ExxonMobil and Abu Dhabi
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ExxonMobil and Abu Dhabi
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An <strong>ExxonMobil</strong> publication<br />
<strong>ExxonMobil</strong><br />
<strong>and</strong> <strong>Abu</strong> <strong>Dhabi</strong><br />
promote cooperation<br />
Breaking ground at Antwerp<br />
What we do<br />
when storms hit hard – part 2<br />
PLUS<br />
King Ranch<br />
Economic growth<br />
Industrial evolution<br />
Breakthrough research OFC<br />
2009 – Number 2
Viewpoint<br />
1<br />
Power<br />
Transportation<br />
Residential/<br />
Commercial<br />
Industry<br />
Energy saved<br />
through industrial<br />
efficiency gains<br />
Industrial evolution<br />
New technologies can help businesses<br />
become more energy-efficient.<br />
0 25 50 75 100 125<br />
Million barrels daily oil-equivalent<br />
If you drive a fuel-efficient car, you are helping<br />
the environment by conserving natural<br />
resources <strong>and</strong> reducing emissions of carbon<br />
dioxide (CO2) <strong>and</strong> other greenhouse gases.<br />
But what about the energy it took to produce<br />
the fuel <strong>and</strong> the other products we<br />
use? Can efficiency help there, too?<br />
The answer is yes. Businesses are major<br />
consumers of energy. In creating <strong>and</strong> delivering<br />
the goods <strong>and</strong> services we depend<br />
upon, they use large quantities of electric<br />
power <strong>and</strong> other energy sources. For example,<br />
the industrial sector alone accounts for<br />
about one-third of total energy consumption<br />
worldwide <strong>and</strong> more than 25 percent of<br />
energy-related CO2 emissions.<br />
By improving energy efficiency, <strong>and</strong> taking<br />
advantage of advanced efficiency technologies,<br />
industries have a tremendous opportunity<br />
to contribute to the global effort to<br />
reduce greenhouse gas emissions.<br />
At <strong>ExxonMobil</strong>, our high-efficiency cogeneration<br />
facilities throughout 10 U.S. sites<br />
generate up to 2,400 megawatts of electricity,<br />
while also producing steam <strong>and</strong> useful<br />
heat needed for industrial processes. At our<br />
refinery in Beaumont, Texas, one cogeneration<br />
plant – our largest worldwide – can<br />
produce about 500 megawatts of electricity,<br />
which not only powers refining operations<br />
but also supplements the local power grid.<br />
We have invested more than $600 million<br />
Estimated 2030<br />
world primary<br />
energy dem<strong>and</strong><br />
by sector<br />
in U.S. cogeneration facilities commissioned<br />
since 2004. When combined with our global<br />
cogeneration capacity, these investments<br />
have helped reduce global greenhouse gas<br />
emissions equivalent to taking more than<br />
1 million cars off U.S. roads.<br />
Clearly, increased energy efficiency<br />
is good for the environment. But it also<br />
enhances the global business environment.<br />
Companies can reduce costs, increase<br />
productivity <strong>and</strong> benefit shareholders by<br />
using advanced technology to make their<br />
operations more energy-efficient – a valuable<br />
asset during challenging economic times.<br />
The International Energy Agency calls<br />
efficiency a “triple win” solution – boosting<br />
economic performance, strengthening<br />
energy security <strong>and</strong> reducing greenhouse<br />
gas emissions.<br />
We agree. <strong>ExxonMobil</strong> has systematically<br />
worked to improve efficiency at our global<br />
operations, <strong>and</strong> we are making large investments<br />
in research <strong>and</strong> development of technologies<br />
that can advance the efficiency of<br />
how we produce energy <strong>and</strong> how consumers<br />
use our products.<br />
Today, companies <strong>and</strong> nations are being<br />
challenged to find creative ways to restore<br />
economic growth while protecting the environment.<br />
Investing in energy efficiency can<br />
help accomplish both.
Rex W. Tillerson<br />
Chairman <strong>and</strong> CEO<br />
Mark W. Albers<br />
Senior Vice President<br />
Michael J. Dolan<br />
Senior Vice President<br />
Donald D. Humphreys<br />
Senior Vice President<br />
Andrew P. Swiger<br />
Senior Vice President<br />
Kenneth P. Cohen<br />
Vice President-Public Affairs<br />
David S. Rosenthal<br />
Vice President-Investor Relations <strong>and</strong> Secretary<br />
Bob Davis<br />
Editor<br />
Pat Gabriel<br />
GCG<br />
Art Director<br />
Len Shelton<br />
Photography Coordinator<br />
Cynthia Solomon<br />
Production Coordinator<br />
Frances Bruscino<br />
Distribution Coordinator<br />
Please address all Lamp correspondence,<br />
including requests to reproduce any portion<br />
of the magazine, to the editor at Exxon Mobil<br />
Corporation, 5959 Las Colinas Blvd., Irving,<br />
TX 75039-2298.<br />
In this issue<br />
1<br />
Viewpoint<br />
Industrial evolution<br />
3<br />
Innovation is key<br />
Chairman Tillerson addresses<br />
global energy challenges<br />
5<br />
Exploring breakthrough<br />
technologies<br />
Options for innovative<br />
energy solutions<br />
23 7 14<br />
Upfront<br />
The goal of the Global Climate<br />
<strong>and</strong> Energy Project (GCEP),<br />
based at Stanford University<br />
<strong>and</strong> founded in 2002 with major<br />
support from <strong>ExxonMobil</strong>, is to<br />
develop research-based, scientific<br />
solutions to help countries<br />
address energy <strong>and</strong> environmental<br />
issues.<br />
Earlier this year, Chairman<br />
<strong>and</strong> CEO Rex W. Tillerson spoke<br />
at Stanford, noting how GCEP<br />
promotes the practical problemsolving<br />
necessary to advance<br />
broad-based commercial solutions.<br />
Chairman Tillerson went on<br />
to discuss <strong>ExxonMobil</strong>’s contributions<br />
to this effort, with breakthrough<br />
research in such areas<br />
as advanced polymer film for<br />
electric-vehicle batteries, hydrogen<br />
fuel-cell technology <strong>and</strong><br />
7<br />
When storms hit hard<br />
Getting products to customers<br />
when <strong>and</strong> where they’re needed<br />
12<br />
Much more than a plan<br />
How lessons learned aid<br />
storm response, recovery<br />
14<br />
New cogeneration<br />
plant starts up<br />
Antwerp facility improves<br />
efficiency <strong>and</strong> cuts emissions<br />
17<br />
Promoting cooperation<br />
in <strong>Abu</strong> <strong>Dhabi</strong><br />
Technology, creativity boost<br />
field recovery at lower cost<br />
21<br />
Reigniting economic growth<br />
Energy industry’s role in<br />
restoring confidence<br />
2 3<br />
Old friend, new lease<br />
<strong>ExxonMobil</strong> extends decadeslong<br />
relationship with King Ranch<br />
Technology key to<br />
<strong>ExxonMobil</strong> <strong>and</strong> <strong>Abu</strong><br />
<strong>Dhabi</strong> relationship<br />
A new technology center,<br />
artificial isl<strong>and</strong>s <strong>and</strong><br />
an innovative drilling<br />
organization highlight efforts<br />
to increase oil recovery at the<br />
Upper Zakum field.<br />
Cover photo courtesy of ZADCO<br />
advanced research in biofuels –<br />
including liquid-fuel production<br />
from algae <strong>and</strong> biomass.<br />
A summary of his Stanford<br />
speech begins on page 3.<br />
This issue’s cover story (page<br />
17) explores how close cooperation<br />
<strong>and</strong> technical prowess by<br />
<strong>ExxonMobil</strong>, the emirate of <strong>Abu</strong><br />
<strong>Dhabi</strong>, the <strong>Abu</strong> <strong>Dhabi</strong> National<br />
Oil Company <strong>and</strong> Japan Oil are<br />
meeting the challenges in developing<br />
the world’s fourth-largest<br />
oil field. This complex project is<br />
expected to boost daily production<br />
at the 50-billion-barrel Upper<br />
Zakum field, helping to meet<br />
future world energy dem<strong>and</strong>.<br />
The conclusion of our<br />
two-part series on hurricane<br />
preparation <strong>and</strong> response starts<br />
on page 7, <strong>and</strong> profiles how<br />
the company’s refining, supply,<br />
lubes <strong>and</strong> fuels-marketing<br />
organizations safely overcame<br />
the effects of Hurricanes Gustav<br />
<strong>and</strong> Ike to get needed products<br />
to customers. A related<br />
story (page 12) details how<br />
the Beaumont Chemical Plant<br />
restored operations after more<br />
than eight feet of seawater <strong>and</strong><br />
mud impacted the facility.<br />
Plus, stories on pages 23 <strong>and</strong><br />
14 explore <strong>ExxonMobil</strong> operations<br />
at the King Ranch <strong>and</strong> in<br />
Antwerp, Belgium.<br />
We hope you enjoy this issue<br />
of The Lamp.<br />
Bob Davis<br />
Editor<br />
27<br />
A helping h<strong>and</strong> Down Under<br />
<strong>ExxonMobil</strong> aids communities<br />
after devastating wildfires<br />
29<br />
Panorama<br />
Business highlights<br />
from around the world<br />
30<br />
<strong>ExxonMobil</strong> quarterly<br />
financial summary<br />
2<br />
17
Meeting global energy<br />
<strong>and</strong> environmental challenges through innovation<br />
3<br />
Chairman Tillerson began his<br />
speech by saluting six years of<br />
promising energy research at the<br />
Stanford-based Global Climate<br />
<strong>and</strong> Energy Project (GCEP),<br />
founded in 2002 with <strong>ExxonMobil</strong><br />
as lead sponsor. He noted that<br />
GCEP’s network of scientists,<br />
engineers, researchers <strong>and</strong> students<br />
involves 20 research institutions<br />
on four continents, with<br />
Stanford at the hub. “GCEP’s<br />
work is ultimately about laying<br />
the scientific foundations for<br />
practical problem-solving that will<br />
help advance broad-based commercial<br />
solutions,” he said.<br />
Technology, said Tillerson, is<br />
the single, most vital element that<br />
should unite all efforts to attain<br />
our energy <strong>and</strong> environmental<br />
goals. He said <strong>ExxonMobil</strong> has<br />
invested more than $6 billion in<br />
technology in just the past six<br />
years, <strong>and</strong> maintains several<br />
company research centers in the<br />
United States <strong>and</strong> elsewhere.<br />
“Our 14,000 scientists <strong>and</strong> engineers<br />
are part of the broader<br />
technical <strong>and</strong> scientific community<br />
dedicated to energy <strong>and</strong><br />
environmental problem-solving<br />
through technology innovation.”<br />
Oil, natural gas continue as<br />
prime energy sources<br />
While the current global economic<br />
downturn has reduced<br />
energy dem<strong>and</strong> <strong>and</strong> prices,<br />
Tillerson said the world econ-<br />
Story by Thomas L. Torget<br />
In a February speech at Stanford University,<br />
<strong>ExxonMobil</strong> Chairman <strong>and</strong> CEO Rex W. Tillerson<br />
described the critical role of technology in meeting<br />
the challenge of delivering more energy while<br />
reducing greenhouse gas emissions.<br />
omy will recover, <strong>and</strong> so too will<br />
energy dem<strong>and</strong>.<br />
Growing populations in<br />
developing countries will drive<br />
increased energy dem<strong>and</strong>, which<br />
is expected to be 35 percent<br />
higher in 2030 than in 2005.<br />
Meeting this dem<strong>and</strong> requires<br />
that we develop all economic<br />
<strong>and</strong> environmentally sound<br />
sources of energy, including oil<br />
<strong>and</strong> natural gas, which Tillerson<br />
described as “abundant, available,<br />
versatile <strong>and</strong> affordable.”<br />
Tillerson noted that huge<br />
investments over many decades<br />
have enabled oil <strong>and</strong> gas to meet<br />
nearly 60 percent of world energy<br />
needs today, <strong>and</strong> that these<br />
same fuels will meet the majority<br />
of world energy dem<strong>and</strong> through<br />
at least 2030. Alternatives such<br />
as solar, wind, nuclear <strong>and</strong> biofuels<br />
will make a significant <strong>and</strong><br />
growing contribution, but no<br />
single energy source solves the<br />
dual challenge of meeting growing<br />
energy needs while reducing<br />
emissions. “For now <strong>and</strong> the foreseeable<br />
future, an integrated set<br />
of solutions is required,” he said.<br />
Turning to environmental<br />
challenges, Tillerson explained<br />
that thanks to greater energy<br />
efficiency <strong>and</strong> growing use of<br />
cleaner fuels such as natural<br />
gas, greenhouse gas emissions<br />
are expected to decline in some<br />
developed economies. U.S.<br />
energy-related carbon-dioxide<br />
emissions are approaching a<br />
plateau <strong>and</strong> will decrease over<br />
the next two decades, he said.<br />
“These trends are set to continue<br />
<strong>and</strong> potentially accelerate,<br />
not only in the United States but<br />
in other developed economies<br />
as well.”<br />
Greenhouse gas emissions<br />
to rise in developing nations<br />
But the challenge of reducing<br />
greenhouse gas emissions is<br />
more daunting for developing<br />
economies, said Tillerson. “By<br />
2030 China’s carbon-dioxide<br />
emissions will be comparable<br />
to those of the United States<br />
<strong>and</strong> Europe combined,” he said.<br />
“Even with dramatic gains in efficiency,<br />
rising dem<strong>and</strong> for energy<br />
will continue to push related<br />
carbon-dioxide emissions higher<br />
through 2030, an increase of 28<br />
percent from 2005.”<br />
Tillerson noted that any new<br />
technology – however promising<br />
– faces practical barriers in<br />
bringing it to the energy marketplace.<br />
These barriers include<br />
performance, cost, safety,<br />
