ExxonMobil is a vast global organization of 63,000
employees on six continents.
But it was made in America.
Pulitzer Prize winning journalist Steve Coll, who
wrote a seminal book on the company, says its story is
the story of oil.
They attract a lot of attention. They did right
from the beginning, in the first part of the 20th
century. And I think for many Americans, they are big
oil.
The first commercial oil well was drilled in 1859.
A decade later, a 30 year old John D.
Rockefeller founded Standard Oil and in so doing created
one of the biggest fortunes in American history.
Well, John D. Rockefeller was a perfectionist.
He was ruthless, absolutely determined to succeed in
business.
By the 1880s, Rockefeller's company controlled 90% of
domestic oil refining.
Back then, kerosene used for lighting, was the
moneymaker. Gasoline was a byproduct.
Virtually useless, it was thrown away.
If you go back to the very history of Standard Oil, it
was not obvious that oil and petroleum was going to
be the thing that powered the world economy.
The rest of the economy built up around it as they
innovated.
With the arrival of the automobile,
A car comes off the end of the line every 10 seconds.
A market for gasoline finally came of age.
The company grew so powerful that the Supreme
Court ruled it was a monopoly.
The court ordered its breakup. Standard Oil became
34 separate companies.
In 1926, the biggest descendant, Standard Oil of
New Jersey, created a new blend of fuel called Esso.
The company expanded dramatically over the next
decades in the U.S.
and overseas, and in 1972 it changed its name, ushering
in the modern era of Exxon.
Then a crisis with a name that has become synonymous
with environmental disaster: the Exxon Valdez.
The worst oil spill in North American history.
A tanker at the Exxon Valdez had just loaded more than a
million barrels of Alaskan crude.
The spill killed wildlife in greater numbers than
previously reported.
After the Valdez, there was a sense that Exxon needed to
get its house in order.
The man assigned to that task was Lee R.
Raymond. A chemical engineer by training, he was
appointed chairman and CEO in 1993.
He was a man of enormous self confidence, and he was
a believer in financial and operating discipline.
Above all else, there is a lot of reflection on
discipline and safety.
And in 1998, Raymond engineered a more than $75
billion merger with Mobil, creating the largest oil
company in the world, and reuniting the two largest
descendants of the Standard Oil breakup.
The new company will be known as ExxonMobil and will
retain both strong brands.
At the close of the 20th century, ExxonMobil was one
of the most valuable companies in the world.
But today, its history and actions in the discussion
around climate change have come under scrutiny.
Did any of your executives at any point mislead the
American public?
Ro Khanna, a Democratic congressman from California,
chairs the House Oversight Subcommittee on the
Environment. He believes that big oil companies like
Exxon can't move forward with an energy transition
until they've come to terms with the past.
And do you feel as though Exxon in particular holds a
outsized role, or is it across the board oil
companies?
The record shows that Exxon was the worst in terms of
the most egregious.
Now, again, not the current management.
Just to be clear.
In the fall of 2021, Khanna helped launch high profile
hearings.
We're going through all the documents because they've
produced a tremendous amount of document.
To uncover what the big oil companies knew about climate
change and when.
He cited a document written by Exxon scientists back in
the 1970s.
Exxon had a report that said, quote, There is
general scientific agreement that most likely,
the most likely manner in which mankind is influencing
the global climate change is through carbon dioxide
release from the burning of fossil fuels.
But Khanna said that in 2002, Lee Raymond, Exxon's
then CEO, was still casting doubt on those conclusions.
He said, quote, he does not believe, quote, that the
science establishes the linkage between fossil fuels
and warming. I assume you would acknowledge that Mr.
Raymond's statement was a mistake and the company
regrets it, correct?
Mr. Raymond's statement was consistent with the science.
I don't even want to argue that, Mr.
Woods. I don't even want to argue that.
Here's what disappointed me.
Darren Woods did not distance himself from a
single comment that past Exxon CEO's or executives
made.
But why does it matter?
Why does it matter? It was 20 years ago.
Because it matters what the culture of that company is.
Is the company going to still hunker down and do
everything possible to make maximum profits without
really tackling climate or have they really turned a
corner? Have they really gotten some religion?
Do you think you pay a price?
Not throwing your predecessor overboard, for
lack of a better term, or at least just somehow
meeting the objections that some of these legislators
have in terms of taking you as a really trusted partner.
I would say judge us on the work that we're doing and
what we're doing going forward. I mean, we've got
to focus on how we're going to address this problem.
We're doing work today and advancing very large scale
projects on those needed technologies.
We're engaged with governments all around the
world to reduce emissions while at the same time
providing reliable and affordable energy, which is
so critical to people's standards of living all
around the world.
