Thank you, Mr. Kirci. It’s an honor to join you and my distinguished colleagues on this panel, and a privilege to participate in the 22nd World Petroleum Congress. It’s also a pleasure to meet here in Istanbul, one of the world’s great cities. To our Turkish hosts, thank you for your hospitality.
This global gathering reflects the scale, scope and diversity of our industry. It’s also indicative of the critical role energy plays in the world economy. We’re here, and we’re in business, because people demand the fuels, power and products we produce.
People around the planet share some similar aspirations. We all want a good quality of life, a clean environment, a better future for our children. Our industry has played an important role in fulfilling these aspirations for billions of people.
One of the triumphs of the past quarter-century has been the dramatic increase in living standards. The UN estimates that, since 1990, a billion people have escaped extreme poverty.
And every year, 160 million are joining the global middle class. Energy is a key driver in this economic success story. By making fuel and power available and affordable, we’ve enabled people to change their lives for the better.
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. The list goes on.
The UN measures a country’s development with an index that combines income, education and life expectancy. When this index is compared to energy use, a pattern emerges. In countries with higher living standards, people require more energy. The correlation is clear.
The world’s oil and gas industry helps improve living standards. We can be proud of that. Collectively, our technologies, the partnerships we have established, and our people have made this progress possible.
But there’s much more to do. A billion people still have no electricity. About 3 billion rely on primitive, unsafe cooking fuels that cause 4 million deaths a year. Their aspirations aren’t being met because they lack access to affordable energy.
Energy poverty is not for lack of potential supply. In fact, global oil and gas markets are oversupplied. Consider this: At the first WPC in 1933, a hot topic of discussion was “peak oil.”
That’s the theory that oil supplies will hit a high point soon and then rapidly run out. Peak oil was also discussed at the twenty-first WPC – just three years ago.
But not this year. Peak oil isn’t on the agenda. Why? Because our industry has again expanded the boundaries of science to produce energy resources previously thought out of reach. In particular, technological advances in hydraulic fracturing and horizontal drilling have unlocked vast new supplies of shale oil and gas. Industry innovation has led to an energy revolution.
So the challenge we face now isn’t peak oil. It’s getting the new energy supplies we’re developing to those who need them most. It’s taking advantage of our energy abundance to promote global affluence.
Meeting this challenge won’t be easy. As we all know, the supply boon has put downward pressure on prices. This has increased competitive pressures for resource-developing companies, like mine, and increased revenue pressures for resource-owning governments. It’s harder to earn money when prices are low and margins are tight – for industry and governments alike.
Success in this environment requires a disciplined approach. It requires creating value by running our businesses more effectively and efficiently. This is the foundation on which ExxonMobil has built the company. Over the course of 135 years, we’ve also found that long-term success requires a focus on technology, integrated value chains and strategic partners.
Technology has led to abundant supply. It’s also helping ExxonMobil create unique value.
At our core, we’re a technology company. We have almost 20,000 scientists and engineers, including more than 2,000 with Ph.Ds. We spend about a billion dollars a year in researching and developing new technologies, including potential breakthroughs, like algae for biofuels, fuel cells for carbon capture, and reverse osmosis for more efficient manufacturing processes.
We’re finding innovative ways to operate more effectively and more efficiently: Better seismic imaging and reservoir modelling; faster and more precise drilling; lower-cost projects; higher yield, less energy-intensive manufacturing processes; and advantaged performance products.
Thanks to our integration, these technologies enable us to maximize value, all along the product value chain. We have long-term relationships with partners who recognize and reward this value. Together, technology, integration and partnerships create win-win situations, even in today’s market conditions. Wins for industry, wins for governments, and wins for society as a whole.
Let me share two examples. Both are projects ExxonMobil operates in the Asia-Pacific region, a center of growing energy demand.
In Papua New Guinea, we partnered with the government to develop natural gas in the country’s remote highlands. The resource potential was enormous, but not economic to produce – until we applied advanced technology and execution techniques.
Building the infrastructure to support this LNG project was the real challenge. We built a high-elevation airstrip to fly in large rigs that enabled us to drill highly productive wells. We developed new techniques to safely install more than 700 kilometers of pipeline across steep, volcanic mountain ridges. And we applied new jet-engine technology to compressors at our plant to boost efficiency and reduce emissions. Technology was critical to scale-up and make the investment profitable.
