April 2007
Orange County Residents Express Concerns and Ideas about Energy Efficiency, Ethanol, Nuclear Power, and Energy Prices at A Conversation on Energy Irvine
ConocoPhillips, the University of California, Irvine, School of Social Sciences, Department of Economics, and local experts discuss America’s energy future
Energy efficiency, ethanol, nuclear power, conservation, technology and a national energy policy were among the issues discussed at a recent town hall meeting in Irvine, Calif. Approximately 270 residents gathered at the Hyatt Regency Irvine on April 18, 2007, to question, comment on and offer solutions to the nation’s growing energy appetite.
“A Conversation on Energy Irvine,” co-hosted by ConocoPhillips and the University of California, Irvine, School of Social Sciences, Department of Economics (UCI), provided attendees an opportunity to talk to local energy, business, and environmental policy experts along with ConocoPhillips executives.
Panelists included Jim Mulva, ConocoPhillips chairman and chief executive officer; Lou Burke, ConocoPhillips manager, biofuels; Dr. David Lizárraga, chairman, president and chief executive officer, The East Los Angeles Community Union (TELACU); David Hackett, president, Stillwater Associates; and Winston Hickox, partner, California Strategies, LLC. The discussion was moderated by Dr. Linda Cohen, UCI’s associate dean for research and graduate studies and professor of economics.
Dr. Michael R. Gottfredson, UCI executive vice chancellor and provost, kicked off the meeting by thanking guests for participating in a discussion that should concern every American. He noted that UCI was pleased to be a part of the event and that the university has been at the forefront of addressing energy and environmental issues.
In setting up the panel discussion, Dr. Cohen said our country’s rapid population growth and proportionate energy consumption growth is putting enormous strain on our economic and social systems, our physical infrastructure, and our natural resources. She added that this impact certainly is felt in Southern California and that organizations like those represented on the panel play important roles in state and national energy discussions.
Discussing ways to meet energy needs is a priority for ConocoPhillips and a key reason for visiting with Orange County residents. Jim Mulva said the discussion is long overdue. He said we live in an energy-dependent society and when prices rise, it impacts consumers and the economy. “The world uses 85 million barrels of oil a day now, and will need 40 percent more by the year 2030,” said Mulva. “That’s a lot of new oil that must be found.”
Mulva also said a survey ranking the most credible industries showed the energy industry ranks last. “That’s hard to take, considering that ConocoPhillips has 38,000 people worldwide who are working hard each day to find the energy we need,” said Mulva. He said the industry has done a poor job of communicating and explained that the company is conducting these conversations to provide information on issues like what drives prices, who controls world oil reserves, and what is possible in terms of alternative energy solutions.
Looking to the future, Mulva said ConocoPhillips believes energy security – as opposed to energy independence – is something the U.S. can accomplish. Mulva outlined four steps needed to provide the country a stable and secure energy future:
1) Energy source diversification.
2) Energy efficiency.
3) Innovation, research and development.
4) Environmental responsibility.
“At ConocoPhillips, we’re making progress in each of these areas,” said Mulva. “But we don’t have all the answers, and we need to establish a dialogue.”
Lou Burke said, “Speaking on behalf of the thousands of engineers, researchers and scientists who work at ConocoPhillips, I can tell you that technology is vital to us.” He added that the company has stepped up research and development spending by 50 percent to encourage development of new technology. “Our research and development efforts are vital because we’re running out of low-cost, easily recoverable oil and gas in North America,” he said.
Burke also cited alternative fuels research and detailed recent announcements about an alliance with Tyson Foods to produce renewable diesel from surplus animal fats and funding for an Iowa Sate University program to develop advanced renewable fuel technology. Burke closed his opening remarks with a comment about a recent ConocoPhillips announcement regarding climate change. “We’ve announced our support for a mandatory national framework that would reduce emissions of greenhouse gases.”
Dr. David Lizárraga discussed the attitudes and perceptions of the energy industry among Hispanics. “The various constituencies that I am speaking for and represent, quite often perceive the energy industry as a powerful global force that is disconnected from the concerns of our everyday lives and livelihoods,” he said. Lizárraga said that more than one in eight people in the United States are of Hispanic origin and projections by the U.S. Census show Hispanics will soon account for 40 percent of the country’s population. As the chair of the United States Hispanic Chamber of Commerce, Lizárraga said he represents the nearly three million Hispanic-owned businesses in the U.S. that today generate more then $350 billion in gross receipts and who are major consumers of energy.
David Hackett explained that he and his company are routinely hired by all types of clients to “explain how gas gets to a gas station.” He said that people are not pleased with the high price of gas and need to know how to reduce their dependence on petroleum.
Market forces and governments are creating alternatives to petroleum,” Hackett explained. “Everyone here needs to know some facts about ethanol, biodiesel, and what the trends are.” He added that Department of Energy recently awarded $385 million for six ethanol plants, including one in Irvine that would convert solid waste into ethanol. “Here in California, the state is encouraging the growth of renewable fuels,” Hackett said.
