Sustainable development and growth

Neil Chapman, APEC CEO Summit 2018
Port Moresby, Papua New Guinea

neil chapman
Neil Chapman

Senior Vice President

Speech Nov. 16, 2018

Sustainable development and growth

Distinguished guests, ladies and gentlemen, good morning to everyone. I’m honored to be here representing ExxonMobil at this summit today. This event is always an important component of – and a complement to – the annual APEC Economic Leaders Meeting.

The summit provides a great opportunity to bring world leaders together with business leaders … to discuss pathways to a prosperous and sustainable future.

And having this year’s APEC meeting in Papua New Guinea in my opinion is entirely fitting.

That’s because of the critical role PNG is poised to play in the economic life of this region in the coming years.

Asia-Pacific is where the 21st century will truly unfold.

Over the next couple of decades, about half of the world’s economic expansion is expected to take place right here in Asia. That’s why the International Monetary Fund describes it as “the main engine of the world’s economy.”

Helping fuel that engine will be abundant, cleaner-burning natural gas … some of it shipped from here in Papua New Guinea to the markets throughout Asia-Pacific.

Prime Minister O’Neill and PNG leaders such as Grand Chief Somare, the late Governor Anderson Agiru and others, of course, deserve tremendous credit for enabling the development of this country’s natural gas resources.

Because although Papua New Guinea may have been blessed with abundant energy resources, they weren’t easily accessible.

It took leaders with a vision … to turn those natural blessings into tangible benefits for the country and for the economies of Asia.

A vision … for a project that could write a new chapter in the economy of this nation.

A vision … to break down barriers to facilitate partnerships between the public and private sectors.

And a vision … to make the PNG LNG project a reality, which happened when operations commenced in 2014.

The abundant natural gas resources of Papua New Guinea offer an abundance of opportunity for Asia-Pacific.

LNG tankers leave Port Moresby every three days … bound for receiving terminals throughout Asia-Pacific … and provide a foundation for sustainable economic growth and prosperity for this entire region.

A foundation … that starts at home.

The 19-billion-dollar PNG LNG project that we operate along with our partners – Oil Search Limited, Kumul Petroleum, Santos, JX Nippon and MRDC – is the largest private investment in PNG history.

But we’re investing more than just dollars. We’re investing in PNG’s future. More than 80 percent of the current workforce are nationals of Papua New Guinea … and we’re proud to be laying the employment foundation for future generations.

The economic benefits don’t stop there. Since 2010, the project has spent more than 5 billion dollars on services provided by local companies.

It also produces reliable electricity that supplies 20 percent of Port Moresby’s needs, with gas reserved for more generation in the Highlands.

Over time, this project will make a very significant contribution to the economy and the people of Papua New Guinea.

And then there are the benefits for markets throughout Asia. Reliable sources of natural gas from PNG join those coming from Australia, Qatar and elsewhere.

Every shipload of LNG that sails from Port Moresby represents opportunity and enhanced energy security for the dynamic economies of this region.

Environmental benefit will flow as well.

Societies increasingly are realizing that economic development and environmental progress can go hand-in-hand. That realization is driven by the prevalence of world natural gas supplies – here in Papua New Guinea and of course around the world in other locations.

Because natural gas is cleaner than coal when used for electricity generation … producing up to 60 percent fewer greenhouse gas emissions … it offers the possibility of less-carbon-intensive economic growth at a time when government leaders everywhere are considering ways to reduce emissions to tackle the very important issue of climate change.

Indeed, substituting natural gas for coal in power generation provides an immediate … large-scale … and cost-effective option for making significant progress in lowering the global emissions while improving air quality.

If you want to see just how much of an environmental benefit natural gas can deliver, look no further than the United States.

Over the past decade, many of America’s electric utilities have shifted from coal to lower-cost natural gas to generate electricity.

The results have been profound: U.S. greenhouse gas emissions have fallen to levels not seen since the 1990s.

That’s not a decrease in the rate of growth of emissions, nor a reduction in per capita emissions, nor any other qualifier or context.

It’s an actual decrease in overall emissions to levels not seen for more than two decades. And that’s extraordinary in its own right.

It’s even more extraordinary when you consider it has happened against the background of a growing economy, rising energy production and increased energy use.

There’s no reason to believe a similar approach to pursue these sorts of benefits cannot be replicated in Asia-Pacific and, indeed, in other parts of the world.

With natural gas looking to be an important energy source to fuel the region’s continued development, PNG is well-positioned to benefit from the growing liquefied natural gas trade.

I mentioned that nature made the energy resources of PNG abundant, but not easily accessible.

It took a simply extraordinary effort – and the application of advanced technology – to develop those resources and unlock their value.

