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Delivering energy in the low-carbon era: Challenges and opportunities
Remarks by Andy P. Swiger
Senior Vice President, Exxon Mobil Corporation
ADIPEC Executive Plenary
Abu Dhabi, United Arab Emirates
November 1, 2010
Thank you. ExxonMobil is proud to sponsor the 14th annual Abu Dhabi International Petroleum Exhibition and Conference.
I am also delighted to join this afternoon’s panel in opening the conference and discussing the challenges and opportunities of delivering energy in a low-carbon era.
It is, I believe, the right time and the right place for discussing this important subject. We are at a strategic point in the evolution of energy — a time when the demand for greater energy supplies and the demand for fewer carbon dioxide emissions are converging.
As world leaders in the production of energy and the search for environmental solutions, the United Arab Emirates and other nations in the Middle East are lynchpins in this convergence.
As the global economy recovers from recession, growing populations worldwide will continue to seek higher standards of living, requiring greater amounts of energy. The correlation between these trends — between economic growth and energy demand — is clear.
We certainly witness them at work in the United Arab Emirates and other nations in the region, which are quickly becoming not only major producers of energy, but major consumers of energy as well.
On a global scale, energy demand is expected to increase approximately 25 percent between now and the year 2030, even taking into account significant gains in energy efficiency. This enormous increase is more pronounced in developing countries, which will account for approximately 95 percent of this growth.
At the same time, concerns about the risks of climate change are growing, warranting action by governments, industry and consumers to reduce carbon emissions. While energy-related carbon-dioxide emissions levels are expected to decline in many developed countries, trends point to sizable increases in developing countries, reflecting a fast pace of economic growth and improved standards of living for growing populations.
Therefore, we are not simply entering a low-carbon era, as our panel theme suggests, but also a high-energy demand era. As we endeavor to reduce our environmental footprint, we must also continue to take forward strides in meeting the increasing energy needs of growing populations around the world.
In so doing, we must also consider our resource reality. Given the scale of global energy demand, all economic sources of supply are needed. This includes a wide variety of emerging alternative energy sources, which will play a more prominent and growing role in the energy mix.
It also includes hydrocarbons such as oil and natural gas, of course. Because of their widespread availability, affordability, reliability and versatility, oil and natural gas will continue to meet the majority of global energy demand for the foreseeable future.
Given this reality, meeting the dual challenge of fueling growth while reducing emissions requires that we develop the world’s oil and gas resources in the most effective and efficient way possible, while managing environmental impacts.
We cannot ignore the enormous need for energy to enable economic prosperity worldwide. We cannot deny the need to manage climate change risks and reduce carbon emissions. And we cannot escape the reality that oil and natural gas will factor large in our energy future. We must confront each of these developments — and reconcile them all.
Some assume these realities are at diametric odds, and that reconciling them is an impossible task. Increasing hydrocarbon energy supplies to fuel growing economies while reducing carbon emissions is indeed an enormous challenge.
But, thanks to technology and innovation, it is not an insurmountable challenge. As history has shown, the way in which we produce, deliver and use the world’s oil and natural gas endowment constantly changes. The situation is not static but dynamic — and the dynamo driving our energy future is innovation.
Throughout history, as the world’s demand for and supply of energy has grown, so has our ability to improve upon the means of developing and delivering energy. Over time, the global energy industry has become more effective and more efficient. We have done so through innovation, in the form of new technologies and new techniques that reflect the workings of our best minds and our best practices.
This energy learning curve extends to the present — and must continue into the future. Meeting the challenge before us — of ushering in a high-energy, low-carbon era — requires us to keep moving forward. To reconcile demands and realities, we need to keep improving the ways in which we produce and use oil and natural gas through the application of new technologies and new techniques.
And for the world’s energy producers — like Abu Dhabi — who commit to innovation and partner with international oil companies to integrate the latest technologies and techniques, the challenge of growing supplies while reducing emissions and other environmental impacts becomes an enormous opportunity — an enormous opportunity that requires vision, leadership and partnerships.
To illustrate this point, I would like to discuss three areas of energy innovation that hold potential — innovations that could enable us to turn the energy and environmental challenge into a historic opportunity.
The first is carbon capture and storage, or CCS. CCS technology involves safely and effectively capturing, transporting and storing carbon dioxide in underground formations such as depleted oil and gas reservoirs. We see some of this technology at work in select upstream operations around the world, where carbon dioxide is already being separated from natural gas and can either be used for enhanced oil recovery operations or stored in a safe and cost-effective manner.
