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Financial Times: Energy leaders seek to diversify resources

By Sheila McNulty in Houston
Published: February 9 2006
Steam injection and cellulose ethanol are the buzz­words at this week's world oil and gas meeting in Houston, where leaders in the energy sector are emphasising the need to diversify resources and improve access through technology.
Among those stressing alternatives to fossil fuels yesterday was the US Dep­art­ment of Energy, which said it was increasing its biofuels budget by 70 per cent in 2007, from $90m (€75m, £52m) this year to $160m, to focus on a breakthrough in using all parts of the corn plant to make processing ethanol cheaper and more efficient.
“Diversity of supplies, which we seek to pursue, is not just good for the United States but for the world economy,'' Clay Sell, the department's deputy secretary, told the Cambridge Energy Research Associates (Cera) meeting.
It was a point upon which there was widespread consensus. On energy security, however, there was little common ground.
Daniel Yergin, the chairman of Cera, said countries could not even agree on how to define “energy security''.
In Russia, for example, energy security meant reasserting state control over strategic resources, Mr Yergin said, whereas in Europe the debate centred on how to manage dependence on imported natural gas. In the US it was about how to cope with the growing reality that its goal of energy independence was increasingly at odds with reality.
There is greater optimism regarding technological advances in the industry.
“The power of technology is sometimes not given proper consideration,'' said Ali Naimi, Saudi Arabia's minister of petroleum and mineral resources. He told of visiting the divided zone between Saudi Arabia and Kuwait to witness an experimental method to extract more oil from heavy petroleum fields. Such steam injection will increase the recovery rate of heavy oil fields from about 6 per cent to more than 40 per cent.
Such innovation is not new to the industry. Mr Yergin said that while frontier deep-water drilling in 1978 was at 600 feet (183m), it is now at 11,000 feet. In the past five years alone, oil sands had moved from the “fringe'' to a “major component'' of the energy equation.
“I've never seen such a bubbling of energy technology along the spectrum,'' Mr Yergin said.

Jeroen van der Veer, the chief executive of Royal Dutch Shell, said such advances gave him confidence that the world's worries about energy security would be alleviated by the industry. “I have no doubt that this industry can offer solutions,” he said. “They will come from our ability to deliver technology, developing and applying new tools to produce the energy people need, while reducing its impact on the environment we all share.''

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