Surprisingly, the energy minister of the UAE, Suhail Al-Mazrouei, who is the president of this year’s ministerial conference of OPEC, is driving a Tesla electric vehicle.
There is no escape from the challenge of electric vehicles (EVs), it seems, but their threat to conventional combustion-engine vehicles may not seem immediate. It will take a while before EVs can compete on an equal footing with combustion-engine cars that run on diesel or gasoline.
Surely the transport sector is the major oil consumer today, with more than 50 percent of oil going to fuel cars and other means of transport. Thus, any threat to this sector is a danger for oil demand in general.
So what are oil producers doing about this challenge? Some international oil companies are riding the wave by opening up electric car-charging stations. Even national oil companies have joined in. Kuwait Petroleum International last month inaugurated its first European charging station in Belgium.
Saudi Aramco, the world’s largest crude exporter, is taking a different approach. The company is investing in ways to improve the efficiency of combustion-engine vehicles with the aim of lowering their emissions while increasing their mileage.
The main problem of the current internal combustion engine is that it uses spark plugs to ignite gasoline cars, Ahmad Al-Khowaiter, Saudi Aramco’s vice president for technology oversight and coordination, told Arab News. Diesel engines are more efficient as they compress the fuel, and marine engines are the most efficient because they have long strokes.
Aramco is developing in its research centers in Detroit and Paris a gasoline engine that uses diesel-like compression technology. In parallel, it is working with a US company called Achates Power on turning gasoline combustion engines into marine-like long-stroke engines, Al-Khowaiter said. Achates will develop a light-duty truck vehicle with 2.7 liters, three cylinders and six pistons that will be integrated into a F-150 Ford truck. The Aramco-Achates engine will raise the existing mileage from 22 miles per gallon for a conventional gasoline engine to 37 miles per gallon, while mileage of the diesel engine will be 42 miles per gallon, up from 32 miles, he said.
Company is investing in ways to improve efficiency of combustion-engine vehicles to lower their emissions while increasing their mileage.
The combustion engine has a long way to go and there is much room for improvement, Al-Khowaiter acknowledged. However, will there be enough time for Aramco to make all these developments?
Companies such as French giant Total SA believe that by the end of the next decade, around a third of new sales of the global fleet may come from EVs. Many in the industry, nevertheless, including Al-Khowaiter, still don’t believe that EVs will dominate the scene, even with the advances in their battery technology.
On another front, the company is also testing technologies that will increase demand for oil in other areas. It teamed up this month with Chevron Lummus Global — a venture between Chevron and CB&I — to turn up to 80 percent of a barrel of crude directly into chemicals without going through an intermediate stage of refining the crude first. In fact, if Aramco can succeed in turning more crude into polymers, it will supply even more materials to EVs which use many polymers in their manufacture.
Developing and testing new technologies remains a major challenge, and Al-Khowaiter acknowledges that. Still, there are some worries about Aramco’s ability to lead on these new technologies as the company is not known for being active in research and development.
“Technology takes time and we don’t have a track record, I agree,” said Al-Khowaiter, who seemed aware that his company was focusing on upstream research but lagging behind in other areas. However, he has provided “proof points” to show that Aramco will deliver on its new technological push.
First, the company is now the fastest-growing international oil company in terms of patents and is now third among its peers in terms of the number of patents produced annually, he said. Last year alone, Aramco registered 233 patents. This is more than the 100 patents the company had from the 1930s until 2011.
Second, the company has doubled its spending on research, and that increased its research centers and offices around the world to 11 from only two, which were located in Dhahran. The number of scientists employed by Aramco also went up as a result from 600 to 1,300.
Time is running out for Aramco but the company seems to be focused on getting results on crude to chemicals and on improving car engines before the end of this decade and as early as next year. If Aramco can extend the demand for oil beyond transport, that would be good news for the initial public offering of the company, which is expected some time this year.
• Wael Mahdi is an energy reporter specializing on OPEC and a co-author of “OPEC in a Shale Oil World: Where to Next?” He can be reached on Twitter @waelmahdi