Following is excerpted from a speech given by ExxonMobil Corporation Chairman and CEO Rex W. Tillerson at the Chief Executives Club of Boston.
The future of energy is a concern not just of my industry, but of all sectors of our economy. Reliable and affordable energy supplies are vital to the continued prosperity of our nation.
By the year 2030 – less than 25 years from now – the world’s energy needs will be almost 50 percent greater than they were last year, driven mostly by growth in developing countries.
Such growing demand for energy reflects a growing demand worldwide for escaping poverty, attaining higher standards of living and achieving greater prosperity. Energy use correlates directly with economic development, and in the hierarchy of human needs, energy ranks high.
An immense industry is required to meet the world’s energy needs. The sheer scale of the global energy industry is often difficult to grasp, but it must be grasped to effectively understand how the application of new technologies or the implementation of new policies might impact it, and ultimately, consumers of energy.
Every day, consumers around the globe use 230 million barrels of energy, measured in terms of `oil equivalent,’ from all sources. Oil alone is consumed at a rate of 40,000 gallons a second. Put another way, in the time it takes me to deliver these remarks, people worldwide will have used over 50 million gallons of oil.
To give you another perspective on our industry’s size, ExxonMobil is the largest non-government energy company, and has the largest market capitalization of any corporation in the world. Yet we produce no more than 2 percent of the world’s total energy.
Enabling industry to meet the world’s rapidly growing and varied energy needs in an immense global market is the essence of the challenge we face in the future.
It carries with it additional challenges. Energy security is one. The gap between U.S. energy consumption and domestic energy production – a gap on the order of 15 million barrels of oil equivalent a day, or 30 percent of daily demand – is filled primarily with imports of fossil fuels. Which countries are the sources of these imports? Do any of these have the power to control supplies or prices? And are energy trade channels and import infrastructure secure? These are important questions.
Another challenge inherent to energy is the environmental impact of its use.
Industry has made tremendous strides in developing cleaner fuels and lower emissions over the years to meet rising environmental expectations, but no energy source of sufficient scale to meet global needs comes without consequences. How do we manage the inevitable environmental impacts of increased energy use? This, too, is an important question.
Another question I am often asked: Can we boost oil production in this country?
The United States is a mature oil province, meaning a sizable portion of the petroleum found here has been tapped.
But a sizable portion has not. In fact, the United States was endowed with the second largest oil and gas resource base in the world and even after more than a century of development and production is still ranked number five in remaining oil and gas. These domestic resources currently meet approximately 50 percent of our domestic demand, but it could supply more if more of it were opened to exploration, development and production.
Federal and state governments in this country have ruled off-limits an estimated 31 billion barrels of recoverable oil and 105 trillion cubic feet of natural gas. And the majority of those amounts are not found in the Arctic National Wildlife Refuge. They are found in the Rockies and off many of the coasts of the continental United States.
Industry has developed the technologies and acquired the experience to produce these resources safely and with a minimal environmental footprint and we are doing it around the world today. What we lack is the permission to access them. Access granted could lead to imports reduced.
In addition to access, we need to continue developing the technologies to produce, refine and deliver hydrocarbon resources in an effective, economic, and environmentally responsible way. The question – how do we advance energy innovation? – goes to the heart of our energy future.
In the discussion about technology in our industry, two things surprise me. First, some today claim that the “era of easy oil” is over. It is true that today oil is not “easy,” but, over my 32 years, it has never been easy. Changing conditions, growing demand and evolving environmental expectations test our latest technology and require our industry to continuously innovate further. Oil only seems easy after it has been discovered, developed and delivered.
The second surprise to me is the perception that the energy industry is not particularly high-tech.
ExxonMobil topped the Fortune 500 list of U.S. companies last year. We invested over $1 billion last year in technology applications and R&D, and we currently employ over 14,000 scientists and engineers.
Nevertheless, the magazine does not categorize us or any oil and gas company as a technology company, like it does many pharmaceutical, computer and airplane manufacturers.
Perhaps it is because our most well-known product – gasoline – appears simple when compared to a cell phone or a flat screen television. Even the term “fossil fuels” sounds primitive.
But, the fact is, the energy business is an extraordinarily technology-intensive enterprise, from the wellhead to the gas pump. Innovations have enabled us to overcome incredible obstacles to decline a product that seems so simple and relatively unchanged for decades.
