A Good Week for ConocoPhillips

It is no secret that I work for an oil company. However, I never acknowledge which oil company, because I don’t want anyone to get the impression that they sanction any of the positions I have taken here in this blog. They would agree with some, and disagree with some. So, I have told my management – all the way to my CEO – that I would not talk about my employer. The last thing I want is for them to be attributed as taking a position that they don’t agree with.

But of all of the oil companies, if I did happen to work for ConocoPhillips, it would certainly have been a rewarding week. Actually, going back to last week, they donated $6 million to the University of Oklahoma (my home state university, and the home of my beloved Sooners football team). Then, this week they announced a $22.5 million biofuels research program for Iowa State University:

HOUSTON, Texas – ConocoPhillips will establish an eight-year, $22.5 million research program at Iowa State University dedicated to developing technologies that produce biorenewable fuels. The grant is part of ConocoPhillips’ plan to create joint research programs with major universities to produce viable solutions to diversify America’s energy sources.

But today’s news item tops them all:

ConocoPhillips: The anti-Exxon

NEW YORK (Fortune) — Here’s yet another sign that the debate over climate change has shifted decisively: ConocoPhillips today becomes the first U.S.-based oil company to support mandatory national regulation of greenhouse gas emissions.

In so doing, ConocoPhillips breaks ranks with the two biggest U.S. oil companies – ExxonMobil (Charts) and Chevron (Charts) – as well as with the Bush administration. With revenues of $188 billion in 2006, ConocoPhillips (Charts) operates in 40 nations around the world from its headquarters in Bush country – Houston, Texas.

Mulva said no particular event caused ConocoPhillips to step forward. “We believe that the science is quite compelling,” he said. “Human activity, including the burning of fossil fuels, is contributing to climate change. Now is the time we need a national mandated framework to deal with climate change.”

He didn’t endorse a specific regulatory regime. But ConocoPhillips has become the second major oil company – after BP America, a unit of British-based BP (Charts) – to join the U.S. Climate Action Partnership, an alliance of big companies and environmental organizations that support federal action to achieve “significant reductions” in greenhouse gas emissions caused by burning fossil fuels.

After the press event, Mulva told me that he’d reflected personally on the issue of climate change for about a year or so; he travels about 180 days a year, and has heard government officials, environmental groups and scientists sounding alarms over the issue.

William K. Reilly, former administrator of the U.S. Environmental Protection Agency and a member of ConocoPhillips’ board, was among those urging the company to act.

Now, Mulva said, there’s no time to waste.

“Voluntary programs are not going to meet the challenge of climate change,” Mulva said. “The longer we wait – two or five years or more from now – it won’t be mitigation, it will be adaptation.”

Yes, that’s the CEO of a Texas-based oil company talking.

I believe that the scientific consensus on global warming is compelling. I believe we need to take steps to reduce our carbon emissions. I am very happy to see ConocoPhillips taking this step. If I happened to work for them, I would say that I am particularly proud of that fact today.

Of course I might also point out that ConocoPhillips was Warren Buffet’s largest acquisition in 2006, and is one of the 10 largest holdings in his portofolio. Seems that Warren and I have something in common. 😉

I just hope the FTCR doesn’t get wind of all of this. I am sure they can spin this into bad news.

13 thoughts on “A Good Week for ConocoPhillips”

  1. Bit by bit the wall of denial is breaking.

    Marks and Spencer, the British clothes and food retailer, has an ad campaign on conservation: ‘Plan A: because there is no Plan B’.


    I am very afraid that the urgency of what needs to be done on global warming, just hasn’t penetrated.

    Exhibit A has to be today’s revelations on the Congo rainforest, which are being logged. The rainforest there holds at least 60 times the CO2 that the UK emits in a single year. Yet we see no evidence of firm and immediate international action.

    I am amazed at the depth of denial of the global warming problem, and in addition, the next iteration of that argument which that this is all just panic ‘just like the other panics that went away’.

    As if the CFC/ ozone problem ‘went away’. Or the problem of the river in Cincinnati catching fire. In both cases, they went away because strong action was taken, laws were passed, new technologies were deployed, a price was paid by society to clean up the environment.

