The Chemical Engineer of the Future in the Oil and Petrochemical Industry

1. The Chemical Engineer of the Future in the Oil and Petrochemical Industry Taking on the world�s toughest energy challenges.�

2. Each year as part of our strategic planning cycle, we do an in depth 20 year study of energy. Let me share some of those results with you. First, as you know energy is critical to economic growth. over the next twenty years this is particularly true of the developing parts of the world. 80% of energy demand growth over the next 20 years will be in developing countries. China and India alone will account for 30% of this growth. Developing reliable, affordable energy supplies to meet growing demand will be an enormous challenge. To do this with increasingly higher levels of environmental care makes the challenge even greater. Oil and gas will continue to be the primary sources of energy through 2020 and beyond. Adequate oil and gas resources exist to meet demand through at least the middle of the century. Renewable energy sources, particularly wind and solar energy will be the fastest growing forms of energy but will contribute only a small share of total energy for decades. Last, over the long term, we believe that a portfolio of energy options will be required. Commercially viable alternatives, deployable on the needed scale, will take groundbreaking research and close cooperation of private industry and universities. Each year as part of our strategic planning cycle, we do an in depth 20 year study of energy. Let me share some of those results with you. First, as you know energy is critical to economic growth. over the next twenty years this is particularly true of the developing parts of the world. 80% of energy demand growth over the next 20 years will be in developing countries. China and India alone will account for 30% of this growth. Developing reliable, affordable energy supplies to meet growing demand will be an enormous challenge. To do this with increasingly higher levels of environmental care makes the challenge even greater. Oil and gas will continue to be the primary sources of energy through 2020 and beyond. Adequate oil and gas resources exist to meet demand through at least the middle of the century. Renewable energy sources, particularly wind and solar energy will be the fastest growing forms of energy but will contribute only a small share of total energy for decades. Last, over the long term, we believe that a portfolio of energy options will be required. Commercially viable alternatives, deployable on the needed scale, will take groundbreaking research and close cooperation of private industry and universities.

3. Energy and GDP Growth Closely Linked The most important driver of energy demand is economic growth. This graph, illustrates the point. As incomes rise, shown along the horizontal axis, so does energy use, shown along the vertical axis. This relationship is consistent across different geographies, geo-political systems and time. We should recall that there are still about 1.6 billion people in the world who do not have access to electrical power and some 2.4 billion use sources of energy such as wood and dung to meet their home cooking and heating needs. The underlying basis is that world GDP is projected to grow at about 3% per year through 2020 (same as the last 20 years). Developing countries will grow faster at about 4.5% on average and developed countries at a little more than 2% per year. The most important driver of energy demand is economic growth. This graph, illustrates the point. As incomes rise, shown along the horizontal axis, so does energy use, shown along the vertical axis. This relationship is consistent across different geographies, geo-political systems and time. We should recall that there are still about 1.6 billion people in the world who do not have access to electrical power and some 2.4 billion use sources of energy such as wood and dung to meet their home cooking and heating needs. The underlying basis is that world GDP is projected to grow at about 3% per year through 2020 (same as the last 20 years). Developing countries will grow faster at about 4.5% on average and developed countries at a little more than 2% per year.

4. Oil & Gas Remain Primary Energy Sources Of the non-fossil fuels shown in this overlay, our outlook assumes a significant slowing in the growth of nuclear power. This results not only from a lack of new construction in the US but also reflects a withdrawal from nuclear in places like Germany and the UK. Recent safety concerns with facilities in Japan, will also likely slow growth. The red area, called bio-mass, is mostly wood and dung but has a small contribution from industrial and municipal solid waste. The rate of growth will slow as developing countries transition to modern fuels in greater quantity. At the top is the contribution from wind and solar energy. As it is small and hard to see we have exploded this trend on the next panel. We are projecting very strong growth in both wind and solar. We believe these high levels of growth can only be supported with the continuation of government subsidies. Even with double digit growth, wind and solar will contribute only about 0.5% to total energy by 2020. Of the non-fossil fuels shown in this overlay, our outlook assumes a significant slowing in the growth of nuclear power. This results not only from a lack of new construction in the US but also reflects a withdrawal from nuclear in places like Germany and the UK. Recent safety concerns with facilities in Japan, will also likely slow growth. The red area, called bio-mass, is mostly wood and dung but has a small contribution from industrial and municipal solid waste. The rate of growth will slow as developing countries transition to modern fuels in greater quantity. At the top is the contribution from wind and solar energy. As it is small and hard to see we have exploded this trend on the next panel. We are projecting very strong growth in both wind and solar. We believe these high levels of growth can only be supported with the continuation of government subsidies. Even with double digit growth, wind and solar will contribute only about 0.5% to total energy by 2020.

