Shale Insight 2013 Conference | ExxonMobil Page 1 of S| ExonMobil ‘Taking on the world's toughest eneray challenges PPhiodelphia, PA September 25, 2013, “Thank you. tis a pleasure tobe back n Pennsyvania and not just because | wont fo college here so many years ago. This region ofthe county payed a ploneering roe in America’s energy histor. And the men and women of tinue that legacy today. (Over the past 40 year, ve seen many advances in energy echnology reshape ou industry, both here and abroad. But Ive never seen anything as owertul as shale energy. "ys eeenenenmateeneTeRSET ony ext nt 0 TD “The milestones are svn. Inthe downstream, the odo cont stp Ananova ae eg ents opt dln roy conse, 8 trevor vege ote roie Saw aon get ceed RUN STE Cea, st Senses hv uy BS hy U5 eednomy and ne it seu aus pers patom of weak owt and Nigh unoeloynet ee by 2025 shal energy could cesta Bdatonal eontute more thar hallaion dolor anal” Petrochemicals, LNG are key to growth 'As producers, you understand this, But what many dont understand, ethan order to take fl advantage ofthis istric opportunity, we must act now. “The United States must encourage vestmentin downstream Indus that dive domand fr natural gs. ancora einen oe eens tenon he Petrochemicals and LNG are American-made products thet ad value to cur county's natural gas resources, Demand for these products is song the potential to ranstorm te ene {Globally demand for ethylene, a key pevochemical growing more than 50 percent faster than natural gas. The markal for LNG is growing ever taster. ‘And, since mest of this demand growth is outside the United Sates, this presents an outstanding opportunity to boost America's export. \you as producers, and the nation as @ whole. ave to make the mos of shale resources, vestments in petrochemicals and LNG must be allowed ove ahead. ‘The US. chemicals renaissance Let me bopin wh chemicals, one of tis county's largest users of natural ‘early 30 percent of U.S. natural gas demand, The chemical industry together with other industrial sectors account for ‘Sale development has given U.S, petrochemical preducersa double bone hutp://www.exxonmobil.com/Corporate/news_ speeches 20130925, sdp.aspx 10/21/2013Shale Insight 2013 Conference | ExxonMobil Page 2 of S In ado o using natural gas as an energy source, they also use the ethane and other iquds fom natural gas asa key raw melil to make plastics and other essential products. “Tiss contrast to most ofthe rest ofthe word, where petrochemicals are made from olLbased naphtha feedstocks, which today are far more expensive. a “This cost advantage has reversed the fortunes ofthe US. chemical indus. “The toll value of shipment rom U.S, chemical manufacturer hit an aie high during the past two years. And, ovr the las five years, capital spending by the American chemical industy has risen by more than 40 percent. Majr capacity addons have been announced forthe frst ie in ‘more than a decade, ‘And exports have been ved, Just ve years ago, the U.S. was losing ground inthe export market. In fact, the county was onthe verge of becoming ‘net mpertrof chemicals. Bu today chemicals are once again Americ’ single biggest export large than agriculture, automobiles and aerospace, ‘And this is jus the beginning. Gobel demand for chemicals expecad to rise by 50 percent over the next decade. Most of hat growh wil happen in Asia Pacifc and other developing regions Whe history tas us that regional cost ferences fuctuate overtime with eneray prices, tho Uriled States is back nthe game. Exports can be the springboard fer @new era of American chemical growth ‘Tho US. chemicals export opportunity ExxonMobil one of he wort largest chemical companies, is moving quick to seize this opportunity. We are planning 8 mul-biion-doliar expansion fat our Baytown, Texas, act, already the county’ largest Integrated refining and choral complex. Industry wide, some 125 new chemical projects have been announced inthe United States, The American Chemisty Councl estimates these projets to be worth as much ae $84 bilon. This is good news for US. natural gas prosucers because petrochemical Investments ceate demand for ean and other natural gas quis. “The bad news ie that, today, U.S, chemical plants are already running at fll capac and therefore cannot absorb the growing surplus of ethane rom natural gas. ‘Asa result ethane in many cases, is being len the gas stream rather than being extracted and upgraded to chemical. tis erefore crucial that planned U.S. petrochemical investments be allowed to move ahead quickly. Failure to do so wil constrain investment in both natural gas production and inastructure. thereby liming economic grow and jb creation. The LNG export opportunity “The same lle applies io LNG. ‘The Untes Stats is poised to pla a signicant role in the global LNG market, whichis expected to tiple in size from 2010 to 2060. Bccontobi projects