Summary Remarks to Select Committee on Energy Independence and Global Warming, U.S. House of Representatives
John Lowe, Executive Vice President, Exploration and Production, ConocoPhillips
April 1, 2008
Good morning, Mr. Chairman. We appreciate the opportunity to come before the committee to discuss our alternative fuels investments, as well as our investments to meet current energy needs.
ConocoPhillips favors developing all forms of energy – conventional, renewable and alternative. However, we recognize that even with aggressive implementation of alternative energy, most sources estimate that fossil fuels must still supply two-thirds of world energy in 2030.
We can not attain an alternative-energy future in a few short decades. Global energy demand is too high, technological development and infrastructure construction take too long, and the cost would be too great.
This makes it essential that we build the political will to utilize our fossil fuel resources. We must also develop the ability to use them in cleaner forms. And we must disavow the misconception that alternative sources can quickly and easily assume the energy burden.
ConocoPhillips is already preparing for the future. Our reinvestments into our business continue exceeding our income. We earned $12 billion in 2007, but reinvested $13 billion – and we have over $15 billion in investments planned this year.
In North America, we are spending billions of dollars to expand supplies by developing the Canadian oil sands, and building infrastructure to transport the oil to the U.S. In pursuit of natural gas, we are conducting major drilling programs, and building pipelines and two LNG regas terminals. Downstream, we are increasing our refining capacity and ability to produce cleaner fuels.
You also asked us to describe our efforts in renewable and alternative energy. Although these are not our core businesses ….
- Ethanol represents 5% of our U.S. gasoline volumes, making us one of the nation’s largest ethanol blenders and users.
- We are test marketing E-85 and biodiesel.
- We produce renewable diesel fuel.
- We are working to develop biofuels from agricultural waste.
- We are funding university research into the next generation of renewable fuels, like cellulosic ethanol.
- We are evaluating opportunities to invest in solar, wind and geothermal power.
- To make electric vehicles more practical, we are developing better materials for lithium-ion batteries.
- And to transform coal and petroleum coke into clean-burning synthetic natural gas, we have developed a proprietary technology, and have two multi-billion-dollar projects planned.
This subcommittee is also charged with addressing climate change. ConocoPhillips favors Congressional enactment of a mandatory framework to reduce carbon emissions. And we are actively researching potential carbon capture and storage.
These efforts show what can be achieved by the industry’s technical, financial and human resources. Our capabilities must not be undermined by punitive tax measures, or counter-productive policies, like those that threaten our co-venture with Tyson Foods.
Two years ago, we formed a unique relationship with Tyson to develop a new technology to produce renewable diesel from byproduct animal fats. Unlike most biofuels, our product can be transported by pipeline. Congress enacted an incentive for the feedstock, but the House is attempting to deny us equal treatment in utilizing this incentive, which is afforded to all other biodiesels. This would make our technology uncompetitive.
If Congress intends to encourage meaningful alternative fuels development, it is critical that all related tax policies and mandates be feedstock-and-technology neutral, and that R&D efforts not be undermined. The market should decide which technologies go forward.
Hopefully, government and industry can move beyond today’s all-too-often adversarial relationship. There is much we can do together to increase supplies, encourage efficiency, develop alternatives, and address climate change.
But have no doubt -- the U.S. is engaged in a global race. Other countries are working cooperatively with their energy industries to secure new supplies. Unless our domestic companies are allowed to compete on level ground, we run the risk of marginalizing the U.S. oil and gas industry, and ultimately undermining U.S. energy supply.
Mr. Chairman, this concludes my statement.
END
Top of page