THE BUSINESS OF OIL

“The oil business is doomed, finito”, - a sinister voice gleefully welcomed me as I walked into our Sunday morning hangout. We, a group of retirees meet every Sunday morning and chat over several cups of coffee. The gentleman in question is secretly called Mr. Wiser-than-thou or simply Mr. wise, as he has a solution for any complex issue and a knack of dismissing any point raised by others just by a wave of his frail hands.

For a moment I froze for the fear of losing my job before I realized I had no job to lose as I retired more than five years ago. However, I was not happy at the impending doom of an industry, which tended and nurtured me all my life.

What was the reason of his confident prophecy, - I politely asked.

“Didn’t you read the newspaper yesterday?” – He retorted. Well, I did but could not remember anything alarming that remotely predicted the end of the oil industry. This time his voice exuded extreme contempt, - “Go back home and read the business page, e-cars will soon swarm the roads and petrol driven cars will be confined to the dustbin of history.”

Mr. Wise looked at me with a victorious but venomous glare as he concluded his argument.

Well, the statement is not completely untrue. E-cars are indeed generating a lot of interest among car users. The sale is still sluggish due to their high cost though running cost is much lower than cars run on fossil fuels like petrol and diesel. Governments all over the world, concerned about rising carbon foot prints due to ever increasing vehicular traffic, are offering subsidies to attract buyers. There have been media reports of leading automobile manufacturers adopting plans to gradually phase out petrol or diesel driven cars.

Sighting an e-car is not rare these days even on Indian roads, particularly in the metropolitan cities. There are a handful in the residential complex in Kolkata, where I live. I still remember the first glimpse of one when I interrupted my morning walk one day to join a few neighbours to ogle at one. The proud owner was passionately explaining the intricate features as we listened with rapt attention.

I distinctly remember Mr. Wise was one of the eager listeners who later waived off this new marvel with the usual gesture as a temporary fad. What an irony! Now, the same person was predicting a bright future for e-cars. There was no point in reminding him of his earlier views, because he often suffered from selective amnesia whenever his contradictory views were highlighted. So, it was my turn to retaliate. I would not let a self-appointed smart-alec to get away with his hollow banters.

So, I decide to counter attack with whatever limited knowledge I possess on the subject.

Going back to my first ever look at an e-car, I remember the owner had installed a charging device at the parking slot allotted to him. At the end of the day, he put the charger on and left it overnight to have the car ready for the day after. This did not sound like a smart idea. Driving to a petrol station and getting a tankful of petrol was more convenient and quicker. So, this was an aspect that weighed heavily against an e-car. Unless technology improves significantly, this car will not be convenient for long drive on highways. Current statistics reveal the use of e-cars is mostly restricted to city driving at the present moment.

The electric vehicle industry received a major impetus from the Government of India to enhance their manufacturing capacities. The government is committed to international guideline about reducing vehicular pollution. It has developed a blue print to shift to electric vehicles by 2030. However, no major steps have been taken yet to build charging facilities in the cities and towns. I am sure in course of time this shortcoming will be tackled on a war footing and innovative technology will reduce charging time significantly. Will these developments eliminate dependence on fossil fuel completely? No, not at all; no matter what Mr. Wise and his ilk may think.

It is also a fact that many cities in India and abroad are switching to electric buses. As a result, pollution level has been reduced considerably. But till the time of writing, no major inroads have been made in introducing battery driven heavy duty trucks and long-distance buses in India or abroad.

In short, transport sector will continue to depend on fossil fuel for a long time to come. A few steps to use alternate energy is good for the oil industry too. Controlled consumption of fossil fuel will prolong the life of oil fields and enforce the much-desired conservation.

Apart from road transport, two other segments of the transport industry are still outside the ambit of alternative energy. These segments are Shipping and Aviation.

The shipping industry plays a vital role in global trade. It is estimated that the industry handles 90% of the goods transported around the globe. This is one industry which started hundreds of years ago using renewable energy of sail power. Ironically, technological development dragged the industry to using coal powered steam engines and to diesel driven power some years later. The industry is now striving to revert to the use of renewable energy without compromising the technical excellence it enjoys now.

Lloyd’s Register, International Renewable Energy Agency (IRENA) based in Abu Dhabi and several other energy leaders have various projects under their Research and Development wings. One of the interesting proposals is an innovative use of a unique sail powered propulsion system which will reduce consumption of fossil fuel by 40 to 50%.

The use of solar power is also under active research along with a hybrid propulsion system. However, all the alternative systems proposed so far talk of reducing the consumption of fossil fuel to certain degree. The possibility of eliminating the use of fossil fuel totally, is still very remote.

Bio-fuel is another alternative under active study and research. The broad definition of bio-fuel is any fuel in liquid state that is extracted from plants. The primary advantage is that unlike fossil fuel, bio-fuel source can be renewed over and over again. According to energy experts bio-fuels are the only renewable energy source that can eventually replace fossil fuel. There are some roadblocks though. One of the initial process of developing bio-fuel was based on wheat and corn. The discovery, instead of creating an euphoria, resulted in strong protests and resentments in social as well as scientific communities. The very idea of using food products to create fuel was feared to impact food supply and cause increased food price. Corn and wheat products are staple food in various parts of the world. With billions of hungry people around, this initiative failed to gather momentum.

Biofuels definitely have great potential to replace fossil fuels provided food supply chain remains unaffected.

The aviation world celebrated with pride a short flight from Dehradun to Delhi in August this year. The flight operated by Spicejet was touted as “India’s first ever biojet fuled flight”. The event was indeed a matter of pride for the airlines and the nation. However, if we probe a bit deep, we would realize that the fuel used was a blend of 25% biojet fuel and 75% Air Turbine Fuel (ATF). While the achievement of CSIR-Indian Institute of Petroleum (IIP), Dehradun in developing the fuel needs to be lauded, the result shows that fossil fuel will still remain an essential source of energy though its use will be reduced substantially. The management of Spicejet hopes to reduce the use of ATF to 50%. The blend is of low cost and reduces carbon emission significantly. Eventually, passengers will enjoy the benefit of low airfare as well. The cost aspect is contested by biojet fuel developers of the western world. According to their prognosis, even mass production of biojet fuel will be costlier. But as has been witnessed in the past, technological development will eventually reduce the cost for sure

International Air Transport Association (IATA) set itself a target of flying about a billion passengers annually using a blend of biojet fuel and fossil fuel by 2015.

However, all these scientific feats failed to eliminate the use of fossil fuel so far though its use will be reduced, which in turn, will prolong the life of the oil fields as mentioned earlier.

At this point, Mr. Wise looked a bit vulnerable having failed to counter my statistical onslaught. I took it as a victory and walked away.

The industry has nothing to fear. The oil industry will continue to flourish. Thousand of rigs will be deployed the world over, gathering centres will continue to grow, oil tankers will venture out with their deep-sea voyages, refineries and petro-chemical industries will continue to thrive.

At the end, I have a special message to the members of my exclusive fraternity, - Happy Drilling.

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