Thank you, Tom [Edgar], for that introduction. I am honored to return once again to the University of Texas, and to participate in one of the many far-reaching endeavors that it so routinely undertakes.
Let me also thank the men and women of the UT Energy Institute, the Longhorn Energy Club, the Kay Bailey Hutchison Center for Energy, Law and Business, and the Texas Law School’s Journal of Oil, Gas & Energy Law for your sponsorship of this important forum.
In just a few short years, UT Energy Week has earned a deserved place among the most constructive discussion forums on a wide range of issues.
I am tremendously proud to be a part of this event because, as Tom mentioned, the University of Texas is my alma mater. Wherever I have gone around the world since I left Austin, I have always considered myself a representative and ambassador of UT.
I think every graduate of the University of Texas has had the same revelation at some point: You leave here, hopefully with a degree in hand, but you never really leave. And this place, it never leaves you. So I am delighted for the opportunity to come back – as I do so often – and renew my connection to this wonderful school.
I am equally proud to be at UT Energy Week this morning on behalf of ExxonMobil, the company that took a chance and hired me upon graduating in 1991. That pride stems from the services that ExxonMobil and our industry provide to billions of people every single day.
When I joined ExxonMobil, I was attracted to a company that valued the engineering skills and critical thinking that I developed here at UT. But I was also attracted to a company and a business I saw providing invaluable and necessary products to an increasingly prosperous world.
Energy in our lives
In many ways, the global energy industry really is indispensable.
What we do and what we offer consumers fundamentally underpin modern society. We search the world to find oil and natural gas and then produce and process them into fuels and other products that literally define the modern world – the products that each one of us could not imagine doing without.
I am not sure everyone properly appreciates the centrality of energy to modern life. It’s very easy to overlook the role that energy plays in the things we do. And it is an exceedingly rare moment when we are forced to stop and contemplate where our energy comes from, what it does for us, and what would happen if supplies were not as reliable and affordable as we expect.
As it happens, we recently had such a moment here in Austin and many of the other cities and towns in Texas and beyond.
One only has to think back to Labor Day weekend a few months ago when a state of unease descended on the city, and I am not referring to the debacle at the hands of the Maryland Terrapins, though that was pretty bad.
I mean the temporary disruptions in gasoline supplies at local service stations because of the historic storm that socked the greater Houston area earlier that week.
Hurricane Harvey didn’t just disrupt the lives of millions around Houston. It also closed the refineries and shut down the supply routes that provide more than 40 percent of the nation’s motor fuels.
For a brief period – just a few days, it turned out – many stations ran out of fuel. I would guess many of you had never seen anything like that before. The lines at the handful of stations that did have gas stretched for blocks before their pumps ran dry, and people had to come to grips with the fact that how they lived their everyday lives – particularly the freedom of mobility we presume to be a birthright – was impacted, albeit temporarily.
Thankfully, the crisis soon passed. Industry got the refineries back online, cleared the roads for tanker trucks, and restarted pipelines.
But that brief episode offered people around the state and around the country an opportunity to reflect on what modern supplies of affordable and reliable energy mean in our personal daily lives.
And while we were fortunate to be spared any significant disruptions or hardships, let us not forget that others were not so lucky. Around the same time as Harvey, two severe storms rocked the Caribbean, particularly Puerto Rico, doing considerable damage. It was only earlier this month when authorities reported that power had been restored to most of the island’s residents, meaning the vast majority of Puerto Ricans went without something as basic as electricity for nearly four months.
Modern energy the foundation for modern life
When you really think about it, you will realize that modern society cannot function – cannot exist, really – without energy.
In the 19th century, a British economist named William Stanley Jevons put his finger on what really sparked the Industrial Revolution, what propelled the creation of the modern world just then emerging.
Just what was it that was responsible for driving the most profound transformation in human history in terms of how people lived and worked, and how society was organized?
It was energy. With it, he said, “almost any feat is possible or easy; without it we are thrown back into the laborious poverty of early times.”
Think about that. Without energy, “we are thrown back” into the poverty of an earlier age.
He wrote those words at a rather decisive moment in human history.
Much like any other spot on the planet, up to that point people in England lived off what could be produced only through the backbreaking labor of humans and draught animals … or from the meager contribution of a waterwheel … or burning the wood from the forests … or perhaps the light provided by a candle or the oil from a whale.
Jevons understood that using an energy-intensive resource would change the social equation entirely. In the case of 19th century England, it was coal; today we use many other sources as well, such as oil, natural gas, solar and wind, hydropower, biofuels, and so on.
