According to a new Pike Pulse report published by Pike Research, the oil companies with the best positioning to benefit from the growth of biofuels are Shell and BP.
The "Pike Pulse Report: Biofuels Commercialization by Oil Majors" evaluates ten of the leading publicly-traded international oil companies and rates them based on 12 criteria in the emerging biofuels market.
These criteria include production, geographic reach, supply and demand chains, market strategy, consumer impact and current investments. The report aims to provide industry members with an objective assessment of each company's position within the biofuels industry.
The biofuel industry accounted for approximately 30 billion gallons of production in 2011, even though it can still be considered to be in its infancy. Fuels are created through renewable sources, such as corn, sugar cane or animal fats instead of fossil fuels, and will no doubt have to expand in order to meet consumer demand and dwindling non-renewable supplies in the future.
Any company that wishes to remain globally competitive in such a future market should be making investments and preparations now in order to succeed.
All Big Oil companies have acknowledged that the transition to fuels developed from sources such as commercial crops has to be part of the future of energy -- and billions have been sunk into developing the industry over the past 5 years.
Companies that are considered 'well positioned' will have an edge in this future market, and biofuels are expected to become increasingly important -- especially as mandates and restrictions become imposed on fossil fuel reserves worldwide.
The top 10 vendors were reported to be:
According to the Pike Pulse report, the oil majors who are best positioned to drive competition and profit from the growth of biofuels are Shell and BP.
"While Pike Research does not perceive any of the oil majors to be outright industry leaders at this stage, several companies have demonstrated a solid foundation for growth and long-term success," senior analystMackinnon Lawrence said.
"Shell and BP both have advantageous near-term positions for ethanol production from sugarcane and strong commitments to commercializing advanced biofuel pathways."
Both companies have put strategies in place to scale-up biofuels sourced from Brazil, where the sugarcane market has become one of the most attractive locations to manufacture biofuel -- as well as the ability to supply sugar for 'drop-in' fuels.
Due to its $12 billion venture with Cosan, one of the world’s leading producers of ethanol from sugarcane, Shell scored slightly higher than BP. However, BP is one of the earliest pursuers of the biofuel industry, and does have multiple investments in supply chain and delivery networks.
Image credit: Pike Research