environmental impacts <strong>and</strong> consumer<br />
acceptance.<br />
He said <strong>ExxonMobil</strong>’s integrated<br />
approach to increasing<br />
supplies <strong>and</strong> reducing emissions<br />
is exemplified by the company’s<br />
Global Energy Management<br />
System. The system involves daily<br />
tracking of more than 12,000<br />
energy variables throughout the<br />
company’s refining, marketing<br />
<strong>and</strong> chemical operations. “Since<br />
2000, we have identified $1.5 billion<br />
in potential efficiency savings,<br />
<strong>and</strong> approximately 60 percent of<br />
those savings have been captured<br />
to date,” he added.<br />
New technologies<br />
in transportation<br />
Tillerson mentioned several<br />
<strong>ExxonMobil</strong> technologies that<br />
are improving energy efficiency in<br />
the transportation sector. These<br />
include tire liners that keep tires<br />
inflated longer, advanced fuel
economy engine oil <strong>and</strong> lightweight<br />
automobile plastics.<br />
<strong>ExxonMobil</strong>’s internal research,<br />
said Tillerson, has produced<br />
breakthrough technology involving<br />
separator film made from<br />
advanced polymers. This film can<br />
significantly enhance the power,<br />
safety <strong>and</strong> reliability of lithium-ion<br />
batteries used to power hybrid<br />
<strong>and</strong> electric vehicles.<br />
Hydrogen fuel-cell technology<br />
is another area pioneered<br />
by <strong>ExxonMobil</strong> <strong>and</strong> its research<br />
partners, said Tillerson. This<br />
technology converts traditional<br />
hydrocarbon fuels into hydrogen<br />
directly onboard the vehicle,<br />
eliminating the need for separate<br />
infrastructure to produce <strong>and</strong><br />
distribute hydrogen. “Measured<br />
on a well-to-wheel basis, this<br />
on-vehicle fuel system could provide<br />
up to 80 percent better fuel<br />
economy <strong>and</strong> emit 45 percent<br />
less carbon dioxide than today’s<br />
vehicles,” he noted.<br />
One of the most promising<br />
areas of <strong>ExxonMobil</strong>’s research,<br />
said Tillerson, involves advanced<br />
biofuels, including production of<br />
liquid fuels from algae <strong>and</strong> biomass<br />
conversion. He said these<br />
technologies could reduce green-<br />
house gas <strong>and</strong> l<strong>and</strong> use impacts<br />
as compared to first-generation<br />
biofuels such as ethanol.<br />
Sound government<br />
policies needed<br />
Tillerson stressed that the complexities<br />
of new technologies <strong>and</strong><br />
the enormous scale of the global<br />
energy market mean that technological<br />
transformation takes<br />
time. That’s why government<br />
policies must allow for long-term<br />
planning <strong>and</strong> disciplined investments<br />
that lead to technological<br />
advances. Tillerson called for<br />
governments to provide invest-<br />
ment stability by implementing<br />
simple, transparent <strong>and</strong> predictable<br />
policies to mitigate greenhouse<br />
gas emissions.<br />
“Consistent with that view,<br />
we believe a carbon tax would<br />
be a more effective policy option<br />
to reduce greenhouse gas emissions<br />
than alternatives such as<br />
cap-<strong>and</strong>-trade,” said Tillerson.<br />
“A carbon tax should be offset<br />
by tax reductions in other areas<br />
to become revenue-neutral for<br />
government.” the Lamp<br />
4
5<br />
Energy conference<br />
explores breakthrough technologies<br />
Leading experts in breakthrough<br />
energy technologies<br />
from the United States <strong>and</strong><br />
Europe gathered in London<br />
earlier this year to share<br />
ideas <strong>and</strong> perspectives on<br />
key issues, including hydrocarbon-productiontechniques,<br />
improved efficiency<br />
in transportation, carbonemission<br />
mitigation <strong>and</strong><br />
alternative-energy options.<br />
Story by Thomas L. Torget<br />
The Financial Times Energy<br />
Conference, sponsored by<br />
<strong>ExxonMobil</strong>, explored technology<br />
options that could help<br />
meet increased energy dem<strong>and</strong><br />
in efficient <strong>and</strong> environmentally<br />
responsible ways.<br />
The ideas discussed included<br />
innovative approaches to oils<strong>and</strong>s<br />
production, extended-<br />
reach drilling, wave energy,<br />
advances in batteries (both for<br />
vehicles <strong>and</strong> for storing energy<br />
produced by hydro or wind<br />
power), hydrogen-powered<br />
cars, thin-film solar cells <strong>and</strong><br />
advanced biofuels.<br />
Attended by more than 100<br />
specialists in the field of energy<br />
technologies, the conference<br />
provided participants with the<br />
opportunity to question the<br />
experts, exchange ideas <strong>and</strong><br />
network with peers.<br />
Debates concentrated on four<br />
topics: new techniques that offer<br />
innovative approaches to find,<br />
produce <strong>and</strong> deliver hydrocarbon<br />
reserves; technological innovations<br />
that allow industries to use<br />
energy more efficiently; advancements<br />
in the large-scale reduction,<br />
removal <strong>and</strong> storage of carbon<br />
dioxide; <strong>and</strong> developments<br />
During his panel presentation,<br />
<strong>ExxonMobil</strong>’s Nazeer<br />
Bhore (second from left)<br />
discussed a number of<br />
promising technologies to<br />
increase vehicle efficiency<br />
<strong>and</strong> lower emissions.
in alternative-energy resources.<br />
Chaired by Neil Hirst of the<br />
International Energy Agency, the<br />
conference included speakers<br />
such as the chief scientific advisor<br />
to the British government, representatives<br />
from eight leading universities<br />
<strong>and</strong> research institutions,<br />
<strong>and</strong> specialists from Schlumberger,<br />
BP, General Motors, GE, Air<br />
Liquide, ALSTOM Power <strong>and</strong><br />
IBM. Professor Lynn Orr, former<br />
Global Climate <strong>and</strong> Energy Project<br />
director, Stanford University, was a<br />
speaker, along with <strong>ExxonMobil</strong>’s<br />
Nazeer Bhore, Corporate Strategic<br />
Planning senior technology advisor.<br />
In addition, Professor M. Stanley<br />
Whittingham of the State University<br />
of New York, who helped invent<br />
lithium-ion battery technology as<br />
an Exxon employee in the 1970s,<br />
was a key speaker.<br />
Technology improvements<br />
During the conference, Bhore<br />
discussed how new technologies<br />
can improve vehicle efficiency<br />
<strong>and</strong> reduce greenhouse gas<br />
emissions.<br />
“In the short term, we need to<br />
improve the efficiency of engines<br />
<strong>and</strong> transmissions, use improved<br />
tires, <strong>and</strong> also make vehicles<br />
lighter <strong>and</strong> more aerodynamically<br />
efficient,” he said.<br />
“In the mid-term, we will also<br />
need to further develop advanced<br />
power trains, such as hybrids <strong>and</strong><br />
advanced diesels, such that their<br />
cost is lowered to promote widespread<br />
adoption.<br />
“For the longer term, we need<br />
step-out technologies involving<br />
hydrogen fuel cells, electric cars<br />
<strong>and</strong> next-generation biofuels. I’m<br />
enthusiastic about all of these<br />
options.”<br />
Bhore said <strong>ExxonMobil</strong> is<br />
developing a highly promising<br />
technology that can produce<br />
hydrogen from liquid fuels<br />
onboard a vehicle. The technology<br />
uses a process called<br />
reforming to chemically convert<br />
gasoline, diesel or biofuel into<br />
fuel cell-ready hydrogen.<br />
“This is very exciting because it<br />
offers the potential to avoid many<br />
of the problems that make hydrogen<br />
use for transportation fuel<br />
such a huge challenge,” he said.<br />
“These challenges include finding<br />
ways to make hydrogen in large<br />
volumes, <strong>and</strong> then distributing it<br />
<strong>and</strong> storing it economically <strong>and</strong><br />
safely. None of that is easy.”<br />
Bhore reported that<br />
<strong>ExxonMobil</strong> engineers estimate<br />
this new on-board hydrogengeneration<br />
technology on a fuelcell<br />
vehicle can reduce fuel consumption<br />
<strong>and</strong> greenhouse gas<br />
emissions by 45 percent or boost<br />
fuel economy by 80 percent.<br />
He noted that this hydrogen<br />
technology is just one of many<br />
innovations <strong>ExxonMobil</strong> is pursuing,<br />
through its own research or<br />
in collaboration with others, to<br />
improve vehicle efficiency. Other<br />
efforts include the company’s<br />
recently introduced battery<br />
separator<br />
film technology,<br />
as well<br />
as numerous<br />
projects involving biofuels <strong>and</strong><br />
step-out engine technologies.<br />
“As a society, we must<br />
To learn more<br />
http://www.ftconferences<br />
.com/energytechnologies<br />
aggressively pursue a portfolio<br />
of options that potentially can<br />
improve vehicle efficiency <strong>and</strong><br />
reduce greenhouse gases,<br />
while also meeting society’s<br />
continuing needs for reliable<br />
<strong>and</strong> affordable transportation<br />
fuels,” he said. the Lamp<br />
Some findings<br />
There is no silver bullet to the energy challenges<br />
the world is facing, <strong>and</strong> a variety of innovative <strong>and</strong><br />
collaborative solutions is required.<br />
The energy future will be more diverse, with<br />
energy efficiency playing a major role in meeting<br />
the challenges.<br />
Carbon capture <strong>and</strong> storage is a key option that<br />
must be further developed <strong>and</strong> explored as part<br />
of efforts to manage greenhouse gas emissions.<br />
Meeting the challenges will require substantial<br />
progress in technology, <strong>and</strong> will depend on scientists<br />
<strong>and</strong> engineers to come up with solutions that<br />
are both scalable <strong>and</strong> cost effective.<br />
6
7<br />
What we do<br />
when storms hit hard<br />
Second of two parts<br />
Soon after Hurricane Gustav<br />
made a surprise, inl<strong>and</strong> assault<br />
on Baton Rouge, Louisiana,<br />
last September, Tom Moeller,<br />
<strong>ExxonMobil</strong> director of refining,<br />
Americas, arrived in the city to<br />
survey the storm damage that<br />
had shut down operations at the<br />
company’s second-largest U.S.<br />
refinery. En route from the airport,<br />
he observed long lines of anxious<br />
motorists at the few service stations<br />
that had the fuel, electrical<br />
power <strong>and</strong> staffing to remain<br />
open for business.<br />
“Scenes like that illustrate the<br />
role our industry plays in supporting<br />
the everyday infrastructure<br />
of society,” says Moeller. “It’s<br />
why we needed to get back up<br />
<strong>and</strong> running quickly.”<br />
When hurricanes hit, restoring<br />
normal operations is a guiding<br />
principle throughout <strong>ExxonMobil</strong>’s<br />
downstream business – from<br />
refining <strong>and</strong> supply, to pipeline<br />
<strong>and</strong> marine transportation, to<br />
John Palaszczuk leads a hurricane<br />
preparation drill at the<br />
Fairfax, Virginia, headquarters of<br />
<strong>ExxonMobil</strong>’s Refining, Supply,<br />
Fuels Marketing <strong>and</strong> Lubricants/<br />
Specialties organizations.<br />
Story by Shelley Moore Christiansen <strong>and</strong> Richard Cunningham<br />
From Texas to Louisiana, the Gulf Coast region<br />
is home to the nation’s highest concentration of<br />
refining <strong>and</strong> supply operations, a host of terminals,<br />
the origination points of the nation’s largest<br />
pipeline systems <strong>and</strong> extensive fuels-marketing<br />
networks. It has also been l<strong>and</strong>fall for some of<br />
history’s most destructive hurricanes.<br />
fuels <strong>and</strong> lubes marketing.<br />
As storms approach,<br />
<strong>ExxonMobil</strong>’s goal is to keep<br />
operations in the region going<br />
wherever they safely can.<br />
Where business is interrupted,<br />
company teams work quickly<br />
to restore product supply – or<br />
develop alternate, interim solutions.<br />
And they do it on a foundation<br />
of rigorous planning <strong>and</strong><br />
preparation that has repeatedly<br />
kept <strong>ExxonMobil</strong> a step ahead<br />
of the industry in times of crisis.<br />
Lessons learned<br />
Taking lessons learned from<br />
such storms as Gustav <strong>and</strong> Ike<br />
in 2008 <strong>and</strong> Katrina <strong>and</strong> Rita in<br />
2005, the company’s hurricaneresponse<br />
teams routinely conduct<br />
training <strong>and</strong> other emergency-response<br />
scenarios.<br />
They fine-tune day-to-day<br />
storm watch action plans <strong>and</strong><br />
update employee tracking data<br />
to make sure workers are safe<br />
if they have to evacuate. Team<br />
members conduct simulation<br />
Photo by Robert Seale
drills with internal <strong>and</strong> external<br />
partners, <strong>and</strong> plan where extra<br />
fuel might come from. And<br />
they provide information, guidance<br />
<strong>and</strong> support to industry<br />
associations, states, counties<br />
<strong>and</strong> municipalities regarding<br />
fuel-specification <strong>and</strong> other waivers<br />
that are considered when a<br />
storm is on its way.<br />
“Our ability to supply fuel to a<br />
particular marketplace where <strong>and</strong><br />
when it’s needed improves dramatically<br />
if we can temporarily shift<br />
from delivering, for example, 12<br />
formulations to delivering five or<br />
six,” says Erskine Frison, products<br />
optimization manager, Americas.<br />
“One of the core strengths that<br />