    Because of that effective 20-100 year lag between our actions, and their worst negative consequences, and conversely that we won’t see real benefits for what positive measures we take for a long time, humanity’s worst tendencies for procrastination are being catered to.

    What, after all, do we care for future generations? In 2050 I’ll be in an old age home, if I’m alive at all.


  2. Looks like it is too late Robert, the FTCR put their spin on it already….
    ConocoPhillips is pushing to become a full-fledged sponsor of Big Oil U with a grant of $22.5 million to Iowa State University to develop technologies to produce biorenewable fuels.

    “We believe the key to a secure energy future is the efficient and effective use of a diverse mix of energy sources,” said Jim Mulva, chairman and chief executive officer of ConocoPhillips. “ConocoPhillips is developing long-term relationships with respected academic institutions such as Iowa State to research extensions of traditional energy sources that ultimately will benefit consumers.”

    What’s really at stake are two things.

    First, ConocoPhillips gets to greenwash its dirty image by associating with academic institutions like Iowa State as it touts its new-found environmentally friendly incarnation in PR campaigns that take advantage of the school’s reputation.

    Second, ConocoPhillips has to pony up the money if it wants to stay competitive with oil giants like ExxonMobil and BP. Exxon began the trend with a $100 million dirty deal with Stanford University and BP as upped the stakes with a proposed $500 million arrangement with the University of California at Berkeley.

    Both have sparked concerns about academic integrity and fears that the oil giants will determine research agendas and control discoveries that should be public.

    Conoco, third largest oil company in the United States is in the game for a mere $22.5 million over eight years, but vows to create more joint research programs with major universities.

    How long will it be before Big Oil U fields a football team?

    Iowa Sen. Tom Harkin’s wife, Ruth, told reporters she lobbied hard for the grant. She serves on both the nine-member board of regents that oversees Iowa State and on the ConocoPhillips board of directors. She didn’t make it clear if she lobbied the directors on behalf of the university or the regents on behalf of the oil company.

    She should make clear just whose interests she was pressing; they are absolutely not the same.

    What the Harkins actually should be doing is working to ensure that ConocoPhillips doesn’t set the Iowa State research agenda or that the oil company unfairly controls any discoveries made in the program.

  3. Looks like it is too late Robert, the FTCR put their spin on it already….

    LOL! I should have known. I have been reading their stuff for over a year now, and those people are truly pathetic. I can’t envision the world they live in.

    Cheers, Robert

  4. I am amazed at the near religous ferver of global warming apocalyptists. Armed with only a few decades of satellite temperatures, a few centuries of ground temperatures (the thermometer wasn’t invented until 1593), some ice core samples that indirectly measure temperatures, they know FOR CERTAIN that a complex unsteady state system like the earth’s climate is changing for the worse and that man is absolutely without a doubt responsible. And that if we don’t do something RIGHT NOW, life as we know it will cease to exist, death, disease, and destruction to follow.

    But I guess all of us who are a bit skeptical are just too stupid to understand the brilliance of Al Gore and Leo DiCaprio.

  5. I am amazed at the near religous ferver of global warming apocalyptists.

    Well, I am definitely not an “apocalyptist.” But there is no question that we have greatly increased the CO2 levels in the atmosphere. Is it enough to cause a general warming trend? It isn’t just Al Gore who thinks so. It is general scientific consensus, and I don’t take that lightly. Also, I would suggest that we need to be very careful when tampering with the atmosphere. It pays to be cautious, IMO.

    Cheers, RR

  6. ‘apocalyptist’ is a wonderful word.

    Is it apocalyptic to say that

    *if we continue on our present emission trends*

    then CO2 levels are likely to rise above 550ppm

    – which would imply a rise in world temperatures of at least 2 degrees centigrade, and possibly 5, based on everything we know about atmospheric science

    – and a possibility (which we can’t quantify) that they would rise much, much more, due to embedded positive feedback loops in the world’s carbon cycle

    – and that at those temperatures (of greater than 2 degrees centigrade, and possibly 5 or more) the cost to the ecosystem, and possibly our civilisation, could be so large as to be unquantifiable?