By employing modern fuels and modern energy technologies, few could accomplish feats that before had required the efforts of many. This could – and did – lead to exponential increases in human productivity and prosperity that would have been unimaginable before.
A former UT professor named Richard Newbold Adams, writing 35 years ago on the topic of energy and society, noted, “We can think thoughts wildly, but if we do not have the wherewithal to convert them into action, they will remain [just] thoughts.”
That’s what our industry provides – the wherewithal to convert wild, ambitious, daring thoughts into action and into reality.
And with it come grand cities, soaring skyscrapers, instantaneous global communication, mobility that can take anyone virtually anywhere on the entire planet, rockets that go far into space, vastly improved health and sanitation here on earth, and material goods, foods and services and other enjoyments that are often taken for granted.
Simply stated, energy continues to make possible the modern world in which we live.
The nobility of energy
Our industry’s mission – to provide the energy needed by the modern world – is an inherently noble one, and not just because it provides material comforts and conveniences to so many.
It is noble because of the role we continue to play in freeing people around the world from the grinding poverty and backbreaking misery of the pre-industrial world – a world that, incredibly in 2018, still exists for far too many people.
Consider that there are still a billion people with no access to electricity. That’s nearly one-seventh of the planet going without something most of us take for granted each day when we flip on the lights, turn on our computers, or simply look at our phones which have been charging overnight.
An even larger number – more than 2.5 billion people – rely on primitive, unsafe cooking fuels and methods that are linked to close to 3 million premature deaths each year from indoor air pollution. That’s tragic. And it is avoidable, with the fuels and technologies that our industry provides.
As ExxonMobil Chairman and CEO Darren Woods recently put it:
Cleaner cooking fuels improve air quality and save lives. Reliable lighting makes for longer, safer, more productive days. Refrigeration preserves food and stops disease. Motorized transport permits better access to water, food, health care and education. Electricity powers appliances, cell phones and computers.
And the list goes on.
That is why I believe that our industry’s mission is a noble one. We want a healthier, safer, cleaner, more prosperous world for all. I have long been impressed by how so many of my colleagues throughout the industry feel the same – recognizing that what we do really is a mission, not just a business and not just a job. Like them, I am both proud and humbled to be able to work in an industry that does such good for the world.
The dual challenge – meeting needs and reducing emissions
Fulfilling our mission highlights what we often refer to as the “dual challenge.”
Simply put, the “dual challenge” is 1) to provide the energy supplies that power the world and 2) to do so in an environmentally responsible manner.
That means mitigating the risks associated with oil and gas development.
It means putting safety at the forefront of our operations.
It means being serious about the connection between energy production and air and water quality.
And it means reducing emissions to address the risks of climate change.
So let’s put this challenge into context.
According to ExxonMobil’s long-range supply and demand forecast, what we call our Outlook for Energy, the size of the global economy is expected to about double between now and the year 2040. Meanwhile, the world’s population will grow, adding nearly 2 billion new energy consumers during the same timeframe.
Even after factoring in extraordinary increases in energy efficiency, we expect global energy demand will grow by about 25 percent over the next several decades.
Twenty-five percent is an astounding and enormous figure. To appreciate the massive scope and scale of what we are talking about, let me offer some perspective.
Consider that on a daily basis, our entire planet currently consumes the energy equivalent of 280 million barrels of oil. That’s every day. Yesterday, today, tomorrow – 280 million barrels each day. And it takes all major energy sources to accomplish this – oil, natural gas, coal, nuclear, large-scale hydropower, and other renewables.
It is a Herculean undertaking, and hard to wrap one’s mind around.
Now, consider that in 2040, the world won’t need the energy equivalent to 280 million barrels per day. It will need nearly 345 million barrels – or 65 million extra – every single day.
That expected demand growth obviously adds to our challenge. But it reflects something that is profoundly good, which is the rising prosperity in rapidly developing economies such as China, India, and many nations in Africa. When we speak of people escaping poverty, of people joining the global middle class, this is what is required to make that happen.
At the same time, we are committed to taking necessary steps to help society lower greenhouse gas emissions – the other leg of our dual challenge.
ExxonMobil has been clear and consistent on this point: We have long held that the risks of long-term climate change driven by rising greenhouse gas emissions are real. These risks warrant action. We believe that governments and policymakers, working with industry and other stakeholders, should take meaningful action to mitigate those risks.
We are dedicated to helping develop constructive pathways for society to address this pressing issue, both in terms of how we operate our business and in pursuing solutions to the grand challenge.