sets <strong>ExxonMobil</strong> apart from other<br />
companies during critical periods<br />
is the way we’re organized,”<br />
says Greg Cunningham, U.S.<br />
supply operations manager. “We<br />
work with many groups within<br />
our company – production,<br />
transportation, refining, supply,<br />
marketing – on a daily basis<br />
within our integrated business<br />
team process. During a hurricane,<br />
we just take that process<br />
<strong>and</strong> accelerate it.”<br />
Hurricane watch<br />
<strong>ExxonMobil</strong> operates four<br />
Gulf Coast-area refineries –<br />
in Baytown <strong>and</strong> Beaumont,<br />
Texas, <strong>and</strong> in Baton Rouge <strong>and</strong><br />
Chalmette, Louisiana – accounting<br />
for nearly a quarter of the<br />
Ominous clouds portending Hurricane Ike’s wrath loom over a Houston-area refinery.<br />
The storm actually tracked up the ship channel where many refineries are located.<br />
region’s industrywide refining<br />
capacity of about 8 million barrels<br />
of crude oil a day.<br />
When a major hurricane is still<br />
seven days away from l<strong>and</strong>fall, it<br />
is far too soon to predict which,<br />
if any, <strong>ExxonMobil</strong> refineries may<br />
be affected. Nevertheless, preemptive<br />
inspections <strong>and</strong> preparations<br />
occur to assure that facilities<br />
are well-prepared for severe<br />
weather conditions.<br />
As the l<strong>and</strong>fall clock winds<br />
down, the hurricane’s path may<br />
still be uncertain. “But once<br />
it hits, you can’t hide,” says<br />
Moeller. So, with about four<br />
days to go, the coastal refineries<br />
(Baytown, Beaumont <strong>and</strong><br />
Chalmette) proceed either to<br />
shut down or to shift into what’s<br />
called “safe park,” a reducedoutput<br />
state that helps conserve<br />
crude oil <strong>and</strong> other key supplies<br />
that may soon be interrupted by<br />
the storm.<br />
While refineries close to the<br />
coast are more exposed to the<br />
effects of severe weather, Baton<br />
Rouge, a hundred miles inl<strong>and</strong>, is<br />
more protected <strong>and</strong> more likely<br />
to maintain operations. After a<br />
storm, Baton Rouge’s continued<br />
output can become vital to the<br />
industry as a whole, providing<br />
emergency supplies to downstream<br />
pipelines <strong>and</strong> terminals to<br />
keep fuel moving to regions far<br />
away from impacted areas.<br />
8
9<br />
Helping communities<br />
<strong>and</strong> businesses<br />
“For hurricanes, we exp<strong>and</strong> our<br />
philosophy of keeping our own<br />
system adequately supplied to<br />
one of helping the overall industry<br />
get back to normal,” says<br />
Cunningham.<br />
<strong>ExxonMobil</strong> refineries also help<br />
their surrounding communities<br />
during power outages, providing<br />
electricity from their cogeneration<br />
plants for use by area households<br />
<strong>and</strong> businesses.<br />
The company’s Supply organization<br />
identifies <strong>and</strong> buys additional<br />
volumes of fuel before it’s<br />
clear that the company needs<br />
them to make up for the shortfalls<br />
that sometimes occur. Those<br />
sources might be from locations<br />
several days away, like New York.<br />
They may even be cargoes at<br />
sea – during Hurricanes Gustav<br />
<strong>and</strong> Ike the company diverted 14<br />
waterborne cargoes from other<br />
geographic markets, including<br />
Europe <strong>and</strong> Asia, to fill gaps<br />
in supply while the Texas <strong>and</strong><br />
Louisiana refineries were coming<br />
back up.<br />
“From the downstream perspective,<br />
our biggest challenge<br />
is to keep fuel moving, not only<br />
to customers in the hurricane<br />
zones but to all the others who<br />
depend on refined products<br />
from the Gulf Coast,” says Mark<br />
DiZio, manager of global products<br />
supply <strong>and</strong> trading.<br />
“People in places like North<br />
Carolina sometimes wonder, ‘If<br />
Members of the company’s<br />
Supply response team conduct<br />
drills before hurricane season to<br />
continuously improve the organization’s<br />
effectiveness when a storm<br />
hits. Seated in foreground (left<br />
to right) are Andre Pennington,<br />
Donna Scanlon <strong>and</strong> Ryan House.<br />
Adel <strong>Abu</strong>nasser (left) <strong>and</strong> Greg<br />
Cunningham are pictured at rear<br />
discussing the exercise scenario.<br />
Photo by Robert Seale
Photo by Mark Wilson/Getty Images<br />
the hurricane struck Texas, why<br />
are we without gasoline?’” adds<br />
John Palaszczuk, manager of<br />
U.S. product trading. “The answer<br />
is often related to the length <strong>and</strong><br />
complexity of the supply chain,<br />
variations in product specifications<br />
<strong>and</strong> industry infrastructure.”<br />
Minimizing those disruptions<br />
on a local, regional or<br />
national level is a top priority<br />
for <strong>ExxonMobil</strong> <strong>and</strong> its affiliates.<br />
For example, the company’s<br />
marine affiliates play a vital role<br />
in maintaining the critical flow of<br />
energy by safely <strong>and</strong> efficiently<br />
moving or redirecting important<br />
cargoes to affected markets to<br />
help restore the flow of crude oil,<br />
feedstocks, refined products <strong>and</strong><br />
chemicals.<br />
<strong>ExxonMobil</strong> Pipeline Company<br />
(EMPCo) also plays a critical<br />
infrastructure role to minimize the<br />
impact of hurricanes on crude<br />
<strong>and</strong> refined products deliveries.<br />
Securing <strong>and</strong> coordinating the<br />
placement of portable generators<br />
at key pipeline <strong>and</strong> terminal<br />
facilities is but one example of<br />
EMPCo’s efforts to restore power<br />
<strong>and</strong> resume operations quickly,<br />
safely <strong>and</strong> flawlessly.<br />
Lubricants’ customer focus<br />
Similarly, the lube-oil blend<br />
plants on the Gulf Coast readied<br />
themselves for the hurricanes,<br />
idling operations, moving product<br />
inventories into the network<br />
<strong>and</strong> staging response teams<br />
in the area. Within days of<br />
each hurricane strike, delivery<br />
operations were restored, <strong>and</strong><br />
the plants were operational,<br />
but raw material supplies were<br />
critically impacted. <strong>ExxonMobil</strong>’s<br />
Lubricants & Petroleum<br />
Specialties Company relies on<br />
<strong>ExxonMobil</strong> refineries for basestocks<br />
<strong>and</strong> company chemical<br />
plants for much of its supply<br />
of polyalpha olefins used in the<br />
blending of high-quality lubes<br />
<strong>and</strong> other products.<br />
“We built up significant<br />
product inventory in preparation<br />
for the hurricane,” says<br />
Lynne Lachenmyer, operations<br />
vice president of Lubricants<br />
An emergency worker inspects damage in front of Houston’s JP Morgan Chase Tower<br />
the morning after Hurricane Ike passed through the city on September 13, 2008. The<br />
storm made l<strong>and</strong>fall in the middle of the night, causing extensive damage to buildings.<br />
<strong>and</strong> Specialties. “Despite these<br />
efforts, the storm’s impact<br />
was significant. We took quick<br />
mitigation steps to manage the<br />
disruption of our base-oil supply,<br />
ensuring supply to singlesourced<br />
customers <strong>and</strong> those<br />
providing emergency response.<br />
Unfortunately, customer allocations<br />
were required to manage<br />
supplies. Communication was<br />
key throughout this process. We<br />
were in regular contact with our<br />
customers, providing them with<br />
updates on our recovery plans.”<br />
Marketing’s timely<br />
response<br />
<strong>ExxonMobil</strong> has 81 companyowned<br />
stores in the Houston<br />
area <strong>and</strong> 275 distributor locations,<br />
which are Exxon- or<br />
Mobil-br<strong>and</strong>ed stations that are<br />
owned <strong>and</strong> operated by others.<br />
All were closed as a result of Ike.<br />
Few were damaged in the storm<br />
but most needed emergency<br />
power to reopen.<br />
“We keep 100 large emergency<br />
generators staged in<br />
three cities within 200 miles of<br />
the Gulf Coast,” says Mike Gore,<br />
company-owned retail store<br />
manager. “The generators are<br />
big enough to run all aspects<br />
of a retail site. Since all of our<br />
stores are designed to ‘plug<strong>and</strong>-play,’<br />
we deliver the generator,<br />
plug it in <strong>and</strong> run the site as<br />
if it were on grid power.”<br />
The generators are loaded on<br />
flatbed trucks <strong>and</strong> ready to roll<br />
well before a hurricane makes<br />
l<strong>and</strong>fall. A generator can be<br />
powering any company-owned<br />
store within 24 hours.<br />
And after Ike, <strong>ExxonMobil</strong> was<br />
able to offer 20 of its extra generators<br />
to distributor locations<br />
until power from the grid was<br />
restored.<br />
“Before the storm, we made<br />
sure that our key stores on<br />
evacuation routes had plenty of<br />
fuel <strong>and</strong> stayed open as long as<br />
possible,” Gore says.<br />
“After the hurricane passed,<br />
we reopened those same stores<br />
quickly so that people could get<br />
back into affected areas. We had<br />
10
Coordination team ensures<br />
critical business continues<br />
Well before Hurricane Ike made l<strong>and</strong>fall, <strong>ExxonMobil</strong> activated<br />
its Regional Response Coordination Team (RRCT) to monitor<br />
the storm <strong>and</strong> take the necessary steps to ensure business<br />
continuity, ultimately deploying more than 400 essential personnel<br />
to the company’s Pegasus Place facility in Dallas.<br />
The purpose of the RRCT, which consists of representatives<br />
from all business <strong>and</strong> service lines including Information<br />
Technology, Facilities Management, Procurement, Safety,<br />
Health <strong>and</strong> Environment, Security, Human Resources <strong>and</strong><br />
other support groups, is to provide cross-functional coordination<br />
during the recovery efforts <strong>and</strong> to assist in operating<br />
<strong>ExxonMobil</strong>’s businesses as smoothly as possible while the<br />
affected infrastructure is returning to normal.<br />
For example, the company’s Global Real Estate <strong>and</strong><br />
Facilities unit coordinated the inspection of more than 9,000<br />
Houston-area offices <strong>and</strong> workstations within five days of<br />
l<strong>and</strong>fall, assessing damage <strong>and</strong> initiating repairs, <strong>and</strong> making<br />
sure facilities were safe for staff to return to work.<br />
Information Technology (IT) assigned personnel to the<br />
Houston data center who worked in shifts around the clock<br />
during <strong>and</strong> after the storm to ensure <strong>ExxonMobil</strong>’s critical<br />
processes were not interrupted. Facilities <strong>and</strong> IT also collaborated<br />
to provide close to 500 alternative work locations<br />
for employees in the early recovery phase.<br />
The company’s Procurement group placed close to 1,000<br />
purchase orders to support the immediate recovery process,<br />
from portable generators to more than 10,000 bottles<br />
of water for employees, while utility <strong>and</strong> city services were<br />
unavailable.<br />
“Communication is key,” says Andreas Goldschmid, of the<br />
RRCT leadership team. “To ensure business continuity, we<br />
coordinate not only with every <strong>ExxonMobil</strong> company, but with<br />
the weather service, government <strong>and</strong> emergency-response<br />
officials, employees <strong>and</strong> contractors to make sure we underst<strong>and</strong><br />
<strong>and</strong> manage the cross-functional needs of the corporation<br />
while getting activities safely back to normal.”<br />
11<br />
limited products, but we focused<br />
on the things people needed<br />
most: fuel, water, batteries <strong>and</strong><br />
ice. And our retail employees<br />
were crucial to this effort, going<br />
above <strong>and</strong> beyond what was<br />
expected during the evacuation<br />
<strong>and</strong> recovery periods.”<br />
Each <strong>ExxonMobil</strong> store<br />
reopened only if members of<br />
Gore’s team were certain they had<br />
what they call the three “P’s” in<br />
place: People able to safely come<br />
back to work; Product to keep<br />
the location stocked with fuel; <strong>and</strong><br />
Power supplied either by a generator<br />
or by the utility company.<br />
More trucks <strong>and</strong> drivers<br />
After Hurricane Ike, <strong>ExxonMobil</strong><br />
opened stores in Houston days<br />
ahead of most other suppliers,<br />
so additional fuel trucks were<br />
brought in to meet the dem<strong>and</strong>.<br />
“Our base operation in Houston<br />
is eight trucks with 25 drivers,”<br />
says June Harper, North America<br />
customer service manager. “To<br />
respond to Ike, we increased that<br />
to 14 trucks <strong>and</strong> 43 drivers. We<br />
brought in trucks from nearby cities<br />
<strong>and</strong> flew the drivers to Texas<br />
from across the country.”<br />
Normally, one truckload of<br />
gasoline – about 9,000 gallons –<br />
lasts two or three days. Larger<br />
stores might take two truckloads<br />
a day, but when there are cars<br />
waiting in line, a load lasts barely<br />
four hours.<br />
For safety, extra drivers were<br />
used to make sure the trucks<br />
could keep running around the<br />
clock <strong>and</strong> that the drivers would<br />
get enough rest between shifts.<br />
In the aftermath of Gustav<br />
<strong>and</strong> Ike, the safety record across<br />
