
Downey It’s pretty tough. If you want to invest in something that doesn’t need a government subsidy, you’d have a heckuva time. I’m looking now at local solutions, for a small city or county.
For example, I went to Lexington, Kentucky. I said to them, “Why don’t you look at ways to produce your own low-cost, local electricity or natural gas…such as from sawdust mills or waste or landfills?” A few cities have put in sewage plants that extract methane. San Antonio makes $10 million a year of cash flow from tapping sewage gas. Why aren’t more cities doing this? They can take some control of their energy supply. I can’t fix the world and I’m not going to be around to see nuclear fusion…but, on a local basis, we can do many things now without screwing up the economy. Start small, do well and then do it bigger.

Investor What do you worry about most?
Downey Government is well-meaning; those people are smart, but policies may be enacted where they have no idea of the unintended consequences. One stupid committee passing a law could wipe out an industry and the American economy. The essence of wisdom is listening and thinking about consequences.