that LNG exports rom North America, which wore essentally zor In 2010, wl ise to about 15 lion cubic fet per day in 2040. By 2040, we expect North Amerea to account for aout 15 percent of global LNG supp¥y. Study ater study has concluded that Nort Amercan LNG export would benef the U.S. economy. ICF Intemational estimates hat LNG exports could ‘add more han $100 billon annuaty fo U.S. GDP. “The expansion of LNG globally woul help counties around the wold cur thelr energy-elted greenhouse gas emissions a they shift way trom col Natural gas emits up io 60 percent ess CO2 than coal when used for power generation, (course, how much LNG ultimately gets exported from the United States depends on how quickly te county can buld te faces to Rauety and port the gas. ust as wth petrochemicals, U.S, LNG capac is alowed to lg it wil consran investment in natural gas development—and limit U.S. economic ‘growth and jb creation Natural gas equals Jobs and renewal Lets tai about bs fora moment ‘As gs producers, you know that growing natural gas production crates good-paying jobs, We are ready seeing this my home sate, Texas, and here m Peansyvania, tw ofthe nations largest shale producers. Out ofthe nearly 2 milion {pbs that are associated with production of uncenventona resources, Texas and PennsyWanla have dose o 700,000 most of whic have been created ‘over the ast five years ‘Simitar ob cretion opportunities ex ferter downstream, htto:/vww exxonmobil.com/Corporate/news speeches 20130925_sdp.aspx 10/21/2013Shale Insight 2013 Conference | ExxonMobil Page 3 of 5 “Together, thse two investments wil cuate $6,000 new direct and indirect jobs nationwide during their consiuction phase and mere than 12,000 permanent Jobs once they ar operational “This county needs the jobs made possible by shale enerpy. “This was crven home to me a few months ago, whan | spake ata press conference in Houston to announce a gran program to expand vocational training at Houston area communty eoteges The goals to tran thousands of young people or siled jobs such as lecricians and plpefiters, where the average salary in he Texas chemical Inasty has sen to $95,000 a year be? ‘We laboled the program: “Houston + Natural Ga ‘As | dosed the program, and nroduced some ofthe young people who are benefiting fom i, the publc- and private-sector leaders inthe audience ‘got realy exited People were busing int rounds of applause. | can el you, te atmosphere inthe room was as close to a revival meeting as you getin our busines, ‘Andina sense, is a revival, because shale enerpy. nd the opportunites Its enabling in states allover the county. is hlping to revive America’s ‘confidence, pide and hope forthe ute ‘The Unite Stats now has neaty 2 100-yar supply of clear-buming natural gas ~ clearly enough lo sais rising demand here at home whe aso ‘supporting increased exports of American products ‘Ad sght now. North America isthe only region of the world wit meaningtl shale energy production. Policies for the game-change ‘So, asa naton, how does the United States capture tis once-in--generation opportunity? How does it achieve the types of numbers that IHS sad shale energy can make possible - 1.8 millon Americans in new, good-paying jobs bythe rida of he next decade? [Most Americans woud be relleved to know that t won't require government programs, subsides or mandates. What wl requ ae poles that clear ‘he pat or private-sector investment ‘This path wit need tobe very, very wide suportighway. “The United States needs tons of bllos of dlrs of investments ntust in producton, but nthe ifastucture and processing faites that can tenable Ameccan-made gas and gas Iquds to reach markets here and around the world. It needs pipelines and chemical plants and LNG export teminais. “The United States needs to unite proudly behind shale gus ~ the same way other counties do with thei nergy industies andthe same way this ‘country with automabies, the Inomet or anyother revolutonary American innovation. ‘The need for timely permiting SSowhat's holding us back? Frstand foremost, ts permiting. ‘As you inom, oir the pt 0 years te U.S. energy industry has faced moe than milon wei. SP tee SETI ‘Anotner area of endless debate Is LNG permits. ‘Some conte to question whether LNG exports ar nthe natonal terest. Yet, the Department of Energy's own study and many others — concluded months ago tha he more LNG this country expos, the more our economy stands to benef. Atnough the pace of approvals has picked up lately, we'e stil awatng action on 20 proposed LNG project. “The DOE needs to act quichly on these applications, ‘While we dont know how many ofthese projects ultimately wil prove viable, we need to lt the compettve market determine which ones get bit and wich dont ‘The DOE should adhere to ts tradon of embracing fre trade and avoid imposing ata iis on U.S. LNG exports. bitp:/wonw.exxonmobil.com/Corporate/news. speeches 