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.

1. The future of Big Oil in a greening economy

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.  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.  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.  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.  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.  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.  Sometimes the unexpected happens.

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.  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.  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.  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. 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.  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.  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.  Natural Gas.

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.  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.  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.  Feel free to reach me at
 angel.gonzalez@dowjones.com
 713-547-9214