Energy Transitions: Industrial Views

    As the world continues to seek new energy sources that will lower or eliminate green house gas emissions, we also need to consider the feasibility of such transitions.  Rather than speculating on this topic, I decided to visit the websites of three of the world's top "energy" corporations: Mobil, BP/Amoco, and Shell.  The word 'energy' appears in quotations above because these companies have traditionally made their profits in one type of energy...petroleum.  To focus the discussion further, we'll examine each company's views on the issue of transportation energy.
       You may be reluctant to adopt the title "energy company" over the more traditional "oil company".  Why have these companies changed their classification in the industrial world?  Unavoidably, the word "oil" has developed a negative connotation or "feeling".  So is the change from "oil" to "energy" simply a marketing strategy?   Yes and no.....it is a marketing strategy, but it's not a marketing strategy only.   These companies all realize that changes are taking place in the transportation energy industry and they're all eager to help find new, cleaner fuels....or are they?
        During my visits to the above mentioned websites, I sent an electronic correspondence to the public relations department of each company.  This correspondence read as follows:

To Whom It May Concern:
As the webmaster of a popular chemical engineering website and a chemical engineer myself, I've recently explored the websites of 3 of the top energy corporations in the world: Mobil, BP/Amoco, and Shell.  I was seeking specific information regarding alternative energy and each companies views, research interests, and industrial direction regarding this topic.  I plan to publish an article on my website regarding my findings.
I am writing to ask if someone at your company would like to read the article and reply, confirm, or give additional information regarding the content.  The subject of alternative energy is indeed very important to all of us and I am hoping for participation from each one of the above mentioned companies in this small endeavor to educate everyone on the "real" direction that alternative energy is taking.
Please reply with contact information for the individual who should receive my article.   After the article is sent, I will allow each person 5 business days to reply in short written comments.  Thank you in advance for your participation in this educational endeavor.  Feel free to check out the website at www.cheresources.com.

Sincerely,

Christopher M. A. Haslego
www.cheresources.com

    The need to change from combustion engines that burn gasoline to other technologies is usually viewed in one of two ways.  Some people believe that an immediate change over is perfectly acceptable, no matter what the economic impact, i.e. environmental extremists.  Others feel that a more gradual transition from gasoline to fuel cell technology may be acceptable. Other options, such as battery powered vehicles, have not been received well from the public.  Currently, one would have to spend more money for an electric vehicle and then suffer with the inconvenience of limited range...a compromise that few people are willing to commit to.
    I read, with interest, a recent article that appeared in USA Today by Allan Ostergren, a senior research associate at the Institute for SocioEconomic Studies in White Plains, NY:

Substituting increased federal taxes on gasoline for the failed corporate average fuel economy (CAFE) standards would reduce consumption and return decisions on vehicle size and efficiency back to the marketplace.   To get significant results, however, requires a large boost in the gas tax and much hardship among consumers.  Research at the Institute of SocioEconomic Studies has shown that combining a gas tax with a universal tax credit would minimize that hardship while providing the people with an incentive to spend their money in other ways.  At tax levels sufficient to reduce demand, the greatest benefit from the credit would go to the poor and the middle class.  Reducing America's appetite for oil would achieve far more than just cleaner air.  It might give some of our adversaries in the oil-rich areas less resources to fuel their ambitions.

   Mr. Ostergren wants to "reduce America's appetite for oil", but gives no suggestions as to how Americans should continue to get back and forth to work  This is where Mobil, BP/Amoco, and Shell have to help everyone else save the environment.

    I found that all of the energy corporations agree on one thing:  any energy transition must be gradual due to the fueling infrastructure.  A very good point, but who is willing to help solve the problem of fueling infrastructure?  Maybe none of these companies have any intentions of doing so, or maybe they're currently trying to raise the capital to do just that by manipulating the price of gasoline...we'll find out later.

    These companies must continue to profit from their huge fueling infrastructure.  In fact, it's this infrastructure that has slowed the progress on introducing new fuels into the system.  So with that in mind, how are these companies becoming involved in new energy technologies?  Simple....all of them propose using gasoline (and their infrastructure) to power fuel cells.  The companies are suddenly in a much better position.  They continue using their fueling infrastructure, they continue making profits, and at the same time, they receive positive public relations for helping to reduce green house gas emissions.

    Mobil's website (www.mobil.com) sports a positive slogan, "Let's Drive for a Better Future™".  Usually a better future involves everyone making sacrifices, but what is Mobil sacrificing?  How about millions of dollars on research and development?  A joint venture with Ford Motor Company calls for "developments in new hydrocarbon-based fuels and power sources".  These new fuels are to provide increased efficiency and lower emissions.  Increased efficiency will mean less gasoline sold, which will almost certainly be accompanied by higher prices to cover additional processing and profits.   But, since we will need less fuel, what will be the final economic change passed onto consumers?  Only time will tell.  Perhaps one of the most impressive statements I found on Mobil's site is the hint of Ford and Mobil looking far into the future:

Market acceptance (for alternative fuel vehicles) has been slow partly because of limited infrastructure.  We believe that by working with Mobil to evaluate the full vehicle/fuel supply equation, we can determine the potential of natural gas and other alternative fuels, and perhaps find some better ways of marketing our excellent alternative fuel products.

   My next stop took me to the virtual home of BP/Amoco (www.bpamoco.com).   The most interesting article I found there was a transcript of BP's chairman Mr. Peter Sutherland's speech as the Institute of Petroleum's Conference on Oil and Gas after 2000.  Mr. Sutherland made several intelligent remarks countered by some that were equally unthoughtful.  Speaking on the topic of climate change, Mr. Sutherland says,

Let me say at the outset that I do not believe these problems can be wished away by supposing that the demand for oil and gas will disappear.  Internal combustion engines have been around in their present form for one hundred years and technological advances will continue to make them cleaner burning.   At the same time, there may be revolutionary technologies that will over time become more important, for example fuel cells, and we need to understand the potential impact of these in the coming decades.  But for the foreseeable future, combustion engines will require fossil fuels. 

