Former U.S. Secretary of State and Exxon Mobil CEO Rex Tillerson speaks during the KPMG Global Energy Conference in Houston.
11/11/1986 – Exxon Operations Manager Rex Tillerson speaks to news media about Exxon pipeline explosion that rocked Baytown’s Lakewood subdivision, destroyed a spacious, two-bedroom home and sent flames shooting 150 feet in the air.
Members of Code Pink, led by Danna Miller Pyke, front with sign, picket and stage a mock arrest of Rex Tillerson, worn by Ernest Jones, as protesters gather outside of the Exxon shareholders meeting across the street from the Morton H. Meyerson Symphony Center in Dallas.
Under intensifying pressure from environmentalists, Exxon Mobil said February 2, 2021 its new low carbon solutions will help position the oil giant for the future. Exxon Mobil, which reported a hefty 2020 loss with the downturn in oil prices due to Covid-19, will advance its carbon capture and storage technology as a means to counter the emissions that cause global warming.
Exxon Mobil plans to announce new steps to tackle climate change — including by adding members to its board — as it confronts rising investor scrutiny of its contribution to global emissions, US media reported on January 27, 2021.
Former CEO Rex Tillerson told shareholders in 2015 that Exxon Mobil would not invest in renewable energy because: “We choose not to lose money on purpose.”
He cast doubt on whether recent extreme weather events were the result of climate change — they were — and rejected a proposal to place a climate expert on the board of directors. “It would not be in the best interests of the company or its shareholders,” he wrote in a separate letter.
At the time, I replied: “The top European oil companies unveiled their strategy for addressing climate change on Monday, but unfortunately, the Americans are too tied to right-wing politics to take a leadership role.
“Memo to Tillerson: The next time you complain about why the public hates the oil and gas industry so much, look in the mirror. Calling your European colleagues insincere and people who understand climate science stupid is not the way to make friends and influence people,” I concluded.
The Texas Blackout has revived the climate-change deniers and energized fossil fuel advocates because they see a chance to roll back the tide of renewable energy. They spread misleading statistics and outright lies to put more money in their pockets at our expense.
No attempt to cover up fossil fuel’s fatal failure, though, will stop climate change or the energy transition. Keep in mind that if Tillerson hadn’t ignored the climate deniers in 2015, his company would be in a much better place right now.
Royal Dutch Shell, one of Exxon’s few peer-competitors, announced last week it was ramping down crude oil production. Longtime CEO Ben van Beurden said the corporation would invest $6 billion a year in renewable energy projects while selling off $4 billion worth of oil exploration and production projects a year over the next decade.
“We must give our customers the products and services they want and need — products that have the lowest environmental impact,” he said in a statement. “At the same time, we will use our established strengths to build on our competitive portfolio as we make the transition to be a net-zero emissions business in step with society.”
Even Exxon’s new CEO Darren Woods has started turning his supertanker around. Shareholders have forced him to abandon his strategy of doubling-down on fossil fuels.
Instead, the company will invest in renewable energy projects, including $3 billion over five years to develop 20 carbon capture projects. The company will make carbon removal from the atmosphere a business line.
Executives from small oil and gas companies may still post snide comments on my LinkedIn posts, but the industry’s leaders recognize the market trends. Even Sinopec, China’s largest refiner, said its demand for crude would likely peak in 2025.
S&P Ratings, the private company that estimates corporate bond risk, downgraded the entire oil and gas exploration and production industry last week.
“Strategic industry announcements in 2020 are a response to the energy transition and the increasing risks and uncertainties for oil and gas producers as a result of governments’ and consumers’ concerns and actions on greenhouse gas emissions in particular,” S&P wrote in its explanation. “The downgrade reflects our reassessment of the industry’s and companies’ risk profiles, in part due to these environmental risks.”
Those industry announcements include General Motors’ plan to make only zero-emission vehicles by 2035. Ford will sell only electric vehicles in Europe by then. Not to mention President Joe Biden’s plan for net-zero emissions in the power sector by 2035 after dozens of utilities said they could achieve it.
None of this will end the oil and gas industry. We rely on too many products derived from petrochemicals to end drilling. But the industry will shrink, which is why Shell and other European companies are looking to diversify.
Even oil-field services companies such as Schlumberger see opportunities outside the oil patch, including constructing carbon-free hydrogen facilities, refining lithium salts for batteries and pumping captured carbon dioxide into oil and gas reservoirs.
“We believe they’ll have success (possibly beaucoup success) over time,” analysts at Houston energy investment bank Tudor, Pickering & Holt wrote in a note to investors.
While the energy transition poses a threat to Texas’ economy, it also poses an opportunity for energy entrepreneurs to develop long-term, marketable solutions that will keep our economy at the forefront of the industry.
Take it from someone with more than 25 years in journalism; industry transitions are not fun. But as Exxon has discovered, haughtily dismissing change does not stop it from happening. The best executives know getting ahead of it is the key to financial success.
Chris Tomlinson has written commentary on business, energy and economics for the Houston Chronicle since 2014. Before joining the Chronicle, he spent 20 years with The Associated Press reporting on politics, conflicts and economics from more than 30 countries in Africa, the Middle East and Europe. He’s also the author of the New York Times bestseller Tomlinson Hill, and he produced the award-winning documentary film by the same name. Both examine the history and consequences of race, politics and economics in Texas.