The Future of Energy: Hear from ExxonMobil at the World Petroleum Congress
The 24th World Petroleum Congress (WPC) will be held in Calgary from September 17 to 21, 2023. The conference takes place every three years and has been described as the world’s leading assembly for the petroleum industry. The organizers are expecting 15,000 visitors and 5,000 delegates from over 100 countries.
This week, we hear from Matthew Crocker, Senior Vice President, Product, Strategy and New Assets, for ExxonMobil’s Low Carbon Solutions business. Matt, along with others from ExxonMobil will be at the WPC in Calgary.
Here are some of the questions Jackie and Peter asked Matt: ExxonMobil’s Global Outlook projects oil and natural gas will still make up more than half the world’s energy supply in 2050; why is ExxonMobil’s view of oil and gas demand more than some other scenarios such as the IEA’s Net Zero Emissions by 2050 (NZE)? Considering the amount of oil and natural gas demand in ExxonMobil’s Global Outlook, do you think it is possible to keep long-term global warming to less than 2°C? What was ExxonMobil’s intention for acquiring Denbury, a developer of CCUS solutions and enhanced oil recovery? What other investments is ExxonMobil making in CCS? Is ExxonMobil investing in biofuels? How is policy risk factored in when ExxonMobil makes low-carbon investments?
Content referenced in this podcast:
- The World Petroleum Congress registration information: https://www.24wpc.com/
- ExxonMobil Global Outlook: Our view to 2050
Please review our disclaimer at: https://www.arcenergyinstitute.com/disclaimer/
Check us out on social media:
X (Twitter): @arcenergyinst
LinkedIn: @ARC Energy Research Institute
Subscribe to ARC Energy Ideas Podcast
Apple Podcasts
Google Podcasts
Amazon Music
Spotify
Episode 211 transcript.
Speaker 1:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Speaker 2:
This is the ARC Energy Ideas Podcast with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian. Well, watching the stock market and the energy stocks broadly, whether it’s oil and gas, renewables, and everything in between, is super important because at the end of the day, we’re going to require a lot of capital to invest in the world’s energy systems, to decarbonize, to expand for demand growth. And one of the notable trends is the weakening of the clean energy space over the course of the last couple of weeks.
Jackie Forrest:
The WilderHill ETF index, which is a basket of all sorts of companies. It includes hydrogen and renewables and electric cars. It’s down about 20% since August. And there’s lots of headlines to support this. Interest rates were a big issue. Orsted just took a write down on a big US offshore wind project. And we’re starting to see the early signs that some of those companies that raised all that money in 2021 in those special acquisition vehicles, SPACs, are starting to run out of money. We saw an electric bus company announce bankruptcy. So, definitely a bit of a negative sentiment. We have something like $1.1 trillion spent last year on clean energy and that needs to something like triple by 2030 and this kind of thing doesn’t help for sure these companies raise the capital needed.
Peter Tertzakian:
No, and I think of course there’s a lot of government subsidy in that 1.1 trillion, and that’s the way energy transitions are typically triggered is that it does require public funding. But that has to be followed through with a multiples of what I would call institutional capital or private capital, private investors, to come in, including corporations to invest. And if their cost of capital goes up, in other words, if their stock valuations go down, then the ability to tap into markets and fund projects which are now subject to higher interest rates becomes more problematic. So, we may see a little bit of a pause over the course of the next couple of years. I mean, the long-term trend is still positive because of the technological innovations that are happening, but it’s not going to be a straightforward straight line or even exponential growth, I think, in this transition because the funding of the infrastructure that requires is subject to the macroeconomic conditions in the capital markets.
Jackie Forrest:
Yeah, I mean, everyone draws these charts like 20% growth for clean energy, year on year equal growth. It’s going to be more up and down. I think the overall trend will be up, but there’s going to be periods where it’s not. And you need to take a long-term view as an investor because there’s going to be a lot of volatility. And we have a company to talk to today that definitely takes a long-term view when it comes to energy.
Peter Tertzakian:
Well, it’s the longest standing energy company in the world, or one of them anyway, and that is one that started out as Standard Oil, became Standard Oil in New Jersey, and then eventually through a whole bunch of corporate acquisitions and mergers became ExxonMobil. We are delighted to have with us today, Matt Crocker, Senior Vice President for Product Strategy and New Assets for ExxonMobil’s Low Carbon Solutions. Well, that must be a fairly lengthy business card, Matt. Welcome.
