Texaco buys 20% stake, plans JV with 'green' technology firm
Texaco is taking an important step into the 'green' technology field by purchasing a 20% stake in Energy Conversion Devices. The firms will work together to develop and market ECD's solid-hydrogen storage and regenerative fuel-cell technologies.
Texaco Inc., White Plains, NY, on Tuesday announced plans to purchase a 20% stake in Energy Conversion Devices Inc. (ECD) for $67.3 million. Both companies also agreed to establish joint ventures for the continued development and commercialization of ECD's proprietary Ovonic solid-hydrogen storage and regenerative fuel cell technologies.
The purchase is part of Texaco's plan to become "a leader in the development and commercialization of environmentally smart alternative-energy technologies," said Texaco Vice-Pres. William M. Wicker. "We intend to be a company that is responsive to the changing face of the marketplace and the energy sector."
The JV's joint efforts to develop and commercialize the technologies could have a dramatic effect on the automobile industry by bringing the concept of electric powered cars to reality, said officials with both firms. "There's no question that the oil industry over the next 2 decades will be subject to technological changes," said Wicker.
How it happened
Texaco has long been working its proprietary gasification technology for converting coal, petroleum coke, and other low-value hydrocarbons into a clean synthesis gas that can be used to produce electric power or petrochemicals. The company also been involved in testing fuel-cell vehicles in California, in cooperation with that state, as well as in actively developing hydrocarbons-to-liquids technology, including manufacturing diesel from low-value or stranded hydrocarbons.
Although Texaco has developed a "great level" of expertise in fuel-cell processing, the company was looking to participate in a joint venture to further develop fuel-cell technology, Wicker said. Ron Robinson, an executive with Texaco's technology division who already was familiar with ECD, met with ECD officials on a visit to Detroit in January. Texaco officials became intrigued with ECD's technology, and soon the two companies were discussing ways they could work together. Texaco never discussed buying ECD, feeling it had a good future as an independent company, Wicker said, but Texaco did decide it wanted an equity stake in the firm.
Hydrogen storage, in particular, could bring the idea of electric-powered cars to reality. In concept, processing gasoline on board a car to convert it to usable energy is too costly, while hydrogen storage presents other problems, such as difficulty in compressing it and working with hydrogen in the gas and liquids forms.
Unlike other companies that Texaco had talked with, ECD has gone beyond the basic science and concepts into reality, Wicker said. "We think they have the breakthrough technology," he said, adding that the technology is different from protonic fuel cells.
Stan Ovshinsky, president, CEO, and cofounder of EDC, said the company has already solved problems related to hydrogen storage, infrastructure, and the regenerative battery. "One day, instead of pulling into a Texaco station to fill up on gas, customers could pull and get their hydrogen battery recharged. ECD has already produced a battery that could carry a strong enough charge to fuel electric cars for several hundred miles," Wicker added.
Established in 1960 in Troy, Mich., just outside of Detroit, ECD was founded to "use science and technology to solve serious societal problems," said Ovshinsky. The company's proprietary Ovonics technology is designed to "exploit unique properties" resulting from engineered chemical or structural disorder.
He said ECD would benefit from the venture by having a large, well-known company through which their technology can be distributed and which might present new applications for their technology. Texaco will also lend the expertise of its scientists and technological personnel to ECD.
"From the outset, we decided that energy and information would be the bases on which we would build new industries to meet the economic and technical needs of a changing world," said Ovshinsky. ECD decided hydrogen would be ideal because of its high energy content and low polluting quality.
In 1980, the company began using solid hydrogen in nickel batteries for consumer use. EDC's Ovonic battery can be recharged in 1.5 min, and in November 1999, it achieved 7% hydrogen storage. Translated, that means that a car could run about 300 miles on a single charge.
Now, the company can begin the commercialization process with Texaco. So far, ECD's development efforts have primarily been funded through contracts with US government agencies, the company's licensees, and its industrial partners.
Wicker said ECD's nickel battery technology is already in consumer use and would work well in an electric hybrid car. ECD's solar products also offer a number of potential applications.
Both companies intend to move quickly in bringing the storage and regenerative fuel-cell technology to market, The decision was made after several automotive companies indicated they had aggressive plans for to start working on hydrogen vehicles using fuel cells, said Robert Stempel, chairman of ECD.
Texaco's promise of additional investments for joint ventures will "leverage Texaco's position in the company far beyond its 20%," said Wicker. Texaco also will chair two seats on ECD's board of directors.
Wicker stressed that Texaco remains committed to its upstream and downstream oil and gas businesses but will continue striving to become a major player in technology. Texaco's interest in ECD will be managed by Texaco Energy Systems Inc., a wholly owned subsidiary established in 1999 to harness Texaco's fuel-conversion expertise to advance the commercialization of fuel cells and hydrocarbons-to-liquids technology.