Texaco Buys Stake in New Power Technologies
Texaco bought a 20% equity stake in hydrogen storage specialist
and fuel cell developer Energy Conversion Devices, Inc. (ECD) last
week for $67.3 million. While the major producer has not lost sight
of the importance of its upstream and downstream businesses nor the
surge in mergers among its major competitors, it has chosen to
focus on a variety of new technologies that it believes will
determine the future of the automobile and electric power
Texaco and ECD have agreed to establish joint ventures for the
continued development and commercialization of advanced energy
technologies, initially in the fields of ECD's proprietary Ovonic
solid hydrogen storage technology and the Ovonic regenerative fuel
cell. Troy, MI-based ECD develops and commercializes enabling
technologies for use in the fields of alternative energy and
information technologies. The company holds patents in materials
engineering, solid hydride storage, photovoltaic batteries,
semiconductor applications and other areas.
"This is a potential game changing situation for the energy
business. As we said in our talk [with analysts] in February, this
will evolve slowly but there's just no question but that the oil
industry over the next couple of decades will be subject to
technological change," said Texaco Senior Vice President William M.
"We got 20% of a very exciting company," he added. "This is a
company unlike a lot of the companies that we talked to..... We
believe their batteries are a clear choice for the hybrid car. We
believe their solar products are very exciting with a lot of
potential applications. Their information storage technology is an
area with unbelievable potential. But I must say we were
particularly drawn to their work in the hydrogen storage area.
"As you know, there's a lot of work with respect to fuel cells
and fuel processes in terms of electric power generation and more
importantly for Detroit, the automobile of the future. Many
observers think that the concept of processing gasoline on board a
car may in fact be too complicated, too costly or unrealistic. And
the hydrogen storage problem is one where it is not easy to
compress, you can't get enough of it and it takes too much energy
to cool. We think ECD has a breakthrough technology in the hydrogen
In addition, he said ECD will be developing a different type of
fuel cell, different from the proton exchange membrane that many
companies are working on. "To be frank," said Wicker, "any one of
these products would be worth what we paid for 20% in the company
and we are just delighted to make this investment."
Texaco also will have two board seats on ECD. Its interest in
ECD will be managed by Texaco Energy Systems Inc., a subsidiary
established in 1999 to harness the company's fuel conversion
expertise to advance commercialization activities in the areas of
fuel cells and hydrocarbons-to-liquids.
"While oil and gas will remain the dominant energy resource for
the foreseeable future, hydrogen will inevitably become part of the
energy mix, and Texaco aims to be a leader in the development and
commercialization of environmentally smart alternative energy
technologies," said Wicker.
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