Exxon Mobil is one of the most consequential and profitable companies in U.S. history. For more than a hundred years, the company's oil and gas have helped power the global economy.
But the Exxon Mobil of today faces the seemingly opposing priorities of supplying the world with abundant energy and also drastically reducing its carbon footprint to help stave off climate disaster. With unprecedented access to company executives, workers and facilities, David Faber explores whether Exxon Mobil is serious about taking on global warming and how its actions match up with its words.
A shareholder rebellion
For decades, Exxon Mobil's insular corporate culture helped keep the company somewhat shielded from outside influence. But in 2021, Exxon Mobil Chairman and CEO Darren Woods faced a rebellion from his board.
First, giant hedge fund D.E. Shaw got two new directors installed on the 12-person board. Then, a little-known activist firm called Engine No. 1 waged a campaign for shareholders to vote in four new members. The campaign came to a head at Exxon Mobil's 2021 shareholder meeting when the company learned that some of its largest investors were siding with Engine No. 1. In the end, three of the four dissident candidates were voted onto the board. Since then, the new members have helped increase internal pressure on Exxon Mobil to accelerate the greening of its operations.
Yet even with a revamped board, it is ultimately up to the shareholders to agree to larger investments in the energy transition, a point acknowledged by Exxon Mobil board member Jeff Ubben.
"I'm talking to shareholders this week," Ubben, founder of Inclusive Capital Partners and one of the board members installed after pressure from D.E. Shaw, said in May. "You just don't get the mandate."
Capital expenditure plans through 2027 show Exxon Mobil spending just $15 billion on emission reduction investments, despite the company having earned $23 billion in profits in 2021.
The home base of U.S. energy
As the Russian invasion of Ukraine continues to affect global energy markets, oil and gas companies are under pressure to pump more to increase supply and cool down prices.
"This is a time — not the time to sit on record profits," President Joe Biden said on March 31. "It's time to step up for the good of your country, the good of the world; to invest in immediate production that we need to respond to [Russian President] Vladimir Putin; to provide some relief for your customers, not investors and executives."
One of the locations where Exxon Mobil plans to increase output is in the Permian Basin, an area about the size of Nebraska that stretches across West Texas and southeast New Mexico. Exxon Mobil subsidiary XTO Energy is developing a massive new processing plant there.
The area was first drilled in 1920, and production grew until a peak in the 1970's, followed by a sharp decline during which the area was thought to be on its last legs. "The shale revolution — which was founded on a combination of technologies — has been a sea change for our industry," said Bart Cahir, president of XTO Energy and a 28-year veteran of Exxon Mobil.
One of those technologies, and one of the most controversial, is hydraulic fracturing, or "fracking." The technique has fueled a resurgence in the area's energy productivity, helping turn it into the world's most productive oil field and making the U.S. the world's top producer of oil and gas, surpassing Saudi Arabia and Russia.
While Exxon Mobil works to increase output in the Permian, it says it is simultaneously undertaking efforts to reduce emissions there. In December, Woods pledged to make the Permian Basin operations net zero by 2030, meaning its operations would remove as much carbon from the atmosphere as it contributes.
But that pledge only accounts for the emissions that result from operating in the basin. It does not account for the emissions that come from burning the product it produces. "That comes back to the demand equation and what alternatives people have to meet their needs," Woods said. "Until you have good solutions to address that demand, those emissions will be generated."
One of the ways the company plans to reduce its emissions in the Permian is to electrify operations —powering some of the equipment with electricity instead of diesel fuel. So far, the company says it has replaced almost 10 million gallons of diesel across the Permian, but it's got a way to go. Right now, only 40% of the electric power is coming from carbon-neutral sources.
Another effort is underway at the company's Cowboy plant — a sprawling complex that wrangles and separates oil and natural gas from roughly 400 wells. The company says when a new well starts producing, the gas — along with the oil — can be sent to Cowboy to be processed and sold. Without that process to capture and sell the gas, it may have to be flared, or burned off, into the atmosphere.
Kayley Shoup grew up in Carlsbad, New Mexico, among the roughnecks and pumpjacks common to the region. She's an activist working to raise awareness about environmental concerns related to the oil and gas industry. "I think it's very overlooked, and underappreciated, the health effects that come along with being surrounded by fracking," Shoup said. She's working on efforts to have more air monitoring to study potential exposures in the region.
Another compound she's monitoring in the Permian Basin is methane — an invisible component of natural gas that traps even more heat than carbon dioxide when emitted into the atmosphere. Methane is commonly released from under ground during fracking, and it can also leak from oil and gas facilities. Shoup has seen it happening through the use of special equipment.
