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Case Study: Energy Security v. Energy Independence


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Title: Case Study: Energy Security v. Energy Independence

Case Study
Energy Security
v. Energy
  • Alexandra Thompson ---
  • Joel Eagle ---
  • --------------------------------------------------
  • Energy Law, Spring 2007
  • Chicago-Kent College of Law

On Energy Independence
  • At ConocoPhillips, we dont believe that Energy
    Independence is practical, possible, or
    achievable. We need more research in all forms
    of potential energy. And we need to protect the
    environment in all we do.
  • --John Lowe, Executive Vice President of

  • You cant use a quarter of the energy supply
    but only have 3 of it here. So I just answered
    why we are in Saudi Arabia, why we are in
    Venezuela, why we are in Russia. Why are we out
    in all of these far-reaching places in the world?
    Were trying to find oil, thats why. Were a
    country that consumes huge quantities of energy.
  • -- Jim Gallogy, Executive VP, Refining,
    Marketing, and Transportation, ConocoPhillips

Consistent Theme
U.S Addicted to Oil
  • George W. Bush, 2007 State of the Union Address
  • For too long, our Nation has been dependent on
    oil. Americas dependence leaves more vulnerable
    to hostile regimes and to terrorists, who could
    cause huge disruptions of oil shipments, raise
    the price of oil, and do great harm to our

Dependence on Foreign Oil
  • U.S. imports roughly 60 of energyliquids, oils
    and refinery productand rising
  • U.S. 4 of worlds population, consumes 25 of
    worlds energy
  • Independent companies own only 6-7 of world
  • 93-94 owned by government controlled companies
    or governments themselves.

Imports, Demand and Oil Price
  • According to the Oct. 2006 Report of the Council
    on Foreign Affairs
  • If imports decrease and demand decreases, prices
    may go down
  • But if imports decrease and demand remains high,
    prices will increase and consumers will be forced
    to seek higher-priced substitutes

World Energy Demand
  • Three-fold increase in consumption
  • As worldwide population grows, oil consumption
    expected to increase from 85 million barrels/day
    to 250 million barrels/day by 2030.

Energy Independence v. Energy Security
  • Independence U.S. could supply all the countrys
    energy needs without relying on foreign energy
  • Security U.S. could provide the countrys energy
    needs through a variety of energy sources both
    domestically and internationally.

How to Reduce Energy Dependence
  • If the goal is reducing dependence on Middle
    Eastern oil, the public must be willing to make
    dramatic changes
  • Ethanol and biodiesel production
  • Reduction in usage
  • Research into new technologies
  • Realism
  • The choices were making today are not leading
    to energy independence -- Lou Burke,

Introduction to ConocoPhillips
  • The company which would eventually be known as
    Conoco was founded in 1875 as the Continental Oil
    and Transportation Co. by Isaac Elder Blake.

Introduction to ConocoPhillips
  • Blake and his company became one of the first
    petroleum marketers in the West.
  • Blake thought that if kerosene was imported from
    eastern refineries by railroad and sold in bulk
    in the West, prices would drop and demand would
    rise. Many western pioneers were still using
    candles and whale oil to light their homes at
    that time.
  • The company also sold
  • candles and wax.

Introduction to ConocoPhillips
  • From 1885-1913 Standard Oil controlled

Introduction to ConocoPhillips
  • Continental built the Wests first filling
    station in 1909
  • Continental was top marketer of petroleum
    products in the Rocky Mountain region
  • In the next 20 years, Continental built 1000
    more service stations in 15 states

Introduction to ConocoPhillips
  • In 1929 Continental Oil merged with Marland Oil,
    a petroleum company started in 1911 by E.W.
    Marland in Ponca City, OK.
  • Marland had access to a steady supply of crude
    and was an innovator of drilling techniques.

Introduction to ConocoPhillips
  • New company was named Continental Oil Company and
    it owned 3,000 wells and thousands of retail
    outlets spread over 30 states.
  • The company first began trading on the NYSE in
    September, 1929.