    The best published estimate we have is the UK Government’s Stern Review, which says that unregulated climate change could trigger a *permanent* loss of world GDP of 15 to 30%.

    However that Review explicitly refuses to address the question of a world with a greater than 5 degree centigrade temperature rise. It simply says the damages would be so great, we don’t know how to quantify them.

    That hardly sounds like alarmism to me. That says: do something or we could live in a very, very bad world.


  7. There are those who are reading too much into the ConocoPhillips announcement. Mr. Mulva said that humans have some influence on climate change. The magnitude of the influence is still open for debate.

    COP, like the other international energy company, is finding fewer and fewer places to invest its capital and intellectual resources in conventional oil and gas. Nearly 90% of the world’s oil reserves are out of reach to the IOCs either the exculsive domain of the state companies or off limits for political reasons. ConocoPhillips may be rethinking its long term investment strategies towards areas like biofuels, clean coal, and other energy forms which are open for investment.

  8. But there is no question that we have greatly increased the CO2 levels in the atmosphere. Perhaps, we get back to cause and effect. Global C02 levels rose rapidly in the late 19th century, while the world was burning very little fossil fuel when compared to today.

    I think this problem is fixing itself. Looking at fossil fuel usage per unit of GDP, the world produces much more in goods and services in 2007 with much less energy than we did in 1980.

    Looking at the GAO report you see that world crude production increased from 20 million to 60 million barrels per day from 1960 to 1980 (up 300%). From 1980 to 2005 it increased to 80 million (up only 33%). There was a big jump from the late 1990s to 2005 during which crude prices were near historic lows (adjusted for inflation). During the last 25 years the number of autos and miles driven worldwide has increased dramatically.

    I think $60-70 oil and $8 natural gas will drive further efficiency improvements. If, as ConocoPhillips proposes, there is some sort of mandatory carbon tax or cap and trade system, then we will see further advances in efficiency.

  9. King of Katy wrote:

    Looking at fossil fuel usage per unit of GDP, the world produces much more in goods and services in 2007 with much less energy than we did in 1980.

    Valuethinker replies:

    Yes, but total energy use and emissions have increased.

    The big increases in oil prices 2002-2006 did not lead to a significant fall in world energy consumption. This despite a tripling of oil prices, and more than that in some instances of gas prices (coal prices also doubled, AFAIK).

    Increases in efficiency are normal (the world also uses less copper per dollar of GDP than it did in 1980) but they don’t, normally, in the long run offset increases in consumption.

    Cap and trade (or carbon taxes) will work if the system imposed is fair, and well managed. The record of the US Acid Rain (SO2) scheme is encouraging: 60% reduction in precipitation, at less than half the forecast cost since 1990. The record of the European Emissions Trading Scheme (ETS) for CO2 is quite negative: the permits were a free gift to the existing players, who have not cut emissions.

    Studies show consumers turn down chances to save energy that have a 2-3 year payback and an Internal Rate of Return of 30-40%. Even though they get 3% (after tax) from their bank accounts. Similar hurdle rates have been observed in industrial enterprises for energy saving technology.

    For these and other reasons, I think there is a lot of room for regulatory solutions, as well as ‘cap and trade’.


  10. KingofKaty:

    Global C02 levels rose rapidly in the late 19th century, while the world was burning very little fossil fuel when compared to today.


    Query that. About 1ppm, vs. 1.9ppm post WWII (twice the rate) and 3 ppm (latest figure)?

    Arrhenius (1896) thought the greenhouse effect was only a curiousity, because humans would never emit that much CO2!

    In the 19th century, the key human impact was undoubtedly deforestation. This is the period when the US west was colonised, and widespread international logging was taking place all over the world (most notably in Russia and Canada).

    (since then, many Northern hemispheric countries (like Japan) have actually *reforested*- -unfortunately whilst an immature temperate forest is a carbon sink, a mature one is, at best, carbon neutral).

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