the entire retail organization was<br />
outst<strong>and</strong>ing. Even with all of the<br />
extra drivers <strong>and</strong> more than 700<br />
workers helping to reopen stores,<br />
there was not a single accident.<br />
Focused response<br />
to hurricane fury<br />
Although hurricane l<strong>and</strong>fall,<br />
severity <strong>and</strong> impact are unpredictable,<br />
the <strong>ExxonMobil</strong><br />
response is second to none. The<br />
focus is on taking care of our<br />
people, facilities, customers <strong>and</strong><br />
communities where we operate.<br />
“We plan, prepare <strong>and</strong> have<br />
strong processes in place<br />
across the downstream to deal<br />
with hurricanes,” notes Denny<br />
Houston, who leads the downstream<br />
hurricane response<br />
organization. “We quickly <strong>and</strong><br />
fully utilize our<br />
flexibility, experience<br />
<strong>and</strong> global<br />
collaboration<br />
to manage the response. The<br />
To learn more<br />
exxonmobil.com/<br />
stormupdates<br />
<strong>ExxonMobil</strong> response to Gustav<br />
<strong>and</strong> Ike is a great story for our<br />
shareholders, employees, customers<br />
<strong>and</strong> communities. We<br />
are all proud of what we accomplished<br />
as a team.” the Lamp<br />
After Hurricane Ike, <strong>ExxonMobil</strong> was able<br />
to open its Houston retail stores days<br />
ahead of most other suppliers, <strong>and</strong> extra<br />
drivers <strong>and</strong> trucks were brought to the city<br />
to keep deliveries moving to customers.<br />
Photo by Gary Blockley
Much more than a plan<br />
Last year’s hurricanes in the Gulf of<br />
Mexico left scars on the coast <strong>and</strong><br />
affected chemical markets worldwide,<br />
but lessons learned from earlier storms<br />
helped <strong>ExxonMobil</strong> employees respond<br />
much faster this time around.<br />
Photo by Guiseppe Barranco/The Beaumont Enterprise<br />
Call it a worst-case scenario. A<br />
major hurricane fills the Gulf of<br />
Mexico <strong>and</strong> l<strong>and</strong>s on the most<br />
heavily industrialized stretch<br />
of the upper Texas coast.<br />
<strong>ExxonMobil</strong>’s Houston offices<br />
lose power, <strong>and</strong> several of the<br />
company’s manufacturing sites<br />
are damaged. Specialty products<br />
– some supporting global<br />
supply networks – are suddenly<br />
unavailable to customers in the<br />
Americas, Europe <strong>and</strong> Asia.<br />
Although it’s the kind of emergency<br />
that <strong>ExxonMobil</strong> employees<br />
plan <strong>and</strong> practice for each<br />
year, only similar experiences<br />
following the violent Gulf storms<br />
of 2005 could fully prepare them<br />
for the hurricanes of 2008.<br />
“We prepare for this, but it was<br />
difficult to anticipate the extent<br />
of damage caused by Hurricane<br />
Ike,” says Will Cirioli, <strong>ExxonMobil</strong><br />
Chemical Company regional<br />
director, Americas, who also<br />
heads the company’s Emergency<br />
Support Group (ESG).<br />
“One enhancement we made<br />
to our emergency-response plan<br />
after Hurricanes Katrina <strong>and</strong> Rita<br />
in 2005 was to add a regional<br />
response team that can quickly<br />
relocate our headquarters operations<br />
from Houston to Dallas,”<br />
he says. “Hurricane Ike was the<br />
first time we had to put that plan<br />
in motion.”<br />
A measured response<br />
The goal of <strong>ExxonMobil</strong>’s hurricane-response<br />
plan is to secure<br />
facilities, protect the public,<br />
make sure employees are safe,<br />
<strong>and</strong> continue serving customers.<br />
The response is measured, following<br />
plans that are made well<br />
in advance.<br />
“This is not a situation that<br />
you make up as you go,” Cirioli<br />
Boats moored for safety at the Port of Beaumont thrash wildly as Hurricane Ike roars ashore.<br />
A ship captain estimated waters rose 11 feet at the port, almost lifting vessels onto their docks.<br />
explains. “We make our decisions<br />
long before there’s a<br />
threat. When hurricanes do<br />
threaten, our response is preprogrammed,<br />
based on a series<br />
of triggers that are dictated by<br />
the storm.”<br />
<strong>ExxonMobil</strong> operates many<br />
oil <strong>and</strong> gas facilities, four large<br />
refineries, two lube-oil blending<br />
plants <strong>and</strong> nine major chemicalmanufacturing<br />
sites along the<br />
coast from Texas to Florida.<br />
Some facilities can be shut<br />
down in as little as 12 hours, but<br />
others take two or three days,<br />
so the moment a tropical storm<br />
or hurricane threatens the Gulf<br />
of Mexico, the ESG begins communicating<br />
with all the sites <strong>and</strong><br />
monitoring the weather several<br />
times a day.<br />
By Tuesday, September 9,<br />
there was enough certainty in<br />
the forecast that Cirioli moved<br />
Chemical’s ESG to Dallas. Other<br />
Houston-based <strong>ExxonMobil</strong><br />
companies did the same, joining<br />
forces with <strong>ExxonMobil</strong>’s<br />
Regional Response Team, sharing<br />
office space that is kept<br />
ready year-round with all the<br />
computers, supplies <strong>and</strong> phone<br />
lines needed to run the global<br />
business.<br />
As Ike grew in size <strong>and</strong><br />
continued toward the Texas-<br />
Louisiana coast, it triggered the<br />
next stages of the emergencyresponse<br />
plan. Generators,<br />
food, water, radios <strong>and</strong> all the<br />
other equipment needed during<br />
recovery were pre-positioned<br />
so they could be trucked in<br />
quickly once the storm passed.<br />
On Wednesday, plants started<br />
shutting down. By noon Friday,<br />
the ones nearest Houston were<br />
bracing for the worst.<br />
Story by Richard Cunningham<br />
12
Clockwise from upper left: 1) The impact of floodwaters that inundated the Beaumont Chemical Plant can be<br />
seen in this view taken from the adjacent refinery looking east. The plant’s administration building is at the<br />
upper left of the photo. 2) The same shot after water was pumped off the grounds <strong>and</strong> operations restored. 3)<br />
The area around the administration building after cleanup is a far different sight today than 4) the way it looked<br />
just after Hurricane Ike, which caused water levels to rise more than 10 feet in some locations.<br />
L<strong>and</strong>fall<br />
Early Saturday morning, the center<br />
of Ike surged through Galveston<br />
Bay <strong>and</strong> up the Houston Ship<br />
Channel. By dawn, more than 90<br />
percent of the region was without<br />
power. Historic Galveston <strong>and</strong><br />
communities all along the coast<br />
sustained widespread damage.<br />
The Beaumont Chemical Plant, on<br />
what’s called the “wet side” of the<br />
storm, was impacted with more<br />
than 11 feet of storm surge.<br />
“When people saw the damage<br />
here, they thought we would<br />
be down for years,” says Dick<br />
Townsend, Beaumont Chemical<br />
Plant manager. “By Saturday<br />
afternoon, we had a small group<br />
of workers inside, making sure<br />
there were no leaks or spills.<br />
Damage assessment crews<br />
moved in the following day.”<br />
Almost every part of the plant<br />
was damaged, <strong>and</strong> anything<br />
13<br />
electrical that was lower than<br />
10 feet from the ground was<br />
destroyed.<br />
“We had to replace approximately<br />
5,000 instruments, 2,000<br />
valves, 800 pumps, 700 motors,<br />
650 junction boxes, 500 online<br />
analyzers, 45 air conditioners<br />
<strong>and</strong> 25 switch-gear buildings,”<br />
Townsend says. “We removed<br />
13 million pounds of debris <strong>and</strong><br />
used more than 300 generators<br />
for temporary power while we<br />
were doing all the work.”<br />
Business continuity<br />
“The Beaumont Chemical Plant<br />
is a critical supplier of polyalpha<br />
olefins,” says John Lyon,<br />
Synthetics vice president. “PAOs<br />
are the basestock that our customers<br />
use to blend high-quality<br />
lubricants for heavy machinery,<br />
such as the gearboxes of the<br />
giant wind turbines used to gen-<br />
erate electricity. The plant also<br />
produces synthetic basestock<br />
used in Mobil 1.”<br />
A nonstop effort by the various<br />
emergency groups <strong>and</strong> regional<br />
response members in Dallas<br />
managed the recovery, held<br />
supply networks together <strong>and</strong><br />
advised global customers on<br />
what to expect. The companies<br />
that blend <strong>and</strong> market synthetic<br />
lubricants routinely keep some<br />
amount of basestock in reserve,<br />
but would they have enough to<br />
last until the Beaumont plant was<br />
back on stream?<br />
“Given the inventory levels<br />
of some of our lubes manufacturing<br />
customers,” Lyon says,<br />
“we began allocating our own<br />
inventory <strong>and</strong> working with them<br />
to develop options to maintain<br />
supplies to their customers.”<br />
As many as 2,000 people<br />
worked in shifts around the clock<br />
to repair the Specialties units at<br />
the Beaumont Chemical Plant.<br />
“The storm hit in mid-September,”<br />
Lyon recalls, “<strong>and</strong> by early<br />
December both the Synthetics<br />
<strong>and</strong> the Catalyst units at the<br />
chemical plant were back on<br />
line. We began increasing allocations,<br />
<strong>and</strong> by mid-January, we<br />
were back to 100 percent.”<br />
Efficient manufacturing<br />
Once the Synthetics <strong>and</strong> Catalyst<br />
units were running again, they<br />
performed extremely reliably, <strong>and</strong><br />
that helped increase inventories<br />
faster than anyone expected.<br />
“In most cases, we replaced<br />
damaged equipment with newer<br />
<strong>and</strong> more efficient technology,”<br />
Townsend says. “Our goal was<br />
to come back strong, <strong>and</strong> we<br />
did. At least in terms of the electrical<br />
system, we have a br<strong>and</strong><br />
new plant.” the Lamp
Antwerp<br />
cogeneration plant<br />
breaks new ground<br />
A new facility in Belgium uses technology<br />
to make productive use of excess heat in<br />
the generation of electricity. The result:<br />
improved efficiency <strong>and</strong> reduced emissions.<br />
Startup of a new cogeneration<br />
plant at the <strong>ExxonMobil</strong> Refinery<br />
in Antwerp, Belgium, is another<br />
major step by <strong>ExxonMobil</strong> in using<br />
energy more efficiently <strong>and</strong> reducing<br />
greenhouse gas emissions.<br />
Inauguration of the facility<br />
at Antwerp, <strong>ExxonMobil</strong>’s<br />
second-largest refinery in Europe,<br />
exp<strong>and</strong>s the company’s interests<br />
to about 100 cogeneration installations<br />
at 30 worldwide sites,<br />
generating some 4,600 megawatts<br />
(MW) of additional power.<br />
That’s enough electricity to supply<br />
the needs of approximately<br />
2 million U.S. homes.<br />
With cogeneration technology,<br />
<strong>ExxonMobil</strong> can produce electricity<br />
to power its operations <strong>and</strong><br />
also capture heat, in the form<br />
of high-pressure steam that, in<br />
turn, can be used to transform<br />
raw materials into a variety of<br />
products. Cogeneration provides<br />
a more efficient source of power<br />
than purchasing electricity from a<br />
local utility – in some cases up to<br />
50 percent more efficient.<br />
How it works<br />
Cogeneration starts with the<br />
burning of fuel, often natural<br />
gas, in a large gas turbine that<br />
provides the power to rotate an<br />
electric generator.<br />
The hot exhaust gases from<br />
the turbine are then routed to a<br />
heat-recovery unit that captures<br />
additional energy otherwise lost<br />
to the atmosphere. Steam from<br />
the process is typically used in a<br />
refinery’s manufacturing units.<br />
At Antwerp, however, there<br />
is only a limited requirement for<br />
additional steam, so the excess<br />
energy is also used to heat the<br />
refinery’s crude oil directly, significantly<br />
reducing the energy<br />
needed to convert the crude into<br />
clean fuels. Using heat this way,<br />
on such a gr<strong>and</strong> scale, is what<br />
sets the Antwerp Refinery – <strong>and</strong><br />
its cogeneration unit – apart.<br />
“The Antwerp cogeneration<br />
process generates about 125 MW<br />
of electricity – enough to power<br />
the refinery, as well as the needs<br />
of most of <strong>ExxonMobil</strong>’s other<br />
Belgian manufacturing operations,”<br />
says Richard Henderson,<br />
the refinery’s technical manager.<br />
Moreover, the process is highly<br />
energy-efficient, so carbon-dioxide<br />
emissions are reduced. In fact,<br />
the total impact of this project<br />
is a reduction of Belgium’s CO 2<br />
emissions by approximately<br />
200,000 tons a year. Worldwide,<br />
<strong>ExxonMobil</strong>’s investment in<br />
cogeneration has lowered greenhouse<br />
gas emissions equal to<br />
removing more than 1 million cars<br />
off U.S. roadways.<br />
<strong>ExxonMobil</strong>’s newest cogeneration facility is in<br />
Antwerp, Belgium, with 125-megawatt capacity.<br />
Construction in a tight space<br />
Construction of this cogeneration<br />
plant presented a special set of<br />
challenges.<br />
“The Antwerp refinery is<br />
densely built,” says David<br />
McLatchie, project executive.<br />
“There’s very little extra l<strong>and</strong> available<br />
for new construction. Given<br />
the small plot space the team<br />
had to work with, it was essential<br />
to come up with something completely<br />
out of the ordinary in order<br />
to accommodate this new plant.”<br />
Normally, the two major components<br />
of a cogeneration facility<br />