   This statement is right on target and very realistic.  Some want to abandon petroleum immediately, but this is not realistic.  Petroleum is buried too deeply in our daily energy needs to be replaced instantly.  However, speaking on the topic, Mr. Sutherland says, "Technology is not going to make this demand disappear."  Perhaps he omitted the words "within 5 years".  After all, technology must make the demand for petroleum disappear at some time for petroleum is a limited resource.   If technology does not make the demand disappear, the Earth will when it simply has more oil to offer, a fact that the energy companies continue to ignore.  Notice that all of these companies point out the low emissions and higher efficiencies that fuel cells offer.  None have ever acknowledged that fuel cells (or another technology) will someday be absolutely necessary and not just an environmental and economic aid.  

    Mr. Sutherland goes on to state that "...by 2020, up to 5% of world energy could be supplied by renewable energies...Within 50 years, it could be as much as half".  This could be more wishful thinking rather than intelligent foresight on Mr. Sutherland's part.  With biomass research (including ethanol), fuel cell technology (which uses methanol), and other options on the horizon, I believe that 5% could be conservative estimate.   I would certainly like to think that by 2050, our dependence on petroleum will have decreased to well below half of the world's needed energy.

    Finally, a stop by Shell's website (www.shell.com) revealed a more refreshing approach to this problem as well as the best web site of the three companies.   The site is well planned, maintained, and designed.  The site also includes the most extensive "library" of the three.  I was pleased to see that Shell, through a partnership with the state of California, is attacking the real problem...the fueling infrastructure.  In addition to helping place 50 fuel cell vehicles on CA roads between 2000 and 2003, a key goal of the partnership is "to determine the best fuel infrastructure for the market entry of fuel cell vehicles, which could emerge as soon as 2004" (Arco and Texaco are also involved in this partnership).  Shell has also committed $500 million to the development of renewable energy, not just cleaner burning fuels.  Shell Hydrogen has been established to ensure that Shell is still an energy company when the oil wells begin drying up.   Shell lists the following four goals in the commercialization of fuel cell technology:
1.  Refine the size of fuel cells
2.  Reduce manufacturing cost
3.  Increase production volume
4.  Depending on fuel source, make fuel infrastructure investments

    Congratulations to Shell for acknowledging and planning to participate in an absolutely necessary infrastructure investment to "carry" transportation into the next century.  Don't be surprised though if Shell also uses their current stations to fuel the first commercial fuel cells with hydrocarbon fuels.  We've established that this will be necessary and is an acceptable compromise.  I certainly wish Shell the best of luck in their hydrogen venture and I would like to know what else they may have on the horizon.  I think it's obvious that Shell has an eye pointed toward the future and that they'll be around for decades to come.  I only hope that that we hear about "Mobil Hydrogen" or "BP/Amoco Ethanol" in the future as well!

    As you can see, not all of the energy companies have taken the same position on alternative energy.  The general trend is to move toward hydrocarbon powered fuel cells, which is an acceptable first step.  Shell seems the most prepared to deal with the next step: revamping the fueling infrastructure.   However, note that Shell has not made an investment yet in the infrastructure change.  Mobil and BP/Amoco could also make such investments just as easily.   Only time will tell which company is truly willing to make these sacrifices for a better future.

The Energy Companies Reply:

Mobil

   Mr. Robert Canada, Communication Coordinator at Mobil Technology Company, stated that readers of this article "may be interested in a report on Mobil's assessment of the impact of advanced technology on energy demand and carbon dioxide emissions."  Mr. Canada expects a release date in August of 1999.

BP/Amoco

   Mr. Paul Deards, Corporate Internet Editor for BP/Amoco responds:

We have taken several important steps such as investing in solar
energy and clean fuels and supporting the Kyoto Protocols on climate change.
Our commitment, however, does not alter the fact that the world will
continue to need large supplies of conventional fossil fuels for many years
to come.  Their plentiful supply is essential if living standards are to be
increased throughout the world, and if we are to make a successful
transition towards a cleaner environment.

The challenge we face as an oil and gas company is how to serve our
customers while we help shape the energy future of the 21st Century.  For
the foreseeable future, the world may be able to burn less coal, oil and
gas; but it cannot possibly dispense with these fuels altogether.  This
means that conventional oil and gas reserves must continue to be developed
and brought to the market.  We believe, therefore, that while responsible
global energy companies have a duty to seek new solutions, they must achieve
continuous improvement in their own use of energy and environmental
performance at the same time.  As a sign of our commitment, we have set
ourselves aggressive targets, such as our target to reduce our own
greenhouse gas emissions by 10% by the year 2010 from a 1990 baseline. 
See also: 1998 Environmental and Social Report,
http://www.bpamoco.com/reports

Mr. Deards also points readers to the following links:
"Plug in the Sun" -- http://www.bpamoco.com/pluginthesun
"Cleaner Fuels" -- http://www.bpamoco.com/cleanerfuels

Shell

Mr. Alex Trott of Shell International Group Communications replies:

I believe that our next step is e-business. It is coming and
we have to be prepared. The current www.shell.com site provides a firm basis
for turning the Internet into a revenue stream. But we have to do an awful
lot of work to make sure the businesses are prepared for the new corporate
environment which comes with it.

I'd like to extend a warm thanks to all of the company representatives for taking the time to reply to my request and for helping to make this article a complete look at "Energy Transitions".
Christopher Haslego
July 23, 1999