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Exxon CEO Says Government Has Role in Safe Oil, Gas Development

Exxon Mobil Corp., the largest U.S. oil company, said state and federal governments will play an important role in the safe and efficient development of North American crude and natural-gas resources that are transforming the continent’s energy supplies.

Development of petroleum sources in the U.S. and Canada from shale-gas formations, tight-oil reservoirs, oil sands and deep-water projects will help shape projects globally, Chief Executive Officer Rex Tillerson said today at CERAWeek, a Houston conference held by IHS Cambridge Energy Research Associates.

“Our industry has not and cannot achieve these results alone, however,” Tillerson said. “Government has an indispensable role in this quest.”

Policies related to access, taxes and regulations can have “profound implications” on the industry’s ability to develop new resources and “share the enormous economic benefits they promise,” Tillerson said. New technologies such as hydraulic fracturing have allowed the industry to tap previously unavailable resources, he said.

The industry is working to develop Canadian oil sands, Tillerson said. In 2010, unconventional resources contributed more than $76 billion to the U.S. gross domestic product, he said.

Gas demand is expected to rise by 60 percent by 2040, Tillerson said, and gas will satisfy more than 25 percent of global energy needs, Tillerson said.

Energy’s Role

Policy makers with various political backgrounds are recognizing that energy is essential to growth, Tillerson said, citing President Barack Obama’s call to develop every available source of U.S. energy. Some American and Canadian citizens have questions about new unconventional development, Tillerson said.

Exxon has advocated disclosure of fluids used in fracturing in the U.S., working with other companies and state regulatory agencies as they set up the FracFocus website, Tillerson said. That allows companies to voluntarily submit fluid data on drilling, he said.

“We will be calling on our government and industry partners to implement in Europe the same level of openness and accountability that FracFocus has delivered in the United States,” Tillerson said.

Tillerson said the recent decision that went against TransCanada Corp.’s Keystone XL pipeline was “a product of political calculations in Washington.” That project would have benefited both the U.S. and Canada by linking oil-sands output with refining operations, he said.

Multiple Agencies

Regulation once gave U.S. businesses rules on how to get things done, Tillerson said, while now the process involves multiple and duplicative agencies that can be an obstacle.

“It has become the tool of opponents of development and special interest groups,” Tillerson said.

The Canadian approach to regulation is “very rigorous,” while being defined and enabling issues to be worked through during a process, Tillerson said.

Government can help speed up technological innovations by supporting research, he said. It should let markets operate openly, not picking energy winners and losers through subsidies, mandates and punitive taxes, he said.

“Government is most effective when it acts as a research catalyst, not as a venture capitalist,” Tillerson said.

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