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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.


5 Comments

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  1. John Lorz says:

    Rex said, “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.”

    Why should the Keystone Pipeline help us when you ~ the oil industry ~ are already exporting 1.9 bbl/day from U.S. oil production? Why is this aspect of the “free market” so important?

    It seems to me that if you were really that interested in servicing American energy needs, you’d keep that 1.9 bbl/day of oil right here to reduce oil prices.

    What am I missing?

    • gery katona says:

      Good points. To bad nobody visits this site to read your comments. I recently saw a new-to-me tv commercial by this company in support of the keystone pipeline. It is interesting that it talks about the path the oil takes and ends with a picture of the Gulf of Mexico with my interpretation of the message being the products are conveniently exported via the Gulf! This is why Senator Reid was quoted as saying ““If we want to wean ourselves from foreign oil, why would we allow a pipeline to be built for 1,700 miles to manufacture petroleum products to be shipped overseas?”

  2. Jeff Drake says:

    The transformation of energy this country needs is not to access previously inaccessible oil and gas so much as it needs to reduce our use of oil dramatically. The only way to become energy independent, or even close, is to use less.

    Germany is in the middle of a huge push to solar and wind power, and so too should we. The economic and ecological gains to be had from producing using wind and solar are great considering the hundreds of billions we send to the rest of the world by importing oil. Exxon Mobile says in a blog posting that it alone imported $198 billion in oil last year for its refineries to sell to US auto drivers. This why we must use much less. The average mpg is still only 24 miles per gallon- lots of room to go higher.

    Although solar power is produced only during daylight hours, this is when energy use peaks daily . Powering many more U.S. cars with natural gas also makes a lot of sense. Global warming is a fact and not only calls for less oil use, but the use of much less coal.

  3. Airroll Head says:

    Why not include Hydrogen inside your gas it would increase each drivers mileage and cut down the CO2 emissions you could endorse a kit sold on the internet maybe improve on the design instead of having internet scientists doing it themselves plus your company with it’s on the way out technology would be more of an old American Icon becoming a new American Icon like your old image before the gulf disaster at least look more favorable to the general public, I know it was British petro who was to blame however Gas is gas

  4. Larry Johnson says:

    Associated Press/David J. Phillip, File – FILE – In this Nov. 10, 2010 file photo, oil refineries are shown in this aerial view, in Deer Park, Texas. For the first time, the top export of the United States, the world’s biggest gas guzzler, is _ wait for it _ fuel. (AP Photo/David J. Phillip, File) less

    .. .

    .
    .

    NEW YORK (AP) — For the first time, the top export of the United States, the world’s biggest gas guzzler, is — wait for it — fuel.

    Measured in dollars, the nation is on pace this year to ship more gasoline, diesel, and jet fuel than any other single export, according to U.S. Census data going back to 1990. It will also be the first year in more than 60 that America has been a net exporter of these fuels.

    Just how big of a shift is this? A decade ago, fuel wasn’t even among the top 25 exports. And for the last five years, America’s top export was aircraft.

    The trend is significant because for decades the U.S. has relied on huge imports of fuel from Europe in order to meet demand. It only reinforced the image of America as an energy hog. And up until a few years ago, whenever gasoline prices climbed, there were complaints in Congress that U.S. refiners were not growing quickly enough to satisfy domestic demand; that controversy would appear to be over.

    Still, the U.S. is nowhere close to energy independence. America is still the world’s largest importer of crude oil. From January to October, the country imported 2.7 billion barrels of oil worth roughly $280 billion.

    Fuel exports, worth an estimated $88 billion in 2011, have surged for two reasons:

    — Crude oil, the raw material from which gasoline and other refined products are made, is a lot more… read more »

    …expensive. Oil prices averaged $95 a barrel in 2011, while gasoline averaged $3.52 a gallon — a record. A decade ago oil averaged $26 a barrel, while gasoline averaged $1.44 a gallon.