– the gas turbine that creates<br />
electricity <strong>and</strong> the heat-recovery<br />
unit that generates steam – are<br />
built adjacent to each other. At<br />
Antwerp, this wasn’t possible, so<br />
it was necessary to construct the<br />
heat-recovery unit on top of the<br />
gas turbine, more than three stories<br />
above it.<br />
Photo by Kees Stuip<br />
Story by Bill Corporon<br />
14
The toy cars held by children attending the inauguration<br />
ceremonies for the startup of Antwerp’s new cogeneration<br />
plant are symbolic of the emissions reduction the plant will<br />
bring: the equivalent of removing 90,000 cars off the roads.<br />
Construction required highprecision<br />
lifting operations from<br />
crane operators to get all the<br />
equipment in position for assembly.<br />
With much of the work<br />
being performed in<br />
tight conditions high<br />
above the ground,<br />
developing plans for<br />
working safely was paramount.<br />
“We made sure that safety<br />
considerations were part of every<br />
step of the planning <strong>and</strong> construction<br />
process,” says Gilbert<br />
Asselman, refinery manager.<br />
At its peak, construction of<br />
the facility employed some 400<br />
people. Commissioning activities<br />
began in December 2008, with<br />
startup <strong>and</strong> testing successfully<br />
completed in January 2009.<br />
To learn more<br />
exxonmobil.com/<br />
cogeneration<br />
Inauguration day<br />
The Antwerp refinery hosted an<br />
inauguration ceremony for the<br />
new cogeneration unit in March.<br />
It drew more than 200 representatives<br />
from government,<br />
business, the community <strong>and</strong><br />
<strong>ExxonMobil</strong> as well as numerous<br />
members of the news media.<br />
15<br />
Photo by Stefan Dewickere<br />
Flemish Prime Minister Kris<br />
Peeters recognized the company<br />
for its additional investment<br />
in cogeneration. He also<br />
emphasized the importance of<br />
energy efficiency in reducing<br />
emissions <strong>and</strong> elaborated on the<br />
government’s policy to promote<br />
cogeneration.<br />
Hilde Crevits, the Flemish minister<br />
of energy <strong>and</strong> the environment,<br />
<strong>and</strong> Cathy Berx, governor<br />
of the province of Antwerp, also<br />
attended the event.<br />
Senior <strong>ExxonMobil</strong> executives<br />
included Olivia Owen, corporate<br />
vice president for safety, security,<br />
health <strong>and</strong> environment;<br />
Darren Woods, refining director<br />
for Europe/Africa/Middle East;<br />
<strong>and</strong> Joost van Roost, the company’s<br />
lead country manager for<br />
Belgium, the Netherl<strong>and</strong>s <strong>and</strong><br />
Luxembourg.<br />
The inauguration was a<br />
memorable launch to an extraordinary<br />
project that promises to<br />
meet the needs of the Antwerp<br />
Refinery <strong>and</strong> the Belgian people<br />
while also helping the environment.<br />
the Lamp<br />
Canada<br />
More than<br />
100 installations<br />
worldwide<br />
<strong>ExxonMobil</strong> self-generates<br />
more than half of it’s<br />
total electricity dem<strong>and</strong>.<br />
More than 50 percent of<br />
the corporation’s global<br />
cogeneration capacity is<br />
in the United States, <strong>and</strong><br />
all seven of the company’s<br />
U.S. refineries have<br />
cogeneration facilities.<br />
<strong>ExxonMobil</strong> is a<br />
Canada<br />
United States<br />
United States<br />
Argentina<br />
19 megawatts Argentina<br />
Includes fully owned/operated <strong>and</strong> equity-interest facilities
global leader in cogeneration technology<br />
United Kingdom<br />
France<br />
The Netherl<strong>and</strong>s<br />
Belgium<br />
Italy<br />
Chad<br />
Germany<br />
Austria<br />
<strong>ExxonMobil</strong> <strong>and</strong> cogeneration:<br />
More than 100 installations in 30 locations worldwide<br />
Kazakhstan<br />
More than 4,600 megawatts of cogeneration capacity – enough to<br />
power more than 2 million U.S. homes<br />
<strong>ExxonMobil</strong>’s investment in cogeneration has lowered greenhouse gas<br />
emissions equal to taking more than 1 million cars off U.S. roads<br />
Largest <strong>ExxonMobil</strong> cogeneration plant, with 500 megawatts of power<br />
capacity, is in Beaumont, Texas<br />
Africa<br />
168<br />
Thail<strong>and</strong><br />
Singapore<br />
Cogeneration capacity<br />
by region<br />
(megawatts)<br />
Europe/<br />
Caspian<br />
605<br />
Asia Pacific<br />
728<br />
Americas<br />
3,127<br />
Japan<br />
Australia<br />
16
17<br />
Technology key to <strong>ExxonMobil</strong><br />
<strong>and</strong> <strong>Abu</strong> <strong>Dhabi</strong> relationship<br />
<strong>ExxonMobil</strong>, <strong>Abu</strong> <strong>Dhabi</strong><br />
National Oil Company (ADNOC)<br />
<strong>and</strong> Japan Oil Development<br />
Company (JODCO), co-venturers<br />
in the Zakum Development<br />
Company (ZADCO), have<br />
launched a major project to<br />
exp<strong>and</strong> development of the<br />
world’s fourth-largest oil field,<br />
<strong>and</strong> the development is on track<br />
to meet its targets.<br />
Containing an estimated 50<br />
billion barrels of oil, the Upper<br />
Zakum field produces more than<br />
one-half million barrels a day.<br />
Through the efforts of professionals<br />
from <strong>ExxonMobil</strong>, ZADCO,<br />
ADNOC <strong>and</strong> JODCO, <strong>and</strong> by<br />
applying <strong>ExxonMobil</strong>’s leading-<br />
Story by Bill Corporon Photography courtesy of ZADCO<br />
<strong>ExxonMobil</strong> is working closely with its co-venturers to develop one of the world’s<br />
largest oil fields. A new technology center, artificial isl<strong>and</strong>s <strong>and</strong> an innovative<br />
drilling organization highlight efforts to boost recovery at a lower cost.<br />
edge technology, the project could<br />
boost daily field production by<br />
200,000 barrels over the next six<br />
to seven years – a sizable contribution<br />
toward meeting future<br />
growth in global oil dem<strong>and</strong>.<br />
Upper Zakum lies about 50<br />
miles northwest of the city of <strong>Abu</strong><br />
<strong>Dhabi</strong>, the capital of the seven<br />
emirates that make up the United<br />
Arab Emirates (UAE). The offshore<br />
field covers more than 450<br />
square miles <strong>and</strong> contains some<br />
450 wells drilled from more than<br />
90 existing platforms. Wells typically<br />
extend 7,000 to 8,000 feet<br />
below the earth’s surface.<br />
Oil flows through a pipeline<br />
network to one of four main pro-<br />
cessing facilities. After the oil is<br />
treated, it’s fed into another pipeline<br />
for a 35-mile journey to Zirku<br />
Isl<strong>and</strong>. There it’s held in large<br />
storage tanks to await export.<br />
<strong>ExxonMobil</strong> holds a 28 percent<br />
joint-venture interest in the<br />
field <strong>and</strong> in ZADCO, the field’s<br />
operator. ADNOC owns 60 percent,<br />
with JODCO holding the<br />
remaining 12 percent stake.<br />
Opening doors<br />
Less than 10 percent of the field’s<br />
oil has been produced, testimony<br />
to the imposing technical challenges<br />
it presents. Much of the<br />
reservoir is made of low-permeability<br />
rock, making the oil difficult
– <strong>and</strong> expensive – to extract.<br />
Nevertheless, says Frank<br />
Kemnetz, president of<br />
<strong>ExxonMobil</strong> <strong>Abu</strong> <strong>Dhabi</strong> Offshore<br />
Petroleum Company, Ltd.,<br />
development is well under way<br />
<strong>and</strong> on schedule.<br />
He attributes this to the spirit<br />
of cooperation among the <strong>Abu</strong><br />
<strong>Dhabi</strong> government, ADNOC,<br />
ZADCO <strong>and</strong> the private oilcompany<br />
co-venturers, <strong>and</strong><br />
stresses the importance of a<br />
disciplined approach that relies<br />
on cutting-edge technology to<br />
solve problems.<br />
“First you have to underst<strong>and</strong><br />
the resource,” he says. “If you<br />
don’t know much about the res-<br />
Right: <strong>ExxonMobil</strong> retains<br />
offices in the Sheikh<br />
Khalifa Energy Complex<br />
in <strong>Abu</strong> <strong>Dhabi</strong>, which is<br />
also headquarters for the<br />
<strong>Abu</strong> <strong>Dhabi</strong> National Oil<br />
Company <strong>and</strong> the Zakum<br />
Development Company.<br />
Below: The huge central<br />
complex at the Upper<br />
Zakum field, some 85 miles<br />
offshore of <strong>Abu</strong> <strong>Dhabi</strong>,<br />
houses some 650 workers<br />
<strong>and</strong> processes more than<br />
550,000 barrels of oil <strong>and</strong><br />
130 million cubic feet of<br />
natural gas a day.<br />
18
The <strong>Abu</strong> <strong>Dhabi</strong> Technology Center promotes research <strong>and</strong> collaboration<br />
between United Arab Emirates <strong>and</strong> <strong>ExxonMobil</strong> professionals.<br />
ervoir rock, you don’t know what<br />
will happen when you drill. We use<br />
<strong>ExxonMobil</strong>’s 3-D seismic technology<br />
to get the picture we need.”<br />
The next step is to create models,<br />
using <strong>ExxonMobil</strong>’s proprietary<br />
EM power reservoir-simulation<br />
technology, which helps predict<br />
how the reservoirs will perform.<br />
“Then,” says Kemnetz, “we<br />
apply our decision-making tools<br />
to determine how to maximize<br />
recovery at the lowest cost <strong>and</strong><br />
risk. Technology adds value by<br />
reducing costs <strong>and</strong> enhancing<br />
resource recovery. It opens the<br />
door to more options.”<br />
A first for <strong>ExxonMobil</strong><br />
To open that door further,<br />
<strong>ExxonMobil</strong> has established a<br />
unique technology center in<br />
<strong>Abu</strong> <strong>Dhabi</strong>.<br />
“The center’s mission is twofold,”<br />
says <strong>ExxonMobil</strong>’s Ram<br />
Rajagopalan, the center’s operations<br />
manager. “We want to apply<br />
high-impact technology that<br />
benefits Upper Zakum while still<br />
protecting our proprietary technology.<br />
And we want to promote<br />
a good working relationship<br />
between ZADCO <strong>and</strong> <strong>ExxonMobil</strong><br />
professionals.”<br />
19<br />
The technology center is the<br />
first to be established at an<br />
<strong>ExxonMobil</strong> joint-interest facility.<br />
It’s managed <strong>and</strong> operated by<br />
<strong>ExxonMobil</strong> staff.<br />
“The technology center<br />
provides a window into the<br />
<strong>ExxonMobil</strong> world,” says<br />
Rajagopalan. “It enables ZADCO<br />
to pair the best technology with<br />
a state-of-the-art computing<br />
environment to achieve its development<br />
targets.”<br />
Employees of <strong>ExxonMobil</strong><br />
work closely with members of<br />
the ZADCO team that manages<br />
the Upper Zakum field. Together,<br />
they seek to meet the field’s<br />
development challenges.<br />
The center places a strong<br />
emphasis on training. From<br />
2007 through 2008, it conducted<br />
11 courses for more<br />
than 122 people. In addition,<br />
about 25 <strong>ExxonMobil</strong> employees<br />
were “seconded,” or temporarily<br />
assigned, to ZADCO to further<br />
enable the transfer of technical<br />
expertise. The center also hired<br />
<strong>and</strong> trained UAE nationals in line<br />
with a strategy set out by the<br />
government.<br />
In addition to making technology<br />
<strong>and</strong> expertise available in<br />
Photo by Keith Wood<br />
<strong>Abu</strong> <strong>Dhabi</strong>, <strong>ExxonMobil</strong> brings<br />
ZADCO’s Emirati nationals to the<br />
United States for training, <strong>and</strong> has<br />
accepted a number of individuals<br />
for developmental assignments<br />
within the company.<br />
“The technology center allows<br />
us to bring technological expertise<br />
to our co-venturer’s facility so we<br />
can work together applying it to<br />
Upper Zakum’s challenges,” says<br />
Rajagopalan.<br />
Innovation with s<strong>and</strong> <strong>and</strong> rock<br />
Technological advances come in a<br />
variety of ways. Some are results<br />
of years of intensive research.<br />
Some arise from ideas inspired by<br />
work in other areas.<br />
Abi Modavi, an engineer with<br />
<strong>ExxonMobil</strong> Production Company<br />
who was temporarily assigned to<br />
ZADCO as the field development<br />
planning leader, suggested that artificial<br />
isl<strong>and</strong>s, rather than the more<br />
expensive steel platforms, be used<br />
as drilling <strong>and</strong> production sites.<br />
“When I first joined ZADCO, I<br />
noticed how shallow the water<br />
was – about 15 to 80 feet,” says<br />
Modavi, “<strong>and</strong> I started thinking<br />
about ways to use artificial isl<strong>and</strong>s<br />
for drilling <strong>and</strong> production.”<br />
<strong>ExxonMobil</strong> <strong>and</strong> ZADCO agreed<br />
that the technical <strong>and</strong> economic<br />
value of the concept held merit,<br />
<strong>and</strong> Movadi’s staff of three<br />
quickly grew to more than 100<br />
during the assessment stage,<br />
completed one year ago. The<br />
project team now is conducting<br />
detailed engineering design <strong>and</strong><br />
tendering construction bids.<br />
Frank Kemnetz says that artificial<br />
isl<strong>and</strong>s can reduce costs <strong>and</strong><br />
achieve long-term environmental<br />
benefits. He points out that the<br />
isl<strong>and</strong>s would not be feasible<br />
without the “enabling technology”<br />
of <strong>ExxonMobil</strong>’s expertise<br />
in extended-reach drilling, which<br />
allows wells to be drilled vertically<br />
at first, then turned horizontally<br />
to target reservoirs up to several<br />
