Oil Companies Looking in New Direction
This week Shell Oil signed a very large joint venture agreement down in Brazil. It has nothing to do with drilling rights or processing plants for crude oil, either. In fact, Shell has just put two billion dollars down on the table to join forces with Cosan SA Industria & Comercio, the world’s largest producer of sugarcane. Everything totalled, including stations and processing facilities for the sugarcane waste product, the venture is valued at nearly 12 billion.
So why is Shell looking into sugar? They haven’t gone crazy, but rather they are investigating another revenue channel that will help them branch out and start utilizing other energy sources that have nothing to do with oil. Brazil happens to use a ton of sugarcane ethanol, and it represents over 17 percent of the entire country’s source of energy. It is also a very efficient fuel to produce. For every unit of fossil fuel used in the production process, 8 units of sugarcane ethanol are produced.
Shell isn’t the only one getting into the biofuel game, though. Other energy giants like Exxon and BP have spent tens and sometimes hundreds of millions of dollars acquiring other biofuel companies. Their sources of fuel range from producing biofuel from algae to producing it from forest biomass. It seems that if they can squeeze fuel out of it, they will.
While the idea isn’t new, Shell’s joint venture is certainly the largest to date. Should it prove successful, the other oil giants might be tempted to toss their billions around in an effort to keep up.
It’s always interesting to watch companies, especially oil companies publically attempt to secure their future. You can almost already hear their commercials about how diverse and environmentally friendly they are now that they’re working on new sustainable fuel sources to reduce our dependence on oil. The funny part is that they always seem to leave out the fact that while we may be reducing our dependence on fossil fuels, we will always have to depend on them.
Don’t get me wrong, I like to see that big oil companies are trying to find creative ways to produce energy in our future instead of drilling in Antarctica (something that BP just decided would be a bad idea). I think that it’s a positive direction to be looking, especially considering the long-term negative affects of the Deepwater incident in the Gulf. I just hope that they balance the quest for increased profits through new ventures with good business practices.
To read the original article, please go to http://www.fastcompany.com/node/1685007/print