Local Touch, Global Standards Key to Energy Project Success

What Is ExxonMobil's Take on the Economy and the Energy Sector?

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ExxonMobil is the largest process industry firm in the world, so it is always interesting to hear the company’s thoughts on the state of the world economy. Of particular interest is ExxonMobil’s take on the intersection of the economy and the energy sector.

“We believe that worldwide energy demand will increase at an annual rate of 1.3% from 2005 to 2030,” said Neil Duffin, president of ExxonMobil Development Company, in his keynote address to the 2008 ABB Automation World conference this week in Houston. “That’s a 40% increase over today, but also represents a significant decrease from the 1.8% annual growth in recent years past,” added Duffin.

“Keys to execution excellence are defining the right strategy, up-front planning, teamwork and the discipline to adhere to initial design.” ExxonMobil Development’s Neil Duffin on how the global energy giant will continue to help meet the world’s growing energy demands.

Energy demand will be met from four main sources. Oil will grow at 1.2%, coal will grow at 0.9%, natural gas will grow at 1.7%, and other sources of energy will grow at 1.7%. Oil and gas will continue to satisfy over half of the total worldwide energy demand. Perhaps reflecting environmental concerns, coal will grow slowly, while natural gas along with other alternative sources of energy will grow almost twice as fast, Duffin predicted.

Interestingly, energy demand is projected to grow at a much slower rate than overall economic growth, projected by most to be in the 3% to 4% range for the foreseeable future. “Energy demand trails economic growth primarily because of significant increases in energy efficiency. We expect to see tremendous technological advances in those areas in years to come,” Duffin said.

Where will energy demand grow most quickly? The developed or OECD countries will only increase their energy use by 0.5% a year, albeit from a high current base of energy use. Developing countries will gallop ahead at an energy use growth rate of 2% from their relatively low current base of demand.

The costs of satisfying increasing energy demand will grow at rates much higher than inflation. “Much new oil and gas production will be in deep-water locations, where costs are escalating rapidly,” observed Duffin.

ExxonMobil aims to control the costs of new capital projects through collaborative efforts with its employees and suppliers. “We find that high productivity on projects is very closely linked with safety,” Duffin said. “Both productivity and safety require strong project leadership and attention to detail. The focus on safety has to be on prevention of even the most minor injuries, as preventing them is the best way to minimize all safety-related incidents,” he added.

ExxonMobil finds that up-front planning is the key to project success. This planning helps to fix the budget and the schedule by freezing the design before beginning actual project execution. “Keys to execution excellence are defining the right strategy, up-front planning, teamwork and the discipline to adhere to initial design,” explained Duffin.

Many of the projects that ExxonMobil and other process industry firms plan to execute in coming years will be in developing countries. “We find that heavy investment in local training, community health and supplier capabilities is absolutely critical to success in developing countries.”

As an example of how investment in local training pays off, ExxonMobil’s Erha Deepwater Development project in Nigeria was staffed with 85% local labor at the beginning of project execution. Local staffing has increased from those levels and now exceeds 90%. Staffing with locals not only cuts costs, it also helps develop the local economy.

In terms of protecting the environment, ExxonMobil has four key guidelines, Duffin added. The first is establishing global standards and enforcing them worldwide, even when these standards exceed local requirements. The second and third guidelines are understanding local issues and respecting sensitive areas.

The final guideline is to apply technology wherever possible to minimize environmental impacts. “Directional drilling is a good example of a technology that helps us protect the environment by producing from a single drilling platform what once took hundreds,” explained Duffin.

ExxonMobil will continue to be a world leader in satisfying increasing worldwide energy demand, Duffin concluded. Much of the increased demand and production will come from developing countries. And producing energy in developing lands will require heavy investment in local infrastructure as well as increased sensitivity to environmental issues.

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“Keys to execution excellence are defining the right strategy, up-front planning, teamwork and the discipline to adhere to initial design.” ExxonMobil Development’s Neil Duffin on how the global energy giant will continue to help meet the world’s growing energy demands.

 

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