Introduction to ConocoPhillips
  • On September 30, 1981 Conoco became a wholly
  • owned subsidiary of DuPont, when 100 of its
  • shares were purchased in the largest merger in
  • history at that time.
  • On October 22, 1998 Conoco split from DuPont and
  • the largest IPO in history at that time of 4.4

Introduction to ConocoPhillips
  • 1905 - Phillips brothers hit the first of 81
    wells in a row.
  • 1917 Phillips Petroleum Company was founded.
  • 1927 Phillips begins marketing
  • gasoline through service stations.

Introduction to ConocoPhillips
  • 1931 Phillips builds the first long-distance
    multi-product pipeline.
  • 1951 Phillips invents polypropylene plastics.
  • 2001 Phillips acquires Tosco Corporation.

Introduction to ConocoPhillips
  • ConocoPhillips was formed on August 30, 2002 by
    the merger of Conoco, Inc. and Phillips Petroleum
    Company of Oklahoma.

Introduction to ConocoPhillips
  • Today ConocoPhillips has its headquarters in
  • Houston, Texas and operates in more than 40
  • countries.
  • The company has approx. 38,400 employees
  • worldwide and assets of 183.7B.

Introduction to ConocoPhillips
  • Third largest integrated energy company in the
    U.S. based on market capitalization, oil and gas
    proved reserves and production.
  • Second largest refiner in the U.S.
  • Has the sixth largest total of proved reserves
    worldwide of nongovernment- controlled companies.
  • Fifth largest refiner based on crude oil capacity

Introduction to ConocoPhillips
  • 4 Core activities worldwide
  • Petroleum exploration and production
  • Petroleum refining, marketing, supply and
  • Natural gas gathering, processing and marketing
  • Chemicals and plastics production and

Introduction to ConocoPhillips
  • Investing in 4 emerging businesses
  • Technology solutions
  • Carbons-to-liquids
  • Power generation
  • Alternative energy and programs

ConocoPhillips-Sponsored Conversations on Energy
  • ConocoPhillips 35 city tour
  • Town Hall meetings community events
  • COP representatives, state local governments,
    business and industry, and interested citizens
  • PURPOSE Engage communities, invite questions and
    comments, and discuss alternative energy sources.

Main Themes of Conversations
  1. Poor Communication in Oil Industry
  2. Low Credibility in Oil Industry
  3. 4 Steps to Energy Security
  4. Need for Education

1. Poor Industry Communication
  • ConocoPhillips reaching out overcoming oil
    companys historically poor communication
  • Jim Mulva, CEO Our industry, and our company,
    have not done an acceptable job of reaching out
    to public and the American consumer.
  • John Lowe, Executive VP of Commercial Our
    industry has lost touch with public. Were
    viewed as part of the problem. We want to be
    part of the solution.

2. Distrust of Oil Industry
  • American Petroleum Institute poll - Out of 25
    major industries that are polled and reviewed,
    the oil industry ranks last last in credibility
    even behind tobacco.
  • High dose of reality for oil industry and COP

3. Energy Security
  • ConocoPhillips 4 Steps to Energy Security
  • Energy Source Diversification
  • Greater Energy Efficiency
  • More Innovation and RD
  • Environmental Protection

I. Energy Source Diversification
  • Ethanol
  • Biodiesel
  • Hydrogen
  • Oil sands oil shale
  • Heavy oils
  • Additional liquid fuel technology (turning coal
    and natural gas into liquids)
  • Carbon sequestration

Ethanol Not a Silver Bullet
  • COP remains cautious of ethanol and biodiesels,
    but still sees a future for them
  • Need government help research and
  • E85 quality control will be very important

  • Iowa residents concerned about rising price of
    beef dairy in response to rising corn prices
  • Iowa Renewable Fuels Association Is a nickel
    more for a pork chop worth becoming more
    independent of foreign oil?

Health Risk of Ethanol
  • Is ethanol better for our health?
  • Stanford University Study
  • A high blend of ethanol poses an equal or greater
    risk to public health than gasoline (which
    already causes significant health damage)
  • Computer modeling simulation of atmospheric
    conditions throughout U.S., especially L.A.