At our refineries, we are using nanocatalysis to manage hydrocarbon molecules and remove impurities from our products. Technologies such as these have helped us dramatically reduce emissions from the use of our fuels. A new car today, running on new low-sulfur diesel fuel and equipped with the most advanced emissions technology, has 97 percent less emissions than a new vehicle had in 1970.
Our industry can and will continue achieving such technological feats – and continue making oil look easy, even though it is not – under the right conditions, and sustained by sensible policies – conditions and policies I will return to later.
The climate factor
For all the technological progress we have achieved in the energy field, we have yet to discover or develop an energy source that meets the world’s enormous needs with no environmental impact. There are no silver bullets to the energy-environment challenge. This is a reality we dare not ignore, and one we must not mismanage.
This is especially true when it comes to the issue of climate change.
While our scientific understanding of climate change continues to improve, it nonetheless remains today an extraordinarily complex area of scientific study. Having said that, the potential risks to society could prove to be significant, so despite the areas of uncertainties that do exist, it is prudent to develop and implement strategies that address the potential risks.
In my view, this means we should continue to fund ongoing scientific research without conditions or preconceived outcomes to increase our understanding of all of the forces which are part of this very elegant, but very complex climate system in which we live. This should include ongoing study of not only the possible forcing effects resulting from mankind’s socioeconomic activity, but equally – if not more important – understanding of the natural forcing elements that are and have been a part of the climate system since the dawn of time.
While the scientific community continues this study, we should pursue public policies that start gradually and learn along the way with full recognition of the economic consequences of certain actions and we should bring all countries into the effort. This is a global-wide, century-scale problem. Eighty-five percent of the growth of CO2 emissions are associated with economic activity in the developing part of the world, with only 15 percent of the growth associated with developed countries. We should start on a path to reduce the likelihood of the worst outcomes and understand the context of managing carbon emissions among other developing world priorities, such as economic development, poverty eradication and public health.
As we take steps today, we must also take steps towards tomorrow, through research and development into new technologies that could “change the game.” ExxonMobil through its long standing relationships with manufacturers of automobiles and commercial industrial engines has ongoing promising research and development that could lead to improvements in conventional internal combustion engines leading to as much as 30 percent better fuel economy and lower environmental emissions.
The Global Climate and Energy Project, based at Stanford University, epitomizes the approach to exploring game-changing technology. By accelerating research into promising new energy technologies with economic and environmental potential on a worldwide scale, scientists at GCEP are progressing towards breakthroughs that could lead to meaningful, worldwide emissions reductions.
GCEP scientists are researching how hydrogen and solar energy can be made economic. how engine and fuel systems can be made significantly more efficient. how carbon dioxide capture and storage can be made more effective. and how biofuels can be made more abundant. ExxonMobil is proud to serve as the lead founding sponsor for GCEP’s groundbreaking work.
Directions for Energy Policy
It is the actions of policymakers that have the greatest impacts in shaping our shared energy future, because they create the legal and regulatory framework in which multi-billion-dollar risk investment decisions must be taken.
Policies that promote free markets and investment and strengthen export-import partnerships broaden the diversification of our nation’s energy portfolio and enhance our energy security.
Policies that promote stable tax, regulatory and legal frameworks over the long-term encourage the investments needed to not only meet current needs, but also the technological advances required to meet future needs while reducing environmental impacts.
Policies that promote open access to untapped oil and natural gas resources in our own country can help reduce our dependence on imports in an effective and environmentally sensitive way. Ours is the only country in the world with major oil and natural gas resources that as a matter of policy denies its own citizens the economic benefits of developing and utilizing those resources that belong to its citizens.
The solutions to the energy challenges we face will come from this generation’s scientists, engineers, managers, and policymakers – and the next. Policies that promote math and science education and provide visas for international students to study in this country are necessary to ensure the human intellect required is available and resident within this country.
We must invest more in math and science education. ExxonMobil is doing so, contributing over $42 million in proven programs nationwide last year. And we intend to contribute even more in the year to come.
Such investments have the power to not only produce new technologies, but also the power to produce better informed citizens, policymakers and future leaders. Unless others join us in taking action in support of this cause, not only is our energy future in doubt, but our nation’s continued economic leadership is threatened.
Our nation’s educational needs are not limited to science and math. It is important that policymakers and the public at large become educated about the nature of the energy challenge, the workings of the energy industry, and the mechanics of energy markets. The most productive public dialogues are those informed by facts.
All of us in the business community can and should help promote this informed dialogue.
This speech excerpt has been reprinted with permission from ExxonMobil. Visit: www.exxonmobil.com.