The promise of technology
Unfortunately, there is no neat, tidy answer that explains how to tackle both aspects of the dual challenge. There is, however, a foundational one: technology.
As the 21st century marches on, technology will be critical to fulfilling our industry’s mission and meeting our obligations to society.
To that end, I’m going to say something that may sound a bit provocative: ExxonMobil is not really an oil company.
It’s true. What we are – and really have always been – is a technology company.
That’s the reality of our business: In what we do and how we do it, ExxonMobil is as high-tech and cutting-edge as any Silicon Valley company. Perhaps more so.
People today generally think of technology in terms of personal electronics and the gadgets that make up the modern home – televisions, bluetooth, smartphones, video games, even smart refrigerators and roomba vacuum cleaners.
Technology often means the latest offering from Cupertino.
It’s less visible that ExxonMobil – whose roots stretch back to the middle of the 19th century – has survived and thrived through the years thanks to continuous, relentless technological innovation.
In our earliest decades, many of those innovations were marshalled by celebrated technology pioneers. Luminaries such as Thomas Edison, the Wright Brothers, and Charles Lindbergh all used our innovative products in the service of their own historic accomplishments.
Indeed, the long history of our company is best told by pointing to our various technology milestones:
- We developed the very first lubricants for automobile engines
- We developed the world’s first steam cracker
- We invented thermal cracking to increase gasoline yields
- And we produced the first commercial petrochemical
Mind you, this is only a small sample, and we’re only up to 1924. The years that followed produced:
- Numerous offshore drilling milestones. In Sakhalin in the Russian Far East, for instance, we drilled to a world-record measure depth of more than 44,000 feet with a horizontal reach of nearly 40,000 feet – or 7.5 miles.
- We pioneered 3D seismic exploration technology that helps image the subsurface and is now the industry standard
- And we developed the first synthetic automotive lubricant, Mobil 1, while our industrial lubricants are used in more than 40,000 wind turbines worldwide
This list is by no means exhaustive. But I wanted to impress upon you how much our business has relied upon continuous innovations and technological breakthroughs to stay atop our industry.
I’ll be the first to admit that our technology is unlikely to be featured in Wired magazine, it doesn’t capture the attention of self-styled technology journalists. But while it may not be as eye-catching, it is often just as – if not more – consequential and significant for society than the latest gadget for sale.
As it turns out, we are starting to gain some recognition for our technology focus. Last month the Drucker Institute and the Wall Street Journal published the Management Top 250 list of the most effectively managed companies.
We were proud to make their list.
And we were particularly pleased that we were also listed as one of the handful of “Top Companies for Innovation.” Not surprisingly, that list included well-known tech companies such as Alphabet and Apple. Seeing ExxonMobil in that mix likely surprised some people. But it’s fitting recognition, I think, of what the 70,000 men and women of ExxonMobil actually do every day.
I have long believed that one cannot truly understand the role of innovation in our industry until they understand this evolving nature of our business.
If there is a single truism about our industry, it is that the only constant is change. Every executive of every company, big or small, would be wise to keep this in mind.
And it’s not just commodity cycles I am referring to, though prices do go up and down, seemingly without fail. The constancy of change is true in terms of markets, the energy supply mix, the sources of supply around the world, and the technologies that are used, whether by producers or consumers. You can always count on change.
Look at the United States. In one short decade our energy landscape has been altered profoundly, thanks to the plentiful new supplies of oil and gas unlocked from America’s shale regions.
These supplies are fundamentally altering the geopolitics of energy. They have shifted the paradigm on which we were all raised that portrayed the U.S. as a region of increasing resource scarcity. That scarcity has now given way to abundance.
Our nation’s electricity mix, which for decades was dominated by coal, has been reordered. Natural gas is now the leading fuel used to generate American consumers’ electricity. This in turn has produced a considerable drop in U.S. greenhouse gas emissions, unmatched by any other country or region on the planet.
There are other changes afoot as well. Before our eyes, for instance, we are witnessing the birth of a truly global market for natural gas. Shipped as liquefied natural gas on specialized tankers, these supplies are going to dynamic markets in the Asia Pacific and to the mature markets of Western Europe that are concerned about regional energy security. This represents a sea-change from the different, Balkanized and captive regional markets around the world that have governed for half a century.
Not only has the world gotten much “smaller” and more interconnected, we’ve seen digital technologies act as an incredible accelerator of change.
Computers and Big Data enable us to do fantastic things we could hardly dream up a generation ago. We can do so much more now, better and faster than before.
Innovating to survive
This environment of constant, ceaseless change helps explain that list of ExxonMobil innovations I recited a few minutes ago.