"On any given day just driving, we could catch, like, 10 to 20 emission events," she said. "That was just really harrowing to sit back and be, like, 'Oh my gosh, this is happening every day, and no one's seeing it.'"
For decades, little was known about how much methane the industry was emitting, according to Mark Brownstein, senior vice president of energy at the Environmental Defense Fund. His organization set out to change that and conducted its own field studies.
"Emissions are 60% higher in actuality than what's being reported to the federal government today by industry," Brownstein said.
Exxon Mobil's chief environmental scientist, Matt Kolesar, acknowledges EDF's research and promises that his company is actively trying to reduce its emissions and is monitoring for methane leaks using special gas imaging cameras, overhead flights, and new technologies at certain sites.
"So we got sight, sound, sort of a digital smell. We're trying all sorts of applications of technology," Kolesar said.
Still, Brownstein says it's just a start. "I'll know we're making progress when they can show me the field monitor data that shows that, in fact, yes, their emissions have gone down and that they can show me year after year that that is in fact the case."
In fall 2021, Rep. Ro Khanna, D-Calif., chairman of the House Oversight Subcommittee on the Environment, launched an investigation into what the big oil companies knew about climate change and when. He brought in the CEOs of the oil majors to participate in a high-profile hearing.
There, Khanna pointed to an Exxon document from the 1970's that said: "[T]the most likely manner in which mankind is influencing the global climate is through carbon dioxide release from the burning of fossil fuels.''
Khanna said the company — and all the other oil majors — proceeded to sow doubt about the science in the years that followed.
"Imagine if they had come clean in the 1970's and '80s and said, 'You know what? Burning fossil fuels causes climate change and this could be catastrophic, and so we're going to have 1% every year diversification investment and renewable energies.' We'd be in a whole different place today in the climate crisis and in our energy independence," Khanna said.
Woods dismisses the importance of what his company may have said in the past. "Judge us on the work that we're doing and what we're doing going forward," he said.
"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," Woods said. "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."
Carbon capture and sequestration
Part of Exxon Mobil's plan to reduce emissions is to build a carbon capture and sequestration network. The facility — called the Houston Hub — would take in carbon dioxide before it's emitted from heavy industrial facilities in the area around the city's ship channel and store it deep underground.
Steve Davis, a geologist and researcher affiliated with Stanford University, worked on carbon capture projects during his 22-year tenure with Exxon Mobil, leaving the company in 2020. He said the cost of transporting carbon dioxide could be astronomical if the existing pipeline system isn't up to the task.
"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, costs $300,000 to build," said Davis. "All of a sudden, you're way up in the millions to $10 million per mile for that pipeline."
But Exxon Mobil has faith in the technology. "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," Ubben said.
Brownstein agrees that carbon capture will be a necessary part of reducing emissions, but he doesn't see real progress on the Houston Hub.
"It is, in fact, visionary, so good for them. OK, 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," said Brownstein.
Woods said the company has done its homework on the Houston Hub. "It's real. It's happening. There's more work to be done, no doubt about that. But the journey of 1,000 miles starts with the first step, and we're taking several first steps."
Expansion in South America
Off the coast of South America floats a new entrant in the global race to secure oil. Exxon Mobil is expanding its operations in the deep waters off Guyana and changing the landscape of the long undeveloped and ecologically pristine nation, which has a population of less than 800,000.
Outside the capital city of Georgetown, roughly 85% of the country is blanketed by untouched forests. For decades, this lush cover has allowed the country to act as a carbon sink, absorbing more carbon than it emits.
But when Exxon Mobil struck oil off Guyana's shores in 2015 and began producing in 2019, a new economy emerged. Exxon's local subsidiary, Esso, now has two FPSO's, or floating production storage and offloading vessels, operating off Guyana, with several more slated to come online over the next few years.
"Before the end of the decade, we anticipate that we'll reach a million barrels a day of production, which is a major headline for a country this size," said Alistair Routledge, Exxon Mobil's lead country manager in Guyana.
It's a bit of a double-edged sword for a nation where most of the population resides along the Atlantic coast. The coastline — including the capital — sits below sea level and is prone to flooding. As seas rise due to climate change, so too does the city's risk of being inundated. At the same time, the country needs funding to implement and improve mitigation measures, such as its seawall.
"Oil and gas give us this excellent opportunity to advance the development of Guyana and the transformation of Guyana — the human transformation, the social transformation, the economic transformation," said Dr. Mohamed Irfaan Ali, Guyana's president.
