Reduce carbon, not fossil fuels: Exxon, Oxy CEOs

Reducing carbon emissions from fossil fuels, not the actual use of fossil fuels, offers the best way to combat climate change, the leaders of two of the largest US oil and gas producers said today.

ExxonMobil chief executive Darren Woods and Occidental Petroleum chief executive Vicky Hollub both stressed on separate panels during CERAWeek by IHS Markit that the world still needs oil and gas. So instead of attacking fossil fuels, they both argued, governments can mitigate global warming by helping the industry to develop carbon capture and storage technologies and strengthen markets where polluters buy and sell the rights to emit carbon.

"Let's focus on what the issue is," Woods said. "It's emissions."

President Joe Biden's decisions to temporarily freeze drilling in federal lands and waters and kill the Keystone XL pipeline have unnerved oil and gas producers. The government is also considering a tax on imported goods manufactured in countries that do not tax carbon.

In addition, ExxonMobil, which hosts its annual investors presentations tomorrow, has been under pressure by activist firm Engine No. 1 and the California state teachers pension fund to change its practices.

Although ExxonMobil recently announced a new business unit called Low Carbon Solutions, Engine No. 1 said the US major needs to simultaneously invest in clean energy projects and completely offset carbon emissions over the next 30 years like other producers have promised to do.

Woods told CERAWeek that ExxonMobil sees promise in hydrogen, but that energy source is still far from ready. But when it comes to carbon capture, he sees a number of factors coming together that makes the technology a realistic option: government support, better economics to scale, development of markets to price carbon, and venture capital firm investments.

ExxonMobil "can leverage those converging forces," he said.

Occidental is currently building what will be the world's largest carbon capture and storage plant in the Permian basin. The independent hopes to complete the construction of the plant, designed to remove and store 1mn metric tons/yr of CO2, by 2024.

Hollub said Occidental's carbon business, which also includes carbon capture and enhanced oil recovery, is getting close to operating as a self-sustaining, profitable business.

"We should not be talking about eliminating fossil fuels," she said. "We should be talking about eliminating emissions."

By Thomas Lee