Dow Jones Newswires
HOUSTON, TX –The world’s largest oil companies are talking more than ever about taking action on global warming, but their actual investments in alternative energy still pale alongside their multi-billion dollar budgets for conventional energy.
At the Cambridge Energy Research Associates conference here, executives at the world’s largest oil companies acknowledged that global warming is a problem but insisted that their main — and in some cases only — business would continue to be the production of hydrocarbons.
The appearance Tuesday by Exxon Mobil Corp. Chief Executive Rex Tillerson made it clear that while the company is talking more than ever about the importance of cutting greenhouse gases, it continues to view alternative energy as a bad investment choice. Tillerson didn’t preclude future alternative energy investments, but he said ExxonMobil would be “very selective” about its choices.
“We are a petroleum and petrochemical company. We have been for more than 100 years,” Tillerson said. “That’s what we know how to do.”
Chevron Corp. also believes that its main business will be oil production and refining, despite the rise of ethanol and other biofuels. “The world is going to need every molecule of energy it can find,” said Mike Wirth, Chevron‘s executive vice president for refining and marketing.
Wirth said the company has a record $19.7 billion budget for 2007. By contrast, one of Chevron‘s flagship projects, a research joint venture with Georgia Institute of Technology, will involve only a $12 million commitment over the next five years.
Jeers From Some Quarters
ExxonMobil and Chevron have a higher profile at this year’s conference than peers like BP PLC and Royal Dutch Shell PLC. While the two European giants have been more aggressive with alternative energy investments, the vast majority of their spending also remains in conventional oil and gas.
As global warming has morphed from a controversial theory to a scientific fact, the industry has come under increasing pressure to tackle the issue. The Democratic takeover of Congress and a recent report by a United Nations-backed study have given new momentum to the policy debate in Washington. A growing number of experts, lawmakers and company executives are voicing support for federal legislation that would require electric utilities to reduce emissions of greenhouse gases.
Big Oil’s embrace of the environmental debate has drawn jeers from some quarters. “Big Oil CEO’s are meeting in Houston this week to develop a message on making their energy look better — greener and more committed to energy efficiency,” said the California-based Foundation for Taxpayer and Consumer Rights, headlined “Big Oil’s Hot Air in Houston.” “But their underlying business strategy hasn’t changed a bit.”
Industry experts say part of the problem for the oil companies is commercial technologies to cut oil-based greenhouse gas emissions don’t exist. The other option is cars that would consume much less gasoline or run solely on electricity — a step that would leave the oil industry out in the cold.
Beyond technological hurdles, the companies say they also face regulatory difficulties. Without an overarching federal policy controlling the development of ethanol and other biofuels, each state will develop its own regulations, making it difficult for businesses with a nation-wide presence to comply, according to Shell U.S. president John Hofmeister. Some states have already begun to regulate the nascent industry, said Marathon Oil Corp.’s VicePresident Gary Heminger.
Lobbying For Access
That’s left the industry continuing to lobby for greater access to U.S. domestic oil and gas resources as a means of bolstering energy security and reducing U.S. dependence on Middle East oil. Senior executives in the industry have pointed to long-term investment in boosting production capacity elsewhere around the world, a point Big Oil elite like Exxon and Chevron are raising in high-profile advertisements that in some cases also highlight their work on global warming.
At the same time, the oil executives continue to underscore their realistic assessment of the energy debate.
Tillerson, for instance, spoke enthusiastically about the company’s share of a research project at Stanford University on game-changing clean energy technology. But he likened the venture, which was announced in 2002, to searching for a cure to cancer, and said the goal is “very long-term innovations” that would not be expected to have yielded advances yet. One goal is to spur technologies that are “not on anyone’s consciousness today,” he said.
At the same time, Tillerson extended this view of future energy needs to the controversy surrounding TXU Corp.’s plan, loathed by environmentalists, to build 11 new coal-fired plants in the state. In light of future power needs, “the coal plants are just part of the total picture you’re going to need,” he said. “You’re going to need it all.”
————–
Contact the author Matthew Dalton at: 201-938-4604 or [email protected]
