New Century, New Business Models
GEMI Power Conference
June 2006
New Century, New Business Models
China & India aspire to OECD living standards – their rise
to materiality changes everything
Oil Consumption
(MMBD in 2005)
World Population
(Billion in 2005)
7.0 2.5
1.3
23.7
2.8
1.1
1.2
1
49.3
China
India
China
India
More Developed
Less Developed
More Developed
Less Developed
Private and Confidential
New Century, New Business Models
Oil has little competition in the transportation sector
2003
85.9 Quads
Oil
2030
Global
Transportation
125.0 Quads
Oil
+45%
Other
Source: EIA IEO2006
2
Private and Confidential
Other
New Century, New Business Models
Coal and natural gas are competing for power growth
Global
2003
2030
Power Generation
163.7 Quads
Oil
296.4 Quads
Gas
Oil
Nuclear
Coal
3
Private and Confidential
Nuclear
+81%
Coal
Renew
Source: EIA IEO2006
Gas
Renew
New Century, New Business Models
Issue #1: Oil and gas suffer from a security of supply
“externality”
500
125
Mtoe
400
300
200
65
40
100
0
Oil
4
Private and Confidential
Gas
140
120
100
80
60
40
20
0
Coal
Russia
China & India
North America
Middle East
Other
R/P
R/P (Years)
Global Hydrocarbon Reserves
New Century, New Business Models
Issue #2: Coal suffers from a GHG emissions
“externality”
CO2 Emissions - North America
CO2 Emissions - Other OECD
MMT
MMT
5000
5000
4000
4000
3000
3000
2000
2030
2010
1000
2000
2030
2010
1000
1990
0
1990
0
Coal
Oil
Nat Gas
Coal
CO2 Emissions - China
MMT
5000
5000
4000
4000
3000
3000
2000
2030
2010
1000
1990
Coal
5
Oil
Private and Confidential
Nat Gas
CO2 Emissions - India
MMT
0
Oil
2000
2030
2010
1000
1990
0
Nat Gas
Coal
Source: EIA IEO2006
Oil
Nat Gas
New Century, New Business Models
To address these issues, we must reframe our sense of
industry purpose and boundaries
Gasification
Natural Gas
Crude Oil
Hydrocarbons
Coal
Refining
Fischer Tropsch
Gasoline &
Diesel
PC
Syngas
Combined Cycle
ICE
Fuel Cell
Hydrogen
CO2
Flue Gas
Primary
“Goods”
Personal
Mobility
Electrons
On
Demand
Transmission
Bio-fuels
Chem Processing
Bio-refining
Engineered
Crops
6
Resource
Segments
Chemical
Separation
Private and Confidential
Wind, Tides,
Currents,
Waves, Solar
Emission
s Control
Sequestration
Nuclear Waste
Transportation
Nuclear
Carbon Neutral
New Century, New Business Models
What will be the Winning Business Models?
Gasification
Natural Gas
Crude Oil
Hydrocarbons
Coal
Refining
Gasoline &
Diesel
Combined Cycle
ICE
Fuel Cell
Hydrogen
CO2
Flue Gas
Chemical
Separation
Personal
Mobility
Electrons
On
Demand
Emissions
Abatement
Nuclear
Waste
Bio-fuels
Bio-refining
Engineered
Crops
7
Syngas
Basic Power Play?
Transport of Delight?
Fischer Tropsch
Private and Confidential
Wind, Tides,
Currents,
Waves, Solar
Nuclear
Carbon Neutral
New Century, New Business Models
Conservative Oil?
Gasification
Natural Gas
Crude Oil
Hydrocarbons
Coal
Refining
Fischer Tropsch
Gasoline &
Diesel
Syngas
Combined Cycle
ICE
Fuel Cell
Hydrogen
CO2
Flue Gas
Chemical
Separation
Personal
Mobility
Electrons
On
Demand
Emissions
Abatement
Nuclear
Waste
Bio-fuels
Bio-refining
Engineered
Crops
8
Private and Confidential
Wind, Tides,
Currents,
Waves, Solar
Nuclear
Carbon Neutral
New Century, New Business Models
Big Dig?
