Lessons of the Deepwater Horizon Forum: Industry Strides on Containment Capabilities and Areas of Potential Future Collaboration

Remarks by Rex W. Tillerson
Chairman and CEO, Exxon Mobil Corporation
Department of Interior Forum on Deepwater Blowout Containment
Washington, D.C.
September 22, 2010

Thank you, Director. I think others have noted this forum provides a welcome opportunity for leaders from the business industry and government to discuss what we have learned from the tragedy in the Gulf of Mexico — specifically about the role of government, the role of industry, and the places where the public and private sector might work together to further enhance our distinct capabilities in oil spill prevention and emergency response.

In meeting these goals, government and industry each have an important role to play. By respecting each other’s strengths and unique capabilities, we can further improve safety performance, operational integrity, and find new and effective ways to work together in the event of a major incident.

Role of Government
Let me start by making a few comments about the role of government in energy sector emergency preparedness and response. First and foremost, government plays a critical role in helping prevent incidents by maintaining competent, stable oversight and a consistent approach for all competitors participating in energy development in the United States. This role, in consistently enforcing the laws and regulations, sends a clear message of the government’s expectations to all industry participants and helps hold the industry accountable.

As the Deepwater Horizon incident unfolded, we were also reminded of another important function that must be played by the federal government in its role as on-scene commander of the Joint Unified Command: assuring the responsible and timely coordination among the various local, state and federal government entities playing a role in incident response, and assisting the responsible parties in marshalling the required well control and cleanup equipment.

The U.S. energy industry respects this role of government — as evidenced by the rapid and comprehensive effort to support the government’s stewardship of the incident response. This is a response that must be coordinated on multiple fronts to address, in this case, regaining control and integrity at the well; addressing oil released at the source; oil that finally reaches the surface of the water; and oil that reaches the beaches and marshes.

I believe history will show that one of the most significant learnings of the incident was the comprehensive and effective use of dispersants in keeping some 4 million barrels of crude oil from reaching the beaches of Louisiana, Mississippi, Alabama, and Florida.

In that regard — and it has been mentioned, the importance of R&D — ExxonMobil has maintained an oil spill research program for four years, and while some may call it modest at a few million dollars, it is our continuity and understanding of the importance that led us to recommend direct injection of dispersants at the source early in the spill.

The Government’s approval of surface dispersant use on a large scale, including the first time use of subsea dispersants, was, in my view, critical in enabling natural processes to biodegrade the oil offshore. These processes have proven effective for thousands of years in the case of natural oil seeps. The benefits of lowering the impacts to marshes, marine and bird wildlife, as well as lowering the risk to work activities ongoing at the surface — weighed against the concern and risk associated with a large-scale subsea injection area — is an area where I think additional study is warranted. It also will be useful in considering future such applications.

Role of Industry
Just as the U.S. industry respects the role that government plays in oil spill response, so, too, government should encourage and support the strengths of the industry and utilize our unique capabilities in incident prevention and response. Prevention is, of course, the best response. By upholding high standards of safety and operational integrity, the oil and gas industry has safely and successfully drilled more than 14,000 deepwater wells around the world.

When you properly design wells for the range of risk anticipated; when you follow established procedures; when you build in and follow layers of redundancy; when you properly inspect and maintain equipment and train operators; when you conduct tests and drills and focus on safe operations and risk management, tragic incidents like what occurred in the Gulf of Mexico simply do not occur.

The industry’s dedication to operational integrity has made America’s energy industry one of the most important and effective contributors to the economy, job creation, and U.S. competitiveness around the world. Further collaborative approaches in which the industry can ensure best practices around risk management are available to all in the industry, and that they are put to the effective use by all who participate in the industry, is an area for further consideration. That consideration is underway in the industry at this time.

Containment
But all of the precaution that our industry invests in must be backed up by preparedness — and I believe the Deepwater Horizon incident made clear that there is a need to enhance this preparedness in the event of a major incident.

Along with Chevron, ConocoPhillips and Shell, we have committed our technology, expertise, and financial strength to an unprecedented initiative. We are designing and developing a Marine Well Containment System for the deepwater Gulf of Mexico. ExxonMobil is leading this effort, with strong support from our partner companies.

We accomplished a great deal in the weeks since we first announced our plans to build this new containment system. Recent milestones include the formation of a project team of approximately 100 engineers and project management personnel from all four of the companies. We also completed conceptual engineering, and we are already procuring existing equipment to improve our current capabilities.

We are forming a Marine Well Containment Company to operate and maintain this equipment, with membership open to all companies operating in the Gulf of Mexico. We already received several expressions of interest, and have information sessions planned for potential members in the next two weeks.

A key focus of our Containment System is flexibility and adaptability. We want to be able to respond to a wide range of potential scenarios, such as deepwater depths up to 10,000 feet, adverse weather conditions, and flow rates exceeding the size and scope of the Deepwater Horizon spill.

We want to ensure the system can be deployed rapidly. Our goal is to begin mobilization within 24 hours and be fully operational within days to weeks. We will also put a focus on training and accountability for readiness. We will undertake regular tests to ensure preparedness of personnel and put in place integrity management systems to maintain a continuous state of operational readiness.

Collaboration
In the aftermath of the Deepwater Horizon incident, government and industry have an opportunity to reaffirm the distinct, mutually-reinforcing roles of the private and public sector in oil spill mitigation and response.

In fact, I think this is already underway. Through the Joint Industry Task Forces and multiple consultations with the Department of Interior, Energy, the Presidential Commission and other authorities, our industry has engaged government in a comprehensive and constructive way.

It is in this spirit that I would like to offer additional thoughts on other areas of potential further research and study that could be considered between the private sector and DOE's system of world-class National Laboratories. This is building on what is already a long history of technology collaboration between the industry and the National Lab. It's not like we have to go introduce ourselves.

These areas include research into dispersant modeling, both for subsea application or well or surface spraying and methods to improve the remote sensing of satellites to quickly define the extent, thickness and movement of surface oil to optimize utilization of mechanical response resources. ExxonMobil would be pleased to follow up these thoughts with additional discussions with the Government in the near future.

As we consider these or other areas of potential collaboration, several fundamental questions must be addressed to ensure our mutual objectives are achieved. They include the following:

• Recognizing the distinct roles, capabilities and experience of government and industry, how do we ensure collaboration is effective and achieves the intended benefits without unintended consequences?
• How is the separation between the role of government regulator and the role of operator best maintained?
• Of course, what are the lessons learned from Macondo? Did collaboration enhance timely decision making, or are there alternative approaches that could be more effective?

I believe that if we maintain a spirit of cooperation and dialogue, we can successfully address these questions and identify new opportunities to enhance oil spill response capabilities.

Conclusion
The American people have shown their support for deepwater drilling — but they expect it to be done in a safe, secure, and environmentally responsible way. Our industry recognizes this and we agree with it. The American people support deepwater development because they understand it is important. The Gulf of Mexico accounts for about one quarter of U.S. oil production. Oil and gas activity in the Gulf, including deepwater drilling, accounts for hundreds of both small and large businesses involving approximately 170,000 direct and indirect jobs. This is an industry that is essential to our national economic and energy security.

With continued innovation by industry, sound policies by the government, and a commitment to dialogue and cooperation, we can continue to develop America’s deepwater resources safely and work together to support economic growth and responsible stewardship of the environment. I assure you as an industry, that is our commitment.