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Los Angeles Times: Oil Giants Put Energy Into Other Resources

By Elizabeth Douglass

Inside two half-million-gallon tanks built in the 1950s, a team of microorganisms is preparing to munch its way into the annals of energy innovation. Late this month, the microbes will start transforming truckloads of restaurant grease into electricity for a water pollution control plant in Millbrae, Calif. The one-of-a-kind setup relieves the city and area eateries of a fatty disposal headache while saving energy. And it has come with the help of a surprising backer: Chevron Corp.

‘You don’t think of a big energy company being involved in anything but gasoline,’ said Dick York, superintendent of the Millbrae plant. ‘But Chevron is really trying to diversify. Working together, we’ve brought forward a project that puts waste to work.’

It’s a small undertaking for a company that takes in millions of dollars in profit each day from selling oil and natural gas, not saving them. But it’s part of a growing portfolio of projects backed by some of the biggest oil companies to wring energy from the sun, wind, water and waste.

Royal Dutch Shell has become one of the world’s largest developers of wind farms and is part owner of two in California. Chevron operates massive geothermal plants in Indonesia and the Philippines. And BP is a partner in hydrogen power plants proposed for Carson and Scotland. Energy executives point to such endeavors as proof that oil companies are part of a global push to rein in pollution and boost alternatives to oil and natural gas.

‘We think it’s important to get things done when it comes to climate change,’ BP Chief Executive John Browne said in an interview. ‘If you weigh in the balance what we’ve done, and what we continue to do, I think it amounts to something very significant.’

Critics dismiss the efforts as ‘greenwash’ – using environmentally friendly programs to draw attention away from unfriendly activities. ‘If you look at what they are doing in terms of any kind of renewable fuel, it’s swamped by a factor of 100 by what they are doing to continue to exploit fossil fuel resources,’ said Roland Hwang, vehicles policy director at the Natural Resources Defense Council.

‘If they want to have real green credentials, they need to support real policies to ensure that we can develop cleaner fuels [and] they have to support emission standards on global warming pollution.’ Hwang sees Proposition 87, which would tax California oil producers to fund biofuel research, as a test of the oil companies’ resolve. ‘They’ve failed miserably. They’re fighting it tooth and nail,’ he said.

The measure’s supporters say it would reduce dependence on foreign oil and create jobs in new energy ventures; opponents say it would increase oil prices and fund a state energy-research bureaucracy with no guarantee of results. San Ramon, Calif.-based Chevron, the state’s largest oil producer, is the most vigorous opponent, spending an estimated $22 million to persuade voters to reject Proposition 87 in November.

Other big contributors are Aera Energy, a joint venture of Royal Dutch Shell and Exxon Mobil Corp., and Westwood-based Occidental Petroleum Corp.

In addition, none of the oil companies stood with California as it embarked on its groundbreaking move to reduce greenhouse gases. The state’s ambitious Global Warming Solutions Act, signed into law Sept. 27, faced resistance from the region’s largest oil industry trade associations.

‘I think critics are reasonable in saying, ‘Where’s the walk behind the talk?’ ‘ said Nicholas Eisenberger, managing principal at GreenOrder, a New York environmental strategy and marketing firm. But, he added, ‘these resource-based questions, they don’t get solved overnight.’

A Chevron spokesman declined to discuss the company’s oil tax stance, but Chief Executive David O’Reilly recently explained Chevron’s opposition to the greenhouse gas law. ‘We support the first step of measuring’ greenhouse gases, O’Reilly said in an interview. ‘I think it would be better, from a state competitiveness standpoint, if we could get a similar approach to dealing with carbon emissions across the whole country.’ He said California ‘ought to be careful about launching off something in the state that divides us from the rest of the country.’

BP’s renewable-energy efforts have been the most visible, in part because its ‘Beyond Petroleum’ advertising campaign has for years been highlighting the firm’s accomplishments. The London-based company is a leader in harnessing the sun’s power. Its solar subsidiary is a top manufacturer of solar panels and equipment and it has installed solar systems in 100 countries. In California, the company has funded solar research at Caltech, installed a solar power system at a water pumping station in Vallejo and sold home solar systems through Home Depot. Late last year, BP created an alternative energy subsidiary and pledged to invest $8 billion in the unit over the next decade – a commitment that dwarfs those of other oil companies. And recently, the company stepped up its wind-energy activities, announcing an alliance with Clipper Windpower Inc. and the purchase of Greenlight Energy Inc., a U.S. company with plans for 39 wind projects.

‘Step by step, I think we’ve achieved a lot,’ CEO Browne said. ‘We have a lot more to do, both in the practical – changing the way we do business – and in inventing new businesses and new products.’ But BP’s efforts have also underscored the difficulties inherent in trying to reshape a company’s image and focus when its profit, operations and heft are still in the oil business. A series of major mishaps have provided an uncomfortable contrast to – or mockery of, some environmentalists say – the company’s professed devotion to clean energy and corporate responsibility.

