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Topics shift to the environment as oil executives meet in Texas

`It really reflects how the times change,' says Daniel Yergin, whose group is the sponsor.

February 14, 2007|Elizabeth Douglass | Times Staff Writer

HOUSTON — Amid the perennial topics of geopolitics, production challenges and supply and demand, the world's energy leaders have descended on this oil town for a weeklong conference with a surprising new focus: using less oil.

Exxon Mobil Corp. Chief Executive Rex Tillerson acknowledged the dangers of global warming but sounded skeptical about alternative fuels. Chevron Corp. CEO David O'Reilly took on the subject in a keynote speech, noting that renewable fuels "have the potential to alter the energy portfolio over the long term." And lunch Tuesday included a recounting of Brazil's success with fuel ethanol.

The influential annual conference, sponsored by Cambridge Energy Research Associates, this year is devoting an unprecedented share of the program to unorthodox topics such as alternative power sources, carbon dioxide policy and the future of ethanol and other biofuels.

"It really reflects how the times change," said Daniel Yergin, chairman of the Cambridge, Mass.-based research group. "It's even striking how much has changed in a year on the climate-change front and in renewables."

Tillerson started Tuesday's events by reiterating some of the Irving, Texas-based company's -- and oil industry's -- favorite themes: the need to tap more of this country's oil reserves, the importance of oil to the world economy and the damage new oil taxes could have on the industry's long-term investments to find and produce more petroleum.

But he also offered a cautious view on biofuels such as ethanol and biodiesel. Such renewable fuels are being touted in many circles as the best near-term hope for reducing carbon emissions from gasoline and diesel.

"I'm not an expert on biofuels. I don't know much about farming, and I don't have a lot of technology I can add to moonshine," Tillerson told his audience with a laugh.

"I'm not at all trivializing the important role that biofuels will play. But it's going to be limited in terms of the scale of the capabilities, absent some significant technology breakthroughs."

For that reason, he added, "the important thing is that the public and policymakers be realistic about the role that biofuels will play and not get ourselves into wishful thinking."

O'Reilly of Chevron was a little more upbeat, noting that the San Ramon, Calif., company had invested in a biofuels plant in Texas and funded related research at several universities aimed at lowering the cost of making ethanol from plant matter other than corn.

"We're a big player in alternatives ... and we're doing a lot of work in the biofuels area," O'Reilly said in a Tuesday interview before his evening speech. "The dollars that are being invested in alternative energies today -- that's going to generate new products, new ideas, and it's going to be the marketplace that dictates this, no matter where policy is."

However, he disagreed with the notion that renewables would ultimately replace gasoline. "It's not fossil fuels or renewables that's the answer. It's fossil fuels and renewables. We're going to need both, not one or the other."

Jose Sergio Gabrielli de Azevedo, chief executive of Brazil's Petrobras oil company, made a point of touting his country's dramatic shift to ethanol-based fuels made from sugar cane.

"I'm trying to call attention to the role of Latin America as oil producer and also trying to call attention toward the importance of biofuels as a new source for energy," Gabrielli said. His country, where every gas station has at least one pump dispensing pure ethanol, is considered a model in the shift away from the fossil fuels that have powered cars for a century.

Brazil, he said, stands ready to help the United States boost its ethanol use. But that won't happen as long as this country clings to its tariff of more than 50 cents per gallon on imported ethanol.

All the talk of ethanol, biofuels and climate change represented a striking departure from the hot topics that have coursed through this energy conference over the last 25 years. But oil industry critics at the Foundation for Taxpayer and Consumer Rights weren't impressed.

"Big Oil CEOs are meeting in Houston this week to develop a message on making their industry look better -- greener and more committed to energy efficiency. But their underlying business strategy hasn't changed a bit," the Santa Monica-based consumer group said in a Tuesday statement.

"Without strong federal regulation -- including an antitrust update and requirements that oil companies put a portion of their outlandish profits into robust development of renewables -- meetings like this week's in Houston are just hot air."

elizabeth.douglass@latimes.com

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