Bob Williams
Senior Staff Writer
Heightened concern for environmental and safety issues is extending beyond industry intitiatives to business opportunities.
A number of companies have substantial resources and experience in dealing with environmental and safety issues and have beefed up that capability in recent years (OGJ, Jan. 22, p. 14).
That was followed in short order by marketing that capability on a broader basis, first to other areas of a corporation, then outside as a profit center.
The most advanced example of this approach is the series of ventures petrochemical companies have launched to recycle plastics (OGJ, July 24, 1989, p. 13).
Perhaps the most noteworthy recent environmental initiative to turn into a profit opportunity has been the push for reformulated fuels started by ARCO last year. Conoco Inc. and Shell Oil Co. are the latest to follow ARCO's lead in introducing more environmentally benign products.
Other companies, notably Amoco Corp., BP America Inc., and Phillips Petroleum Co., have ventured into the waste management business by acquiring or starting new units.
REFORMULATED FUELS
ARCO's instincts on reformulated gasoline are on target, at least according to one California agency long deemed a nemesis of the petroleum industry.
South Coast Air Quality Management District, which is promoting an air quality plan designed to require alternate fuels use-mainly methanol-to clean up southern California air, presented ARCO a resolution commending the company for introducing a low emission gasoline in California.
In addition, Fortune magazine named ARCO's reformulated gasoline one of its products of the year.
"EC-1 does everything we'd hoped for and then some," said Ken Dickerson, ARCO senior vice-president for government affairs. "Not only are we getting the significant emissions reductions in older cars we had expected, we are getting significant reductions in 1989 cars."
ARCO recently announced plans to invest $1 billion each in its two California refineries to develop reformulated fuels.
Dickerson also cited as a key environmental initiative the joint research on cleaner engines and fuels by the auto and oil industries.
"Collectively we can present a product to the public and tell them: If you use this, we guarantee it will result in an improved environment. The world will force us to produce a better product or force us into something else that would be a mistake."
CONOCO'S FUEL
Conoco introduced a reformulated gasoline in Colorado.
The new gasoline will be seasonally adjusted for the state's varied environmental conditions.
The fuel, which contains Du Pont Co.'s ValveMaster lead substitute, will replace Conoco's current leaded regular gasoline in the state.
Although not a lead fuel, elements of ValveMaster are not compatible with catalytic converters.
Seasonal adjustments to the reformulated gasoline include a 25% increase in oxygen content during the winter and reducing Reid vapor pressure to 8.5 psi in the summer.
SHELL'S MOTOR OIL
Shell is introducing a reformulated heavy duty motor oil.
Shell's new additive technology in Rotella Multigrade with extended life additives (XLA) is designed to provide improved engine cleanliness and protection, along with better oil consumption control.
Tests using Cummins NTC-400 and John Deere 6466A engines show Rotella T with XLA lessens the chance of sticking engine parts, reduces the need for top off oil, and can extend engine overhaul intervals, Shell said.
The reformulated oil also prevents thickening.
Rotella T with XLA, designed to outperform the previous Rotella formulation, will be available after Feb. 1.
BUSINESS OPPORTUNITIES
Some companies are leaping headlong into pursuit of environmental and related services as business opportunities.
Du Pont and British Gas plc have created environmental/safety services.
Du Pont set up a business unit, Safety and Environmental Resources, to manage industrial environmental and safety issues. The focus is on waste management, safety and training, and environmental remediation.
Du Pont expects annual revenues of the unit to jump to $1 billion in 10 years from $100 million.
British Gas is offering a safety/environmental service to the onshore and offshore oil and gas industry covering hazard studies, safety/emergency procedures, site evaluation, structural analysis, environmental impact studies, risk assessment, and related research.
British Gas spends more than 8 million/year on safety and environment research and development.
OTHER VIEWS
Although several oil companies have acquired or started businesses involved in waste management, there are some misgivings from Fred C. Hart, president of Hart Environmental Management Corp., New York.
"They may run into some problems competing," he said. "Some of these other companies have built their businesses over 25 years or more."
Walter Quanstrom, Amoco Production Co. vice-president for environmental affairs and safety, said his company won't venture into the environmental services area as a profit center.
"We already consider ourselves an in-house consulting organization with just one client to serve."
However, Quanstrom said, companies in developing countries "are looking at these same problems, so there is the opportunity for technology transfer."
Pursuing business opportunities in environmental services is not a high priority and not likely soon for Chevron Corp., said Lyn Arscott, Chevron director of health, environment, and loss prevention.
"We need everyone we can get in this area for our own operations,"
ARCO's Dickerson said his company probably won't pursue business opportunities except in the very limited sense of pursuing participation in a joint venture to dispose of waste.
Barry Kumins, Conoco manager of safety, occupational health, and environmental affairs, however, cited a need for increased environmental resources, largely because states are becoming more active in the environmental regulatory arena.
"There may be some real growth potential in considering these resources as business opportunities," he said.
One such opportunity presented itself when Conoco formed an environmental geosciences group to provide support for parent Du Pont's environmental projects.
"We have always had an environmental group-a relatively small number of people-in exploration," Kumins said. "We are applying those existing resources to an expansion of our business. Now that we've expanded, the potential is out there to market this service."
CONOCO GEOSCIENCE GROUP
Conoco's new group, consisting of 11 geoscience professionals from its worldwide exploration department, will provide geological, geophysical, and mapping services to other operating areas in Conoco and other Du Pont units.
It will consolidate those services in Ponca City, Okla., the hub for Conoco's worldwide geoscience technology programs. The object is to provide a range of geoscience services in support of beefed up programs aimed at environmental mitigation.
The consolidation will provide a single contact for company departments seeking geoscience assistance with projects that affect soil or groundwater. The group will work closely with environmental groups in Conoco and other Du Pont units.
Areas of assistance will include on site guidance during drilling of sample boreholes and monitoring wells, groundwater and soil sampling, sample analysis, geophysical measuring, gravity/magnetic surveying, site characterization, computerized 3D subsurface mapping, and computerized modeling,
In addition to helping company operators manage projects, the group will help them satisfy the increasing demand for statistical data required by state and federal regulatory agencies.
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