A "global automobile" operating on cleaner burning gasoline will drive the oil and gas industry to new prosperity in the next century, says Mike Bowlin.
Speaking to a Dallas conference of energy economists, the president and chief executive officer of ARCO offered an encouraging forecast for the industry's future despite pervasive change that are sweeping through it.
"Today," Bowlin said, "you'll probably find more Texas oilmen in Jakarta than Midland. ARCO's newest office building will be found in-of course Beijing, our Asia Pacific headquarters.
"In the gasoline marketplace, the bouncy jingles and giveaway dolls have given way to careful measurement of ROGS, NOy and SOx-and sober evaluation of the ozone problem. In fact, we're in a pretty serious struggle to prove that gasoline has a place in the coming century. It isn't in the bag, but I think were making pretty good headway."
UPSTREAM OUTLOOK
For the upstream U.S. oil industry, Bowlin said, the future is clearly international, and ARCO is pursuing overseas options seriously.
"We're going where we think the oil and gas are-and where we know the growth will happen. China, for example, is still a poor country. But we and a lot of other people think that's going to change-and quickly."
Bowlin cited a prediction by the World Bank that China's economy will outstrip that of the U.S. by 2026, becoming the largest in the world. Meeting China's growing energy demand will require investment of hundreds of billions of dollars, he said.
"That's where ARCO and other international oil companies can help. Development on that scale is our specialty. We have the technology and the expertise. We know how to manage large projects. We can raise the capital.
"And, most of all, we want to be part of this amazing story: Asia's coming of age in the 21st century."
The U.S. oil industry's worldwide prospects will be greatly enhanced by its technical expertise, Bowlin said. He pointed out that enhanced oil recovery, including miscible gas injection, is a well established practice in the U.S. but only beginning abroad.
ARCO, Bowlin pointed out, is taking advantage of this trend with a new project in Algeria.
The company agreed with the North African country to install miscible gas recovery in 32 year old oil field, 450 miles south of Algiers, where only about 15% of the oil in place has been produced.
With gas injection, Bowlin said, ARCO can increase Rhourde el Baguel production to perhaps 125,000 b/d from 25,000 b/d and boost remaining recoverable reserves to more than 550 million bbl from 75 million bbl.
U.S. GASOLINE
Downstream in the U.S., gasoline faces a challenge from alternative fuels, Particularly electrically powered cars. The challenge stems from public demand for cleaner air, Bowlin said vowing that the demand can be met by reformulated gasoline.
He predicted a "great worldwide surge" in the use of private automobiles in less developed countries (LDCS) such as China.
Bowlin said,. "The auto companies recognize this in their search for the 'global car,' a vehicle that will satisfy the natural transition for the 3 billion people in the LDCs from bicycles to mopeds to autos. This will be an enormous market, which is why I'm not doubtful about the future of oil."
But the environmental threat that expanding numbers of cars present must be met, Bowlin added.
"They pollute the air," he said. "And dirty air soon will be no more tolerable in East Asia than it is in East Los Angeles.
"We clearly have to do something about the air quality issue if we want to stay in this business and if we- want to go on operating our companies without foolish, counterproductive regulations imposed on us by government."
While recognizing the popularity of some alternatives to gasoline, Bowlin said reformulated gasoline (RFG), coupled with new emission controls on cars, is a transportation package that can meet U.S. clean air objectives in the most cost effective way.
ARCO introduced RFG in 1989, Bowlin noted, adding that no alterative can compete with clean burning, low emission gasoline-certainly not electric cars.
Under Clean Air Act amendments of 1990, the U.S. government requires RFG to be sold in the nation's smoggiest cities beginning Jan. 1, 1995. California will require an even cleaner burning gasoline, CARB Phase 2, by March 1996.
These gasolines, Bowlin said, cost an extra $5,000-20,000/ton of hydrocarbons removed from vehicle emissions. But the electric car, he said, referring to a study by the economic firm McGraw Hill, costs an extra $265,000/ton.
Bowlin said logic and economics dictate continued reliance on gasoline powered cars for many, many years to come.
"All over the world," he said, "millions and millions of people are beginning to learn the benefits that petroleum can bring. Their lives are improving, and their children's prospects are even brighter."
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
Issue date: 11/21/94