miles away.<br />
“With artificial isl<strong>and</strong>s <strong>and</strong><br />
extended-reach technology, we<br />
anticipate building fewer isl<strong>and</strong>s<br />
instead of having to install a<br />
larger number of steel platforms<br />
to accommodate a comparable<br />
number of wells, along with the<br />
miles of pipelines to connect<br />
them all together,” says Kemnetz.<br />
“The cost savings could be in the<br />
billions of dollars, <strong>and</strong> the isl<strong>and</strong>s<br />
are a better long-term option for<br />
the marine environment.”<br />
The oval-shaped isl<strong>and</strong>s will<br />
be made of s<strong>and</strong> <strong>and</strong> rock <strong>and</strong><br />
measure 2,000 to 2,600 feet<br />
in diameter. The rocks, some<br />
weighing several tons, are<br />
barged from quarries in the UAE.<br />
The isl<strong>and</strong>s are expected to<br />
outlast the very long producing<br />
life of the Upper Zakum field.<br />
A multinational drilling group<br />
ZADCO has embarked on a<br />
major development program<br />
to boost daily production in<br />
the Upper Zakum by nearly 40<br />
percent. Reaching that goal<br />
requires a significant increase in
Sense of community<br />
<strong>ExxonMobil</strong> affiliates have a long history of<br />
supporting important community programs<br />
in <strong>Abu</strong> <strong>Dhabi</strong>. These include the regional <strong>and</strong><br />
local efforts of the United Arab Emirates Red<br />
Crescent Society, the American Community<br />
School <strong>and</strong> the Future Center for Children<br />
with Special Needs.<br />
“Since our entry into the Upper Zakum project,<br />
our community activities have grown significantly,”<br />
says Michael Perry, vice president<br />
of Public <strong>and</strong> Government Affairs, Exxon (Al<br />
Khalij) Inc., an <strong>ExxonMobil</strong> subsidiary operating<br />
in <strong>Abu</strong> <strong>Dhabi</strong>.<br />
In 2008, <strong>ExxonMobil</strong> pledged $5 million<br />
over three years to the Emirates Foundation,<br />
a nationwide philanthropic organization<br />
established in 2005, to facilitate public-private<br />
initiatives for social betterment. The grant will<br />
support efforts to promote energy efficiency<br />
<strong>and</strong> environmental conservation.<br />
The company also is a founding member<br />
of the board of INJAZ UAE, a local chapter of<br />
Junior Achievement Worldwide, or JA.<br />
“<strong>ExxonMobil</strong> is a longst<strong>and</strong>ing supporter of<br />
JA organizations,” says Perry. “Our involvement<br />
in INJAZ is aimed at the extension of these<br />
programs to benefit the youth that will be future<br />
business <strong>and</strong> community leaders in the UAE.”<br />
The strong partnership between<br />
<strong>ExxonMobil</strong> <strong>and</strong> <strong>Abu</strong> <strong>Dhabi</strong> is helping to<br />
develop needed energy to fuel growth in the<br />
Middle East <strong>and</strong> beyond.<br />
Arabian Gulf<br />
Qatar<br />
Upper<br />
Zakum<br />
Field<br />
<strong>Abu</strong><br />
<strong>Dhabi</strong><br />
United Arab<br />
Emirates<br />
drilling activity. When <strong>ExxonMobil</strong><br />
acquired its interest in Upper<br />
Zakum, another offshore operating<br />
company conducted well<br />
operations. ZADCO had no drilling<br />
unit of its own.<br />
A planning team studied more<br />
efficient <strong>and</strong> effective ways to<br />
manage drilling. The team, led<br />
by Hamid Mozayani, <strong>ExxonMobil</strong><br />
executive advisor for drilling,<br />
was charged with designing an<br />
organizational structure for newwell<br />
operations involving drilling,<br />
completions <strong>and</strong> well workovers.<br />
“We conducted a study that<br />
looked at a number of options,”<br />
says Mozayani. “We focused on<br />
the people, systems, processes<br />
<strong>and</strong> organizational aspects of<br />
well operations.”<br />
The team’s conclusion was<br />
for ZADCO to create its own<br />
drilling organization. The recom-<br />
Saudi Arabia<br />
Area of detail<br />
mendation was approved, <strong>and</strong><br />
Mozayani was asked to head<br />
up the multinational working<br />
group charged with creating the<br />
new entity. It began operation in<br />
November 2008 when ZADCO<br />
took over five offshore rigs <strong>and</strong><br />
one barge.<br />
“One of the key benefits of<br />
establishing a ZADCO drilling<br />
organization is its ability to<br />
access <strong>ExxonMobil</strong>’s technology<br />
<strong>and</strong> best practices,” says<br />
Mozayani.<br />
“Our goal is to achieve<br />
improvements in efficiency <strong>and</strong><br />
effectiveness of up to 30 percent,”<br />
he says. “We’re already<br />
drilling wells 10 to 15 percent<br />
faster than before, <strong>and</strong> we<br />
anticipate achieving additional<br />
efficiencies in drilling <strong>and</strong> completion<br />
times.”the Lamp<br />
Processed oil from the Upper<br />
Zakum field is transported by pipeline<br />
to Zirku Isl<strong>and</strong>, where it is stored<br />
for shipment to world markets.<br />
20
21<br />
Healthy energy industry key to economic<br />
<strong>ExxonMobil</strong> Senior Vice<br />
President Mike Dolan<br />
spoke at Cambridge<br />
Energy Research<br />
Associates’ CERAWeek<br />
conference in Houston in<br />
February. He emphasized<br />
that the energy industry<br />
can play a critical role<br />
in rebuilding confidence<br />
amid today’s challenging<br />
economic times.<br />
Story by Mike Long Illustration by Pat Gabriel<br />
The energy industry’s role in<br />
managing risk <strong>and</strong> helping to<br />
restore economic confidence<br />
will be paramount as the world<br />
continues to face economic<br />
uncertainty, <strong>ExxonMobil</strong> Senior<br />
Vice President Mike Dolan told<br />
attendees in a keynote speech<br />
at the 2009 CERAWeek.<br />
Equally clear, said Dolan, will<br />
be the importance of energy<br />
policies that encourage investment,<br />
reduce risks <strong>and</strong> focus on<br />
the long term.<br />
Industry excels<br />
in risk management<br />
Dolan explained that the energy<br />
industry has a long history of<br />
managing risk effectively.<br />
“Each day, energy companies<br />
manage a variety of risks – operational<br />
risks, technological risks<br />
as well as risks related to project<br />
investments <strong>and</strong> the ups <strong>and</strong><br />
downs of commodity prices,” he<br />
said. “The fact that these risks<br />
go largely unnoticed by consumers<br />
is a testament to our industry’s<br />
success <strong>and</strong> reliability.”<br />
Since July 2008, crude oil has<br />
dropped in value from a record<br />
of nearly $150 a barrel to around<br />
$40 in the first quarter of this<br />
year. Dolan said few industries<br />
could weather such a steep <strong>and</strong><br />
sudden decline in the value of<br />
their core commodity.<br />
The fact that the energy<br />
industry is managing this<br />
volatility testifies to its long-term<br />
planning <strong>and</strong> effective risk management.<br />
At the same time, it<br />
continues to provide affordable<br />
energy to consumers around the<br />
globe, while generating billions<br />
in government revenues <strong>and</strong><br />
shareholder returns.<br />
“<strong>ExxonMobil</strong>, for example,<br />
had total tax expenses of nearly<br />
$65 billion in the United States<br />
between 2002 <strong>and</strong> 2007,<br />
exceeding our U.S. earnings by<br />
almost $20 billion during that<br />
time,” said Dolan. “For the same<br />
period, our dividends <strong>and</strong> sharebuyback<br />
programs put nearly<br />
$118 billion into the h<strong>and</strong>s of<br />
pension holders <strong>and</strong> investors,<br />
the great majority of whom are in<br />
the United States.”<br />
The industry supports nearly<br />
6 million jobs in the United States<br />
alone. It is also a major employer<br />
<strong>and</strong> investor in human capital<br />
around the world.<br />
“These facts – combined with<br />
our ongoing investments in new<br />
energy sources <strong>and</strong> new technologies<br />
– make it clear that a healthy<br />
energy sector will be critical to<br />
reigniting economic growth.”<br />
A two-part energy challenge<br />
Dolan added that the industry<br />
must also focus on the dual<br />
energy challenge facing the world<br />
over the long term – meeting
growth<br />
increased global energy dem<strong>and</strong><br />
while reducing the growth in<br />
greenhouse gas emissions.<br />
Despite the current economic<br />
downturn, global energy<br />
dem<strong>and</strong> is expected to continue<br />
to increase, even with substantial<br />
energy-efficiency gains. At the<br />
same time, energy-related carbondioxide<br />
emissions are expected to<br />
rise by almost 30 percent – rising<br />
primarily in developing nations<br />
where populations <strong>and</strong> economies<br />
are growing the fastest.<br />
“To help put this potential new<br />
dem<strong>and</strong> in perspective, consider<br />
the scale of China’s development,”<br />
Dolan said. “Today, China<br />
has one car or light-duty vehicle<br />
for every 100 citizens. In contrast,<br />
here in the United States,<br />
we have 78 cars or light-duty<br />
vehicles for every 100 citizens.<br />
Similarly, per-capita electricity use<br />
in China is only one-seventh that<br />
of the United States.”<br />
The industry faces economic<br />
<strong>and</strong> environmental challenges<br />
as it works to find <strong>and</strong> produce<br />
reliable, affordable energy. To<br />
do this <strong>and</strong> reduce emissions<br />
growth it must continue to pursue<br />
integrated solutions.<br />
Dolan explained that integrated<br />
solutions are those that<br />
combined will help the industry<br />
develop new supplies of energy<br />
from all economic sources,<br />
accelerate gains in the efficient<br />
use of energy, <strong>and</strong> develop <strong>and</strong><br />
deploy new technologies to curb<br />
greenhouse gas emissions.<br />
Policy options<br />
To continue making these<br />
needed long-term investments<br />
during both good times <strong>and</strong><br />
bad, Dolan told attendees that<br />
the industry depends on stable<br />
<strong>and</strong> predictable legal, tax <strong>and</strong><br />
regulatory frameworks.<br />
In providing these frame-<br />
For the record<br />
Despite the current global economic downturn,<br />
<strong>ExxonMobil</strong> continues to invest in new energy<br />
supplies, increased energy efficiency <strong>and</strong> new<br />
technologies that will be required to help address<br />
global energy needs in the decades to come.<br />
“That is our record,” Senior Vice President Mike<br />
Dolan told CERAWeek attendees regarding the<br />
company’s long-held philosophy of making sustainable<br />
<strong>and</strong> disciplined investments in both good<br />
times <strong>and</strong> bad.<br />
For example, over the past 25 years, Dolan<br />
said, <strong>ExxonMobil</strong> has invested some $380 billion<br />
in future energy development around the<br />
world – more than its total earnings during that<br />
same period. Since 2004 alone, the company has<br />
invested some $1.5 billion in activities to reduce<br />
greenhouse gas emissions <strong>and</strong> improve energy<br />
efficiency. It plans to spend at least one-half billion<br />
dollars more on additional energy-efficiency initiatives<br />
over the next few years.<br />
works – <strong>and</strong> resisting the urge to<br />
micromanage markets – governments<br />
can play a constructive<br />
<strong>and</strong> necessary role in helping<br />
industry meet the world’s energy<br />
<strong>and</strong> environmental challenges.<br />
“It is ultimately a question of<br />
risk,” Dolan said. “Policies that<br />
increase risks for industry are<br />
likely to decrease needed investments.<br />
Policies that reduce risks<br />
are likely to increase long-term<br />
investment <strong>and</strong> exp<strong>and</strong> the<br />
availability of reliable, affordable<br />
energy that is essential to economic<br />
progress.”<br />
As an example, he cited the<br />
area of policy options to reduce<br />
greenhouse gas emissions.<br />
One option supported by<br />
<strong>ExxonMobil</strong> is a revenue-neutral<br />
carbon tax. Dolan said that a<br />
carbon tax would reduce policy<br />
risks for businesses <strong>and</strong> investors<br />
in a way that cap-<strong>and</strong>-trade<br />
schemes would not. In addition,<br />
by reducing other taxes – such<br />
as income or excise taxes – a<br />
carbon tax can be revenueneutral<br />
<strong>and</strong> offset the impact of<br />
higher taxes on the economy.<br />
“By reaching out to inform the<br />
public on these policy options<br />
<strong>and</strong> by working together with<br />
policymakers, we can ensure that<br />
our energy policies provide the<br />
long-term stability our industry<br />
needs to do what we do best:<br />
manage risk <strong>and</strong><br />
provide energy<br />
to the world,”<br />
Dolan said. “With<br />
To learn more<br />
exxonmobil.com/<br />
cera2009<br />
a positive policy <strong>and</strong> investment<br />
climate in place, we can continue<br />
to pioneer solutions that power<br />
our economy, increase energy<br />
efficiency <strong>and</strong> curb greenhouse<br />
gas emissions.” the Lamp<br />
22
23 Story by Richard Cunningham Photography by Jerry Jones<br />
Old friend,<br />
new lease<br />
<strong>ExxonMobil</strong>’s Johnny Saenz (left) <strong>and</strong> Clay<br />
Powell unwind after a day’s work at the King<br />
Ranch Gas Plant in South Texas. The plant,<br />
shown at rear, processes about 600 million<br />
cubic feet of natural gas a day.