Already the country's GDP jumped 43.5% from 2019 to 2020. Ali hopes that the money coming in from oil and gas will deliver a wave of much needed prosperity to a nation where more than 40% of its citizens live on less than $6 a day.
But not everyone believes in developing the country's offshore oil fields.
"I think it's really backwards thinking to think that oil and fossil fuels is the way to go in 2022, with all that we know. All the science is clear," said Sherlina Nageer, a local activist. She's part of a group of women suing Guyana's Environmental Protection Agency over offshore flaring. The women haven't seen the offshore vessels with their own eyes, but they believe Esso is causing environmental harm.
To see the massive FPSOs requires an hourlong helicopter flight 120 miles out over the Atlantic Ocean. The newer of Exxon's two vessels is called the Liza Unity. Once it's operating at full capacity, the company says, it will produce 220,000 barrels of oil per day, with the capacity to store two million barrels before the oil is offloaded to tankers for transport and sale.
Travys Townson, the Liza Unity's asset manager, gave a tour aboard the vessel. "Our flow lines come from here down to the sea floor, and go out to our drill centers. Some of our flow line's about 11 kilometers long. The wells can then, from the sea floor, be up to seven kilometers below the sea floor," Townson said. It's a massive operation, with massive implications for this developing nation.
It's a chemical company, too
While Exxon Mobil is best known as an energy company, it's also one of the world's largest chemical companies. In 2021, the chemical division brought in $7.8 billion in earnings for the company.
Exxon opened a new chemical plant in early 2022 in Corpus Christi, Texas, as a joint venture with Saudi company SABIC. There, the company brings in natural gas from the Permian Basin to turn into chemicals. One of the chemicals, polyethylene, is used in making plastic. In a tour of the company's Baytown, Texas, lab, Exxon engineer Adriana Silva demonstrated how she makes different types of plastic for different purposes.
"This is one of the films that is put together with other films to make something like your stand-up pouch. It needs to be able to stand up, hold the liquid, and all that," said Silva. "Something that is designed to hold meat and cheese, you need different materials to give you more — what we call 'barrier' — barrier to oxygen, barrier to moisture."
The irony of Exxon's plastics business is that it acts as a hedge against the inevitable reduction in combustion engine vehicles. While Exxon's oil and gas business may see lower demand as consumers buy more electric vehicles, its chemical business will see a boost.
"For an electric vehicle, the amount of plastic that you want to put into that vehicle is much higher because you've got to overcome rolling resistance," said Karen McKee, head of Exxon Product Solutions, which includes the chemical business. "And so in order to get that battery to give you the longest distance between recharges, you've got to get the weight down."
But with less than 10% of the world's discarded plastic currently being recycled, Brownstein says that more plastic is not necessarily something to tout.
"I think plastics will continue to play an important role in our economy. They help lightweight vehicles. They help lightweight ships. They help lightweight aircraft. They can and will play a role," Brownstein said. "The question is: Are we going to continue to live in a world where everyone gets their Chinese food in a plastic container and throws it out at the end of the meal? Single-use plastics? Not a sustainable behavior."
"While you look at addressing the plastic waste problem, you also have to keep in mind and consideration the benefits that plastic brings to society, the standards of living," said Woods, the CEO. "I think about the medical equipment, or any medical procedure you have today, the role that plastics play in today's health-care system."
"So you got to kind of consider that and then address how you deal with the plastic waste system, and how do you make sure that that plastic is used to bring you benefit, then gets recycled, and brought back into the product," Woods said. "And frankly, we're doing a lot of work in that space. And we think, again, technology's going to help solve that problem."
The technology Exxon is working on is called advanced recycling, which the company says breaks used plastic down to its molecular components. But that project is still in development.
Time is of the essence
The Paris Climate Agreement in 2015 gave the world a target of limiting global warming to less than 1.5 to 2 degrees Celsius. The key factor will be the drastic reduction of greenhouse gas emissions worldwide.
"The energy transition is truly an all-hands-on-deck moment," Brownstein said. Fossil fuel companies such as Exxon Mobil are under pressure to dramatically reduce emissions. At the same time, demand for their product remains high.
Whether society moves away from fossil-fuel consumption or companies such as Exxon Mobil find innovations to keep pumping while reducing emissions, the problem is urgent and demands immediate action, Brownstein said.
"We don't have huge amounts of time," he said. "We need to move much quicker."
Stream "ExxonMobil at the Crossroads" any time on Peacock: https://www.peacocktv.com/watch/asset/news/exxonmobil-at-the-crossroads/d82dea59-f353-38ee-a96c-4478bfc0ebb2
— Jamie Berna, Mary Hanan and Kathy Liu contributed to this article. David Faber reporting.