Matt Crocker:
Thanks very much. It’s great to be with you today.
Jackie Forrest:
Okay, Matt, well, you’re coming to Calgary soon, very shortly here with the World Petroleum Congress, and we’re excited to learn more about what Exxon is doing. I still encourage our listeners to look at how you can get involved. It is not too late to register and there’s opportunities just to see the exhibition hall which are fairly low cost and then of course there’s the higher cost option of seeing the whole conference. But first of all, Matt, tell us a bit about ExxonMobil’s Low Carbon Solutions business. I think it’s relatively new, so a bit about the history and how you came to lead it.
Matt Crocker:
Absolutely. We formed Low Carbon Solutions in early 2021, so just over a couple of years ago. And simply put, our mission is to reduce our own emissions and to help others reduce theirs. And our initial focus really is on bringing carbon capture and storage, low carbon hydrogen, and biofuels to market and making them accessible to hard to decarbonize industries worldwide. And we believe broad deployment of all three of those technologies will help society reach its net zero goals.
And just from a personal point of view, actually this week I’m celebrating 28 years with ExxonMobil and I’ve been very fortunate to have a wide range of opportunities through my career. Actually the last 18 of those I’ve spent here in different locations in North America. I’ve got a lot of experience in our refining and downstream business, but I’ve also worked in the upstream and in chemicals, and I think it’s that sort of breadth of experience across ExxonMobil that is really helping as we look at low carbon solutions really across the entire oil and gas value chain.
Peter Tertzakian:
Over the 28 years, you’ve seen a lot and certainly I’ve seen a lot in those 28 years, including many outlooks from various independent agencies like the International Energy Agency. But the large multinational companies like ExxonMobil also put out their outlooks, which are closely watched by analysts. And your latest outlook assumes that in 2050, oil and natural gas will still account for more than half of the world’s energy mix and that natural gas use is projected to grow by more than 20% by 2050. Let’s talk about that and what it means as well as what it means to emissions and the pursuit of net zero by 2050 and those sorts of things. What do you make of all the scenarios, including your own that are out there?
Matt Crocker:
That’s a great question and maybe a good place to start is just to maybe provide some context for what is our global outlook. So really it’s our most recent view of global supply and demand through 2050. We have internal teams here within ExxonMobil who develop that based on really a deep understanding of long-term market fundamentals and it forms a basis of our company planning. Now, it’s a projection, it’s a look forward. So it’s taking where we are today and looking forward and building in trends, let’s say, in economic development, in technology advances, and consumer behavior. And so it’s a little different from some of the third party scenarios. For example, IEA’s net zero where they start with a hypothetical outcome and then work backwards.
By 2050, the global population is expected to rise by 2 billion people. That’s about a 25% increase. And just to put that in context, that’s the equivalent of adding 1 million people every six days. We’ve just got a huge increase in population expected over the next 30 or so years. To support that population with rising living standards, we project that the world will need to produce about 15% more energy in 2050 than it does today. And obviously economic expansion’s a great driver of demand and energy is clearly very supportive of that. Access to affordable and reliable energy is really at the core of every measure of human development and quality of life.
And so even with unprecedented rise in lower emission options, oil and natural gas are still projected to meet more than half of the world’s energy needs in 2050. And maybe just to underscore that, if every new passenger car sold in the world in 2035 were an electric vehicle, all demand in 2050 would still be about 85 million barrels a day. And that’s about equivalent to where it was around 2010. There are just so many uses for oil and gas in addition to the fuels that most people think of.
Peter Tertzakian:
Yeah, it’s not just population growth by the modeling that I’ve done. I mean, the big kicker is when rural population migrates into big cities there’s just a dramatic rise in energy consumption on a per capita basis. The minute somebody moves off a rural farm where actually their usage of energy is very low and they move into a city, even if it’s a small apartment, they buy a refrigerator, they buy all sorts of amenities and then some kind of vehicle. The rise is typically up to 20 times what they were consuming. And so the combination of population growth and wealth creation, migration to urban centers, is really at the root of it.