Production began in 2014 - ahead of schedule. This partnership, built on technology and an integrated value chain, is creating value for local communities, for the national government, for our shareholders and for consumers throughout the region. That’s a winning combination.
In Singapore, we operate the world’s largest integrated refining and petrochemical complex.
Here we manufacture a wide range of lubricant basestocks, specialty products and fuels, including low-sulfur diesel. In recent years, using a proprietary catalyst we boosted the production of high-value lubricant basestocks by 20 percent.
The site converts a number of refinery streams into high-value plastics and other specialty products. In 2013, we started up the world’s only steam cracker that uses crude as a feedstock. This technology provides unique economic advantages and allows us to fully utilize the benefits of an integrated site. We can maximize the value of every molecule we process.
With the strong support of the government, we’ve helped transform Singapore into a manufacturing powerhouse, helping to meet the needs of its growing neighbors.
Of course, the Asia-Pacific region isn’t the only center of global demand growth. The Middle East is another. Our projects in the region – including world-class LNG facilities in Qatar, fuels and chemical manufacturing in Saudi Arabia, production of Upper Zakum in Abu Dhabi and redevelopment of West Qurna in Iraq – play important roles in shaping the world’s energy future. ExxonMobil is building on our strong partnerships with national oil companies to meet the needs of growing populations across the world.
Our industry’s challenge is reducing energy poverty by increasing energy access. But that isn’t enough. Working with governments, we also need to reduce emissions and other environmental impacts of energy use. Technology is also the foundation for addressing this challenge. Advances in supplying natural gas are clear examples of the power of technology to deliver environmental progress.
As a fuel for generating electricity, natural gas emits up to 60 percent fewer greenhouse gas emissions than coal. By switching from coal to gas, the United States, for example, has reduced its emissions to a 25-year low. And as LNG markets mature internationally, other countries will be helped in meeting their goals. Natural gas is one of the most economic options available, and a key part of the solution to managing the risks of climate change.
Carbon capture and storage technology is another key part. ExxonMobil has an interest in about one-quarter of the world’s CCS capacity. Last year, we announced a technology partnership to research whether fuels cells can be used to capture carbon dioxide more economically. This potential game-changer could enable continued hydrocarbon use with greatly reduced emissions.
Another promising area of research in reducing emissions is advanced biofuels. For several years, ExxonMobil has been partnering with Synthetic Genomics to develop biofuels from algae. We aim to engineer algae that could produce low-emissions fuel at scale. Recently, we reached a key milestone in this research. We’re also teaming up with a company called Renewable Energy Group to research ways of producing biodiesel from agricultural waste.
Technology holds the promise of reducing both energy poverty and emissions. Our industry, and many others, are helping realize this promise. But we also need the cooperation of governments. I’ve described the importance of strong partnerships with resource-owning governments. Cooperation is equally important in countries where governments regulate resource development. Here, policymakers create the legal, regulatory and policy frameworks in which our industry operates and innovates.
We can do our jobs when markets are open, rules are clear and investments are protected. This framework encourages investment and spurs innovation. Without this framework, the investment case is more difficult. So the challenge is not only on the ground, where oil and natural gas resources are discovered and developed, but also in the halls of government, where policy decisions are made.
Free markets are the best means of enabling the needed investments and innovation. If governments restrict markets, these restrictions should be applied evenly. The playing field should be level. This is the only means of preserving competition in a way that drives innovation and progress.
This panel is dedicated to a discussion of “shaping our energy future.” I believe that our industry’s past is its prologue. I believe we’re well-positioned to build on our recent accomplishments to shape a hopeful energy future.
The challenge we face today is reducing energy poverty, reducing the costs of energy production and reducing the impacts of energy use on the environment. It’s about using today’s abundance to create tomorrow’s affluence.
It will require free markets promoting investment and innovation, strong partnerships between industry and governments, and integrated oil and gas companies capable of maximizing value across the supply chain. But most importantly, it will require technology. That’s the foundation for meeting the challenges we face. More than any single factor, technology will shape our energy future.
I’ve seen the power and potential of technology at my own company. It has enabled us to help defy peak oil, capture efficiencies, cut emissions and create unique value. If industry seizes the opportunity, through free markets and strong partnerships, to harness the potential of technology going forward, I have no doubt we can rise to the challenge and shape a future that meets our shared aspirations.