ExxonMobil Corp. isn't about to let the natural gas and oil opportunities in North America slip out of its grasp, CEO Rex Tillerson told a Houston audience Thursday. But federal officials might if they don't allow energy exports to be freely traded, he said.
Tillerson was keynote speaker at the Greater Houston Partnership's inaugural State of Energy conference. The largest oil and gas employer in the United States is headquartered in Irving, TX, but more than one in six of its employees are based in Houston. And the workforce is continuing to move south; more than 13,000 will be working in the region by 2015 once a new campus is completed 20 miles north of downtown.
Plenty of gas and oil reserves exist across the globe, but Houston remains the energy epicenter of the world, Tillerson told the audience. The Bayou City is where the newest industrial (i.e., unconventional) revolution began, and it's where the deepwater technology is being created. And no matter where he travels around the world, there's a "remarkable consistency" in the questions he's asked about the state of energy -- both onshore and offshore.
What's going on in North America?
"In Canada, industry innovations have made it possible to safely and responsibly develop the nation's vast oilsands. Technology has enabled access to proven oil reserves of approximately 170 billion bbl. In the Gulf of Mexico, advanced technologies have opened up unprecedented opportunities in offshore exploration and production. In less than a generation, we have progressed from engineering concepts hand-drawn on drafting tables -- that's how I had to do them -- to sophisticated computer-designed rigs.
"We have offshore facilities operating in ultra-deepwater depths of more than 10,000 feet, rigs capable of drilling wells that extend five miles below the ocean floor. With each passing year, we see continuous improvement in the offshore technologies and processes we employ. As a result, we project that in the period from 2010 to 2040, deepwater production worldwide will grow 150%."
The "most unexpected and far-reaching breakthrough," undoubtedly for the world, is the advanced integration of hydraulic fracturing and horizontal drilling.
"Our industry's efforts have...put the United States in a position to become an energy exporter, reversing four decades of fear and anxiety about energy scarcity," Tillerson said. "As we look to the challenges of the future, it is clear that with bold leadership and sound policymaking, North America's newfound abundance and energy security could position Canada, Mexico and the United States to help reduce global price volatility, moderate international tensions and provide energy flexibility to friends, allies and trading partners.
"These benefits can potentially be magnified as our industry's revolutionary technologies are applied beyond the borders of North America to shale gas and tight oil resources all over the world. With such development, we could see the same economic and environmental benefits that have taken place in the United States repeated around the globe."
With "every barrel of oil we produce, and every cubic foot of natural gas," the nation "also increases the world's overall supply, and supports economic growth and much-needed prosperity for nations around the world," he said. For decades, the United States pursued energy policies based on the "fear of scarcity, the old way of thinking."
Today, energy policies need to be designed for the "era of abundance."
The government has a key role to play, said the ExxonMobil CEO. It can open up markets, strengthen international ties and promote free trade. At this particularly strong energy moment, "our nation needs far-sighted policies equal to the trade and export opportunities that lie before us."
In the current debate out liquefied natural gas (LNG) and crude oil exports, "economists and leaders from across the political spectrum on all sides agree that free trade would lead to increased investment, more jobs, and, important, increased production," Tillerson said. "Allowing the marketplace to determine the viability of energy exports or other infrastructure projects, as opposed to making decisions based on political calculus, is the proper course of action. It is one that can provide significant short- and long-term benefits to the U.S. economy while strengthening our energy security."
By understanding the responsibilities of industry and government may the country leverage its achievements, he told the audience. However, "in some cases, the window is quickly closing for us to develop policies that can properly position North America for the market realities of the future.
"The primary lesson from the energy revolution we are experiencing today, and from our industry's experiences around the globe, is that sound policy leads to wise and disciplined investment, new and revolutionary innovations and increased trade and economic growth."