"Technology: The Engine to Do More for More" (page two)

Technology presentation - continued from page one

FUELING AUTOMOBILES OF THE FUTURE
We expect that the dominant transportation fuels will remain gasoline and diesel for at least two or three decades – the minimum amount of time required to fully retire any existing and still growing fleet of automobiles and trucks powered by these fuels and to deploy any replacement fuel source throughout the U.S.

In considering our future energy needs, we need to understand that gasoline-powered automobiles have been the dominant mode of transport for the past century – and the overwhelming preference of hundreds of millions of people throughout the world. Regardless of fuel, the automobile – likely to be configured far differently from today – will remain the consumer’s choice for personal transport for decades to come. The freedom of mobility and the independence it affords consumers is highly valued.

Rather than being phased out, gasoline and diesel are likely to be the leading fuels well into the future – thanks to such gains in technology as advanced internal combustion engines (ICEs) and rapidly evolving “hybrid” vehicles. Those who write off gasoline and diesel fuels fail to recognize how advanced technology is providing new and more efficient ways of using these hundred-year-old products. For example, significant improvements in internal combustion engine technology have been made, and advancements will continue to provide higher mileage efficiency and lower emissions. Enhanced vehicle emission control technologies, made possible by the introduction of low-sulfur fuels, will be an important component of future conventional systems.

Another advancing technology is the hybrid vehicle – powered partly by gasoline and partly by electricity. Hybrids are already moving aggressively into the market; and their rate of growth will depend, in large part, on their price and performance. Even though hybrids still face technological challenges, such as battery size and life, there is a high probability of hybrids being a significant, though possibly not dominant, part of the U.S. vehicle population in the not too distant future.

In addition to hybrids and advanced ICEs, oil companies - working alone or with automakers - have invested millions of dollars researching new fuel cell technologies. These technologies hold the potential for up to double the fuel efficiency of current gasoline-powered autos. Fuel cell vehicles have essentially zero tailpipe emissions. However, maintaining a national fleet of such vehicles would face significant technical, economic, primary energy source availability, and infrastructure challenges.

Present fuel cell costs are at least 10 times greater than for internal combustion engines, based on current fuel cell technology being produced on a large, commercial basis. Long-term fuel cell durability must be improved and demonstrated. Safe, efficient, and cost-effective hydrogen storage solutions are needed to make possible acceptable driving ranges. The current delivered cost of hydrogen fuel to transportation markets is substantially greater than the energy provided by units of gasoline or diesel. And, making hydrogen widely available will require extremely large infrastructure investments. Even hydrogen made from gasoline using an on-board reformer, which would take advantage of the existing refueling infrastructure, faces many challenges. Nonetheless, all options should be thoroughly evaluated, and it is premature to exclude any option at this point.

We believe consumer preference should and will play the key role in the choice of these new competing vehicle technologies. That preference will be based, in large part, on fuel supply availability, cost affordability, consumer acceptance, and environmental compatibility.

We strongly believe that the private sector should continue to play a major role in applied research, and that both the government and the private sector should be involved in basic theoretical research. The automobile and oil industries have made tremendous progress over the years, introducing a range of new products and technologies to improve emissions, fuel economy, and performance. We fully expect this trend to continue, both with respect to improvements to today’s technologies and to the introduction of advanced vehicle technologies.

Consumers’ acceptance is the key to the success of any vehicular system, and industry competition for their dollars is the fastest means of bringing forward the next generation of transportation options. Societal goals are best attained by setting performance standards. Government mandates, subsidies, preferential taxation, and the premature official selection of one technology over another cannot produce advances as swiftly, or as effectively, as market competition.

REFINERIES AND FUTURE TECHNOLOGIES
The future of refining is rich with opportunities for further advances in technology. Refineries will increasingly need the capability to accommodate changes in crude slates, especially trends toward more sour crudes. Operations will become more sophisticated, and new technology and new approaches will be employed. New catalytic materials will provide the basis for major improvements in existing refinery processes.

We expect that bioscience will be increasingly introduced into refinery operations, as the technology advances. This could provide environmental and performance improvements in fuel and chemical processing, such as desulfurization and demetalation of crude oils and refinery product streams.

In addition, new structural materials and nondestructive on-line testing will reduce maintenance costs and extend the useful life of equipment. Advances in computational methods and process control will continue to make major contributions to solve problems for the design of higher quality, safer and more environmentally compatible processes and products. Refineries will be highly automated with integrated process and energy system controls. Products will continue to meet changing specifications set by regulators and by industry consensus, responding to the demands of society.

U.S. refiners already rely on advanced technology in their operations. For example, using a molecule-management system, refiners have developed technology in both molecular fingerprinting and process modeling, which enables them to more precisely select and blend crudes with properties that will maximize the yield of products most in demand.

Another example of how technology is helping refiners push the envelope is in the manufacturing process. One of the most common processes used to upgrade resid – the most difficult part of the crude barrel – is delayed coking, which removes the dense by-product we know as petroleum coke. The length of time required for removing that coke from the vessel significantly impacts the coker’s capacity. Thanks to a molecular-management approach, refiners are now better able to select raw materials that perform the best under coking conditions, resulting in the formation of coke with properties making it much easier and faster to remove. This is a technology showing potential to increase a delayed coker’s capacity by up to 20 percent.

Another exciting example of recent technological innovation is an approach called high-throughput experimentation under which miniature computer-driven equipment is used to rapidly synthesize and test literally hundreds of catalysts. The products are then evaluated using high-speed analytical equipment and the results are collected in a computerized database. Because of the small scale, nearly 100 parallel experiments can be conducted in a single lab, yielding results in a day that might have taken months in the past. Ultimately, this capability will usher in technological innovations that will enable us to continue to grow conversion capacity.

CONCLUSION
For the U.S. oil and natural gas industry, the past is truly prologue. This is a still unfolding story. We have relied on state-of-the-art technology for many decades to bring us to where we are today – and we are committed to staying on the cutting edge of technology in the decades ahead.

Back in 1965, Intel co-founder Gordon Moore made a prediction that came to be known as Moore’s Law – namely, that the number of transistors on a chip doubles about every two years. This observation about silicon integration fueled a worldwide technological revolution. For our industry, the more we invest in technology for the future, the more opportunities we will have to find new and better ways of providing energy. These opportunities may not double in number every two years, but they will certainly increase; and our industry intends to take advantage of these opportunities.

We are not an industry resting on its laurels, if you will. We know our future requires us to stay ahead of the technology curve. Our survival will depend on our use of the latest technology to continue to find, produce, refine, transport, and distribute the fuels we have supplied over the past century. Which brings me back to the title of my presentation: “Technology: The Engine To Do More For More.” The more we invest in technology today, the more we will gain tomorrow – and the more people around the globe will benefit through gains in their quality of life.