Delivering on long term value
Society of Petroleum Engineers (SPE) Asia-Pacific Oil & Gas Conference & Exhibition, Royal International Convention Centre
Brisbane, Queensland, Australia
Delivering on long term value
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Thank you to the SPE for the opportunity to participate in this panel discussion.
In our industry we are all playing what I like to call – ‘the long game’. And even though we live in an increasingly short-sighted world – I truly believe it’s because of the talent and creativity of scientists and engineers like you, that we play this long game exceptionally well.
I have been privileged to have worked for ExxonMobil for over 20 years, all over the world and on assets in very different phases of the production lifecycle. From supporting project start-ups in Indonesia to managing base decline in the North Sea. From asset divestments in the Gulf of Mexico to transitioning from oil to a fundamentally gas business here in the Bass Strait. In my experience – delivering on long term value is underpinned by doing these things very well:
- Continuously evaluating the changing shape our energy outlook
- Focusing on the business fundamentals of project execution, reliability, efficiency and especially - employee talent development
- Continuous innovation, and
- Developing lasting partnerships – with resource holders, regulators, co-venturers and perhaps most importantly – the communities where we operate.
Let me briefly touch on ExxonMobil’s current Outlook for Energy. Delivering on long term value really requires us to know how the energy landscape is changing, and positioning ourselves to get ahead of that change. This Outlook is available in great detail on our website – and I’m only going to touch on a few key points.
Even with fantastic efficiency gains, global energy demand is expected to increase nearly 25 percent by 2040. Nearly all that growth is in our Asian region and is driven by population growth and improving living standards.
Many energy outlooks like this one, also predict an increase in alternative energy in the global energy mix. But there is also a shared view that oil, natural gas, and coal will continue to meet about three-quarters of the world’s energy needs in the decades ahead, with gas use increasing more than any other energy source. This presents a tremendous opportunity for gas-rich countries like Australia.
So what do we do with these insights? How do we translate this into delivering long term value?
ExxonMobil in Australia has played the long game here in Australia by ensuring we stay in touch with the changing needs in society and effectively anticipating and managing change along the way.
Our heritage businesses started operation in Australia in 1895 importing lubricants and over the last 12 decades we have remained an integral part of the economy and the community with our refining and upstream operations.
Through this journey – we have always focused on some key business fundamentals to ensure long term value: disciplined project execution, striving to have reliable and efficient operations and constantly innovating.
Since Esso and BHP drilled the country's first offshore well named Barracouta-1 in 1965, adopting new technology has been crucial for every stage of the Gippsland Basin development.
After developing our world-class fields like Halibut and Kingfish, Barracouta and Marlin, our attention turned to the smaller marginal fields like Bream, Perch and Dolphin, Seahorse and Tarwhine - our engineers designed smaller installations like monotowers and subsea tiebacks for relatively lower cost that were robust enough to withstand the harsh Bass Strait environment.
During this time, our Gippsland operations became the major gas supplier into the eastern Australian market, and this gas production was largely underwritten by the economics of oil.
Now that those large, liquid-rich gas fields have reached their twilight years, and as the market is desperately calling for new sources of supply. We find ourselves again turning to new technologies.
We have recently seen some really innovative work as our engineers designed a project that resulted in the development of our deep Kipper, Tuna and Turrum gas resources, allowing us to process our higher CO2 and Hg containing gas. We are now also looking at ways to unlock even smaller, deeper and sour gas reserves upstream of our gas plants through new modular membrane technology installed on platforms.
Even though the Gippsland Basin is mature, it is actually relatively under-explored in comparison to many other prolific basins around the world. Our exploration geoscientists, armed with some of the latest advances in seismic reprocessing are relooking at our existing datasets and are seeing things in better detail than ever before. This coupled with the potential to capture new seismic and obtain a 4D view over our mature fields could help identify locations of unswept hydrocarbons.
And as many of you know – we are continuing to explore in increasingly deeper water. We have just completed our first well named Baldfish in the VIC/P70 exploration lease and we are evaluating the data as we await the completion of a second well called Hairtail.
I remain hopeful these wells will usher in new developments for us as we focus on our gas future. Our aim is to leverage off the extensive infrastructure we already have in place in order to capture more value from the mature Gippsland Basin.
As we look to the future and take stock of the changing environmental and regulatory landscape – and especially the changing expectations of our communities and customers, we have to stay creative to ensure we can continue to deliver long term value.
Throughout my career I’ve been humbled by the creativity of our scientists and engineers – what you – are capable of.
Technology breakthroughs have completely changed our landscape – steerable and directional drilling, advanced seismic processing and reservoir modelling, smart completions, unconventional extraction techniques have all been game changers. The potential to truly harness the massive amounts of data we collect to transform our digital future is exciting.
ExxonMobil’s own researchers are working on areas where we think we can make the greatest contributions. In the power generation sector, carbon capture and storage is one of our major focus areas. In the transportation sector, we’re taking the lead on developing next-generation biofuels from algae.
But none of this can happen without our industry continuing to attract and retain talented individuals. Most of the technical specialist working to deliver our growing energy needs tomorrow are today still at school, or haven’t even been born.
It’s critical we promote the teaching of maths and science and capture the hearts and minds of our younger generation. We want to ensure that the child who has the potential to contribute to the next breakthrough develops a fascination and passion for engineering and science early on.
We see investment in school programs to promote STEM subjects as good business sense, but it requires all of us in this room to be advocates for our industry, to be more engaged in the schools and communities where we work. We need to get out of our labs and offices and discuss the importance of what we do.
Attracting the best minds is the first step, then we must ensure that we continuously support them throughout the various stages of their careers. We have to create workplaces where idea sharing is encouraged, diversity is celebrated, questions and dissenting opinions are welcomed and management is open to being challenged.
Attracting talent, retaining it and having an inclusive environment where we get the best out of our teams, is how you play the long game, and critical in delivering on long term value.
Delivering long term value relies on one more key component, establishing enduring partnerships – across the spectrum - with national oil companies, regulators, co-venturers, third party service providers and especially – the communities where we operate.
At ExxonMobil, we strive to establish successful and mutually beneficial partnerships – but this takes time and effort, and ongoing commitment to nurture. But now, more than ever, establishing these partnerships with our resource owners and the regulators who represent them are vital. We need to have a seat at the table to shape or influence policy, and deliver the best outcomes for all stakeholders. Policy makers today have to answer to popular opinion and rarely have a long term view - this makes our job more difficult but the effort all the more important.
Building strong and effective community relationships is also essential. We must ensure that we remain in touch with the views and concerns of the many stakeholders that reside within our communities through regular engagement. It’s key that we listen, understand and appropriately respond to issues as they arise.
Making strategic community investments is also important – in areas that matter to the community – such as health, education, business incubation and the environment.
Also recruiting from the local communities we operate in – and striving to achieve high degree of local content in the services we use and the materials we buy – is also another way of staying woven into the fabric of the communities where we operate, and allows us to deliver long term value.
In closing, next year marks the 50th anniversary of production from our Bass Strait fields and we still have a tremendous opportunity to develop profitable barrels well into the future. To play this long game well and deliver long term value, we must keep focused on what shapes and changes our energy outlook and respond accordingly. We need to be disciplined in project execution, reliability, efficiency. We have to focus on employee talent development and retention, never stop innovating and develop enduring relationships with our customers and key stakeholders.
Finally I ask each of you here to be better ambassadors for our industry – you are an impressive group of people – and the more you can do to promote and discuss the dual challenge we are undertaking to supply our global energy needs while protecting our environment, the more likely we are to attract new talent to continue to play this long game.