To scale up these select applications to a global level, and therefore achieve meaningful reductions in emissions, further technological progress is required. The search continues for a cost-effective means of separating carbon dioxide from the emissions of power plants and industrial facilities.
ExxonMobil is advancing such progress through the ongoing development and testing of a new technology called Controlled Freeze Zone, or CFZ. CFZ has shown the potential to more efficiently separate carbon dioxide and other impurities from natural gas, and then discharge the carbon dioxide as a high-pressure liquid ready for injection into underground storage.
We have committed more than $100 million to develop and test our CFZ technology, which could not only expand the pool of cleaner-burning natural gas resources available for development and delivery to consumers, but also make carbon capture and storage more affordable and efficient in reducing emissions.
Another area of innovation is in the field of renewable energy. As indicated earlier, meeting economic and environmental demands will require developing all commercially viable energy supplies, including alternative and renewable sources where and when they are competitive.
One such potential renewable energy resource is algae, which could one day supplement conventional oil to help meet energy demands. Certain strains of algae produce oils with molecular structures similar to today’s petroleum products, capable of being refined into gasoline and diesel fuel using existing infrastructure in refining. They do so through natural photosynthesis, consuming carbon dioxide in the process. Unlike corn- or sugar-based biofuels, algae-based biofuels do not require fertile land or fresh water, and therefore do not have the same impacts on the food supply or environment.
Last year, ExxonMobil announced a partnership with Synthetic Genomics, Inc. for research and development of next-generation biofuels from photosynthetic algae, and in July we opened a new greenhouse facility in California to enable the next level of research and testing. If milestones are successfully met, ExxonMobil expects to spend more than $600 million on this biofuels program, $300 million of which will be allocated to Synthetic Genomics. We are in the early days in this area of research, and the obstacles we face are formidable, but the potential is great.
Finally, perhaps the most underestimated avenue for achieving a high-energy, low-carbon future lies in the area of energy efficiency. By producing, delivering and consuming oil and gas more efficiently, we not only displace demand and extend the life of the world’s hydrocarbon endowment, but we also reduce carbon emissions. Gains in energy efficiency across the world’s economies from 2005 through 2030 are expected to reduce the growth of global energy-demand growth by approximately 65 percent, and with it, stem any associated carbon emissions.
Achieving these gains requires the application of energy-saving technologies such as cogeneration — the simultaneous production of electricity to power operations while capturing useful heat or steam for industrial processes.
ExxonMobil is a leader in cogeneration, with an interest in 4,900 megawatts of capacity at more than 30 sites around the world — enough capacity to supply the electricity needs of more than 2 million homes in the United States.
Equally important to achieving greater efficiency is the application of new energy-saving techniques and practices. The expected 65 percent reduction in global energy demand growth and associated emissions due to energy efficiency through 2030 represents an aggregate of actions taken at all levels and by all actors within the energy marketplace.
Industry represents one of these actors, and is making significant gains in energy efficiency. At ExxonMobil, we have over the past 10 years adopted and implemented our Global Energy Management System, or GEMS. This system spans our entire global refining and petrochemicals organization, and is used to methodically and rigorously identify and capture opportunities to improve energy efficiency.
At our refineries and chemical plants worldwide, we have identified ways to improve energy efficiency by 15 to 20 percent — and we have captured more than 60 percent of these opportunities to date. These gains have put us on track to reaching our goal of improving energy efficiency across our operations by at least 10 percent between 2002 and 2012.
The contributions of new techniques, as well as new technologies to achieve greater energy efficiency, underscore the important role international oil companies can play in a high-energy, low-carbon future. Our commitment to research and development, as well as our proven management systems and utilization of best practices across our global operations, has made us a leading integrator of innovation, capable of implementing the best set of technological solutions in the most effective and efficient way to achieve our shared energy and environmental goals.
We cannot do so, of course, without strong national oil company partners and supportive host governments, such as those we find here in Abu Dhabi and across the region. NOCs often have strong, localized knowledge of the resource as well as valuable technical and managerial expertise. Host governments support the integration of innovation by upholding sound, stable policy and regulatory frameworks that encourage fair sharing of risk and rewards, as well as establishing a vision for their nations’ long-term resource development and economic and social progress.
To conclude, the convergence of global demand for greater energy and reduced emissions — together with the resource reality we face — demands that we continually innovate in the areas of carbon capture and storage, algae biofuels development, energy efficiency, and many more. This innovation involves both new technologies as well as new techniques — and it involves the integration of innovation through partnerships between international oil companies, national oil companies and governments.
In this way, we can work most effectively to achieve a high-energy, low-carbon future, ensuring that the evolution of energy continues to demonstrate the best of human ingenuity and achievement.
Thank you.