<strong>ExxonMobil</strong> <strong>and</strong> the historic King Ranch have agreed to continue<br />
an oil <strong>and</strong> gas agreement that’s been in effect since 1933.<br />
The extension clears the way for new wells, creative technology<br />
<strong>and</strong> the continued stewardship of this legendary l<strong>and</strong>.<br />
TEXAS<br />
Founded in 1853, the<br />
King Ranch is nearly<br />
the size of Rhode<br />
Isl<strong>and</strong> <strong>and</strong> consists<br />
of four separate parcels<br />
called divisions,<br />
encompassing some<br />
825,000 acres.<br />
Kingsville<br />
Corpus<br />
Christi<br />
Gulf of<br />
Mexico<br />
King Ranch<br />
property<br />
Even before the sun came up,<br />
we could tell that the King Ranch<br />
was not the sort of place city<br />
folks often see. Six white-tailed<br />
deer barely noted our arrival at<br />
the gas plant office, <strong>and</strong> from<br />
the scrub brush 300 yards away,<br />
coyotes were yelping an end to<br />
their nighttime hunt.<br />
On the way to a nearby lake,<br />
cattle warming themselves on<br />
the asphalt road blocked our<br />
way. As we waited for them to<br />
move, at least a dozen peccaries<br />
– dark, bristling pig-like<br />
creatures often called javelinas –<br />
w<strong>and</strong>ered from the brush to<br />
check us out.<br />
“This is generally considered to<br />
be much like open range,” says<br />
Johnny Saenz, operations superintendent<br />
for the South Texas<br />
area. “Out here, that means<br />
cattle, deer, javelinas, wild turkeys<br />
<strong>and</strong> quite a few other kinds of<br />
animals can w<strong>and</strong>er across your<br />
path at any time. As operators,<br />
we are responsible not only for<br />
our wells <strong>and</strong> facilities, but also<br />
for protecting the l<strong>and</strong> <strong>and</strong> the<br />
wildlife that live on it.”<br />
The King Ranch, established<br />
in 1853, includes nearly 1,300<br />
square miles of coastal prairie,<br />
<strong>and</strong> it used to be more. The<br />
spread is still one of the largest<br />
ranches in the world.<br />
“Because of its size <strong>and</strong> the<br />
way the l<strong>and</strong> is managed,”<br />
Saenz adds, “the King Ranch<br />
has become an important wild-<br />
life habitat. Its staff works closely<br />
with the Texas Parks <strong>and</strong> Wildlife<br />
Department to manage these<br />
resources.”<br />
Humble roots in South Texas<br />
Humble Oil & Refining Company,<br />
<strong>ExxonMobil</strong>’s predecessor, leased<br />
l<strong>and</strong> on the King Ranch <strong>and</strong><br />
drilled several dry holes there as<br />
early as 1919. That lease expired<br />
in 1926, but a new agreement<br />
for more than 1 million acres was<br />
signed in 1933. The first well was<br />
completed in 1939, <strong>and</strong> the big<br />
push began in 1945 with the discovery<br />
of the Borregos field.<br />
When the oil played out,<br />
natural gas became the primary<br />
resource. The King Ranch Gas<br />
Plant, commissioned in 1959,<br />
once h<strong>and</strong>led as much as 1.75<br />
billion cubic feet of natural gas a<br />
day <strong>and</strong> produced 80,000 barrels<br />
of natural-gas liquids, all from<br />
company-owned wells in South<br />
Texas. The plant still processes<br />
some 600 million cubic feet a day<br />
for <strong>ExxonMobil</strong> <strong>and</strong> other gas<br />
producers in the area.<br />
As a young engineer, Pat<br />
Ketcham helped with the design<br />
<strong>and</strong> construction of the gas plant<br />
<strong>and</strong> later became district manager<br />
of the Kingsville District during<br />
its boom days of oil <strong>and</strong> gas<br />
production.<br />
“At one time we were operating<br />
around 10 drilling rigs a day<br />
in South Texas, which required<br />
a rig move about every three<br />
24
The main house on the ranch reflects a blend of<br />
Spanish, Mexican <strong>and</strong> South Texas architecture.<br />
days,” he says. Now retired <strong>and</strong><br />
living with his wife in Kingsville,<br />
Ketcham has fond memories of<br />
the King Ranch <strong>and</strong> the many<br />
people who worked there with<br />
him, including Rex Tillerson,<br />
current Chairman <strong>and</strong> CEO of<br />
Exxon Mobil Corporation.<br />
Morris Foster, retired president<br />
of <strong>ExxonMobil</strong> Production<br />
Company, <strong>and</strong> Jim S<strong>and</strong>y, U.S.<br />
Production operations manager,<br />
took the lead in negotiating the<br />
new lease. Like Tillerson, Foster<br />
<strong>and</strong> S<strong>and</strong>y both spent parts of<br />
their early careers working with<br />
the King Ranch.<br />
“Because of the high activity<br />
of exploration <strong>and</strong> production,<br />
many past <strong>and</strong> current members<br />
of the company’s management<br />
earned their spurs here,”<br />
Ketcham says.<br />
25<br />
A good fit<br />
One key to long relationships is<br />
underst<strong>and</strong>ing what the other<br />
person needs. Many employees<br />
of the South Texas operations<br />
are lifelong residents of the area,<br />
so they’re familiar with the challenges<br />
of ranch life.<br />
“That’s one reason we get<br />
along so well with the local<br />
King Ranch people,” says Clay<br />
Powell, senior field superintendent.<br />
“I was raised in a ranching<br />
family that lived just 20 miles<br />
from here, so I know what<br />
ranchers need <strong>and</strong> underst<strong>and</strong><br />
how to do things right.”<br />
An example is that when it’s<br />
time to ab<strong>and</strong>on a well – shut<br />
down a piece of equipment –<br />
<strong>ExxonMobil</strong> restores the l<strong>and</strong> to<br />
its original state.
The other heart of Texas<br />
If you had a time-lapse video of the South<br />
Texas coast for the last 30 million years – <strong>and</strong><br />
<strong>ExxonMobil</strong> does – the shore might remind you<br />
of a beating heart. It’s the geological engine<br />
that formed more than 300 oil <strong>and</strong> gas reservoirs<br />
below the King Ranch <strong>and</strong> elsewhere<br />
along the coast.<br />
“Thirty million years ago, South Texas was<br />
similar in shape to what you see today,” says<br />
Mike Gaskins, geoscience technical manager<br />
with U.S. Production. “Rivers draining to the Gulf<br />
of Mexico left layers of sediment on the continental<br />
shelf, creating new l<strong>and</strong> as they grew.”<br />
When river deltas reached a certain size, however,<br />
their weight caused the rock below them<br />
to collapse. As deltas sank, shorelines retreated<br />
as much as 50 miles. Ocean sediment covered<br />
each sunken delta, creating the natural seal that<br />
would eventually trap hydrocarbons after biological<br />
material in the sediment cooked off.<br />
“That’s very important here,”<br />
Powell says. “When a well has<br />
reached the end of its productive<br />
life <strong>and</strong> needs to be ab<strong>and</strong>oned,<br />
we take out the equipment <strong>and</strong><br />
replant the area, based on what<br />
the ranch botanist recommends.<br />
Restoring the l<strong>and</strong> is an ongoing<br />
part of our work.”<br />
Looking ahead<br />
<strong>ExxonMobil</strong>’s earliest activities<br />
at the King Ranch date back<br />
90 years, <strong>and</strong> the recent extension<br />
updates the current lease<br />
<strong>and</strong> guarantees that the strong<br />
<strong>ExxonMobil</strong> retiree Pat Ketcham,<br />
shown in the workshop of his<br />
Kingsville home, helped with the<br />
design <strong>and</strong> construction of the King<br />
Ranch Gas Plant in the late 1950s.<br />
“That process has repeated many times, <strong>and</strong><br />
it continues today,” Gaskins says. “A vertical<br />
cross-section of the coast looks like a stack<br />
of wedges, with the thickest end toward l<strong>and</strong>.<br />
Each wedge represents one cycle of deposition<br />
<strong>and</strong> subsidence, <strong>and</strong> each cycle may have<br />
lasted 10,000 years.”<br />
relationship will continue. It is an<br />
important part of <strong>ExxonMobil</strong>’s<br />
effort to fully develop domestic<br />
energy supplies.<br />
“We have a very diverse<br />
portfolio in the United States,”<br />
says R<strong>and</strong>y Clevel<strong>and</strong>, U.S.<br />
Production manager. “There are<br />
areas of tremendous growth,<br />
but we also have some mature<br />
fields, such as the ones in South<br />
Texas. The older the asset, the<br />
more challenging it can become.<br />
We have to use technology in<br />
all kinds of creative ways to help<br />
those parts of our business to<br />
be more profitable.”<br />
One approach is to use<br />
enhanced seismic imaging<br />
<strong>and</strong> other technology to reach<br />
smaller reservoirs that remain<br />
untapped. That was not eco-<br />
nomical in the past, when fewer<br />
than one in four wells might be<br />
productive. With today’s tools, the<br />
success rate is much higher, particularly<br />
in fields with a long history<br />
of production.<br />
“The King Ranch has been a<br />
prolific producer of oil <strong>and</strong> gas<br />
for many years,”<br />
Clevel<strong>and</strong> says.<br />
“It has already<br />
produced a<br />
Over millions of years, the<br />
coast of Texas has exp<strong>and</strong>ed<br />
<strong>and</strong> contracted, creating<br />
natural seals that trap b<strong>and</strong>s<br />
of hydrocarbons that can be<br />
tapped from surface wells.<br />
To learn more<br />
exxonmobil.com/<br />
production<br />
vast amount of hydrocarbons,<br />
<strong>and</strong> we believe there’s more to<br />
come. We’re very pleased to have<br />
renewed this lease agreement<br />
with the ranch owners.” the Lamp<br />
Illustration by Pat Gabriel<br />
26
27<br />
Story by Kevin Gault<br />
Most of the damage was done by<br />
two massive fires, one that virtually<br />
wiped out towns northeast of<br />
Melbourne <strong>and</strong> a second inferno<br />
that raced across Gippsl<strong>and</strong>.<br />
These were the worst fires<br />
in the history of Australia, a<br />
country accustomed to several<br />
outbreaks of fire every year. In<br />
this rare disaster that took place<br />
during a severe drought, many<br />
people died trying to protect<br />
their homes or running from the<br />
swiftly moving flames.<br />
Red Cross assistance<br />
The Australian Red Cross played<br />
a critical role in assisting those<br />
affected by the blaze – 15,000<br />
people sought help from the<br />
agency. The Red Cross established<br />
20 evacuation-relief cen-<br />
Recovering from<br />
The aftermath of several dozen<br />
wildfires that ravaged southeastern<br />
Australia in February<br />
was shocking: 173 lives<br />
lost, more than 2,000 homes<br />
destroyed, 7,500 people left<br />
homeless. One month after the<br />
first flames ignited <strong>and</strong> were<br />
propelled by 60 mph winds,<br />
some of the fires still smoldered<br />
but were finally contained.<br />
ters supported by more than<br />
400 volunteers <strong>and</strong> staff, providing<br />
meals <strong>and</strong> medical aid for<br />
firefighters <strong>and</strong> police along with<br />
other emergency services such<br />
as personal support, trauma<br />
counseling <strong>and</strong> referrals for<br />
emergency relief <strong>and</strong> recovery.<br />
“I’m sure that the thoughts<br />
<strong>and</strong> sympathies of everyone<br />
in our company are with the<br />
people <strong>and</strong> communities that<br />
have been directly impacted by<br />
these fires,” says <strong>ExxonMobil</strong><br />
Australia Lead Country Manager<br />
Mark Nolan. “We applaud the<br />
Red Cross for the assistance<br />
that its staff <strong>and</strong> volunteers provided<br />
for affected people as well<br />
as the recovery efforts of the<br />
emergency-services personnel.”<br />
Above: A huge wildfire blazes through<br />
the Healesville, Australia, region in<br />
Victoria State earlier this year. The<br />
loss of life <strong>and</strong> destruction caused by<br />
the fires was the worst in Australia’s<br />
history. (Lucas Dawson/Getty Images)<br />
Left inset: A fire-fighting helicopter<br />
hovers above the flames <strong>and</strong> drops<br />
water on a blaze spreading through<br />
dense forest east of Melbourne.<br />
(Paul Crock/AFP/Getty Images)<br />
Above inset: A fire crew battles in<br />
thick smoke to save houses north of<br />
Melbourne. Firefighters likened the<br />
series of infernos to “an inl<strong>and</strong> tsunami.”<br />
(William West/AFP/Getty Images)
devastation Down Under<br />
Helping the recovery<br />
The public response to the<br />
catastrophe was immediate<br />
<strong>and</strong> substantial: the generous<br />
donations of thous<strong>and</strong>s of<br />
people raised more than $300<br />
million for the official relief fund,<br />
the Australian Red Cross 2009<br />
Victorian Bushfire Appeal Fund.<br />
<strong>ExxonMobil</strong> donated $500,000<br />
to the fund, which is being used<br />
to support emergency-response<br />
services <strong>and</strong> provide direct assistance<br />
to people, local organizations<br />
<strong>and</strong> communities devas-<br />
tated by the wildfires.<br />
“We would like to thank<br />
<strong>ExxonMobil</strong> for making such<br />
a fantastic contribution to the<br />
bushfire appeal,” says Robert<br />
Tickner, CEO of the Australian<br />
Red Cross.<br />
Several fires raged in the<br />
Gippsl<strong>and</strong> area. While not directly<br />
threatened by fire, <strong>ExxonMobil</strong>’s<br />
Longford facility was impacted by<br />
dense smoke <strong>and</strong> falling ash on<br />
the night of February 7, <strong>and</strong> plant<br />
personnel remained on high alert<br />
for several days.<br />
Donations for community<br />
When the fires destroyed water<br />
tanks <strong>and</strong> also contaminated<br />
water in many townships, the<br />