Darren Woods has been facing pressure not just from
politicians but from Exxon's own shareholders.
First D.E.
Shaw, a giant hedge fund, got two new directors
installed on the board in March of 2021.
This after activists started to get involved.
D.E. Shaw, which we've been reporting on for some time,
took a sizable position in the company.
During that same spring, a little known activist pushed
the company to embrace the energy transition and
mounted an audacious campaign to get four new
members on Exxon's 12 member board.
This is a very significant moment.
This will be written about. This is historically
important. Unclear at this hour whether Exxon has
prevailed.
And it's time to let shareholders have their v
oice. It appears that they have elected two.
Shareholders have elected two of the dissident's
candidates for that board.
And from what I understand, a third director nominated
by Engine One will actually join the board.
This is either the most a ppalling intrusion into a
company's business imaginable on one side or
it's about time something happened.
In the end, the shareholders voted in three out of the
four candidates.
Exxon is nothing if not realistic, and their
experience of this proxy fight is surely gotten their
attention. They've got three people on their board
who they didn't want to be there.
And so they've got to learn to, you know, navigate in a
different kind of conversation.
Change is good almost always.
And the change here happened faster than
otherwise would have.
I think everybody's benefiting from a room
that's got more new thinkers.
Jeff Ubben, a leading activist investor, is the
founder of Inclusive Capital Partners, which
focuses on sustainable investing.
He was one of the two members who joined the Exxon
board due to the pressure from D.E.
Shaw.
It's a good board.
You've got an environmental activist in the room.
He kind of anchors the conversation over here, and
it makes other people like me look reasonable.
You know? No, but that's what a board should have.
You know, I'm curious about what you've learned about
the oil and gas industry that may be different from
your beliefs before you joined the board.
The only way we're going to fix a problem is to go into
the problem. You can't run away from the problem.
We can determine our future.
We can carve out our future because of this climate
imperative.
Since the changes in its boardroom, Exxon has made a
number of announcements.
One of the biggest, its ambition to make its global
operations net zero by 2050.
It was the last oil major to make the pledge of
capturing or removing as much greenhouse gases as it
emitted.
The fact that Exxon is modeling net zero and is
comfortable with its role in a zero carbon economy in
2050. That's one year change.
That's in one year we've done that.
That's fascinating, right?
So I think it's roughly a year ago or so, you you lost
that proxy fight. What, if anything, have you changed
in terms of whether it's your transparency, whether
it's the way you communicate with
shareholders as a result of that event?
I think you've touched on two important ones.
For all these things, all these challenges, our job is
to learn from those and make sure that we're
responding to, why did we get the votes against us?
So you will see today we've become much more transparent
so that people can get an idea of how we expect to
manage this business as we move into this uncertain
future. And, the Houston Hub is a great example of
that.
Joe, nice to see you.
Nice to see you. Joe Blommaert was the first head
of a new business at Exxon called Low Carbon Solutions.
Here we go. Let's do it.
Shortly before announcing his retirement Blommaert
showed us where the company is developing one of its
biggest projects.
Located around its massive Baytown complex, the Houston
Hub is a proposed CCS, or carbon capture and
sequestration network, and will include other
industrial facilities in the area.
When you talk about carbon capture and sequestration
and the project that you're beginning, how does
this fit in?
Most of the facilities here, David, emit carbon dioxide
. And what carbon capture and sequestration does, it
captures that carbon dioxide prior to releasing
it to the air and then it's transported and deep
underground sequester that in a safe and secure manner.
This is actually an excellent location to do
that. And then in close proximity of the U.S.
Gulf Coast, for instance, where there is a unique
amount of storage of CO2 possible.
ExxonMobil is moving forward as fast as I've seen it
move, which is pretty fast.
Steve Davis is a geologist and researcher affiliated
with Stanford University.
He was a 22 year veteran of ExxonMobil who worked on CCS
projects and left the company in 2020.
He says the Houston Hub will be expensive for
several reasons, including the need for new
infrastructure.
Oil and gasoline pipelines are very low pressure
systems relative to what we have to transport CO2.
So the existing pipeline system we have, to the
extent that we might hope to repurpose it to transport
CO2, is not going to work.
Probably not.
CO2, if it gets any exposure to water, will react with
water and create carbonic acid, which is corrosive to
steel. For a spec-built CO2 pipeline, you're going to be
looking at something around $300,000 per inch mile.
So that means for every inch of diameter that mile
will cost $300,000 to build.
All of a sudden you're way up in the millions to $10
million per mile for that pipeline.
You're talking multibillion dollar project.