It is a heady list, and we are proud of those accomplishments. But we are hardly satisfied by them. We can’t afford to view any of them as laurels to rest on, but only as accomplishments on which to build.
If we ever stop trying to build on them, to improve, to innovate, we’ll be done – joining the ranks of Pan Am, Compaq Computer, EF Hutton, The Saturday Evening Post, Tower Records, and other iconic institutions that exist today only in people’s memories.
As an energy company … a technology company … breakthrough innovations have always been part of ExxonMobil’s DNA. I am particularly fortunate with my portfolio as president of ExxonMobil’s Upstream Research Company where I help direct the research that – knock on wood – will set the stage for our success decades down the line.
The robust suite of technologies in which ExxonMobil is investing points to an exciting future, for our company and for the ways in which the world will produce and use energy years from now.
For those who think of ExxonMobil solely as an oil company, it should surprise no one that we are investing in advanced reservoir characterization and computer modeling that will help us discover and develop new resources in harder-to-find spots.
But you may be surprised to learn about our substantial research into producing next-generation biofuels from algae, or our efforts to eliminate greenhouse gas emissions at gas-fired power plants through advanced carbon-capture-and-storage.
You may also be surprised to learn of our work on carbonate fuel cells that aim to capture CO2 as part of a process that will generate even more power, not to mention research into reverse osmosis that could reduce the energy intensity of plastics manufacturing. Since 2000, we have invested upward of $8 billion to develop lower-emission technology solutions. More importantly, we are investing the intellectual capital of our people.
Science and technology lie at the heart of ExxonMobil.
We focus on science and technology because we understand the need to constantly evolve. We recognize the imperative to adjust and innovate and subtly reinvent ourselves in ways that stay current with shifting markets and social changes. Our company looks very different from the one started by John D. Rockefeller in a long-ago era. And it will look different yet again a century from now.
ExxonMobil and the University of Texas
Amidst all this change, one thing I am certain will remain constant is ExxonMobil’s close connection with the University of Texas.
We are an organization of scientists and engineers. In fact we are the largest recruiter of University of Texas engineers. As a Texas-based corporation, it gives us great satisfaction to know our ranks are filled with talented men and women who came to ExxonMobil clutching a degree earned here in Austin. Meanwhile we work with researchers at the UT Energy Institute – as at other top universities around the world – in the search for solutions to 21st century energy and environmental challenges.
It has always seemed to me that the motto “What starts here changes the world” might apply as much at ExxonMobil as it does to the University of Texas. And I have considered my career at ExxonMobil, one that has taken me all over the world in a variety of different assignments, to be the natural extension of the time I spent in Austin.
I will always be grateful for how this university prepared a kid from the tiny central Texas town of Llano to make my way at a place like ExxonMobil.
While I didn’t plan to offer advice to the students in the audience today, I would like to say that there is one thing I would have done differently as an undergraduate had I the opportunity to do it over again.
Simply, I wish I had made a greater effort as an undergraduate to really understand the broader world around us.
Mind you, this is a reflection on me, not a criticism of UT. My ExxonMobil career has certainly helped me catch up in that regard, particularly with my international assignments. But there were times when I was conscious of how much I wish I knew because I had limited the scope of my curiosity in my younger years.
I understand that’s easy to say from where I am today – especially when you think that going from a town of 3,000 to a university campus of 50,000 gave me plenty to wrap my head around at the time. But it has been clear throughout my career in business that those who understand the broader world have a very real advantage over those who don’t.
I suspect many of the students here this morning know that – it helps explain why you are here in the first place.
Ultimately, ExxonMobil and the University of Texas share the same ambitions.
We seek to improve society. We aspire to solve big problems. And we know that we can make a real difference for the world through the application of science and the pursuit of innovation.
There is one more similarity between the two institutions – During my time at each place I have been encouraged to Dream Big.
That’s the promise of the UT motto “What starts here changes the world” – big dreams, big possibilities, big, meaningful outcomes for people around the world.
And this is what I love about our industry, that we can do world-changing things and do them to a greater degree than perhaps any other industry or vocation.
Because of the size and scale of the global energy industry, because of its implications for the lives of virtually every person on this planet, working in the energy field invites all of us to Dream Big.
So, what does Dreaming Big look like?
What might a carbon-free energy future look like?
What would a world that has eradicated pre-industrial poverty look like?
What would a future with vibrant, growing, sustainable economies in Africa, Asia, and South America look like?
We are drawn to consider these questions, both at UT and at ExxonMobil. And working together, I am excited at the answers we might find.