Cara Pasquale
March 7th
Professor Crawford
ExxonMobil’s
Outlook on the Future Energy and Environmental Challenges
Abstract:
This paper describes what ExxonMobil believes the future
energy challenges to be and how they will address those challenges. The paper
highlights the new technologies that ExxonMobil has developed and what they
plan to invest in for the future. The
paper goes on to describes the company’s actions regarding curbing emissions to
respond to the growing environmental concerns that will only increase as time
goes on.
Introduction:
Our world is drastically changing as the population grows
and in turn increases the energy demand. This energy demand will increase
greatly in the coming decades, as developing countries become industrialized
and the population increases by the billions. Not only will the energy demand
increase, but there have been increasing concerns and policy initiatives
related to global warming and other environmental concerns because of the
burning and drilling of fossil fuels. The energy industry is facing increasing
challenges and responsibilities that each company within this industry is
handling in different ways. The focus of this paper is on ExxonMobil and their
beliefs and actions on the energy and environmental problems that will plague
the future.
Background:
ExxonMobil’s headquarters are in Irving,
Texas. This company is the parent of Exxon, Mobil and Esso companies. Mobil and
Exxon were descendants of the Rockefeller monopoly Standard Oil. When Standard
Oil was split into 34 companies to break the monopoly, Jersey Standard arose
which was to become Exxon and another was Standard Oil Company of New York,
which became Mobil. In 1999, Exxon merged with Mobil to become ExxonMobil in a
73.7 billion merger agreement. Overall, this company has operated for more than
120 years and at the present operates on approximately 200 countries and
territories. The current CEO is Lee R. Raymond (Corporate Citizenship Report,
2003: 3). The company is usually recognized for the Exxon Valdez spill in 1989
considering the degree and damage of the spill. The spill resulted in 10.8
million gallons of crude oil being dumped into Prince William Sound: “[it was] a
spill that ranked 34th on a list of the world's largest oil spills in the past
25 years came to be seen as the nation's biggest environmental disaster since
Three Mile Island” (Details about the Accident).
Energy
Outlook and Actions:
ExxonMobil’s
motto on their online website is “Taking on the world’s toughest energy challenges”.
ExxonMobil has put a lot of research into looking at what energy resources will
be needed for the future and what the demand will be for those resources. In
ExxonMobil’s A Report on Energy Trends,
Greenhouse Gas Emissions and Alternative Energy, the company has come to
certain conclusions about the future of energy based on using a team of energy
planners who develop a long term energy outlook of 20 years. The team of energy
planners develops their outlook by utilizing a wide-ranging database, “…to
analyze past economic and energy trends, and guide future forecasts” (A Report
on Energy Trends…2004: 3). ExxonMobil claims this allows them to predict
certain patterns of energy use so they can make appropriate policies and
changes. ExxonMobil’s conclusions from their 20 year energy assessment are:
·
That energy use and
economic growth are linked. This connection between energy use and economic
growth represents, “ the trajectory that developing countries will likely
follow as they progress toward industrialization” (A Report on Energy
Trends…2004:2).
·
Eighty percent of the
energy growth between 2000 to 2020 will be in developing countries trying to
improve their quality of life. In the developing world, by 2020, 85% of the
world’s population will be concentrated in developing countries (A Report on
Energy Trends…2004:2).
·
Since 80% of the growth
in energy will be in developing countries, than 80% of the growth in carbon
emissions will be from the developing world (A Report on Energy Trends…2004:3).
·
By 2020, the world will
need 40% more energy than that of today. This demand will require around 300
million barrels of oil-equivalent energy per day (A Report on Energy
Trends…2004:2).
·
ExxonMobil expects that
60% of the energy needed in 2020 will continue to come from oil and gas. The
company believes that oil and gas will be able to continue as the primary
sources of energy because, “…[they] are available in sufficient quantity to
meet the world’s growth and are, at the same time, the most economical” (A Report
on Energy Trends…2004:2).
·
Wind and solar energy
will continue to grow because of public subsidies and technological advances,
but they are starting from a small base. As a result ExxonMobil believes that
by 2020, wind and solar will only contribute less than .5% to total energy
supplies (A Report on Energy Trends…2004:3).