Health Risk of Ethanol
  • According to the study, using ethanol-based fuel
    instead of gasoline would likely increase the
    ozone-related death rate in Los Angeles by 9
    percent in 2020

Health Risk of Ethanol
  • Results E85 vehicles reduced atmospheric levels
    of two carcinogens (benzene and butadiene) but
    increased two others (formaldehyde and
  • E85 may increase ozone, similar effects to lungs
    and immune system.
  • No difference what E85 is made of corn,
    switchgrass, or other plant product.
  • Alternative? Battery-electric, plug-in hybrid,
    hydrogen fuel cell vehicles, wind or solar
    powered energy

Additional Ethanol Concerns
  • Ethanol produced mainly in middle of the country
  • Ethanol cannot be shipped by pipeline
  • Must be shipped by truck or rail
  • These sources use energy to ship

  • BP announced in 2005 plans to invest 8 billion
    over 10 years into an alternative energy division
    focusing on wind, solar, natural gas and hydrogen
  • In February of 2007 BP announced a plan to give
    500 million over 10 years to a consortium with
    UC Berkeley.
  • Chevron Corp owns part of a biodiesel plant along
    the Houston Ship Channel and has earmarked 5
    billion for alternative and renewable energy
    technologies from 2002 through 2009
  • Last year, Chevron Corporation pledged
    25-million to the University of California at
    Davis and 12-million to Georgia Institute of
    Technology, both awards over five years, for
    research into alternative fuels.

  • Shell has spent more than 1 billion on biofuels,
    wind, solar and hydrogen since 2000 and
    distributed nearly 100 million gallons of
    biofuels last year.
  • Stanford announced in 2002 that it would receive
    225-million over 10 years from the Exxon Mobil
    Corporation and two other sponsors for a variety
    of research on renewable research, including
  • Exxon Mobil Corp. isnt seeking to invest in
    renewables because they arent viable without
    subsidies. The company had unprofitable
    investments in solar and nuclear energies.

Is Conoco Doing Enough?
  • According to pro-environment investment firm
    Trillium Asset Management, a ConocoPhillips
  • ConocoPhillips is ignoring zero-carbon technology
  • Behind the curve
  • BP, Shell, and Chevron will have market share
    before ConocoPhillips joins the market
  • May 9 Shareholder meeting will consider whether
    to prepare a report on COP response to rising
    competitive and regulatory pressure to
    significantly develop renewable energy sources.

II. Greater Energy Efficiency
  • Great lifestyle changes are needed
  • Must be more efficient with energy use. U.S has
    4 of worlds population but consumes 25 of
    worlds energy.
  • 5-7 of electricity demand comes from Parasitic
    Load (home computers left on during the day,
    devices/chargers left plugged in, unused lights
    left on)
  • ConocoPhillips U.S. refineries will improve
    efficiency by 10 by 2012.

Greater Energy Efficiency
  • ConocoPhillips Billings refinery earned EPA
    ENERGY STAR for superior energy performance
  • Top 25 in country
  • Based on design, operations, and maintenance -
    captures and recycles thermal energy used to make
  • heat-recovery system from crude tower for
    preheating cold crude
  • intensive steam trap maintenance program to
    separate condensed water from a steam system and
    returns hot water to the boilers to generate more

III. Increased Innovation and RD
  • Increasing 2007 technology RD budget by 50 - to
    150 million.
  • Employs 250 scientists, engineers, and
    researchers exploring alternative and renewable
    energy sources

Current ConocoPhillips Projects
  • 1. ConocoPhillips and Tyson Foods
  • 2. Iowa State University Biodiesel Research
  • 3. Controlled Hydrogen Fleet and Infrastructure
    Demonstration and Validation Project
  • 4. Whitegate Refinery for renewable diesel
  • 5. Freedom Car Fuel Partnership for Hydrogen
  • 6. Clean coal application
  • 7. LNG initiatives

1. ConocoPhillips Tyson Foods
  • On April 16, 2007 ConocoPhillips and Tyson
    Foods, Inc. announced a strategic alliance to
    produce and market renewable diesel fuel.