Huge.
The cost of these pipelines comes up a lot, Joe.
If we were to really do this nationally or
internationally, it will be very expensive.
This is not new.
CO2 is actually being used already for quite some time.
The industry understands how to transport CO2 through
a pipeline. The corrosion aspects can be managed.
The use case for carbon capture is we just need to
get that scale going.
Once we get the scale going, great things will
happen. We'll go down this cost curve.
EDF's Mark Brownstein agrees that large scale CCS
projects are needed to lower carbon emissions, but
he doesn't see real progress on the Houston Hub.
It is in fact visionary.
So good for them.
But what's missing underneath that are any of
the business plans, any of the engineering plans.
I mean, this is a company that does its homework.
I would say that's a mischaracterization. We have
done our homework. And frankly, we've announced a
project in Baytown, which is a starter project for
that hub. And so we've got a project in works,
hydrogen, carbon capture and storage, reducing
emissions at our site, a viable project that's been
advanced. So it's real.
It's happening. There's more work to be done, no
doubt about that. But, you know, the journey of 1000
mile starts with the first step and we're taking
several first steps.
And one of the crucial pieces Exxon says it needs
is a price on carbon of at least $100 a tonne.
That price may influence another project that Exxon
touts.
At its research and development facility in
central New Jersey, the company is testing materials
that could be made into something called biofuels.
Vijay Swarup is the vice president of R&D.
Welcome, David, to our biology lab.
We do a variety of things here.
We want to turn this and we want to put this in your
tank. We want to turn this into jet fuel.
Biologist Kelsey McNeely is looking into different
organic materials from algae to wood chips.
So what did this come from originally?
This was-
This was wood.
It was? Okay, right. So this , it started looking like
that. And I like to think about it basically as
liquefied wood.
You basically just cook that sawdust under the right
conditions and it liquefies and then we can upgrade that
into a drop in fuel.
We want to understand down to the DNA level what is
actually going on in the biology. So in this lab, we
have the ability to sequence DNA.
You can tailor the biology to be able to get the
products, the feeds you want to make the fuels that
society wants with a lower carbon intensity.
A lower carbon intensity, because biofuel is
potentially a carbon neutral fuel.
So we actually account for the carbon dioxide that
plants pull out of the air, and the energy that you have
to put into farming those plants, and then the energy
to process, and finally the emissions associated with
using it as a fuel.
And carbon neutral basically just means that that
accounting comes out at zero or close to zero.
They've talked for years, for example, about advanced
biofuels. And it's a great talking point.
And they're right.
We need sustainable aviation fuels if we're
going to continue to be able to fly for pleasure or
for business. But how many years can you talk about
your intention to develop them before after a while it
begins to wear thin?
This is not a one company activity or endeavor.
It requires policy.
It requires market incentives. As the policy
gets put in place, as the market incentives develop,
then you'll see us move into that space.
You're in a position right now, given where oil prices
are, that you're generating massive amounts of cash
flow, cash flows that could be deployed in any number of
ways. But your shareholders may just want you to buy
back stock. How do you respond to sort of their
desires when you think about what you need to do in
terms of positioning the company for the future?
We've got a very long term horizon.
We've been around for 100, 135 years.
Our expectation is to be around for the next 135
years. When we first started out, we were
basically making kerosene to replace whale oil for
lighting. The electric light came on, we moved into
gasoline, we moved into chemicals.
Our company has been evolving since its inception
and we will continue to do that.
If ExxonMobil is trying to change direction, the
question remains, how fast can it turn?
Biofuels and carbon capture are so close.
That Houston Hub, for instance, probably needs
$100 or $210 a ton of carbon.
Just like they made long term investments in
hydrocarbons and they theoretically made a bet on
hydrocarbon pricing, is Exxon willing to make a bet
on carbon pricing?
So do we want to lead the transition and do we want to
speculate, for lack of a better word, on carbon and
the carbon economy, or do we want to wait for it to
happen? That is the conversation we have four,
five, six times a year.
To those critics of ExxonMobil who say that
their efforts are nothing more than greenwashing, what
do you say?
Could be.
You do think it could be?
The core business of ExxonMobil is to produce and
refine hydrocarbons.
And in order to move away from that would
require a very large shift in just about the entire
culture of the company.
Could happen, but it's going to be generational.
If you move too fast, you leave a whole lot of the
country and people in the world behind.
And so there's a very delicate balance.
A delicate balance, especially when you have a
global economy still powered largely by fossil
fuels.
And when gas prices skyrocket across the nation,
prompting politicians to ask big oil to pump more,
the energy transition ends up taking a backseat to the
need to find more oil.