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Industry Leaders Tout Technology, Change at WEC

September 21, 1998
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Industry Leaders Tout Technology, Change at WEC

Technology and deregulation are viewed as the preeminent drivers for change in the energy industry by executives speaking last week in Houston at the 17th congress of the World Energy Council. Indeed, change - of the fast-paced and relentless variety - seemed to be regarded as a given by most at the congress.

Texaco CEO Peter I. Bijur called these the last days of the traditional oil company. "And its demise is related to the very topics of this conference - technology and development. I believe the companies that transcend and prosper will be new corporate beings - new in outlook, new in attitude and new in purpose." He invoked the words of Jonathan Swift, saying vision is the art of seeing the invisible.

The view from the other side of the Atlantic is much the same. "If politics is the art of the possible, technology is the art of the impossible," said John Browne, group CEO of British Petroleum. "Progress has always required a redefinition of the possible, and science has always responded to that requirement."

In his remarks, Enron CEO Kenneth L. Lay predicted technological advances in alternative energy, such as wind and solar power, as well as improvements in gas and oil efficiencies will save the environment and bring reliable energy to countries currently doing without.

The three executives' speeches dovetailed with that of Secretary of Energy Bill Richardson. Richardson said future energy needs must be met and environmental consequences mitigated. "This can only be accomplished through a substantial and sustained commitment to science and technology. We can strategically and efficiently manage our energy resources through a concerted investment in research and development which will advance all energy options: oil, gas, biomass, hydropower, wind, nuclear fission and fusion, and solar."

Bijur recounted creating a team of Texaco employees to formulate predictions for the oil industry's future. Three scenarios emerged. The first suggests a decline in the industry's access to oil. "This declining access will not be caused by expropriation as in eras gone by, but by a change in the nature of competition. We believe that host governments will gradually exert more control over their own natural resources.

"We see innovative companies emerging, companies that will offer the necessary technical expertise without insisting upon ownership interest. These high-tech, high-service, high-solution companies will enable host governments to realize the full value of their assets." With the erosion of the oil company's upstream producer role the value of its knowledge will be its true worth.

The second Texaco scenario focuses on the downstream and predicts new options coming to consumers from innovators, such as Microsoft, Wal-Mart, and Sprint, who are not currently in the energy business. With this comes commodity convergence. "Eventually the distinction between oil, gas and electricity will blur as new competitors offer customers 'units of power' from a variety of sources, rather than individual products."

Technology and the environment take center stage in the company's third set of predictions. "We will see multiple ways to power cars - hybrids, advanced batteries, fuel cells, even cars that run on pure hydrogen. How soon? Prices dropped dramatically and power increased exponentially with microchips. Why should the chemical reaction in fuel cells be exempt from such scientific breakthroughs? Who among us would want to bet against technology?"

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