Jackie Forrest:
Okay, but I mean, I think a lot of people would be concerned by this outlook because it still shows that greenhouse gas emissions would be over two times higher than what is needed to meet the IPCC’s less than two degrees scenario. What can be done about that? If we do need more energy, and it seems that it’s going to be difficult to get off oil, and you’re saying gas is even going to have to grow. Do we have any hope of making these goals?
Matt Crocker:
I think it is a really important question. Again, the outlook is really, it’s sort of a fact-based-important question. Again, the outlook is really… It’s a fact based reality check on where we are. And obviously in order to meet net zero and to reduce emissions, we need to rapidly increase the deployment of the lower carbon technologies. There are really three drivers, in my opinion, to accelerate the pace of the energy transition and they affect both the supply and demand. Firstly, we need technology advances. I mean, we’re talking here about building new low carbon value chains. Some of those technologies that exist are being developed, but others need to be innovative. Technology is a huge driver.
The second then is around public policy support. There’s a real need for clear and consistent policy that supports investments and is durable over the long term. Then the third is down to each and every one of us. We need to have market-based solutions. Eventually there will need to be a carbon-based market where consumers and companies are willing to pay some level of premium to reduce carbon because obviously government subsidies can support an initial part of a transition. But to support that over the long term, we do need to have a way to be able to monetize that.
Jackie Forrest:
So if we do all that and we deploy these low carbon solutions, and I know you had mentioned earlier you’re interested in biofuels and CCS and some of the others decarbonization options, do you think it is achievable that you could reduce emissions and still meet all those world’s energy needs?
Matt Crocker:
We are very focused on the core areas of capability we have. Carbon capture and storage now is well acknowledged by various different bodies as being a critical component of reducing emissions, and that can have a substantial impact on overall emissions. We’re obviously heavily involved in that and accelerating investments. You’ve seen recent announcements from ExxonMobil here in the U.S. So that’s one factor. I think the second is around low carbon hydrogen as an alternative fuel source. Again, that’s an early developing market, but as demand for that grows, the infrastructure that goes with it grows, that can have a very meaningful impact as well. It is going to take a significant amount of investment and a lot of cooperation between governments, companies, academic institutions. It’s going to take a bit of everybody to work together in order to have a significant impact. But I think we’re starting to see at least momentum starting to build and real projects start to come to bear that will have an impact.
Peter Tertzakian:
You mentioned the public policy support that’s required through incentives. The IRA, Inflation Reduction Act, in the United States is one of the most generous and large-scale public policy support mechanisms we’ve seen in energy. Is that not enough? Is that what you’re saying, that more is required?
Matt Crocker:
It’s a very good starting point and I think as we’ve seen, a year since the Inflation Reduction Act was passed, and we’ve seen a tremendous increase in the number of projects being announced and the amount of investment that’s coming in the United States. It’s a good start and it’s a good example of constructive policy that incentivizes companies to pursue a variety of low carbon energy solutions. That said, there are still other things that need to go with that. The projects that we’re developing, there are huge hurdles to overcome around permitting. Whether that’s for new pipelines or new wells, some of those timelines can be multi-year. That’s a piece of it. We need additional incentives because the amount of investment required to reduce emissions is very significant indeed. It’s a great start and you’re starting to see projects come along, but more is going to be needed as we go forward.
Jackie Forrest:
All right. You’re on the board of Imperial Oil in Canada. You have some perspective on incentives here for clean energy and over the border. I think the narrative sometimes is over the border it looks better because you have the certainty of, for example, the 45Q, which guarantees a price for carbon for, I think, 10 years or something like that. Where here in Canada, we’re looking more at carbon prices. Can you give any perspective on the Canadian energy industry when you think about it versus the opportunities in the U.S. or the rest of the world for Exxon in terms of investment?
Matt Crocker:
Yeah, absolutely. The Canadian policy, while it’s different to the Inflation Reduction Act, it actually is amongst the best in the world for providing durability and incentives to make major investments and reduce emissions. The prices on carbon at the national and provincial levels are incentivizing investments, and the recent budget in Canada recognized the need for clean fuels for a clean economy, including biofuels, and obviously the Canadian government has committed to engage with the biofuels industry in the month that’s ahead. I think a good example actually is Imperial’s investment in a grassroots renewable diesel project in Alberta, which is supported by policy and is actually the first major grassroots biofuels investment across ExxonMobil actually.