Last year, an explosion killed 15 people at its Texas City, Texas, refinery, where federal investigators later cited the company for a list of ‘egregious and willful’ safety violations. In Alaska, where BP is a significant petroleum producer, an oil leak this year was followed by a shutdown of key pipelines because of extensive corrosion, which critics said could have been avoided with proper maintenance.

In California, BP recently agreed to an $81-million settlement over claims that it illegally spewed toxic gas from its Carson refinery for nearly a decade. It also paid a $225,000 fine for nearly 300 air pollution violations at the Port of Long Beach and had 43,000 gallons of gas oil spill from a pipeline in the port. ‘There’s been this interesting dynamic around all the things that have happened with BP,’ said Eisenberger of GreenOrder. ‘In the environmental community, they’re wondering, ‘Do we yell at these guys or do we hold our fire?’ And there’s been a little of both.’

Browne was contrite in an interview a few days before the Alaskan pipeline corrosion problem emerged. ‘I regret everything that’s happened,’ he said. ‘Our franchise is built on what we do, and that also includes how we respond to our own issues.’

Exxon Mobil, the world’s largest publicly traded oil company, has long been a lightning rod for critics of the industry’s record on greenhouse gas and renewable energy issues. The Irving, Texas-based company has responded by pointing to energy-efficiency and emissions-reduction reducing projects as well as research that could improve existing fuels and vehicles. But its efforts are relatively meager on the renewable energy front, consisting primarily of hydrogen-power research projects and a $100-million grant to fund research of solar, hydrogen, biomass and other energy technologies at Stanford University’s Global Climate and Energy Project.

Exxon spokesman Russ Roberts said that the company’s focus remained mostly on traditional forms of energy because it believes that the ability of renewable power sources to meet the world’s needs ‘is very limited.’ Even so, ‘we are doing things in alternative energy,’ Roberts said. ‘Just because we’re not as visible as those other [oil companies] doesn’t mean we’re not doing it. We’re just doing it in a different way.’ The company couldn’t provide spending figures on alternative energy ventures.

European rival Royal Dutch Shell has invested $1 billion in alternative energy since 2000. It has installed hydrogen fueling stations in five countries and joined with Ottawa-based biotechnology firm Iogen Corp. to make ethanol from straw. ‘We’re getting quite a bit of experience in the renewables and alternative energy field,’ John Hofmeister, president of Houston-based Shell Oil Co., said in a interview. ‘We think that, over time, people will judge us by our deeds, not by our words.’ He characterized Shell’s spending on alternative energy as ‘the right amount for what we know and what the market is ready for.’

‘We will do more as we prove out the commerciality of these renewables or alternative forms of energy, and we will do more as we find the technology breakthroughs to make things happen,’ Hofmeister said. At Chevron, funding for renewable-energy and energy-efficiency projects topped $1.5 billion from 2000 to 2005. The company said it expected to spend $2 billion more from 2006 through 2008 on such projects.

In addition to the Millbrae grease-to-energy project, which is an undertaking by Chevron Energy Solutions, Chevron subsidiaries have installed large commercial hydrogen fuel cells and teamed with California on hydrogen fuel tests, invested in a Texas biodiesel plant and last month pledged as much as $25 million over five years to fund research at UC Davis into next-generation biofuels. ‘We have a lot of activity underway in alternatives and in energy conservation, and I think all of that is compatible with getting things done and testing them in a pragmatic way, rather than talking about them and saying this is a big issue,’ O’Reilly said.

At the Millbrae plant, supervisor York couldn’t be happier. He credits Chevron with finding a way for the wastewater plant to produce its own power and at the same time collect and put to use 4,000 pounds per day of the kinds of kitchen grease that has for years clogged and damaged its sewer pipes. ‘We’ve gotten calls from as far away as Singapore grease is a universal problem,’ York said. Their solution, he added, ‘is a natural process that we’ve learned to enhance.’ Come opening day, the $5.5-million project will include a 24-hour automated drop-off system for grease haulers and two giant waste tanks teeming with 19 kinds of microorganisms. In digesting the mix, the organisms will create methane gas that will power – along with natural gas – a 250-kilowatt microturbine. That electricity will heat the tanks and other operations, replacing a smaller generator that emits more pollutants. The system also will save Millbrae the cost of buying power. ‘We’re excited about it, and we know it’s going to work,’ York said. What’s more, he added, ‘packaging energy in new ways is beneficial. We can’t keep going back to the old oil well.’ * [email protected]

October 07, 2006

Copyright © 2006 Los Angeles Times, All Rights Reserved.

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