ConocoPhillips Tyson Foods
  • Plan to use beef, pork and poultry by-product
    fat to create a transportation fuel

ConocoPhillips Tyson Foods
  • Renewable diesel
  • Similar to biodiesel in that they use similar
  • Different from biodiesel in that they have
    different processing methods and create
    chemically different products.
  • Renewable diesel is chemically equivalent to
    conventional diesel fuel and can be shipped and
    distributed through existing pipelines to
    distribution terminals unlike other biofuels
    which must be transported by rail or trucks.

ConocoPhillips Tyson Foods
  • Benefits of renewable diesel
  • Produces lower life-cycle carbon emissions.
  • Increases energy security by using a domestic and
    renewable energy source.
  • Can be used in todays vehicles.
  • Can be produced and distributed with existing
    refineries and fuel distribution systems.
  • Refinery quality control systems ensure product

ConocoPhillips Tyson Foods
  • Tyson will make capital improvements this summer
    in order to begin pre-processing animal fat in
    some of its North American rendering facilities.
  • ConocoPhillips will also be making capital
    expenditures to enable it to produce the fuel in
    several of its refineries.

ConocoPhillips Tyson Foods
  • By the fourth quarter of 2007, ConocoPhillips
    Borger refinery will be the first to process the
    renewable diesel from fat from Tysons Amarillo
    beef rendering plant about 50 miles away.

ConocoPhillips Tyson Foods
  • They will produce renewable diesel fuel mixtures
    that meet all federal standards for
    ultra-low-sulfur diesel.
  • Production is expected to eventually reach as
    much as 175 million gallons (4.2 million barrels)
    per year, roughly 3 of ConocoPhillips entire
    diesel production.

ConocoPhillips Tyson Foods
  • Proprietary thermal depolymerization production
  • Animal fats will be processed with hydrocarbon
    feedstocks to produce high-quality diesel fuel
    that meets all federal standards.
  • The addition of animal fat will improve the
    fuels ignition properties.
  • The processing steps will improve the fuels
    storage ability and handling characteristics.

ConocoPhillips Tyson Foods
  • Thermal depolymerization technology
  • Process for the reduction of complex organic
    materials into light crude oil.
  • Mimics the natural geological processes.
  • Under pressure and heat, long-chain polymers of
    hydrogen, oxygen and carbon are decomposed into
    short-chain hydrocarbons with a maximum length of
    around 18 carbon atoms.

ConocoPhillips Tyson Foods
  • ConocoPhillips believe the key to a secure
    energy future is the development and efficient
    use of diverse energy sources. This alliance
    will provide a new and significant contribution
    to our nations domestic renewable fuel supply.
    It also offers an excellent opportunity to use
    our companys manufacturing expertise and
    advanced technology to help increase the supply
    of renewable fuels and to reduce greenhouse gas
  • --Jim Mulva, ConocoPhillips Chairman CEO

ConocoPhillips Tyson Foods
ConocoPhillips Tyson Foods
  • The processing technology was developed by a
    cross-functional team at ConocoPhillips and was
    tested successfully at the companys Whitegate
    refinery in Cork, Ireland, in 2006.

ConocoPhillips Tyson Foods
  • Energy Policy Act of 2005
  • - Provides tax subsidies of 51 cents per gallon
    of ethanol and 1 per gallon of biodiesel

ConocoPhillips Tyson Foods
  • Early April, 2007, IRS issued Notice 2007-37
  • Ruling interprets thermal depolymerization
  • The Energy Policy Act of 2005 and its legislative
    history do not specify whether a process that
    uses catalysts is a thermal depolymerization
  • IRS said it was.
  • Upon this finding, ConocoPhillips and Tyson foods
    announced their co-venture.