·
The increase in oil and
gas demand will be a challenge, however ExxonMobil believes that there are
abundant oil and gas resources. Over the years the estimates of the total oil
and gas reserves have increased due to increased access in new areas and
technology (A Report on Energy Trends…2004:3).
·
The conventional
resource base of oil “…is very large and is likely to continue to be the
primary source of energy through at least the middle of the century” (A Report
on Energy Trends…2004:3).
·
There are a considerable
amount of unconventional resources which the International Energy Agency has
estimated to be about 4.3 trillion barrels (A Report on Energy Trends…2004:4).
·
There will be new technologies
that will continue to increase the recoverable resource base. These new
technologies will make uneconomical reserves “commercially attractive” (A
Report on Energy Trends…2004:5).
·
Natural gas use will
increase due to its abundance and the fact that it is the cleanest burning
fossil fuel. ExxonMobil has become very invested in developing new technologies
and practices to make natural gas even more economically friendly and available
(Raymond, 2004).
According to ExxonMobil CEO Lee R. Raymond, the company
believes that, “To successfully provide for adequate energy supplies,
government policies and private sector, actions will need to focus on access to
resources, energy investments and new technology” (Raymond, 2004). ExxonMobil
strongly believes that if energy companies do not have access to possible new
sources of energy, then meeting the world’s increasing energy demand will not
be possible (Raymond, 2004). The company has been frustrated by the inability
or resistance to drilling in certain places in the United States such as
Alaska, California and Florida. ExxonMobil notes that this resistance is due to
environmental concerns over drilling in these areas but believes, “It is
unfortunate that some of the public and a number of opposition activists fail
to understand how successfully we can mitigate potential environmental impacts
and manage environmental risks with new technologies and sound operating
practices” (Raymond, 2004). ExxonMobil truly believes that it can address
environmental concerns while at the same time having free access to resources
and markets. They advocate that governments can and need to play an important
role in policy making to allow the energy industry to have access to the
necessary potential resources and markets (Raymond, 2004).
The next important action for the industry, according to
ExxonMobil, is focusing on energy investments. The challenge in this regard is
the amount of money it is going to require to invest in future energy needs.
ExxonMobil estimates that an increase of about 20% on the level of investments,
which is an average of $200 billion dollars, will be needed to develop the
amount of oil and gas necessary for the future demand (Raymond, 2004).
According to the CEO of ExxonMobil, Lee R. Raymond, this investment does not
include other energy options, and to invest in those would be an additional
cost that was even larger than the $200 billion for oil and gas investments.
ExxonMobil believes, “…that the most appropriate public policy regarding these
projects is to rely on market incentives and to avoid mandates that discourage
investments by raising costs, risks, or both” (Raymond, 2004). Governments can
play an important role in helping this since some investments will take a long
time to pay off. So ExxonMobil believes that governments should make policies
that will lesson the costs that industry will have to bear, for providing
future energy needs (Raymond, 2004). However, I could find no specific policies
that ExxonMobil wanted the government to make except for letting industry have
as much access and support for all of their initiatives.
The final and most important aspect for meeting the future
energy demand is researching and developing new technologies. ExxonMobil claims
this is one of the strengths of their industry and their, “ability to develop
the technologies for finding, producing, and delivering energy has been central
to having both adequate and affordable supplies” (Raymond, 2004). In 2003,
ExxonMobil invested in about $15 billion in funds and exploration costs and
around $600 million in research and development (A Report on Energy
Trends…2004:6). ExxonMobil is focusing its research and development on
technologies to improve hydrocarbon detecting, to make liquefied natural gas
more attractive commercially and safe, to research hydrogen production for use
in fuel cells, to develop more efficient and cleaner burning internal
combustion engines, and invested $100 million in the Stanford University’s
Global Climate and Energy Project (GCEP) (A Report on Energy Trends…2004:8).
The GCEP is, “a major long-term research program that is designed to accelerate
the development of commercially viable energy technologies that can lower green
house gas emissions on a world wide scale” (Corporate Citizenship Report, 2003:13).
They plan on making these technologies not only viable for industrial nations,
but for developing countries (A Report on Energy Trends…2004:13).