<strong>ExxonMobil</strong> Yarraville terminal<br />
in Melbourne donated several<br />
portable storage tanks that<br />
provided clean drinking water<br />
for affected communities, which<br />
allowed many people to remain<br />
in their local areas.<br />
“I would like to pay tribute to<br />
the efforts of emergency services<br />
<strong>and</strong> other agencies that worked<br />
courageously <strong>and</strong> tirelessly in<br />
their efforts to mitigate losses to<br />
our communities,” adds Nolan.<br />
“They included many <strong>ExxonMobil</strong><br />
employees <strong>and</strong> contractors<br />
who are volunteers with fire<br />
departments in Australia, state<br />
emergency-services agencies<br />
<strong>and</strong> other community-support<br />
organizations.” the Lamp<br />
To make an online donation<br />
to the Bushfire Appeal Fund<br />
https://www.redcross.org.au/<br />
Donations/onlineDonations.asp.<br />
28
Panorama<br />
Thai program<br />
promotes learning<br />
To help students learn more about<br />
science <strong>and</strong> technology outside<br />
the classroom, Esso Thail<strong>and</strong><br />
sponsors full-day seminars for<br />
about 1,500 teachers each year.<br />
The program, organized by<br />
the country’s National Science<br />
Museum (NSM), encourages educators<br />
to promote learning in other<br />
venues, particularly by visiting science<br />
<strong>and</strong> technology museums<br />
<strong>and</strong> facilitites run by NSM.<br />
A number of Esso Thail<strong>and</strong> managers<br />
participate, <strong>and</strong> take turns<br />
giving the Energy Outlook <strong>and</strong><br />
Advanced Fuels presentations to<br />
educators attending the seminars.<br />
“This is a unique program,”<br />
says Mongkolnimit Auacherdkul,<br />
public affairs manager, “<strong>and</strong> our<br />
speakers are always pleased to<br />
get involved <strong>and</strong> meet the science<br />
teachers from across the country.<br />
The teachers share what they<br />
learn with students, who not only<br />
increase their knowledge of technical<br />
subjects, but also gain a better<br />
underst<strong>and</strong>ing of <strong>ExxonMobil</strong> <strong>and</strong><br />
the energy business.”<br />
Mongkolnimit Auacherdkul, public<br />
affairs manager for Esso Thail<strong>and</strong>,<br />
answers a question from a teacher<br />
about the company’s energy outlook.<br />
29<br />
The jetty at South<br />
Hook LNG receiving<br />
terminal allows berthing<br />
of the world’s<br />
largest LNG vessels.<br />
First South Hook cargo<br />
The first liquefied natural gas (LNG) cargo has arrived at the<br />
South Hook LNG receiving terminal in Milford Haven, Wales.<br />
The terminal adds to the United Kingdom’s LNG import capacity<br />
<strong>and</strong> energy diversity with the ability to deliver up to 2 billion<br />
cubic feet of gas daily into the natural gas grid when it reaches<br />
full operational capacity later this year.<br />
South Hook LNG Terminal Company Ltd. is owned by Qatar<br />
Petroleum (67.5 percent), <strong>ExxonMobil</strong> (24.15 percent) <strong>and</strong> Total<br />
(8.35 percent).<br />
An inauguration ceremony commemorating South Hook<br />
was held last month, attended by HM The Queen of the United<br />
Kingdom, His Highness Sheikh Hamad bin Khalifa Al Thani,<br />
Amir of the State of Qatar, other members of both royal families<br />
<strong>and</strong> other dignitaries. Rex W. Tillerson represented <strong>ExxonMobil</strong><br />
at the event.<br />
Dr. Bernard<br />
Harris entertains<br />
<strong>and</strong> encourages<br />
students in Detroit<br />
as part of The<br />
Dream Tour,<br />
presented by<br />
<strong>ExxonMobil</strong>.<br />
Second year of Dream Tour<br />
<strong>ExxonMobil</strong>, in conjunction with Dr. Bernard Harris <strong>and</strong><br />
The Harris Foundation, has announced the schedule for<br />
the second year of The Dream Tour, a program designed<br />
to help middle school students across the country reach<br />
their potential through the power of strong math <strong>and</strong> science<br />
skills.<br />
“Today’s students are different from my generation in<br />
that they’ve had technology in their h<strong>and</strong>s since birth,”<br />
said Dr. Harris, a former NASA astronaut <strong>and</strong> the first<br />
African American to walk in space.<br />
This year’s tour is expected to draw more than<br />
12,200 students at schools in Atlanta, Chicago, Detroit,<br />
Houston, Indianapolis, Miami, Minneapolis/St. Paul,<br />
Mobile, Oakl<strong>and</strong> <strong>and</strong> Seattle.<br />
The Lamp is published for <strong>ExxonMobil</strong><br />
shareholders. Others may receive it on<br />
request. It is produced by the Public Affairs<br />
Department, Exxon Mobil Corporation.<br />
Exxon Mobil Corporation has numerous<br />
affiliates, many with names that include<br />
<strong>ExxonMobil</strong>, Exxon, Esso <strong>and</strong> Mobil. For<br />
convenience <strong>and</strong> simplicity in this publication,<br />
those terms <strong>and</strong> the terms corporation,<br />
company, our, we <strong>and</strong> its are sometimes<br />
used as abbreviated references to specific<br />
affiliates or affiliate groups. Similarly,<br />
<strong>ExxonMobil</strong> has business relationships<br />
with thous<strong>and</strong>s of customers, suppliers,<br />
governments <strong>and</strong> others. For convenience<br />
<strong>and</strong> simplicity, words like venture, joint<br />
venture, partnership, co-venturer <strong>and</strong> partner<br />
are used to indicate business relationships<br />
involving common activities <strong>and</strong> interests,<br />
<strong>and</strong> those words may or may not indicate<br />
precise legal relationships.<br />
Trademark ownership: The terms Exxon,<br />
Mobil, Mobil 1, EM power <strong>and</strong> Taking on the<br />
world’s toughest energy challenges are<br />
trademarks, service marks or certification<br />
marks of Exxon Mobil Corporation or its<br />
affiliates. The following terms are trademarks<br />
of the entities indicated: Financial Times <strong>and</strong><br />
FT (Financial Times); CERA (IHS CERA).<br />
Forward-Looking Statements: Outlooks,<br />
projections, estimates, targets <strong>and</strong> business<br />
plans in this publication are forwardlooking<br />
statements. Actual future results,<br />
including dem<strong>and</strong> growth <strong>and</strong> supply mix;<br />
<strong>ExxonMobil</strong>’s own production growth <strong>and</strong><br />
mix; resource recoveries; project plans,<br />
timing, costs <strong>and</strong> capacities; capital<br />
expenditures; revenue enhancements <strong>and</strong><br />
cost efficiencies; margins; <strong>and</strong> the impact<br />
of technology could differ materially due<br />
to a number of factors. These include<br />
changes in long-term oil or gas prices<br />
or other market conditions affecting the<br />
oil, gas <strong>and</strong> petrochemical industries;<br />
reservoir performance; timely completion<br />
of development projects; war <strong>and</strong> other<br />
political or security disturbances; changes in<br />
law or government regulation; the outcome<br />
of commercial negotiations; the actions<br />
of competitors; unexpected technological<br />
developments; the occurrence <strong>and</strong> duration<br />
of economic recessions; unforeseen<br />
technical difficulties; <strong>and</strong> other factors<br />
discussed here <strong>and</strong> under the heading<br />
“Factors Affecting Future Results” in item 1<br />
of our most recent Form 10-K <strong>and</strong> on our<br />
Web site at exxonmobil.com.<br />
Frequently Used Terms: References to<br />
resources, the resource base, recoverable<br />
resources, barrels <strong>and</strong> similar terms include<br />
quantities of oil <strong>and</strong> gas that are not yet<br />
classified as proved reserves, but that we<br />
believe will likely be moved into the proved<br />
reserves category <strong>and</strong> produced in the future.<br />
Discussions of reserves in this publication<br />
generally exclude the effects of year-end<br />
price/cost revisions <strong>and</strong> include reserves<br />
attributable to equity companies <strong>and</strong> our<br />
Syncrude operations. For definitions of,<br />
<strong>and</strong> information regarding, reserves, return<br />
on average capital employed, normalized<br />
earnings <strong>and</strong> other terms that may be used in<br />
this publication, including information required<br />
by SEC Regulation G, see the “Frequently<br />
Used Terms” posted on our Web site. The<br />
most recent Financial <strong>and</strong> Operating Review<br />
on our Web site also shows <strong>ExxonMobil</strong>’s net<br />
interest in specific projects.
First-quarter earnings<br />
<strong>ExxonMobil</strong>’s first quarter earnings were<br />
$4,550 million, down 58 percent from<br />
the first quarter of 2008, resulting, in<br />
part, from the global economic slowdown<br />
<strong>and</strong> sharply reduced commodity<br />
prices. Earnings per share were down<br />
54 percent, reflecting lower earnings<br />
<strong>and</strong> the benefit of the share purchase<br />
program. Capital <strong>and</strong> exploration project<br />
spending was $5.8 billion in the first<br />
quarter, up 5 percent from last year.<br />
Upstream earnings were $3,503<br />
million, down $5,282 million from the<br />
first quarter of 2008. Lower crude oil<br />
realizations reduced earnings approximately<br />
$4.4 billion, while lower natural<br />
gas prices decreased earnings about<br />
$500 million.<br />
On an oil-equivalent basis, production<br />
was up slightly from the first quarter<br />
of 2008.<br />
Downstream earnings of $1,133 million<br />
were down $33 million from the<br />
first quarter of 2008. Petroleum product<br />
sales of 6,434 kbd (thous<strong>and</strong>s of barrels<br />
a day) were 387 kbd lower than<br />
last year’s first quarter.<br />
Chemical earnings of $350 million<br />
were $678 million lower than the first<br />
quarter of 2008, attributable to reduced<br />
volumes <strong>and</strong> lower margins.<br />
Corporate <strong>and</strong> financing expenses of<br />
$436 million increased by $347 million<br />
due overall to net lower interest income.<br />
<strong>ExxonMobil</strong> declared a cash dividend<br />
of 42 cents per share (compared to 40<br />
cents in the first quarter of 2009) on<br />
the Common Stock, payable on June<br />
10, 2009 to shareholders of record of<br />
Common Stock at the close of business<br />
on May 13, 2009.<br />
<strong>ExxonMobil</strong> quarterly financial summary<br />
First Quarter<br />
Millions of dollars, except per-share amounts 2009 2008<br />
Functional earnings<br />
Upstream $ 3,503 $ 8,785<br />
Downstream 1,133 1,166<br />
Chemical 350 1,028<br />
Corporate <strong>and</strong> financing (436) (89)<br />
Total earnings (U.S. GAAP) $ 4,550 $ 10,890<br />
Earnings per common share<br />
– assuming dilution $ 0.92 $ 2.02<br />
Special items $ 0 $ 0<br />
Earnings excluding special items $ 4,550 $ 10,890<br />
Other financial data<br />
Total revenues <strong>and</strong> other income $ 64,028 $ 116,854<br />
Income taxes <strong>and</strong> other taxes $ 17,643 $ 29,341<br />
Capital <strong>and</strong> exploration expenditures $ 5,774 $ 5,491<br />
Dividends on common stock $ 1,981 $ 1,879<br />
Dividends per common share $ 0.40 $ 0.35<br />
Thous<strong>and</strong>s of barrels daily, except natural gas <strong>and</strong> chemical<br />
Operating data<br />
Net production of crude oil <strong>and</strong><br />
natural gas liquids 2,475 2,468<br />
Natural gas production available<br />
for sale (millions of cubic feet daily) 10,195 10,229<br />
Oil-equivalent production<br />
(6 million cubic feet = 1 thous<strong>and</strong> barrels) 4,174 4,173<br />
Refinery throughput 5,381 5,526<br />
Petroleum product sales 6,434 6,821<br />
Chemical prime product sales<br />
(thous<strong>and</strong>s of metric tons) 5,527 6,578<br />
30
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© 2009 by Exxon Mobil Corporation<br />
exxonmobil.com<br />
XOMLAMP0609<br />
Many parts working<br />
together – the only way<br />
to solve the world’s<br />
energy challenges.<br />
Energy dem<strong>and</strong> is expected to be 35 percent higher in the year<br />
2030 than it was in the year 2005, driven largely by people in the<br />
developing world seeking higher st<strong>and</strong>ards of living. Meeting this<br />
growing long-term dem<strong>and</strong> requires that we develop all economic<br />
sources of energy – oil, natural gas, coal, nuclear <strong>and</strong> alternatives.<br />
This global energy dem<strong>and</strong> challenge is matched by a global<br />
environmental challenge – curbing greenhouse gas emissions<br />
<strong>and</strong> addressing the risks of climate change. No single energy<br />
technology available today solves this dual challenge, <strong>and</strong> it is<br />
very likely no single energy technology will solve it tomorrow.<br />
We need an integrated set of solutions, powered by technology<br />
<strong>and</strong> innovation – ranging from producing energy more effectively...<br />
to using it more efficiently...to improving existing alternative<br />
sources of energy...to developing new options.<br />
<strong>ExxonMobil</strong> is working to help meet the world’s energy challenges –<br />
investing more than $100 billion in new supplies over the next four<br />
years, developing efficiency technology options like lithium-ion<br />
battery film to speed the adoption of hybrid <strong>and</strong> electric vehicles,<br />
<strong>and</strong> testing new carbon capture technologies that could reduce<br />
emissions significantly. Because only by integrating all of our energy<br />
options – new sources <strong>and</strong> new technologies – will we solve<br />
our dual energy <strong>and</strong> environmental challenges.<br />
exxonmobil.com<br />
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<strong>ExxonMobil</strong>