ConocoPhillips Tyson Foods
  • Rep. Lloyd Doggett, D-TX, plans to introduce
    legislation that would repeal the Treasury
    Departments interpretation.
  • There appears to be abuse that demands
    legislative correction.
  • Lloyd Doggett

ConocoPhillips Tyson Foods
  • In addition, the National Biodiesel Board, which
    represents companies primarily using soybean oil
    to make fuel, does not agree with ConocoPhillips
    and Tysons ability to use the tax incentive.
  • Were not opposed to refiners converting a
    portion of their capacity into renewable
    capacity. But we believe its bad public policy
    for taxpayers who are paying as much as 3 for a
    gallon of gasoline to have their taxes pay
    another dollar for this.
  • --Joe Jobe, CEO of the National Biodiesel Board

ConocoPhillips Tyson Foods
  • Denying the companies the right to use the tax
    credit will only serve to limit the expansion
    and availability of alternative fuels and also
    damage the ability of livestock farmers and
    ranchers to participate in the renewable energy
  • --Gary Mickelson, spokesman for Tyson Foods

ConocoPhillips Tyson Foods
  • Cost of using animal fat as a feedstock 2 per
    gallon, or about 84 per barrel.
  • Crude oil futures at above 63 per barrel on the
  • With the tax credit the cost of using animal fat
    as a feedstock
  • 1 per gallon, or about 42 per barrel.

ConocoPhillips Tyson Foods
  • Without the tax credit, it wouldnt be
    commercial. With the tax credit, its just
    barely commercial.
  • --Jim Mulva, CEO, ConocoPhillips

ConocoPhillips Tyson Foods
  • If were trying . . . to reduce our dependence
    on foreign oil and have more homegrown energy
    sources, every bit of flexibility we can provide
    in getting bio-mass converted to usable forms of
    transportation is absolutely needed for this
  • --Cal Hodge, President of A 2nd Opinion, a fuels
    consulting firm which supports the Treasurys

ConocoPhillips Tyson Foods
  • Several agricultural groups such as the National
    Cattlemens Beef Association, the National
    Chicken Council and the Texas Cattle Feeder
    Association support the broader interpretation.
  • Subsidy for Big Oil? Or helping farmers and
    ranchers and fostering production of alternative

2. ConocoPhillips Iowa State University
  • April, 2007 ConocoPhillips established a 22.5
    million biofuels research program.
  • Initial grant of 1.5 million in 2007.
  • 3 million each year for 7 years thereafter.

ConocoPhillips Iowa State University
  • Research will include converting biomass
    to fuel through fast pyrolysis
  • Process that uses heat in absence of oxygen to
    decompose biomass into a liquid product.
  • This bio-oil can be used as a heating oil or can
    be converted into transportation fuel at
    petroleum refineries.

ConocoPhillips Iowa State University
  • COP will also sponsor studies of other
    thermochemical technologies that produce biofuels
  • Research to understand and support
  • environmental sustainability and rural
  • economies
  • Emphasizing crop improvement
  • and production
  • Harvesting and transport of
  • biomass
  • Impacts of biofuels on economic
  • policy and rural sociology

ConocoPhillips Iowa State University
  • ConocoPhillips staff scientists will not work
    regularly on Iowa State's campus.
  • The university will own the rights to any
    inventions discovered with ConocoPhillips money,
    but the company will have first rights to an
    exclusive license.
  • ConocoPhillips will have a right to delay
    publication of scholarly findings for up to 45
    days to ensure that none of its proprietary
    information is inadvertently released.

ConocoPhillips Iowa State University
  • ConocoPhillips is developing long-term
    relationships with respected academic
    institutions such as Iowa State to research
    extensions of traditional energy sources that
    ultimately will benefit consumers."
  • --Jim Mulva, Chairman CEO

3. Controlled Hydrogen Fleet and Infrastructure
Demonstration and Validation Project
  • 5-year program, began in 2004
  • Funded in part by DOE grant
  • COP, automakers, CA universities, government
  • Goal continue to demonstrate and validate
    advancements in hydrogen-based transportation
  • COP will provide six of 24 CA fueling stations
    and will provide hydrogen produced from natural
    gas and renewable energy sources

4. Whitegate Refinery Cork, Ireland
  • Renewable diesel production
  • Uses soybeans and other vegetables to produce
    renewable diesel that meets European Union diesel
    fuel standards
  • Crude oil discharging
  • at Whitegate

