ExxonMobil: Carbon Capture and the Fight to Stay Relevant

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ExxonMobil, the largest non-governmental energy company in the world, has been at the center of various climate change conversations. Founded a century and a half ago as Standard Oil Company, the energy giant has played key roles in providing fuels to power numerous mechanical engines that were at the heart of many technological advancements throughout this period. Not surprisingly, this era of heavy fossil fuel use to power our lives has coincided with the era in which the rapid warming of our planet is taking place. ExxonMobil is in the business of extracting oil & gas from depths underneath the earth’s crust. The company then directly sells some these commodities at the world oil market while a substantial portion is refined at numerous company-owned refineries. Refined products, including gasoline, diesel, kerosene, among others are then sold to consumers at filling stations around the world. Processed gas is used in thermal plants to generate electricity, and also used in industrial settings to manufacture products such as fertilizer.

In 2014, 52% of global total primary energy supply came from oil and natural gas. This usage amounts to the generation of 7,124 million metric tons of CO2e1. An additional 29% of energy supply came from coal. As expected, the amount of greenhouse gas (GHG) emitted from these sources of energy has attracted the attention of scientists and government agencies who see an opportunity to place tight regulations to help curtail GHG emissions. Several North American states and provinces, together with some European countries have imposed their own cap and trade regimes in order to reduce the environmental impact of GHGs. A general trend away from coal, the dirtiest of all thermal fuels, in developed countries is actually leading to a rapid increase in the number of gas-fired power generating plants. It also helps that global natural gas prices are currently very low, making natural gas competitive against coal. Exxon, as a major natural gas producer, benefits from this regulatory and market dynamic.


On the flip side, renewable sources of energy are becoming economically viable relative to traditional energy sources. Exxon will suffer declining demands for oil & gas if these renewable energy options continue to make giant strides in the power generation market. In the transportation sector, incremental inroads have been made in producing fuel efficient vehicles, and developing electric cars. Because the dominant modes of transportation still depend on traditional fuels, the demand for Exxon’s refined products will hold steady for much longer.

In an effort to drastically reduce (up to 90%)2 the amount of CO2 released from power plants, Exxon has decided to focus on developing carbon capture and sequestration (CCS) technology. With CCS, CO2 output from power plants is captured, compressed and injected into geologic formations for permanent storage3. Since a majority of the world’s carbon emission comes from fossil fuel power plants, the implementation of CCS has the potential to make a massive positive impact on the planet. In oil and gas production, CO2 gas is often reinjected into production wells to enhance oil recovery. By using captured carbon in this manner, Exxon has found a way to utilize a resource that would otherwise remain unused.

To expand its market and to further help reduce global climate change problems, Exxon should consider investing in gas processing facilities, especially in emerging economies. Today, many developing countries are still heavily reliant on coal for electric power generation. These regions have large coal deposits and do feel that it’s the cheapest energy source within their grasp. Well, natural gas resources are widely distributed across many regions of the globe, but extracting and locally processing this fuel is necessary in order to encourage regional utility companies to switch from using coal to natural gas. In Nigeria, for instance, massive quantities of natural gas are extracted, usually as byproduct of oil production, and the lack of gas processing facilities has led to the regular flaring of a precious fuel source. A substantial number of gas-fired power plants will spring up in the country if entrepreneurs believe that they would have a regular supply of fuel for their operations. If this development were to happen, the use of dirty coal will be minimized and ordinary citizens will not even have to cut down trees in order to obtain firewood for cooking. Electricity demand is very high and Exxon can be rest assured that there would be a strong market for its processed gas products.



1 HBS Case N2-317-032, “Climate Change in 2016: Implications for Business,” October 14, 2016, Exhibit 5

2 “What is CCS?” http://www.ccsassociation.org/what-is-ccs/, accessed November 3, 2016.

3 “Developing cutting edge technology – carbon capture and sequestration,” http://corporate.exxonmobil.com/en/technology/carbon-capture-and-sequestration/carbon-capture-and-sequestration/energy-promise-of-ccs, accessed November 3, 2016.


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Student comments on ExxonMobil: Carbon Capture and the Fight to Stay Relevant

  1. Thanks for the interesting post, Anto. I agree with your approach towards natural gas in developing countries while making their plants more environmentally friendly. However, I also wonder how Exxon could be a player in the shift in certain countries in Latin America toward a “cleaner” coal or a more energy efficient coal. Some companies have been investing in carbon-efficient coal plants, but Exxon could potentially come in a strong source of natural gas and help drive more investment in that type of energy generation.

  2. Excellent post Anto. You really lay out the problems and obstacles with the industry in a concise way. Regarding the development of processing plants in developing economies, I feel we are up against a chicken-or-the-egg scenario. Infrastructure and implementation are opposite sides of the same coin. Will the development of natural gas processing plants allow for the demand to increase and thus the need for an infrastructure to support it? Or will a proper infrastructure that enables the implementation of natural gas encourage Oil & Gas to develop them and take advantage of an existing demand? I am sure there is no right approach and both are necessary towards the ultimate goal, but I remember hearing about entrepreneurial efforts in India for example result in a billion dollar effort to supply electricity to the masses, only to discover that there was no proper distribution plan in place (http://documents.worldbank.org/curated/en/815021468042283537/More-power-to-India-the-challenge-of-electricity-distribution).

    Thank you for this post! Very insightful and detailed. You included many well-supported pieces of evidence.

  3. Thank you for the insightful post, Anto. Companies such as Exxon Mobile can indeed tremendously help humanity collect the carbon reduction low hanging fruit by investing in gas extraction, processing and distribution, things that will ultimately eliminate the usage of coal, a mineral which produces twice as much carbon dioxide as gas does.

    Nonetheless, even after taking into account focus on gas, I find Exxon Mobile`s underlying business model to be at odds with what long-term fight against global climate change means. Why would a company extracting and selling products that are by definition polluting, help society switch to a low carbon economy? Or do you think such companies have enough resources and will ultimately switch and produce renewable type of energy?

  4. Great article! I agree with you that Exxon has made significant progress towards reducing its carbon footprint as it focuses on the development carbon capture and sequestration (CCS) process. However, I believe that Exxon, despite its long history and success in the oil business, is well equipped with unsurpassed human and capital resource to help pioneer the innovation and development of clean technologies which could have a considerbly bigger impact on climate change than the CCS technology. We have seen in recent years that both BP and Shell have decided to invest in clean technologies, and I strongly believe that Exxon can certainly join them in tackling one of our generation’s biggest challenges.
    – Shell: https://www.theguardian.com/business/2016/may/15/shell-creates-green-energy-division-to-invest-in-wind-power
    – BP: http://www.bp.com/en_us/bp-us/what-we-do/wind.html

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