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North America can help deliver a global energy transformation – if leaders do their part

North America stands ready to play a leading role in a global energy transformation through the safe and responsible development of shale natural gas, oil sands and deep-water resources to meet growing energy needs – but it is going to require industry and governments to fulfill their respective roles if these opportunities are to be maximized.

ExxonMobil Chairman and CEO Rex Tillerson delivered this important message at a keynote address  yesterday  at CERAWeek in Houston – one of the energy industry’s premier annual conferences.

Rex talked about the drivers of the global energy transformation currently underway. Led by pioneering technological developments in North America – notably oil and gas production from shale and other tight rock formations, Canadian oil sands, and deep-water drilling – this transformation “represents a potentially decisive shift in the history of energy.” Applying the lessons learned here to energy development worldwide will be vital to helping meet the 30 percent rise in global energy demand expected by 2040.

He explained: “New technologies and innovative techniques developed by the men and women of our industry have taken sources of energy once labeled ‘unconventional,’ ‘uneconomic,’ and ‘inaccessible’ and made them conventional … economic … and environmentally responsible.” Rex placed these developments in the context of the industry’s responsibility to unlock and deliver new supplies of energy to bolster economic growth and development around the globe.

Of course, the oil and gas industry cannot further such progress alone. In his speech, Rex focused on what he called the “indispensable role” that government must play in this quest to expedite technological breakthroughs.

This role “is best fulfilled when it allows markets to operate freely and openly,” he said. That depends on government putting in place policies that provide access and accountability while welcoming investment and innovation.

He also noted an additional way government can help: by spurring the fundamental academic research that companies cannot take on themselves. “We have seen the positive impact of government support for basic research in the past. The Internet, the semiconductor, and the Manhattan Project were all facilitated by government support for path-breaking researchers who were re-thinking science and technology at the most fundamental level.”

He made it clear, however, that there is a difference between support for fundamental research and picking winners and losers in the marketplace. “Government is most effective when it acts as a research catalyst, not as a venture capitalist,” he said.

What comes through clearly in Rex’s talk is the notion of industry and government, each with defined roles, working alongside each other to drive the historic energy transformation that will define the next several decades and beyond.

The value of sound energy policy and effective industry approaches to facilitate this transformation cannot be emphasized enough, because, as he said, “The world is watching.” The policies and practices established here will serve as the model for other nations looking to unlock their energy resources.

To that end, Rex called for the development in Europe of a system for disclosing the ingredients in the fluids used in hydraulic fracturing, similar to the FracFocus online-disclosure registry established in the United States. As Rex said, “An initiative similar to FracFocus in Europe will allow citizens and communities to begin their consideration of this technology with a strong factual foundation. And we believe that will lead to open and fruitful discussion about the risks we manage and the benefits we foresee for shale and tight-sand gas-and-oil development in Europe.”

There’s a lot more to Rex’s keynote than I can sum up in a short blog post, including an interesting discussion of issues related to the Keystone XL pipeline and how the U.S. policy approach to energy differs from other important resource-owning countries. He also talked about our support of a university-led initiative to create training programs for regulators of shale development, which I mentioned in an earlier post.

I encourage you to carve out a few minutes to read the whole speech for yourself. If you’re interested in an insight into Rex Tillerson’s thinking about key energy issues, it will be worth your while.


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