Whitegate Refinery (cont.)
  • Tyson Project
  • Process may be used to convert animal fats and
    oils to renewable diesel
  • 2006 Developed the technology to co-process
    beef, pork and chicken fat with hydrocarbon
    feedstocks at Whitegate facility.
  • Aerial View of Whitegate

5. FreedomCAR and Fuel Partnership
  • Began in September 2003
  • Goal Research technologies for cars/light
    trucks and fueling infrastructure to reduce
    foreign oil import dependence without
    sacrificing freedom and mobility and vehicle
  • Promote hydrogen dialogue and research

  • DOE, BP America, Chevron Corporation,
    ConocoPhillips, Exxon Mobil Corporation, Shell
    Hydrogen LLC, and the United States Council for
    Automotive Research (USCAR)a legal partnership
    among DaimlerChrysler Corporation, Ford Motor
    Company, and General Motors Corporation.

6. Clean Coal Technology
  • Wabash River Coal Gasification Repowering Plant
    in Indiana has been using ConocoPhillips E-Gas
    Technology on a commercial basis since 1995.
  • E-Gas Technology converts coal and petroleum
    coke, which may have a negative economic value,
    into a clean synthesis gas containing hydrogen.
    The process allows virtually all
    pollutant-forming impurities to be removed.

Clean Coal Technology
  • 2004 ConocoPhillips and Excelsior Energy
    announced plans for a technology licensing
    agreement for an IGCC facility using the E-Gas
    Technology, called the Mesaba Energy Project.
  • Being built in Minnesota and is expected to be
    operational by 2012.
  • Will be one of the cleanest and most efficient
    coal-fired power generating facilities in the

7. Liquid Natural Gas (LNG)
  • ConocoPhillips built the first LNG carrier used
    for international trade in 1959.
  • The company also built the first successful
    commercial liquefaction facility in 1969 in
    Kenai, Alaska, which it continues to safely
    operate today.
  • ConocoPhillips LNG technology is employed in
    Trinidad and planned for use in Egypt, Equatorial
    Guinea, Australia and Nigeria.
  • Construction has begun on a regasification
    terminal in Freeport, Texas
  • Will connect with the Texas intrastate gas
    pipeline system.
  • Rights to approximately 1 billion cubic feet per
    day of the terminals capacity.
  • Estimated startup 2008.

Other COP Social Initiatives
  • Kuukpikmuit Subsistence Oversight Panel Designed
    to identify and minimize conflict between COP and
    Native Alaskans
  • Indonesia Workforce Program Aids in development
    of a skilled workforce

1. Kuukpikmuit Subsistence Oversight Board (KSOB)
  • ConocoPhillips operates the first production
    facility on Native Alaskan land at the Alpine
  • ConocoPhillips and Nuiqsut community developed
    the KSOB to help identify and minimize conflict
    between Alpine operations and traditional
  • The KSOB consists of Nuiqsut residents and
    monitors the health of subsistence resources on
    Kuukpik lands and identifies any impact that
    exploration, development or production activities
    might have on those resources.

2. Indonesia Workforce Program
  • 1-year new engineer training program.
  • Program teaching high school students about
    drilling and other skills for working in offshore
  • Joined with a group of companies to create
    vocational training workshop in Natuna.

IV. Environmental Protection
  • Ties into everything ConocoPhillips does
  • Cannot operate without following all
    environmental laws regulations
  • Must think about carbon emissions and climate

ConocoPhillips and USCAP
  • U.S. Climate Action Partnership (USCAP)
  • April 2007 COP joined USCAP to support
    mandatory national framework to address
    greenhouse gas emissions
  • Need businesses to step forward to provide
    solutions to climate change problem
  • COP building potential long-term cost of carbon
    into capital spending for major projects
  • Developing internal targets for GHG emissions
    from its operations

ConocoPhillips and USCAP
  • Requirements of Carbon Reduction Framework
  • Transparent
  • Clearly communicate cost of carbon to consumers.
  • Structured to avoid increasing energy price
  • Encourage energy efficiency
  • Paced to match speed of developing technology

Environmental Protection
  • Greater environmental responsibility (shrinking
    environmental footprint) Broader discretion in

