Rex Tillerson: CERAWeek Opening Address

Rex W. Tillerson, chairman and CEO, Exxon Mobil Corporation, delivered the opening address of CERAWeek 2007. His speech, "The State of the Energy Industry: Strengths, Realities and Solutions," opened Oil Day on Feb. 13, 2007

COMPLETE TRANSCRIPT

Rex W. Tillerson
Chairman and CEO, Exxon Mobil Corporation
Opening Address to CERA Week 2007
Houston, Texas
Feb. 13, 2007

The State of the Energy Industry:
Strengths, Realities and Solutions

Thank you, Dan [Yergin]. CERAWeek is one of the most informative and formative events on the international energy calendar—an opportunity to review recent developments in our industry, and to discuss the challenges and opportunities our industry faces in the years ahead. Thank you again Dan.

As we engage in these discussions of the challenges and opportunities confronting our industry, it is my view that we have cause for optimism. The challenges we face are great—but the opportunities are even greater.

And if our industry continues applying our proven strengths, I am confident we will meet the challenges, seize the opportunities, and continue to deliver the energy the world needs in a safe, secure, reliable, affordable and environmentally-sound manner.

Doing so requires that we reaffirm our understanding of the fundamental realities that define our industry—and that we share this understanding with the public and policymakers that shape our work. Today, I'd like to discuss some of these realities with you—and to talk about what is needed to address them successfully.

The Industry's Achievements

I would like to start with a fundamental reality that is too often overlooked. The fact is, ours is an industry with a record of tremendous accomplishment and an industry with much to be proud of.

Throughout our history, the oil and gas industry has fulfilled its important role of facilitating economic growth worldwide through consistent investment, constant innovation, and continued interdependence in a global free market system… and ultimately, by providing products of great value to our customers for over a century.

We are responsible for many of the products that define modern life - from transportation, to heating and electricity generation, to the plastics that go into products ranging from medical equipment to children's toys.

In many ways, the story of human progress in the modern world parallels the advances our industry has achieved.

We have consistently invested our earnings to enhance and expand energy production to meet growing needs. At ExxonMobil, we have invested over the last five years alone nearly $82 billion on six different continents to search for new supplies, build new production facilities, expand refining capacity, and deploy new, environmentally-advanced technologies.

Between 1991 and 2005, we invested a total of $210 billion—almost half of our current total market capitalization and a figure exceeding our total earnings during that period. Other companies can report similar strong investment records.

Our industry has also constantly innovated, expanding the boundaries of what is possible. We have moved into deeper and deeper waters to find and produce new supplies of energy. In the early 1960's, the first offshore wells were drilled in just a few hundred feet of water. Today, wells are drilled in water depths of up to ten thousand feet, reaching more of the world's remaining large resources of oil and natural gas. For my company, we anticipate that by 2010, deepwater drilling will account for over 15 percent of our global oil production.

Today, we can drill horizontally to distances of six miles to access new sources of energy more cost effectively, as we are doing on Sakhalin Island in Russia. Not only does this technology enable us to overcome harsh environment challenges, it reduces the footprint of our operations as well.

And through improved seismic mapping capabilities, more sophisticated reservoir simulators and a broad array of other technological advances, we have grown the Earth's accessible resource endowment.

Our industry has also enhanced energy security through greater diversity of supplies, enabled by global free markets.