The future of Big Oil in a greening economy
Energy is a big, profitable business.
Five of the largest 20 companies by market capitalization are
energy companies
Compa...
 World Consumes 86 million barrels of oil a
day
 The United States consumes nearly a quarter
of that amount
 China is r...
 Business boomed in the 2000s, as developing
countries caught up in energy usage
 Boom coincided with increasing scarcit...
 Locked out of easy-to-access areas,Western
oil companies – and Asian oil companies too –
are seeking oil in Canada’s tar...
 Canada’s tar sands are close to major markets
in the U.S. and China--- but they are an
eyesore. Plus, their carbon footp...
 The deepwater, since the 1990s, has been the
most promising area for growth.
 Brazil,West Africa, the U.S. Gulf of Mexi...
 Sometimes the unexpected happens.
 Responders unprepared to handle
unprecedented scale, depth of spill
 Some say industry went ahead of its
capabilities
...
 After years of lobbying, the oil industry had
convinced the U.S. gov to expand offshore
drilling. GOODBYETO ALLTHAT.
 T...
 Oil industry could lose most of its hard-
fought political gains
 Billions of dollars in market value wiped out in
gian...
 Could the consequences of the spill steer the
fossil fuels industry towards renewables?
Depends on the political pressur...
Beyond Petroleum?
• Veridium Inc. , solar ventures
• $500 M Energy Biosciences Institute at Berkeley
Knock onWood
• Cellul...
 Renewables are hard to scale.
 Mostly experimental and uneconomic at
current energy prices.
 Investment in renewables ...
 Cellulosic ethanol: made out of vegetable
waste, potentially inexhaustible – and
inedible – feedstock.
 Algae: reproduc...
 Natural Gas.
 Natural gas is the cleanest burning
hydrocarbon
 It was once impossible to ship, but now can
be traded between continen...
 All majors – Exxon, Chevron, Shell- are
betting big on natural gas. Exxon says it will
be the fastest growing fuel over ...
 The F-word: Fraccing. Critics say it consumes
too much water and poisons water deposits
and air.
 Many of the most prod...
 Feel free to reach me at
 angel.gonzalez@dowjones.com
 713-547-9214
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Angel Gonzalez, After the Spill - Covering the Green Economy

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Angel Gonzalez, After the Spill - Covering the Green Economy

Angel Gonzalez is Houston Bureau Chief for Dow Jones Newswires, where he helps lead the Newswires’ coverage of the global energy industry. He has written about OPEC, hurricanes, Big Oil companies, renewable energy and the BP oil spill for Dow Jones Newswires, WSJ.com and the Wall Street Journal. Previously he covered green energy and biotechnology for the Seattle Times, and worked as an oil reporter for Dow Jones. A native of Caracas, Venezuela, he’s a graduate of the University of Paris and obtained a master’s in journalism from the University of California, Berkeley.

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Angel Gonzalez, After the Spill - Covering the Green Economy

  1. 1. The future of Big Oil in a greening economy
  2. 2. Energy is a big, profitable business. Five of the largest 20 companies by market capitalization are energy companies Company Market Cap No. 1 PetroChina $329 Billion No.2 Exxon Mobil $316 Billion No. 13 Petrobras $186 Billion No. 18 BP $177 Billion (now halved) No. 19 Royal Dutch Shell $176 Billion Source: FT, May 2010
  3. 3.  World Consumes 86 million barrels of oil a day  The United States consumes nearly a quarter of that amount  China is rapidly catching up- at about 8 million barrels of oil a day, 2nd largest user  SaudiArabia, the world’s largest producer, produces about the same amount China consumes.
  4. 4.  Business boomed in the 2000s, as developing countries caught up in energy usage  Boom coincided with increasing scarcity of natural resources available toWestern companies.  Top company roster beginning to resemble the new energy reality: China, Brazil, in the lead.
  5. 5.  Locked out of easy-to-access areas,Western oil companies – and Asian oil companies too – are seeking oil in Canada’s tar sands and the deep water.  The price of oil, high despite the recession, makes it affordable to drill in those areas.  Drilling in those areas comes at a cost.
  6. 6.  Canada’s tar sands are close to major markets in the U.S. and China--- but they are an eyesore. Plus, their carbon footprint exceeds that of, say, Saudi oil.  They’re awfully expensive to exploit.
  7. 7.  The deepwater, since the 1990s, has been the most promising area for growth.  Brazil,West Africa, the U.S. Gulf of Mexico-- that’s where the last elephants are.  Western majors get first dibs because they have the deep pockets, the expertise and the technology.That’s what’s keeping them relevant.
  8. 8.  Sometimes the unexpected happens.
  9. 9.  Responders unprepared to handle unprecedented scale, depth of spill  Some say industry went ahead of its capabilities  Spill stopped the whole economy of the Gulf Coast  Heavy environmental impact in a fragile, populated region
  10. 10.  After years of lobbying, the oil industry had convinced the U.S. gov to expand offshore drilling. GOODBYETO ALLTHAT.  The spill coincided with the fishing and tourism seasons- maximizing the economic impact to the Gulf Coast and ensuing political backlash.  Incident happened on the verge of hurricane season- a dangerous time to work in the Gulf.
  11. 11.  Oil industry could lose most of its hard- fought political gains  Billions of dollars in market value wiped out in giant companies like BP, Anadarko, Transocean, Noble Corp, Halliburton  Small companies face likely exile from Gulf  Drilling moratorium until gov. figures things out  Brings up the question: is it worth it?
  12. 12.  Could the consequences of the spill steer the fossil fuels industry towards renewables? Depends on the political pressure it generates.  Industry-- starting with BP in the early part of the decade, and ending with Exxon Mobil in 2007 – already went through the global warming awakening.
  13. 13. Beyond Petroleum? • Veridium Inc. , solar ventures • $500 M Energy Biosciences Institute at Berkeley Knock onWood • Cellulosic ethanol venture with Weyerhaeuser • UC Davis biofuels research center Late Arrival • Focus on engine efficiency, electric car batteries • $600 M algae program with Synthetic Genomics
  14. 14.  Renewables are hard to scale.  Mostly experimental and uneconomic at current energy prices.  Investment in renewables pales in comparison to investment in traditional oil and gas. Exxon: $25 billion/yr in oil and gas capital projects vs. $600 million in five years in algae.  PR, or prescient move?
  15. 15.  Cellulosic ethanol: made out of vegetable waste, potentially inexhaustible – and inedible – feedstock.  Algae: reproduces quickly.  Neither are controlled byThirdWorld dictators.  Oil companies think ethanol and diesel from these sources can seamlessly meld with existing infrastructure.
  16. 16.  Natural Gas.
  17. 17.  Natural gas is the cleanest burning hydrocarbon  It was once impossible to ship, but now can be traded between continents thanks to liquefaction technology  Huge deposits found in North America– locked in rock formations known as shales.
  18. 18.  All majors – Exxon, Chevron, Shell- are betting big on natural gas. Exxon says it will be the fastest growing fuel over until 2030, in a carbon-constrained world.  Abundance in North America helps fuel fantasies of energy independence.  Could help replace coal and clean up power- related emissions.
  19. 19.  The F-word: Fraccing. Critics say it consumes too much water and poisons water deposits and air.  Many of the most productive shale formations are near heavily populated areas: the Marcellus Shale in Pennsylvania and the Barnett Shale in NorthTexas.  Oil spill likely to result in tighter regulation of fraccing techniques.
  20. 20.  Feel free to reach me at  angel.gonzalez@dowjones.com  713-547-9214

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