Peter Tertzakian:
Yeah. Talk about that. I don’t think a lot of people know about that, the biofuel investment that you made in terms of… Tell us what the magnitude of dollar is and magnitude of barrels.
Matt Crocker:
Yeah, so it’s a renewable diesel project that will take locally grown crops, what we call a first-generation renewable diesel. The unit is sized at 20,000 barrels a day. It’s going to be located at our Strathcona refinery, which is located in the city of Edmonton. And it will also have carbon capture and sequestration on the hydrogen that will be used in that process. It’s a really great example of a project bringing both, not only the biofuel itself, but using carbon capture to reduce emissions from that.
Peter Tertzakian:
And is that scalable? I mean, 20,000 barrels a day sounds like a lot, but in the big scheme of things, we would probably call it a junior oil and gas company. Is that scalable?
Matt Crocker:
The biofuels market is growing and growing rapidly. Obviously it takes investment like the one that we’re making in Canada. I think when we look at the energy transition, one of the unique factors is it’s going to take a range of solutions, and actually, it differs by different locations depending on where you are in the world. Not everywhere, for example, has access to geologic storage for carbon capture as one example. In the totality of opportunities, certainly when we look at heavy duty transport or we look at the aviation sector, those projects that produce renewable diesel or sustainable aviation fuel through a similar route, those are going to be critical components as part of the energy transition.
Jackie Forrest:
So Matt, earlier this year, at the beginning of the year, Peter and I always make predictions about what’s going to happen in the new year. We said we’re going to see some FIDs on projects around carbon capture storage. So we’re glad that you made yours because I think there’s only one other project moving forward and a whole bunch that are still sitting there stalled. Part of it is some of the uncertainty around policy. But anyway, we’re glad you made our prediction true. We’ll be talking about that at the end of the year.
Hey, I want to come back to your scenarios. I think Exxon has put out what you believe to be realistic when you look at the world’s energy needs and the population growth. But a lot of people argue that we need more aggressive future scenarios for net zero, like the IEA’s net zero. That should be our reference case, even if it’s difficult to achieve because people need to have high ambitions and by saying, “Well, we’re actually going to use more gas in 2050 than we do today and that oil demand isn’t going to go down as much as you think,” it’s going to mean that people resign theirselves to that is the case and don’t work as hard to get off oil and gas or to decarbonize it. What do you say to that perspective?
Matt Crocker:
It’s a great question. I think it’s important to note, even the IEA acknowledges that society is not on a net zero pathway, and even in their pathway assuming net zero, that assumes unprecedented energy gains and innovation technology. Still, oil and natural gas are an important part of the energy mix in 2050. I think it’s important, whatever scenario for whichever body, oil and gas is still very significant. I think at this stage, no single pathway can be reasonably predicted because there’s just a wide range of uncertainties. We don’t have all the technologies. Think about the iPhones that we all carry. They’re a relatively recent invention. 2050 is a long way away. I don’t think we necessarily know all those technologies that we’ll be utilizing in 2050. Technology is one.
I think the other thing is just government policy and the support as well. We’ve seen a big change just in the last 12 months in the U.S. with the Inflation Reduction Act. We can expect, I think, more of those type initiatives going forward. There’s a lot of uncertainty. But I do think it’s important to note that our outlook does show that emissions will fall by 25% by 2050, but more would be needed to meet the goals of the Paris Agreement. I think, as you’ve seen and you announced, we’re very proud of the first three carbon capture and sequestration projects that we’ve announced FID on. They’re here in the Gulf Coast servicing the fertilizer business or the steel industry to name two. So I think we see a huge opportunity potential to deploy these technologies and we need to see that happen on an ever increasing scale. We’re focused on playing our part, and I think we’re starting to see that momentum build in different parts of the world.
Peter Tertzakian:
While we’re talking about carbon capture, which is obviously a key part of the upstream-part of the business. I want to come to the downstream in a few minutes, but maybe talk about the recent acquisition of Denbury, which is a pretty experienced developer in the United States of carbon capture and storage technologies and enhanced oil recovery. I think it was a $4.9 billion transaction acquisition by ExxonMobil. Can you explain the rationale and what went into your thinking?