ExxonMobil invented a new technology to create strikingly
more clear images of the earth, the 3-D seismic imaging. This has allowed
ExxonMobil to have, “more complete pictures of areas that held prospective oil
reservoirs” (ExxonMobil website). For their 3-D seismic imaging they have a
special theater at the ExxonMobil Upstream Research Center in Houston where
geoscientists can take a virtual tour of potential new reservoirs, and older
fields that may still contain reserves.
The most amazing thing about the program is that it can zoom “in or out,
rotate the view, or descend through miles of individual layers, searching for
oil-bearing rock” (ExxonMobil website). Furthering their 3-D seismic imaging
technology, they have added the dimension of time-lapse, making it 4-D seismic
imaging (ExxonMobil website). This advance enables them to show how an oil reservoir
has changed over the years of production and predict how it will change in the
future. ExxonMobil sees this as extremely important technological advance
because when deepwater drilling is so expensive, potentially $60 million to
drill, it is important to know as much about the oil reservoir as possible and
its potential for economic benefits (ExxonMobil website). There have also been
improvements in direct hydrocarbon detection. These improvements are essential
because,
“With
3-D images our geologists can tell us where the oil and gas are likely to be,
but we don’t know for
sure until we drill a well. With Direct Hydrocarbon Detection,
we’ll know with greater
certainty if the oil and gas are really there, and we’ll be able
to see the extent of the
reservoir” (ExxonMobil website).
Considering the increasing future energy
demand, this technology is critical to finding the oil and gas reservoirs to
meet that demand.
ExxonMobil
is also working on developing methods to retrieve oil and gas from extremely
cold, remote regions where there is threat of offshore platforms, pipelines and
ships being hit by ice (ExxonMobil website). According to the ExxonMobil
website, they have developed two projects in remote areas, a platform in
Hibernia, and one off the northeast cost of Sakhalin Island, located in the
Russian far east. In Hibernia, the oil field there is in the path of yearly
iceberg migration. The platform built in Hibernia is made to withstand the
impact of a million-ton iceberg without any damage (ExxonMobil website). Both
of these projects have been hard to accomplish and costly to develop, but
ExxonMobil believes being able to recover oil and gas from cold ocean regions
is essential to meet the world’s growing energy demand (ExxonMobil website).
The
next area where new technology is essential is in the department of natural
gas. ExxonMobil has been focusing on developing better LNG technology for safer
and more cost-effective transportation. According to the ExxonMobil website,
natural gas is one of the most expensive fuels to transport over long
distances. Converting natural gas to liquid for transport and developing new
tankers that can hold increased amounts of LNG has led to more cost efficient
practices. ExxonMobil, however, is looking to make LNG more attractive through
further technological developments that will lower its cost:
“Technology [is] now
under development could greatly expand the size of LNG production units,
reducing the costs even further. New Terminals will soon allow LNG tankers to
load and unload faster, increasing the number of yearly round trips each ship
can make. Even larger LNG tankers are being designed that will lower the
transportation costs still further” (ExxonMobil website).
For ExxonMobil, natural gas is the
primary fuel source that will be used to help supply the world’s growing energy
demand. This is because there are abundant reservoirs that will be continually
able to be tapped due to technological advances and because it is the cleanest
burning fossil fuel which will help to reduce the amount of carbon in the
atmosphere (ExxonMobil website).
On
the environmental side of ExxonMobil’s policies and beliefs for the future,
they are focusing on energy conservation as a means to not only to help reduce
the growth in energy demand, but as a way to curb the subsequent emissions from
their practices and products (ExxonMobil website). ExxonMobil believes in the
prediction that by 2030, demand will be 50% higher than today and because of
the growing concern over emissions of GHG’s, conservation efforts will not only
help reduce costs of energy, but help bring down the amount of emissions. The
tool that ExxonMobil uses in improving efficiency within their own operations
is the Global Energy Management System (GEMS), which helps to understand the
efficiency and emission impacts of new projects (ExxonMobil website).
ExxonMobil claims that GEMS has helped them improve their energy efficiency in
their refineries by 10% since 1990, and will continue to help them improve
their efficiency and lower emissions. The reduction by 10% since 1990 has
effected GHG’s emissions because, “ [the] save [ings] over this time are
equivalent to removing a million cars from the world’s roads” (ExxonMobil
website).