20130925_sdp.aspx 10/21/2013,Shale Insight 2013 Conference | ExxonMobil Page 4 of S ‘Bearin min, to, the nation's disastrous experience wih federal contols over the natural gas marke inte 1870s and'80s. Those controls were itimately scrapped bythe Reagan adminstrston. “Turing to petochemicals, the pemiting pictur is somewhat more encouraging. Thus far, ne major sthane steam cracker has been fly permit by the sate of Texas and EPA. Those permits came witha one yar ofthe company submiting a complete appticaton. “That time frame sets an appropriate standard for acon onthe sk other mer ethane crackers that have been announced, Inuding ExxonMobi's Bayiown project. ‘So why should anyone ousis his fom care about how quick regulstors approve pert for chemical and energy projects? ‘Because permit approval mes ae the leangInlaterofhow quicly our nation s capturing the bene of shale energy. Delays cout a illons to ‘rojec costs, restrain jo creation and erade America's new compette advantage. ‘Asa nation eager for economic growth, the Unted States should be monitonng these approval times the same way it monitors oer key economic indlators Free markets and fre tra Beyond te issue of permiting, the Unite States must embrace feo-rade polices forthe products of natural gs, wheter they are chemicals oF LNG “Those who woul mit LNG exports put this country at sk of shuting in aslonicantporton of projected natural gas production and forgoing the jobs and econamie benefits hat come wth Its the eneray-pocy equivalent of keeping your mney under your matzess, LUmiting LNG exports woul also key havea boomerang effect on chemicals. ‘As US. petrochemical experts are ramped up, these lower-cost American exports will put pressure on local producers Latin America Asia and Europe ~ regions that ely on more expensive ol. based feedstocks. Asa resul, we can anticipate cals for protectionism against U.S. chemical expos, isan sto sucosssily counter those arguments and progress free ade agreements wit these regions, it must self be, as Ronald Reagan si, an unrelenting advocate of fee trade. Resting LNG exports would bean affont fo America's trading parnors and undermine the eflots underway to strengthen our rading es. For example, why should the EU drop tars on U.S. chemicals and other goods made from advantaged naural gas ihe US. blocks exports of hat ‘28in iquefed form? Likewise, how can the U.S. ask Japan, a cle ally suring from energy shortages, to stop importing oil fom lan Htwe prevent fapen fom porting US.gas? “Tho answers ae obvious. Limiting LNG exports would have aching effect on trode end resict he ability of U.S. gas producers to reach global marks. Its protectionism — pure and simple. 1 fes in he face of famess, open markets, and free rade Italo ignores the humanitaran and eavionmenalimperave that compels us lo prove the cleaner-buming energy crcl to human progress and ‘economic development around the word “Today, about 1.3 bilon people stil donot have access to elecily. As an ofl of the World Bank sad recent, “Whout energy, there is no ‘economic growth, there no dynamism, and there is no opportunity" ‘man wil wo get? ‘Asa tustee of my aia moter, Lafayette Colege, about 75 mies from here, have had many opportunites over the years to tak wih student groups about energy. “Those bright young peope a are concerned about the environment and making sue we develop our resources ins responsible way. “They also are concemes about thelr economic futures. ‘When tl nese students the whole story about natural gas development - te facts versus the mys, the opportunity forjb creaton and economic renewal. ad the humanitarian imperative of expanding access fo energy ~ they get it nether hey major engineering, economics or English they gett. | thnk etal Americans could hear the whole story. hey would gti, to. (Our ndusty has a responsibilty to communicate the facts about shale energy development othe American public. And that narrative cant stop a the ‘wolhead. it ust explain he ence-na-generaion opportunity for Indust renewal jb creation and revialzaton ofthe US. econony. _Atthe same time, our ratio’ leaders must not alow energy policy to be dictated bythe few who put their economic interests ahead of the nation’s and promote fear over facts http://www.exxonmobil.com/Corporate/news_speeches_20130925_sdp.aspx 107212013,Shale Insight 2013 Conference | ExxonMobil Page 5 ofS “The Unted States must seze the opportunity created by shale energy. We need regulatory and trade polices now that enable industry to safely create initons of new jobs ands new ers of prospety ‘As John F. Keonedy once said, "The mere absence of recession isnot growth. We have made @ beginning ~ but we have ony begun.” ‘twas my pleasure to speak wth you today. Thank you fer your kind attention. Ittp://wwwexxonmobil.com/Corporate/news. speeches 20130925_sdp.aspx 107212013,