Winston Hickox recently completed a two-year assignment with the California Public Employees' Retirement System (CalPERS) Investment Office assisting with the design and implementation of a series of environmental investment initiatives. He noted that CalPERS has committed $600 million in the private equity portfolio to invest in clean technology and is looking to companies that are environmentally responsible. Hickox, who for five years was secretary of the California Environmental Protection Agency, also told the audience that “the world that lies ahead of us is highly likely to be different, perhaps even dramatically different, from the world that we see in our rear view mirror.” He said California has been a leader and is the most energy efficient state in the country and that it must continue to assert itself as national policies are being debated.
A lively question and answer session followed the opening remarks, with topics centering on energy efficiency and prices, ethanol, and research and development in tidal technology.
One guest asked why the cost for energy-efficient home improvements was so high and asked what homeowners can do to increase efficiency. Burke suggested that homeowners use resources like the Energy Star Program to look at the efficiencies when replacing certain appliances. He also suggested simple things such as turning off the lights when leaving a room or unplugging phone and other chargers when not in use to help decrease parasitic load on electricity and increase efficiency. Hickox added that current payback periods for some home improvement efficiencies make it difficult to see an immediate return on investment. However, he felt that that public policy will go a long way toward making it easier for people to initiate such investments. He also said the goal set by Governor Arnold Schwarzenegger’s administration to have 1 million solar homes by 2012 will help drive down the price for energy efficient measures.
A Sierra Club representative said that he was frightened by the dangers of climate change and mentioned that some scientists say our carbon levels need to decrease to 80 percent below 1990 levels by the year 2050 or the sea level will rise 40 feet. He asked what level of carbon tax would motivate needed reductions. Mulva acknowledged the subject and also said we will continue to see growth and demand for energy due to population and economic growth. He explained that even with energy alternatives, fossil fuels will represent 70 to 80 percent of our energy equation. “We as an industry, as energy producers and consumers, need to find a way to reduce our environmental footprint,” Mulva said. He mentioned clean coal technology and synthetic gas, but said it would be difficult to see how we can grow our economy and the standard of living in the United States and around the world without the significant use of fossil fuels. Hickox said he believes tax policy is the most efficient way to move toward reducing carbon emissions, but that it’s not likely to occur.
One guest questioned why the industry isn’t turning more to nuclear fusion and fission as an alternative. Burke explained: “The issue is in fusion. The sustained fusion reaction happens for a short period of time, but no one has found a way for a good energy balance for a sustained period of time.” He agreed that nuclear power is a technology worthy of additional investment.
Another guest wondered what the impact would be on business and on the U.S. economy if world events drove the price of oil to $100 a barrel. Mulva said there is a political price involved in oil and added that prices also can be impacted by hurricanes and other matters that might interrupt supply. “We have a very tight supply and there’s very little excess,” he said. Most of the excess supply is from Saudi Arabia. “If we lose supply from a major source, it’s going to have quite an impact with respect to supply and pricing,” Mulva said. He added that’s why the country has the strategic oil reserve. Dr. Cohen emphasized the importance of a diverse supply and said if the U.S. were to suffer a sustained disruption in supply, our strategic oil reserve would not be adequate to cover it. “However, the macro economic effect is such that we’re in a somewhat better position than we were 30 years ago,” she said.
One audience member mentioned that Mexico is building the second largest ethanol plant in the world and questioned why the United States isn’t building ethanol plants. Hickox said there are 115 ethanol plants running in the U.S. now, which is three times as many as there were just a few years ago. “Production this year is 6 billion gallons and 7 billion gallons next year,” Hickox said. ”The Department of Energy and the Department of Agriculture think corn ethanol is worth 15 billion gallons (a year), which is about 10 percent of the U.S. gasoline market.” Hickox added that the total market is about 140 billion gallons, and noted that getting that much ethanol to market poses logistical challenges and is not realistic.
Exploring New Horizons
ConocoPhillips scientists focus on developing renewable energy technologies.
In April 2007, ConocoPhillips announced its alliance with Tyson Foods, Inc. to produce the next generation of renewable diesel fuel from beef, pork and poultry fat. The alliance will create a transportation fuel that contributes to America’s energy future, helps address climate change concerns and helps supplement the traditional oil-based diesel fuel supply. The company also said it will establish an eight-year, $22.5 million research program at Iowa State University dedicated to developing technologies that produce biorenewable fuels.
In December 2006, the company began commercial production of renewable diesel at its Whitegate Refinery in Cork, Ireland. The production process, which was developed by ConocoPhillips, uses soybeans and other vegetable oils to produce renewable diesel fuel that meets European Union standards for diesel fuels.
ConocoPhillips employs a team of approximately 250 scientists, engineers, and researchers to explore viable alternative and renewable energy sources. These scientists are studying everything from clean-coal technology applications to liquefied natural gas initiatives.
A major area of interest is in hydrogen research, which is why ConocoPhillips is a partner in the Freedom Car & Fuel Partnership, a collaborative including the U.S. Department of Energy, automakers and energy companies. The partnership explores environmental and economical attributes of various pathways to hydrogen production, as well as the merits of hydrogen-powered fuel cell vehicles.
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