Matt Crocker:
The proposed acquisition of Denbury we believe reflects our determination to profitably grow the low carbon solutions business by serving a range of hard to decarbonize industries with a comprehensive carbon capture and sequestration offering. And really the breadth of Denbury’s network when added to ExxonMobil’s decades of experience and capabilities in CCS, we think that gives us an opportunity to play an even greater role in the transition. Denbury has a 1300 miles of CO2 pipeline network along the Gulf Coast. They have 10 strategic located onshore sequestration sites. And so together that will give us the ability to effectively serve more industries in the hard to decarbonize sectors. And obviously there’s a fairly large concentration of different industries along the US Gulf Coast, so we feel that it’s very complimentary to what ExxonMobil has.
Peter Tertzakian:
And what are your views on the acquisition by Occidental of the direct air capture company, Canadian company, Carbon Engineering, just recently?
Matt Crocker:
Yeah, so direct air capture is one of those future technologies and innovations that we also believe is going to play an important role. I’m sure most folks are aware, but for those that aren’t, direct air capture is literally as it suggests, which is capturing carbon dioxide from the air and then permanently sequestering it in geologic storage. And so there are a number of companies that are innovating in this area. The challenge is it’s a very dilute form of carbon dioxide and involves moving massive quantities of air in order to have a meaningful impact. And so we see a number of companies developing those technologies. We ourselves have for a number of years, been doing R&D in this area and continue to see that as being an important innovation for the future.
Jackie Forrest:
But that’s not an area, you had mentioned that you’re developing I think, was it three projects in the Gulf Coast? Would that be in addition to the acquisition that you just made with Denbury?
Matt Crocker:
So yeah, those three projects they were announced ahead of our acquisition. So we’ve got two or over in Louisiana and one in Texas. So they were announced before the proposed acquisition of Denbury.
Jackie Forrest:
Okay. Well, maybe tell us a bit about those, and I’m assuming they’re not direct air capture. It sounds like you’re putting your money in towards capturing flu gases and things like that.
Matt Crocker:
That’s right. Yeah. These are process emissions from existing processes. Our very first project was with a company called CF Industries. They are a major producer of fertilizer. So as part of that ammonia process involves a generation of carbon dioxide. Working together with them we’ll be capturing and transporting that CO2 into geologic storage. And what’s interesting, that first project, well, the three projects together, around 5 million tons, that first project around 2 million tons. Just to put that in context for folks, that’s the equivalent of turning 700,000 gasoline powered cars into electric vehicles. And that number’s relevant because if you look at all the sales of electric vehicles in the United States, that was how many were sold last year. These projects have very meaningful scale when it comes to emissions reduction.
The first one was with CF. Our second project was with Linde in Texas, and they’re producing low carbon hydrogen again, that releases CO2 or generates CO2. In order to generate that low carbon hydrogen, it needs to be sequestered, then the third project we more recently announced is with Nucor Steel, that’s back over in Louisiana. They are again looking at reducing the CO2 emissions from the steel making process.
Jackie Forrest:
And are those all FID? You’re actually going ahead with those or are they still uncertain?
Matt Crocker:
No, those are all FID’d and we’re progressing and with startup in the next two to three years.
Peter Tertzakian:
Let’s talk a little bit more about hydrogen. The Gulf Coast of Texas is just incredible in terms of the scale of the existing infrastructure, and it’s also ideal for hydrogen in a sense that that scale lends itself to good economics. And then you have the geology for sequestration there as well. It’s one of these places in the world that’s actually unique, but yet I sense it still requires the government help and incentives that you speak of. Can you talk about the economics of hydrogen in the Gulf Coast and how much subsidization it needs given that it’s one of the most attractive places to do hydrogen?
Matt Crocker:
Yeah, that’s right. I mean, even like you said, with some of the advantages of the Gulf Coast in terms of natural gas suppliers feedstock at the geologic storage for carbon capture and sequestration, these are still very large and significant investments to make low carbon hydrogen. And maybe I’ll answer that by just referencing the project that we are progressing through engineering right now. Our low carbon hydrogen project in Baytown will be the largest low carbon hydrogen project at planned startup in late 2028. And what we’re doing there is generating low carbon hydrogen that will be used to decarbonize our own operation. We have a very large refining and chemical complex, but then also to supply customers so they can decarbonize their operations. And so this investment is being supported by, within the Inflation Reduction Act is the 45V. 45Q is for carbon capture and sequestration, 45V is the equivalent for incentivizing and supporting development of low carbon hydrogen.