Sustainable Development
  • 4 As of Sustainable Development
  • Affordable to end user
  • Adequate returns to suppliers
  • Available any time
  • Acceptable impacts to society and environment

Sustainable Development
  • No single energy source completely satisfies all
    4 As
  • Must strive for as many as possible
  • Leads to need for energy source diversification

Interdependence (a.k.a. Energy Security )
  • Ways to facilitate supplies outside of U.S.
  • Canadian oil sands (same size as Saudi Arabian
  • Find partnerships in countries with the remaining
    93 ownership (COP owns 20 of Russian oil co.
  • Broker peaceful relations with Iraq, Iran,
    Venezuela trade and appropriate agreements (not
    doing great job so far)
  • REALITY So much reserves in foreign lands, we
    need them.

Interdependence (a.k.a. Energy Security )
  • 4. Domestic supplies in coastal fields, Alaska
    (ANWR) difficult for environmental reasons
  • Need to develop new technologies
  • Only 25-30 accessible, need technological
    improvements to get hard-to-reach 70-75
  • No longer pursuing oil in ANWR
  • Cut ties with Arctic Power

Interdependence (cont.)
  • 5. Methane hydrates
  • Natural gas trapped in ice slush at bottom of the
  • Geographically well-distributed globally
  • Contain 7 more NG than in traditional source
  • As oil/gas prices increase, these sources will
    become more necessary
  • 6. Stranded oil/gas reserves using new
    technology to acquire new resources at old Texas

The Future of U.S. Oil Dependence
Is this the Future?
Some Opinions of Energy Independence
  • The concept of energy independent is
    ridiculous, unachievable, and perhaps not
  • -- Mark Mathis,
  • Energy independence is not really possible in
    the U.S., and the public needs to shift to the
    more practical goal.
  • -- Jim Mulva, CEO, ConocoPhillips

Rocky Mountain Institute
  • Winning the Oil End Game, RMI
  • 4 Steps to Energy Independence
  • Double the Efficiency of Using Oil
  • Ultralight vehicle design
  • Advanced composite or lightweight-steel materials
    can nearly double the efficiency of today's
    popular hybrid-electric cars and light trucks
    while improving safety and performance.
  • The vehicle's total extra cost is repaid from
    fuel savings in about three years

Rocky Mountain Institute (cont.)
  • 2. Apply creative business models and public
    policies to speed the profitable adoption of
    super-efficient light vehicles, heavy trucks, and
  • 3. Provide another one-fourth of U.S. oil needs
    through major domestic biofuels industry
  • 4. Save half the projected 2025 use of natural
  • a. Use the saved gas instead of oil
  • b. Convert gas into hydrogen

The Future of the Oil Industry according to RMI
  • What happens to the oil industry?
  • Shell, BP, ConocoPhillips already shifting from
    Oil companies to Energy companies.
  • Done right, this shift can profitably redeploy
    their skills and assets rather than lose market
  • Biofuels are already becoming a new product line
    that leverages existing retail and distribution
    infrastructure and can attract another 90
    billion in biofuels and biorefining investments.
  • Oil may, however, retain or even gain value as
    one of the competing sources of hydrogen.

IV. Educate the Youth
  • Educate young children on energy efficient
    lifestyle need cultural changes
  • Carpooling
  • Consolidating car trips
  • Living closer to work
  • Utilize mass transit

Education at ConocoPhillips
  • Active in communities where there are COP
    facilities (refineries and research)
  • Community Outreach at grade schools and high
  • 40-50 of ConocoPhillips 38,000 employees are
    within 5 years of retirement
  • Educate college students to be geo-scientists,
    project managers, all types of jobs

  1. Energy Source Diversification biofuels,
    hydrogen, liquid natural gas
  2. Greater Energy Efficiency increasing facility
    efficiency by 10 by 2012
  3. More Innovation and RD increased by 50 in
    2007, partnerships with Tyson, Iowa State
    University, DOE, car manufacturers, industry
  4. Environmental Protection at ConocoPhillips
    shrink environmental footprint, be environmental

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