Gasification
Natural Gas
Crude Oil
Hydrocarbons
Coal
Refining
Fischer Tropsch
Gasoline &
Diesel
Syngas
Combined Cycle
ICE
Fuel Cell
Hydrogen
CO2
Flue Gas
Chemical
Separation
Personal
Mobility
Electrons
On
Demand
Emissions
Abatement
Nuclear
Waste
Bio-fuels
Bio-refining
Engineered
Crops
9
Private and Confidential
Wind, Tides,
Currents,
Waves, Solar
Nuclear
Carbon Neutral
New Century, New Business Models
Big Oil to Big Energy?
Gasification
Natural Gas
Crude Oil
Hydrocarbons
Coal
Refining
Fischer Tropsch
Gasoline &
Diesel
Syngas
Combined Cycle
ICE
Fuel Cell
Hydrogen
CO2
Flue Gas
Chemical
Separation
Personal
Mobility
Electrons
On
Demand
Emissions
Abatement
Nuclear
Waste
Bio-fuels
Bio-refining
Engineered
Crops
10
Private and Confidential
Wind, Tides,
Currents,
Waves, Solar
Nuclear
Carbon Neutral
New Century, New Business Models
Global Cool?
Gasification
Natural Gas
Crude Oil
Hydrocarbons
Coal
Refining
Fischer Tropsch
Gasoline &
Diesel
Syngas
Combined Cycle
ICE
Fuel Cell
Hydrogen
CO2
Flue Gas
Chemical
Separation
Personal
Mobility
Electrons
On
Demand
Emissions
Abatement
Nuclear
Waste
Bio-fuels
Bio-refining
Engineered
Crops
11
Private and Confidential
Wind, Tides,
Currents,
Waves, Solar
Nuclear
Carbon Neutral
New Century, New Business Models
Super-Power?
Gasification
Natural Gas
Crude Oil
Hydrocarbons
Coal
Refining
Fischer Tropsch
Gasoline &
Diesel
Syngas
Combined Cycle
ICE
Fuel Cell
Hydrogen
CO2
Flue Gas
Chemical
Separation
Personal
Mobility
Electrons
On
Demand
Emissions
Abatement
Nuclear
Waste
Bio-fuels
Bio-refining
Engineered
Crops
12
Private and Confidential
Wind, Tides,
Currents,
Waves, Solar
Nuclear
Carbon Neutral
New Century, New Business Models
Why Not? The Ultimate Resource is Human Ingenuity
Gasification
Natural Gas
Crude Oil
Hydrocarbons
Coal
Refining
Fischer Tropsch
Gasoline &
Diesel
Syngas
Combined Cycle
ICE
Fuel Cell
Hydrogen
CO2
Flue Gas
Chemical
Separation
Personal
Mobility
Electrons
On
Demand
Emissions
Abatement
Nuclear
Waste
Bio-fuels
Bio-refining
Engineered
Crops
13
Private and Confidential
Wind, Tides,
Currents,
Waves, Solar
Nuclear
Carbon Neutral
New Century, New Business Models
Key strategic questions for an industry in transition to a
very different future
• What are the big trends and how can we get downwind of them?
• Can we shape the way the rules of the game are written?
• What should be our direction and what goals should we set?
• What should be the boundaries of our business portfolio?
• Which areas should we focus on with greatest intensity?
• What is the best business model for competitive advantage?
– What will be the value drivers?
– How do we leverage our existing and new competencies?
• How do we build out the strategy to get where we want to?
• Which partners will we need to execute the strategy?
• Is our leadership aligned with the new direction?
14
Private and Confidential
New Century, New Business Models
Chris Ross
CRA International
1600 Smith Street
Houston, TX 77002
(713) 646-2211
cross@crai.com
15
Private and Confidential