Peter Tertzakian:
The low carbon hydrogen, whatever that number is in terms of carbon intensity, a lot of people would say don’t waste your money on low carbon, hydrogen from natural gas, go to no carbon hydrogen, straight to renewable energy plus electrolyzers. What would you say to that? Say that you’re wasting your money, ExxonMobil. Put it in no carbon hydrogen.
Matt Crocker:
I think a couple of points on that. Our project will actually have a 98% efficiency capture on the carbon dioxide. It’ll be a very, very low carbon intensity. And in fact, that project will generate 7 million tons of CO2 that we’ll sequester in geologic storage. It’s firstly a very efficient process. The other comment to make is from a scale point of view, the alternative pathway, say using renewable energy, they’ve not been deployed at anywhere near the sort of scale that we’re able to do with the low carbon hydrogen project we have in Baytown. Part of the challenge here is just the sheer scale up and then the economics are more supportive and more attractive forgoing the pathway that we’ve chosen. And I think in all, as I said earlier, this will be a range of solutions. There are locations where renewable generated hydrogen will be an important pathway, maybe where there isn’t natural gas, there isn’t geologic storage, but certainly on the Gulf Coast, I root for low carbon hydrogen is the preferred option.
Peter Tertzakian:
I want to ask you a question about biofuels again. We talked about biofuels here and the renewable diesel plant in Canada, but can you talk about biofuels more from a global concept, the worldwide reach of ExxonMobil and what’s going on with biofuels, whether it’s sustainable aviation fuel or diesel or any other? And also I think you mentioned it was the first generation and the definition of biofuels here in Canada, which is harvesting from crops. What else is going on in the world of biofuels including non-crop type technologies?
Matt Crocker:
Absolutely. I mean, demand for low emission fuels is expected to grow rapidly because certainly for hard to decarbonize sectors, think of aviation or heavy-duty trucking, you need that high energy density, which the lower emission fuels are good for. We’re focused, as you mentioned, on the first gen, but also undertaking work to look at alternative non-food sources, which are often typically referred to as a second generation. And there’s potentially a large scope for that to be a significant contributor to low emission fuels in the future. We mentioned the Canadian investment, we have projects around the world looking at producing sustainable aviation fuel and also renewable diesel as well. It’s a pretty broad portfolio, and certainly we see those low emission fuels or biofuels being a significant contributor as part of the energy transition.
Jackie Forrest:
So Matt, you’re obviously spending billions of dollars. I’d be interested to know, with all these projects we’ve announced how many billions, tens of billions, it seems to me, going towards this space. But in general, when people invest in low carbon, they’re very concerned about policy risk. You’re talking about things like the IRA, which only gives you 10 years of certainty in terms of revenue for things like injecting CO2, but these assets are going to need many more years, I think these are probably 30, 40 year asset. How do you look at policy risk, and even the risk of policy changing? I mean, we’ve seen the Republicans potentially not as supportive of some of these initiatives under the IRA. How do you get your head around that and still go ahead forward with a final investment decision?
Matt Crocker:
That’s a great question. Obviously we’re continuously monitoring all sorts of signposts, policy being one of them. As well as also, we need to think about developments in technology. I mean, there could be, for example, disruptive technologies that come to bear in the horizon we’re looking at. So, our low carbon solutions is just like our other heritage businesses, where these are long-term investments and obviously large sums of money involved. We work to obviously maintain flexibility in that, while growing a portfolio. And, maybe to help context, we’ve announced $17 billion of investment from 2022 through 2027, really to advance our current pipeline of opportunities. And about 60% of that is actually being allocated towards decarbonizing our own emissions in our own operations, and then the remaining 40% we’re expecting to deploy in biofuels, carbon capture, and hydrogen projects.
I think it’s important as we’re looking at our investments, we’re doing that for our own emissions, which we’re committed to do, as well as then working with third parties. And you mentioned the policy risk or policy durability. That’s clearly something that we monitor. I think if you look at not only in the US and Canada, but other jurisdictions around the world, increasingly there’s momentum building that actions need to be taken and more needs to be done to reduce emissions. I think over the long-term, we certainly would see that continuing, even if in the political cycle of changes and which party’s in power, there may be small changes, but over the long-term horizon we look at these in the, like say 20-plus year horizon. That’s what we take into account.
