Charlie Rose talks to Rex Tillerson “My philosophy is to make money. If I can drill and make money, then that’s what I want to do”

ExxonMobil’s CEO discusses the death of Hugo Chávez, the Keystone XL pipeline, and America’s prospects for energy independence


First, what impact will Chávez’s death have on Venezuelan oil?

Their constitution calls for them to hold elections within 30 days. Until we see the outcome of that election, it’s going to be hard to tell what the immediate effect will be, and whether his successor will choose to carry on his programs. When he took over, he narrowed the scope of international oil companies, changed the contracts, and invited us to either accept the new contracts or leave the country. I accepted his invitation to leave. We’ve been in and out of Venezuela before, so it’s something that we’ll keep our eye on.

When you think of U.S. policy, the Keystone pipeline comes to mind.

This is a project that’s been four years in the regulatory process, over 100 public meetings. Now a second environmental impact statement has been prepared [saying] there’ll be no measurable harm to the environment. It’s an important example of the regulatory struggles we have in this country. The processes are lengthy and subject to reopening.

Why have environmental groups made Keystone such a priority?

There’s a segment of the environmental groups that’s very concerned about the burning of fossil fuels. In a sort of obtuse way, they took a view that if they could prevent the transport of crude oil from Canada to the U.S., then that would throw an obstacle in the way of future developments. I think they probably misjudged Canada’s resolve.

Where do you stand on a carbon tax?

At some point policymakers will get around to dealing with additional policies around climate in ways to incentivize certain behaviors. There are different models, one of which is cap-and-trade, which Europe has been trying now with not a lot of success. If you’re going to undertake a policy with those characteristics, a carbon tax is much more straightforward. It’s much simpler to administer, and it doesn’t leave itself open to as much gaming.

How much longer do you think we’ll be burning fossil fuels?

When coal came into the picture, it took about 50 or 60 years to displace timber. Then crude oil was found, and it took 60, 70 years, and then natural gas. So it takes 100 years or more for some new breakthrough in energy to become the dominant source. Most people have difficulty coming to grips with the sheer enormity of energy consumption. If we look at our energy outlook, at things like renewable wind, solar, biofuels, we have those sources over the next 30 years growing 700 to 800 percent. But in the year 2040, they’ll supply just 1 percent.

For now, then, is fracking the solution to our energy problems?

I would hate to hang the hat on that alone, but it’s transformational.

When will America become energy independent?

We talk about it as North America, because Canada and the U.S., and even to a lesser extent Mexico, are very integrated. We forecast that in the year 2020, on a net imports basis, we’ll be neutral.

Whether it’s Alaska or offshore or wherever it may be, is your philosophy “Drill, baby, drill!”?

No. My philosophy is to make money. If I can drill and make money, then that’s what I want to do. For us, it’s about making quality investments for our shareholders. And it’s not a quality investment if you can’t manage the risk around it.

How do you evaluate what happened to BP in the Gulf?

There were a number of practices ... around the drilling of that well that were not what I would have called industry standard. We would never drill a well the way that well was drilled.

But there were lessons to be learned for everyone?

We studied it very carefully. Why they made the choice they made isn’t clear. But it’s clear that this was avoidable.

What were the lessons to be taken from the Exxon Valdez?

There were many. There was a breakdown in leadership on the ship. There was a breakdown of oversight in the regulator, and the Coast Guard in some respects. There were errors in the response, delays that could have mitigated the impact. That incident ... had a huge impact on the company, its reputation, and on its employees elsewhere.

As they say, you can spend a lifetime building a reputation, and you can lose it in a day.

And that certainly happened for Exxon Corp. with the Valdez. All of our people are mindful of that today.

Watch Charlie Rose on Bloomberg TV weeknights at 8 p.m. and 10 p.m. ET


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