Fifty years of teamwork, technology and a long-term view

Queen Beatrix of the Netherlands and ExxonMobil Chairman and CEO Rex W. Tillerson meet at the 50th anniversary of the discovery of the Groningen natural gas field.

At a June conference marking the 50th anniversary of the Netherlands’ Groningen natural gas field, ExxonMobil Chairman and CEO Rex W. Tillerson described how lessons learned in developing Groningen can guide future energy development, while reducing greenhouse gas emissions.

Chairman Tillerson began his speech by noting that the Groningen natural gas field is not only continental Europe’s largest, but also one of the greatest energy discoveries in history. Its development, which Tillerson termed the result of teamwork, technology and long-term thinking, provides invaluable lessons on how ExxonMobil takes on current and future energy challenges. “The Groningen field has been an extraordinary proving ground for the technical skill, innovative ideas and inspiring vision that have helped shape the energy industry as we know it today,” he said.

Initial traces of natural gas were detected in 1955, and exploratory drilling began in 1959. As each of several wells that were miles apart encountered gas, it became clear that they all tapped a single, enormous resource. “So even at the dawn of its development,” said Tillerson, “the Groningen field offered our industry a lesson: Never underestimate the extent of the world’s energy endowment.”

The surprising discovery by the Esso-Shell venture was somewhat disappointing because the wells did not strike oil. A half-century ago, natural gas in Europe was viewed as having little commercial value because the continent was so reliant on coal. “Many did not see a future for gas because they saw a future that would be dominated by nuclear power,” said Tillerson. “Fortunately, creative and enterprising minds saw more.”

One of those enterprising minds was that of Douglass Stewart of Esso. Stewart understood from the United States’ experience that gas could be used to supply households as well as industry. His long-term vision was adopted, and the partnership began to commercialize the resource for both industrial and consumer use.

Tillerson said that such bold vision provides the second lesson of Groningen’s development: Innovative thinking can help turn a seemingly disappointing energy discovery into an extraordinary success.

Supportive government
Farsighted government policies were a key factor in Groningen’s success, said Tillerson. Bringing the resource to market required building vast new infrastructure and educating the public about the benefits of natural gas. “At that time, natural gas was so novel that the government and industry had to explain that it was cleaner than coal,” he said. By the end of the 1960s, less than a decade after its discovery, Groningen gas flowed into almost every Dutch home.

Tillerson praised the Dutch government for allowing the Groningen field to serve as a resource for industry not just in the Netherlands, but also in France, Belgium and Germany. “This reaffirmed the Dutch government’s commitment to free trade and investment decades before the formation of the European internal market we all take for granted today,” he said. “Such policies are a reminder that our world is strengthened by energy diversity. And the best way to increase energy security is to expand global energy supplies and allow free markets to find the most efficient use of those resources.”

A third lesson learned from development of Groningen, said Tillerson, is that energy production and environmental protection are not incompatible. “We can achieve both, as our experience here shows,” he said. As an example, he cited Groningen’s 250 miles of pipeline placed underground to minimize the impact on potato and sugar beet fields above.

Importance of technology
Tillerson emphasized that Groningen’s success would not have been possible without harnessing the power of technology and human ingenuity. “Here, too, is a lesson,” he said. “In the decades ahead, technology will play an increasingly important role as we work together to ensure that the Groningen field can continue to supply energy to the people of the Netherlands and Europe for the next 50 years — and beyond.”

The chairman explained that despite the current global economic downturn, energy demand will continue to grow. “By the year 2030, we expect global energy demand to be about 30 percent higher than it is today,” he said.

As energy demand grows, Tillerson said, we are likely to see an increase in greenhouse gas emissions associated with energy use. “Our best hope for increasing efficiency and reducing emissions is to push forward with teamwork and technology,” he said.

A recent example of such teamwork and technology is ExxonMobil’s newest cogeneration plant at the company’s Antwerp refinery. The plant generates 125 megawatts of power, which is equivalent to the electricity produced by 230 wind turbines. The new plant will reduce Belgium’s carbon-dioxide emissions by an amount equal to removing 90,000 cars from Europe’s roadways.

Participation is key
Chairman Tillerson concluded his speech by stressing that every sector of society needs to be part of meeting the world’s energy challenges — from consumers and businesses to governments around the world. He said that successful energy projects require long-term thinking, long-term discipline and long-term commitment. “Thus, we need public policies that encourage free trade, free exchange, stable tax policies and the rule of law,” he said. “With sound, stable and sensible policies, we can expand and diversify the world’s energy supplies, unlock promising new technologies and meet the challenges of providing more energy, while we reduce the growth of greenhouse gas emissions.”