Few would dispute that 2020 and 2021 will be remembered as two of the most disruptive years in modern history for nearly everyone, but that disruption has been especially evident in the energy sector.
"We have persevered through a pandemic, volatile commodity prices, global supply chain disruptions, a huge shift in how and where we work and, importantly, an intensifying discussion of climate change with an increasing level of urgency," said Darren Woods, chairman and CEO of ExxonMobil. "It is one of the most important conversations of our time."
ExxonMobil, he said, shares global concerns about the pace and extent of climate change. More importantly, the energy giant intends to be part of the solution. Any discussion about how to effectively address the risk of climate change must comprehend society's essential needs and how they will continue to be met, he said.
"Narrowly focusing and taking action on one aspect of this challenge could potentially lead to significant unintended consequences," Woods said at the 23rd World Petroleum Congress. "As history has shown, the best of intentions that are poorly executed can do more harm than good. Doing 'the right thing the wrong way' can end up making it the wrong thing. It's important to keep this in mind as we deal with climate change. Calm heads and a thoughtful approach are needed."
Meeting the demands of an emerging middle class
While the fight to mitigate the risk of climate change is vitally important, so is the work to meet the growing needs of people around the world, Woods said.
"As global populations grow and people become more prosperous, the need for energy increases. Access to affordable and reliable energy is essential to improve mobility, education, health care, availability of food and other necessities, which many of us who live and work in developed countries often take for granted," Woods said. "Billions of people in developing nations are striving for the basic things that affordable energy helps provide."
Alternative sources of energy such as solar and wind are playing an increasing role in addressing these needs and will continue to do so, he added.
"The growth of energy efficiency is good for society and is an objective our company supports. At the same time, as the world transitions to a global energy system, it is critical to strike the right balance to be sure we can meet all of the world's essential needs," he said. "Under most credible scenarios, including net-zero pathways, oil and natural gas continue to play a significant role in meeting society's needs."
In addition to products manufactured by the oil and gas industry, the world also needs the industry's expertise and experience to successfully reduce emissions while preserving economic prosperity, Woods said.
"Our history of innovation, chemical capabilities and large-scale project skills are essential tools to help achieve the largest emissions reductions at the lowest cost to society," he said.
Woods urged fellow energy leaders to continue taking a leading role in providing products "that aid modern life while developing the needed technologies and strategies that advance lower emissions in the future."
It is imperative, he reiterated, "we do both and strike the right balance today while making improvements for tomorrow."
The need for investment
Developing and bringing new technologies to market at scale requires significant financial investment. Recognizing that reality, ExxonMobil plans to invest more than $15 billion by 2027 in its initiatives to lower greenhouse gas (GHG) emissions in its operations and to grow its low-carbon solutions business.
"We have announced new emissions reduction plans through 2030 and continue our aggressive path to lower emissions," Woods said. "These new plans are expected to reduce GHG emissions' intensity across the company by 20 to 30 percent."
As part of that effort, Woods said ExxonMobil plans to achieve net-zero emissions in its Permian Basin operations by 2030.
"Our investments to electrify our operations in the region, coupled with our innovative work to identify and eliminate methane leaks and routine flaring, put us on this achievable path," Woods said.
This effort builds on the participation of ExxonMobil's affiliate, Imperial Oil, in the Oil Sands Pathway to Net Zero initiative. The initiative is an alliance of Canada's five largest oil sands producers collaborating with provincial and federal governments to achieve net-zero GHG emissions from oil sands operations by 2050. These policies will need to support direct investments and incentives similar to those available to other more established, lower-emissions technologies like wind, solar and electric vehicles, Woods said.
"Government assistance is critical in developing durable, predictable and market- driven policies to help achieve the largest GHG emissions reductions at the lowest cost to society," Woods said. "We have long supported an exclusive price on carbon to establish market incentives and provide the needed clarity and stability required for investments."
No single technology will achieve society's lower emissions ambitions, Woods said. "Predictable, stable, cost-effective policies are necessary to incentivize the development of a wide range of lower-emissions technologies at scale and across every relative sector of the economy," he added.
Likewise, no single policy, company, institution or stakeholder can drive the energy transition.
"It will take all of us working together to thoughtfully advance solutions, striking the right balance and meeting all of society's needs as we drive toward a lower-emissions future. We must all play our part," he said.
Observing that the oil and gas industry has been improving lives and supporting economic progress for more than a century, Woods noted that the industry has also developed the experiences and critical skills needed to make meaningful progress.
"We are committed to using our experience, capabilities and skills to make these significant contributions," he said. "Our collective understanding of today's energy system and thoughtful policies that minimize unintended consequences will all be important in helping society strike the right balance and sustain continued growth of global prosperity while significantly reducing emissions."
Categorizing Chevron's approach to emissions reduction as "straightforward," Chevron Chairman and CEO Mike Wirth said the company is accelerating progress for a lower-carbon future "by driving down the emissions intensity of our oil and gas production today and investing to develop carbon energy solutions for tomorrow, all while every day continuing to deliver affordable, reliable and ever-cleaner energy that enables progress around the world, and that progress is dependent upon massive sectors of the economy."
One fundamental truth that informs "any rational conversation about the future of energy," Wirth added, is oil and gas will continue to play a central role in meeting energy needs if the industry continues to assume a central role in delivering production by using lower- carbon methods.
"Our products make the world run, and we can make it run even better, so it's imperative for our industry to lead," Wirth said. "That means reducing the intensity of our operations, setting ambitious targets and leading transparently to deliver results."
Chevron, Wirth said, has a wide variety of projects underway to reduce emissions, through improving methane detection, rethinking facility designs, optimizing equipment, utilizing renewable power and deploying new operational practices.
Wirth asserted that Chevron's involvement in the Permian Basin offers a great example of that approach. "Through our partnership to build solar and wind power to support operations, we expect to reduce emissions by 300,000 tons per year," he said. "Technology like carbon capture and storage will be a critical enabler to a lower- carbon future."
Always look on the bright side of life
Wirth veered the topic of energy solutions and how the industry can navigate and build upon them toward a more philosophical discussion.
"I'd like to introduce something into the conversation that's been sorely lacking: optimism," Wirth said. "Optimism in the power of human creativity, imagination and ingenuity. A belief in engineering and innovation as a means to developing new solutions. Fuel that accelerates progress. Recognition for the prospects of the human condition has never burned brighter."
Optimism, he continued, "is the spark of innovation and the impetus of discovery."
Wirth challenged his fellow executives and stakeholders in the oil, gas and petrochemical industry to "keep accelerating progress."
"We are the industry that knows how to solve the toughest problems," Wirth concluded. "For more than a century, this industry has had the courage to do what is difficult. We do 'difficult' every day. Difficult is an invitation to be great. Let's prove that to the world once again."
