EXXONMOBIL says there is little risk that climate change policies will force it to leave its proved reserves of oil and gas in the ground.
The announcement follows shareholder demand last year that ExxonMobil disclose the impacts that technology advances and global climate change policies are expected to have on the company.
Having assessed a range of energy-use scenarios that would prevent global temperatures from rising 2oC above pre-industrial levels to 2040, ExxonMobil used the average of these assessed scenarios to consider the potential impact on energy demand.
It found that total energy demand increases 0.5% per year, with oil demand falling 0.4% per year, natural gas demand climbing 0.9%, coal down 2.4%, and renewables rising 4.5%.
These findings imply significant use of oil and natural gas through to the middle of the century and so ExxonMobil concludes that its 20bn bbl of proved reserves faces “little risk” of going undeveloped. It estimates that by 2040 more than 90% of these proved reserves will have been developed. While the remaining 10% may face more stringent climate policies, it concludes that operational knowledge gained in the meantime will likely still make these reserves economic to produce.
Furthermore, the company concludes that, assuming it retains its current share of global production, it will need to replenish around half of its 71bn bbl of non-proved resources by 2040.
“As a result of ongoing demand coupled with natural hydrocarbon field decline, trillions of dollars of additional investment in oil and gas production will be required, including to meet a 2oC pathway,” the company reports.
On how shifts in technology might impact demand for the company’s resources, TJ Wojnar, vice president for corporate strategic planning, said: “Our in-depth analysis shows that even if every light-duty vehicle in the world was fully electric by 2040, the demand for liquids could still be similar to levels seen in 2013.
“This is because of growing demand from commercial transportation and the chemical sector.”
ExxonMobil’s announcement was too optimistic for some and assumes the roll-out of carbon capture technologies that will enable the ongoing burning of fossil fuels.
“The range of risks that Exxon faces if climate action is taken is far deeper than what’s being presented here,” Adam Scott, a senior adviser at energy research and advocacy group Oil Change International, told The New York Times.
The company also made no mention of the risks it faces from climate change-related lawsuits. Last month, New York City filed a lawsuit against five of the world’s largest investor-owned fossil fuel companies – BP, Chevron, ConocoPhillips, ExxonMobil and Shell – for billions of dollars to cover its costs for climate change.
Facing up to the coming changes in energy use that will be required by climate change policies, ExxonMobil points to near-term measures to increase its output of cleaner burning natural gas and retooling its refining capacity to shift from fuel oils and light-duty vehicle gasoline to higher-value distillates, lubricants and chemical feedstocks. Also, it is working to reduce emissions from its own activities by reducing flaring, venting and fugitive emissions and boosting energy efficiency.
Longer-term measures include its research into CCS technology and development of process intensification technologies to reduce energy requirements at its production plants.
“Since 2000, our investments to develop lower-emission energy solutions have totalled about US$8bn,” ExxonMobil CEO Darren Woods said. “We are deploying technologies such as cogeneration and carbon capture and storage, while researching next-generation solutions such as algae biofuels and advanced carbon capture using fuel cells. Continued research will be critical.”
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