An Oil and Gas Giant Finds Green Growth Opportunities in Biobased Chemicals

Diversifying into innovative product categories provides a platform for sustainable growth

Challenge

A major oil and gas company was coming under increasing government and public pressure to commit to more sustainable forms of development. It decided to embark on a comprehensive green growth strategy that involved two key types of green products: chemicals made from renewable feedstocks, such as bioplastics, and materials that would help users reduce their carbon footprint and energy requirements, such as insulation materials. This was an entirely new venture for the company, and so, it asked Burk to help it assess growth options in these areas, identify the capabilities it would need to capture them, and develop a detailed implementation plan.

Discovery

Together with the client team, we conducted a detailed opportunity screening of chemicals that could be produced from renewable resources, including biofuels from biomass, oleochemicals, bioplastics, and oils from algae. We also screened chemicals that could help reduce energy and carbon emissions, such as lightweight materials for cars, insulation materials, and chemicals for electric vehicle batteries. The team identified more than one-hundred materials that could both be produced economically and offer significant growth opportunities over the next ten years. In the first phase of the project, which lasted for about four weeks, we helped the client prioritize the main areas for growth, which included automotive, health and nutrition, packaging, and construction. We also worked together to develop a list of carbon abatement ideas using renewable chemicals.

In the second phase, which took another four weeks, we worked with the client to draw up a business-building strategy in green chemicals covering the next ten years. This included a detailed implementation plan setting out investment requirements, a survey of potential acquisition targets, and an analysis of the capabilities the client would need to manage the growth of the new business.

Impact

Just two days after the last steering committee meeting, the company announced its new aspirations to the press. It outlined plans to spend five-hundred million per year in green capital expenditures, including carbon abatement measures to improve its own energy consumption. Six months later, the client had already spent more than five-hundred million and had completed three acquisitions of leading companies identified by the project team. It had also announced a major investment in building a new bioplastics joint venture. Our team helped to conduct due diligence on several of the targets that the client was looking to purchase.