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Interview: Rex Tillerson, ExxonMobil Chairman and CEO

25th September 2014

Rex Tillerson, ExxonMobil chairman, on meeting the energy challenges of the future

Rex Tillerson, chairman and chief executive officer of Exxon Mobil addressed the 21st World Petroleum Congress in Moscow, in May and Oil & Gas Technology were there to hear what the influential oil man had to say.

Rex Tillerson, ExxonMobil Chairman and CEO
'We must invest, innovate, and relentlessly advance the technologies and techniques that promote energy efficiency, improve environmental performance, and reduce the greenhouse gas and air pollution emissions associated with increased energy use'

For ExxonMobil, along with other international oil companies, the challenge is to develop energy strategies for a growing world

 

“Building these sound energy strategies begins with understanding the sources and magnitude of the challenges we must meet,” he says. “First and foremost, we must recognise that the global need for energy is projected to grow – and grow significantly.”

In fact ExxonMobil projects that increases in population, along with growing trade and development, will increase global energy demand by about 30 per cent by the year 2040.

“To put this number in perspective: It will be like adding more than the combined current energy demand of Russia and India, all of Africa, Latin America, and the Middle East,” he continues. “We must also recognise that the vast majority of this growth in population and energy demand will take place in developing economies. These fundamental facts mean that every discussion of energy and energy policy has a humanitarian dimension.”

According to the latest figures on global energy poverty, about one in five human beings still has no access to electricity. And two out of five people must rely on biomass such as wood, charcoal, or animal waste for their basic cooking and heating needs, which has far-reaching consequences for their health and quality of life.

The key to lifting people out of this poverty – and to increasing hope and opportunity for billions, including those yet to be born – is to expand the supplies and availability of modern sources of energy.

“Simply put, the global need for energy we see today – and the growth in demand we anticipate in the decades ahead – will require the world to pursue all sources of energy, wherever and whenever they are economically competitive,” Tillerson says. “In addition, there is a second element to every discussion of energy and energy policy: We must pursue strategies that reflect wise environmental stewardship.

“This means we must invest, innovate, and relentlessly advance the technologies and techniques that promote energy efficiency, improve environmental performance, and reduce the greenhouse gas and air pollution emissions associated with increased energy use.”

The good news, Tillerson reports, is that the oil & gas industry has proven, throughout its history, that it can expand supplies in safe, secure, and environmentally responsible ways.

Because of its investments, innovations, and cooperation, it can point to extraordinary successes.

“Over the last three decades alone, we have taken on deepwater and ultra-deepwater challenges, we have developed new techniques to unlock unconventional oil and natural gas, and we continue to expand on our historic achievements in the Arctic and sub-Arctic to provide the energy the world needs,” he continues.

One of the industry’s most extraordinary advances has been in deepwater. Advanced technologies have enabled unprecedented offshore exploration and production. “A generation ago, my generation of engineers worked at drafting tables with hand drawings of design specs for drilling rigs, while geoscientists were hand-interpreting seismic shoots,” Tillerson explains. “Today, of course, we use high-speed, sophisticated computers to find resources and design rigs that can operate in water depths of more than 10,000 feet, drilling wells that extend five miles below the ocean floor.

“With each passing year, our industry continues to advance the technologies and processes we employ – enabling us to go deeper, more quickly, more accurately, and more safely than ever before. As a result, we project that in the period from 2010 to 2040, deepwater oil production worldwide will grow 150 per cent. And deepwater contributions to global liquids supply will rise from 6 to 12 per cent.”

The offshore capabilities now represent some of the greatest engineering marvels in human history. But these technological achievements do not stand alone. They have been accompanied by striking advancements in other parts of the industry such as unconventional oil and natural gas. In less than a decade, the modern energy map has been rewritten by technological breakthroughs in North America.

“Our industry’s integration of hydraulic fracturing and horizontal drilling has made it possible to develop North America’s shale gas and tight oil – bountiful resources found in dense rock formations,” he says. “Consider that between 2005 and 2014 alone, US production of crude oil and natural gas has risen by close to 70 per cent and 45 per cent respectively, which reflects growing tight oil and shale gas production.

“Our industry is still in the exploratory stages of applying our recent breakthrough technologies and risk-management techniques to regions outside North America. Government and industry continue to assess the size of the global endowment of unconventional natural gas. At ExxonMobil we are optimistic about areas for potential development in Asia, Latin America, Northern Africa, parts of Europe – and in Russia, in Western Siberia.

“These industry achievements – deepwater, unconventionals, and the Arctic – provide lessons on how to construct and maintain ‘energy strategies for a growing world’. The strategies of the future must reward long-term planning, sustained investment, and constant innovation.

“No matter where our industry goes in the world, we will need new technologies to expand supplies and enhance environmental performance and protection. Whether we seek to expand global supplies of energy in North America, South America, Africa, Asia, Europe, or Australia, the most effective path to investment and innovation is for government and industry to understand their specific roles and responsibilities.

“Our industry respects the role of government. We recognise that government is uniquely suited to promote the rule of law, provide a clear regulatory pathway, and hold companies accountable. In addition, government is critical to establishing the level playing field that enables companies to compete – and consumers to win.

“In short, government leaders are responsible for putting in place the sound and stable regulatory and tax policies that enable investment, cooperation, and risk management to flourish. And only that foundation can ensure there is incentive for industry to invest in the research, development, and deployment of evolutionary and revolutionary technologies.

To meet the energy challenges of the future, our industry must maintain its positive role in public dialogue.”

Tillerson also points to communication as a key tool in the industry’s armoury.

“We must communicate with the public and policymakers about how we can achieve our shared aspirations to expand opportunity for all peoples and to promote environmental stewardship in every nation,” he says. “We must also communicate the consequences that follow when governments fail to establish or maintain sound policies. We know from experience that heavy-handed market interventions by government, burdensome regulations, or taxpayer subsidies that favour companies or industries can undermine the technological advancements that enable us to meet the world’s energy needs safely, efficiently, and responsibly.”

The US unconventional revolution has shown that the industry can expand supplies and reduce air pollution and carbon emissions. With sound policies, the industry can apply new technologies and techniques to unlock cleaner-burning natural gas all around the world.

“As we do so, we can meet growing energy needs, while reducing emissions levels. And with sound policies industry can continue to develop technologies to produce and use oil more efficiently – especially in the transportation sector where growing energy needs are so critical to trade, work, and advancement.”

It is clear the world will need to pursue all economic sources of energy – including deepwater, shale gas and tight oil, and conventional sources in the Arctic. And by relentlessly improving technologies, it can improve its environmental performance at every link in the energy chain, increase energy efficiency in every economic sector, and promote environmental care and progress in every nation.

“The oil and natural gas industry will continue to play an essential – and pivotal – role in shaping the world’s future,” Tillerson concludes. “And indeed, even at a time when challenges have befallen some important producing areas, the industry at large – both non-OPEC and OPEC players – has contributed in the reliable supplies to consumers the world over.

“With government and industry fulfilling our respective roles and responsibilities, we can help alleviate poverty, raise living standards, and create economic opportunity for billions of people. And by continuing our industry’s dialogue with the public and policymakers, we can put in place energy policies that enable investments and technological advancements on every frontier and in every sector. Such long-term strategies will help government, industry, and societies each play its part in building a brighter future for all in a growing world.”