    — The volume of fuel exports is rising. The U.S. is using less fuel because of a weak economy and more efficient cars and trucks. That allows refiners to sell more fuel to rapidly growing economies in Latin America, for example. In 2011, U.S. refiners exported 117 million gallons per day of gasoline, diesel, jet fuel and other petroleum products, up from 40 million gallons per day a decade earlier.

    There’s at least one domestic downside to America’s growing role as a fuel exporter. Experts say the trend helps explain why U.S. motorists are paying more for gasoline. The more fuel that’s sent overseas, the less of a supply cushion there is at home.

    Gasoline supplies are being exported to the highest bidder, says Tom Kloza, chief oil analyst at Oil Price Information Service. “It’s a world market,” he says.

    Refining companies won’t say how much they make by selling fuel overseas. But analysts say those sales are likely generating higher profits per gallon than they would have generated in the U.S. Otherwise, they wouldn’t occur.

    The value of U.S. fuel exports has grown steadily over the past decade, coinciding with rising oil prices and increased demand around the globe.

    Developing countries in Latin America and Asia have been burning more gasoline and diesel as their people buy more cars and build more roads and factories. Europe also has been buying more U.S. fuel to make up for its lack of refineries.

    And there’s a simple reason why America’s refiners have been eager to export to these markets: gasoline demand in the U.S. has been falling every year since 2007. It dropped by another 2.5 percent in 2011. With the economy struggling, motorists cut back. Also, cars and trucks have become more fuel-efficient and the government mandates the use of more corn-based ethanol fuel.

    The last time the U.S. was a net exporter of fuels was 1949, when Harry Truman was president. That year, the U.S. exported 86 million barrels and imported 82 million barrels. In the first ten months of 2011, the nation exported 848 million barrels (worth $73.4 billion) and imported 750 million barrels

  5. John Lorz says:

    Rex said, “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.”

    Why should the Keystone Pipeline help us when you ~ the oil industry ~ are already exporting 1.9 bbl/day from U.S. oil production? Why is this aspect of the “free market” so important?

    It seems to me that if you were really that interested in servicing American energy needs, you’d keep that 1.9 bbl/day of oil right here to reduce oil prices.

    What am I missing?

    • gery katona says:

      Good points. To bad nobody visits this site to read your comments. I recently saw a new-to-me tv commercial by this company in support of the keystone pipeline. It is interesting that it talks about the path the oil takes and ends with a picture of the Gulf of Mexico with my interpretation of the message being the products are conveniently exported via the Gulf! This is why Senator Reid was quoted as saying ““If we want to wean ourselves from foreign oil, why would we allow a pipeline to be built for 1,700 miles to manufacture petroleum products to be shipped overseas?”

  6. Jeff Drake says:

    The transformation of energy this country needs is not to access previously inaccessible oil and gas so much as it needs to reduce our use of oil dramatically. The only way to become energy independent, or even close, is to use less.

    Germany is in the middle of a huge push to solar and wind power, and so too should we. The economic and ecological gains to be had from producing using wind and solar are great considering the hundreds of billions we send to the rest of the world by importing oil. Exxon Mobile says in a blog posting that it alone imported $198 billion in oil last year for its refineries to sell to US auto drivers. This why we must use much less. The average mpg is still only 24 miles per gallon- lots of room to go higher.

    Although solar power is produced only during daylight hours, this is when energy use peaks daily . Powering many more U.S. cars with natural gas also makes a lot of sense. Global warming is a fact and not only calls for less oil use, but the use of much less coal.

  7. Airroll Head says:

    Why not include Hydrogen inside your gas it would increase each drivers mileage and cut down the CO2 emissions you could endorse a kit sold on the internet maybe improve on the design instead of having internet scientists doing it themselves plus your company with it’s on the way out technology would be more of an old American Icon becoming a new American Icon like your old image before the gulf disaster at least look more favorable to the general public, I know it was British petro who was to blame however Gas is gas