Jackie Forrest:
Okay. You kind of have to believe that the momentum is going that way and that there’ll be renewals or other opportunities to help pay for that carbon sequestration later. Just quickly, we didn’t mention it, could you just remind us what ExxonMobil’s goals are around GHG emission reductions, if you have any in 2030, 2050? And what scope are they?
Matt Crocker:
Absolutely. We are obviously committed to reducing our emissions from our operations. We aim to achieve net-zero scope one and two from our operated assets by 2050. That’s obviously got a very comprehensive approach to it. Then through 2030, we are expecting to have a reduction of 20% to 30% in our corporate-wide greenhouse gas intensity, and about a 20% reduction in absolute greenhouse gas emissions. And that’s compared to our baseline of 2016 levels.
Peter Tertzakian:
Can I ask you how you think about Scope 3? Because I always say fossil fuels don’t emit anything, it’s people who burn fossil fuels. And at the end of the supply chain, people, whether they’re at an individual level for their vehicles or their appliances, or whether it’s industrial, commercial decision-makers, they’re the ones that make the decision to burn fossil fuels. So, how does ExxonMobil think about the Scope 3 all the way downstream once you’ve sold the final product and passed it on to the consumer?
Matt Crocker:
Yeah, Scope 3, we’ve disclosed estimated Scope 3 emissions for a number of years, and obviously we’ll continue to do so. But just as you said, Peter, Scope 3 is really beyond our control. It’s in the use of the products. And so let me give you an example. If a coal-fired power station today were to switch to natural gas, that would be a cleaner source of fuel and reduce emissions. If ExxonMobil supplies that incremental gas, actually our Scope 3 emission would go up even though the total emissions for the world go down.
And the reason I say that is, we’d like to look at this from a total lifecycle perspective. And we think if you look at the total lifecycle emissions, that incentivizes companies like ExxonMobil to supply lower emitting products to the marketplace. We’d certainly subscribe to looking at total lifecycle. Otherwise, what it’ll do is actually, if you just look at Scope 3, it would incentivize us either to reduce oil and gas production or to divest assets. And let’s say we divested an asset to somebody else, that asset would still get operated, we haven’t actually changed the total emissions picture for the world. Life cycle, total life cycle is what we tend to look at.
Jackie Forrest:
I think that’s a pretty rational approach, actually, so I can understand where that’s coming from. Well, unfortunately, we’re running out of time. We have so many more questions we want to ask you, but the good news is you will be coming to the World Petroleum Congress, and folks from Exxon will be there. Maybe you can tell us a little bit about how people can find you at the World Petroleum Congress and talk to more folks at Exxon to learn more about what you’re doing.
Matt Crocker:
We’re excited that the World Petroleum Congress is going to be in Calgary, and we’re excited to play our part. ExxonMobil will be there in the main exhibition area, together with Imperial. It’ll be both companies represented. We’ll have a large number of subject matter experts available if folks would like to come by and chat. We also have an in-booth coffee bar, so people are welcome to grab a cup of coffee during that. Then during the week, we have a number of speakers from both ExxonMobil and Imperial, covering topics including energy security, climate solutions in the oil and gas industry. I’m involved in a topic on driving innovation in a net-zero world. We’re excited to be there. There’ll be a good number of my colleagues there, please have folks come on by and we’ll carry on the conversation.
Peter Tertzakian:
Yeah, I think that’s great. The World Petroleum Congress is actually much more than about petroleum now, it’s really a holistic energy system. Well, Matt, we’ve talked about all sorts of intriguing issues from the perspective of one of the longest standing energy producers in the world. Thanks for sharing your views on policy, policy risk, technology from biofuels to carbon capture and beyond. Thanks again for joining us, Matt Crocker from ExxonMobil.
Matt Crocker:]
Thanks for having me, and I look forward to seeing you at the World Petroleum Congress. Thanks.
Jackie Forrest:
And thank you to our listeners. If you enjoyed this podcast, please rate us on the app that you listen to and tell someone else about us.
Speaker 3:
For more ideas and insights, visit arcenergyinstitute.com.