The development of PNG’s natural gas resources is a tremendous story in itself.

To get the project up and running, a pipeline had to be built, starting in the Highlands 2,700 meters above sea level, through rugged and diverse terrain, including mountain ridges, rainforests, plateaus and swamps.

But that accounts for less than half the pipeline’s journey. The majority of this 700 kilometer pipeline is buried offshore in the Gulf of Papua as it makes its way down to Port Moresby.

The construction of this pipeline and the associated facilities is truly a marvel of modern engineering.

Let me explain.

The heaviest piece of equipment in the construction of the Hides gas conditioning plant, that’s up in the Highlands, weighed 64 tons.

So we built a three kilometer airstrip capable of landing the world’s largest cargo planes to transport the equipment needed to build the plant.

Portions of the pipeline itself had to be airlifted along the route by helicopter because of inaccessible terrain.

All told, the onshore pipeline contains enough steel to build 20 Eiffel Towers.

And the teams that worked along the pipeline during construction have driven enough distance to go to the moon and back 50 times.

And that’s not all.

At the plant near Port Moresby, where natural gas is cooled to minus-160 degrees to shrink it into liquefied natural gas for shipment abroad … more than two million meters of cable were laid for electrical and instrumentation connections.

The project’s LNG tanks are so large that each can hold a Boeing 747 airplane.

And the tankers that come to ship LNG to ports all over Asia Pacific average nearly 300 meters bow-to-stern – the length of three rugby fields.

These are extraordinary statistics … and they tell a very extraordinary story.

But it’s not complete if it fails to tell of the efforts we’ve taken to protect the environment – from the upland tropical rainforests to the marine ecosystems in the Gulf.

For example, we jointly built a marine jetty specially designed to protect sensitive mangrove habitats.

And the offshore section of the pipeline was routed specifically to avoid marine fauna and coral reefs.

During the construction, the project team discovered dozens of new species of plants and animals that are new to the world, including lizards, frogs and even a bat. It’s amazing to consider that we’re finding new species in the 21st century.

The lush biodiversity of Papua New Guinea is among this country’s greatest features. We should always be cognizant and respectful of that.

In this regard, the PNG LNG project offers a model of sustainable development.

That model was put to test back in February, when a 7.5-magnitude earthquake struck the Hela Province and the surrounding areas.

As operator of the PNG LNG project, our immediate job was to ensure the safety of the people in the area and assist with the relief efforts.

That meant delivering water, food, shelter and medical and hygiene kits for communities in the Highlands.

In the months that followed, we worked with the government and UN-led disaster teams and others of course to support the long-term recovery of affected areas.

And to assist with more immediate needs, we worked in the local communities focusing on food security, health risk mitigation and access to potable water.

We’re also currently helping the government build and repair roads, bridges and other critical infrastructure that was so severely damaged by the earthquake.

After all, supporting the communities that support us is the essence of sustainable development.

Given the magnitude of the earthquake, it should be no surprise that it had a significant impact on our production.

Exports were shut down for eight weeks while damage to equipment, pipelines and the Komo airfield was assessed and repaired.

Fortunately, the damage was not as great as originally feared, which I think is a testament to project design and construction.

In fact, much of the delay in restarting operations was due to the remarkable precision required for aligning the gas compressors associated with the pipelines.

These machines represent the most advanced and precise compression technology available. They were installed to tolerances smaller than the thickness of a single human hair.

So in the interest of safety, and in the interest of long term reliability, we had to carefully ensure they were properly aligned before restarting.

That was exacting, time-consuming labor … but necessary to ensure that PNG could continue as a reliable, long-term supplier of natural gas.

Again, the essence of sustainable development.

Now, let’s look ahead to future plans.

We’re talking with the government about a three-train expansion. This will involve several partners and will roughly double LNG capacity from Papua New Guinea.

I’m hopeful with support of the government we can come to an agreement on terms soon … and together move forward on a new chapter in PNG’s energy story.

There’s no question the appetite for LNG throughout Asia is strong. The market for increased production is out there.

LNG import terminals are being built throughout the region. Governments are facilitating the import and use of natural gas in their economies.

All of this provides further confirmation that the “Golden Age for gas” foreseen by the International Energy Agency is truly emerging today.

It’s particularly golden for this part of the world.

When the full story of the 21st century is written, historians will reflect on the origins of the Golden Age in this region.

They’ll record stories of economic expansion, of new supercities rising, of millions of people trading poverty for prosperity.

And they’ll recognize places like Papua New Guinea – thanks to the enlightened vision of its leaders – as the engines that made such progress so possible.

I can’t overstate how proud ExxonMobil is to be a part of that.

Thank you.

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