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Study Says Industry Investments in New Energy Sources Are Substantial

The domestic crude oil and natural gas industry has invested $98 billion in the past six years on emerging energy technologies in the North American market, significantly outpacing investments made by other industries and the federal government in the energy area, according to a recently issued report.

The report, carried out by the Institute for Energy Research and the Center for Energy Economics at the University of Texas, found that the energy industry's investment represented 73% of the estimated $135 billion spent by all U.S. companies and the federal government between 2000 and 2005 on new energy technologies.

The findings of the 36-page study contrast sharply with the claims of Capitol Hill lawmakers and others that the oil and gas industry is not sufficiently reinvesting its profits to develop new energy sources, said Red Cavaney, CEO of the American Petroleum Institute (API) . "This study clearly refutes the claim that our companies are not putting their investments where their mouths are."

Of the oil and gas industry's total investment of $98 billion, the API-commissioned report said $86 billion was directed toward "frontier hydrocarbons" -- technology to make inferior grades of oil such as tar and oil sands and heavy oil usable by refineries, and to turn waste and residue hydrocarbons into high-value products.

Oil and gas companies also invested $11 billion for advanced "end-use" technologies, mostly for advanced vehicles using fuel cells and for efficiency improvements through combined heat and power co-generation. This represented 35% of the total $31 billion spent by all U.S. companies and the federal government in this area, the report said.

In addition, the energy industry spent $1.2 billion on nonhydrocarbon energy alternatives, or 8% of the approximately $15 billion total industry and federal government spending in this area, according to the API report. The industry's top investment has been in wind, but funds also have been spent on solar, geothermal and landfill digester gas.

Aside from the oil and gas industry, energy technology investments were made by the motor vehicle industry, agricultural industry, electric utilities, renewable fuel industry and the federal government, the report noted. It estimated that these industries invested $32 billion, or 23% of the $135 billion total, between 2000 and 2005, while the federal government invested $5 billion, or 4% of the $135 billion total.

The report noted that the five leading technologies targeted for private and public sector investment as measured by expenditure have been gas-to-liquids ($41 billion), tar and oil sands ($34 billion), advanced technology vehicles ($26 billion), liquefied natural gas ($9 billion), and wind power ($5.6 billion).

"The preponderance of frontier hydrocarbon investment [such as gas-to-liquids technologies and tar sands]...reflects a continuing primary role for oil, gas and coal in the energy mix over the next decades," the report concluded. "All major forecasts of U.S. and global energy supply...continue to place carbon-based fuels in the forefront for supplying the world's energy needs. However, even given the preponderance of frontier hydrocarbon investments, there is substantial activity in end-use and nonhydrocarbon technologies. These applications will play a growing and important role in the future, [resulting in] an energy cornucopia that promises a new chapter in the history of the energy industry."

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