ExxonMobil
has also developed cogeneration facilities that are more efficient because they
can simultaneously produce steam and electricity. ExxonMobil highlights the
benefits of cogeneration when natural gas is used because it results in
decreased emissions. Over the next two years, they will be investing $1 billion
for creating more cogeneration facilities in Texas, Wyoming, and Ontario
(ExxonMobil website).
ExxonMobil
is focusing on internal combustion research in order to develop a better
understanding of the interactions between a fuel and an engine. This will help
to create more efficient engines and lower emissions (ExxonMobil website).
ExxonMobil is working with Toyota, and together they, “are investigating in
detail what happens when different blends of molecules are burned in and ICE.
The knowledge gained will likely lead to new fuel and vehicle systems that use
less fuel and produce less pollution than today’s vehicles” (ExxonMobil
website). ExxonMobil is also doing research and development on a new technology
called homogeneous charge compression ignition, which combines the efficiency
of a high compression diesel engine with the lower emissions of a gasoline
engine (ExxonMobil website). Another avenue ExxonMobil is continuing research
on is hybrid electric vehicles. ExxonMobil recognizes that these cars have a
great potential to reduce emissions, and in regards to city driving, are 50%
more efficient than traditional cars (ExxonMobil website). As a longer term
option, they are working to develop technologies that will make fuel cells more
of viable option. The problem right now concerning fuel cells is where hydrogen
will come from to power the fuel cells. The company is researching some
technologies that could be used to produce hydrogen from either oil or natural
gas (ExxonMobil website). Overall, ExxonMobil believes that fuel cells are
going to be part of the future and are focusing on methods to increase their
applicability.
ExxonMobil,
however, concerning the environment, while focusing on reducing its emissions,
it does not seek to invest in renewable energy. The company recognizes the
appeal of renewable energy because of its ability for long-term sustainability
and environmental benefits, but renewable energy does not meet ExxonMobil’s
investment criteria (A Report on Energy Trends…2004:16). They view that,
“…current renewable technologies do not offer near-term promise for profitable
investment relative to attractive opportunities that we see in our core
business. Therefore, we have chosen not to pursue investments in renewable
energy options” (A Report on Energy Trends…2004:16). Even though there have
been cost reductions over the last decade with regard to renewables, especially
solar and wind energy, ExxonMobil claims that renewable technologies still need
a considerable amount of government support to be competitive (A Report on
Energy Trends…2004: 16). ExxonMobil, however, in what it sees as the longer
term, past 2020, believe hydrogen energy will have great potential and chooses
to invest in that area (A Report on Energy trends…2004:18).
Conclusion:
ExxonMobil recognizes the future challenge of providing
adequate amounts of energy for a growing population and has made considerable
efforts to develop new technologies in many areas such as oil recovery, natural
gas transportation and more efficient engines that will help meet this growing
demand. In the case of renewable energy, however, the company chooses not to
invest in a potential market of energy because of the costs. The odd thing is
that it chooses to focus on fuel cells and hydrogen, which have even higher
costs. Concerning ExxonMobils environmental actions against emissions, they
have made some progress but continue to focus their energy on oil and gas as
being the primary energy sources, which will only continue the problem of GHG’s
emissions and global warming. While ExxonMobil is enacting some measures to
reduce it’s emissions, according to the Don’t
Buy ExxonMobil Campaign US, ExxonMobil has been lobbying against the Kyoto
Protocol, and does not agree that there is a link between fossil fuels and
global warming. ExxonMobil will meet the energy demands of the future through
oil and natural gas because they believe there are enough reserves to continue
meeting most of the energy demand through the middle of the century. However,
as concern grows over the environment and more pressure is put on government, I
feel that ExxonMobil will be forced to follow more of the emissions regulations
and to invest in some renewable resources.
Details about the Accident, February 1990 http://www.evostc.state.ak.us/facts/details.html
Don’t Buy ExxonMobil
Campaign, US. http://www.dontbuyexxonmobil.org/
ExxonMobil website. http://www.exxonmobil.com/corporate/
Raymond, Lee R. Realistic Choice in Future Energy
Investments, ExxonMobil Corporation: May, 2004. http://www.exxonmobil.com/Corporate/Newsroom/SpchsIntvws/Corp_NR_SpchIntrvw_LRR_220504.asp