5. Oil Resource Base Large Of course among the most frequently asked questions are: How much oil is there? and How long will it last? I think this picture, which focuses on oil, helps to put the answer to that question into perspective and also demonstrates the challenge in giving a precise answer. Simply stated, the resource base is very large. Conventional recoverable resources, shown here in red, are those resources which can be economically produced. In addition there are significant unconventional resources. Unconventional oil includes oil sands and other resources that cannot be produced using traditional technology. Last, the green area, which represents resources that exist but are currently uneconomic to produce. Through technology advances, resources considered unrecoverable today may become recoverable tomorrow. TRANSITION The point of these last few charts is to describe the nature of the technical challenge ahead. Whether you look at oil and gas or the other energy sources - new technology will be needed. And Chemical engineers will be in the middle of all of these advances - in research, development, project management and construction, and in manufacturing, supply and sales.Of course among the most frequently asked questions are: How much oil is there? and How long will it last? I think this picture, which focuses on oil, helps to put the answer to that question into perspective and also demonstrates the challenge in giving a precise answer. Simply stated, the resource base is very large. Conventional recoverable resources, shown here in red, are those resources which can be economically produced. In addition there are significant unconventional resources. Unconventional oil includes oil sands and other resources that cannot be produced using traditional technology. Last, the green area, which represents resources that exist but are currently uneconomic to produce. Through technology advances, resources considered unrecoverable today may become recoverable tomorrow. TRANSITION The point of these last few charts is to describe the nature of the technical challenge ahead. Whether you look at oil and gas or the other energy sources - new technology will be needed. And Chemical engineers will be in the middle of all of these advances - in research, development, project management and construction, and in manufacturing, supply and sales.

6. To meet demand and manage and develop new technologies, Oil and Petrochemical companies will need the skills of chemical engineers The industry is mature and is experiencing moderate growth, but to meet the world�s energy needs significant innovation and technical advances are needed Technological advances of the future will require broader skills and capabilities from engineers, and learning will be continuous over a career Transition Let�s look at some of these new requirements using the manufacturing area as an example. Keep in mind that we see similar challenges and changes in all the other aspects of our businesses. To meet demand and manage and develop new technologies, Oil and Petrochemical companies will need the skills of chemical engineers The industry is mature and is experiencing moderate growth, but to meet the world�s energy needs significant innovation and technical advances are needed Technological advances of the future will require broader skills and capabilities from engineers, and learning will be continuous over a career Transition Let�s look at some of these new requirements using the manufacturing area as an example. Keep in mind that we see similar challenges and changes in all the other aspects of our businesses.

7. Let me briefly describe the manufacturing plant that exists today and how it has changed in my thirty years since leaving WPI Reliability has improved There is less day-to-day trouble shooting and fire fighting and more focus on planning and optimization Computers control most aspects and make routine decisions as well as improve overall safety So the job has changed and the tools have changed and this last point is very important in my view as we think about graduating engineers Operators are now highly skilled - many college educated - and carry out many of the tasks that engineers of the past were responsible for doing I�ll come back to this later Let me briefly describe the manufacturing plant that exists today and how it has changed in my thirty years since leaving WPI Reliability has improved There is less day-to-day trouble shooting and fire fighting and more focus on planning and optimization Computers control most aspects and make routine decisions as well as improve overall safety So the job has changed and the tools have changed and this last point is very important in my view as we think about graduating engineers Operators are now highly skilled - many college educated - and carry out many of the tasks that engineers of the past were responsible for doing I�ll come back to this later

8. Where are we headed and what does that mean for new chemical engineers? Innovation and technology drive changes in the manufacturing plants of the future Engineering solutions will be needed in all areas, including materials, equipment, catalysts, process control and optimization Some incremental, some breakthrough This last point will be very important in the future. We are already starting in this direction. Our capability to model at the molecular level is increasing as analysis and computing becomes more powerful and more portable (on line) Today - we still control on physical properties (T, P, rate, etc.). Tomorrow we�ll learn how to apply our molecular modeling techniques to on-line, real time optimization and control Where are we headed and what does that mean for new chemical engineers? Innovation and technology drive changes in the manufacturing plants of the future Engineering solutions will be needed in all areas, including materials, equipment, catalysts, process control and optimization Some incremental, some breakthrough This last point will be very important in the future. We are already starting in this direction. Our capability to model at the molecular level is increasing as analysis and computing becomes more powerful and more portable (on line) Today - we still control on physical properties (T, P, rate, etc.). Tomorrow we�ll learn how to apply our molecular modeling techniques to on-line, real time optimization and control

9. Well, how will all this impact new Chemical engineers? What new skills and competencies will make them more successful? Entry level engineering has changed from design and monitoring to playing a key role in the development of new tools and technology, and leading technicians to achieve better results The role of the engineer is also shifting from largely technical to a dual role of providing technical expertise and optimizing business results In order to meet these challenges, engineers need to �up skill� in a few key traditional areas Basics more important than ever Design, modeling, reaction engineering, advanced controls, etc. Acquire skills typically learned in a graduate program To achieve greatest success, engineers will also need to multi-skill and learn new skills not traditionally acquired in engineering programs such as Computing and computer control as well as optimization Molecular level modeling Economics, business, and leadership Well, how will all this impact new Chemical engineers? What new skills and competencies will make them more successful? Entry level engineering has changed from design and monitoring to playing a key role in the development of new tools and technology, and leading technicians to achieve better results The role of the engineer is also shifting from largely technical to a dual role of providing technical expertise and optimizing business results In order to meet these challenges, engineers need to �up skill� in a few key traditional areas Basics more important than ever Design, modeling, reaction engineering, advanced controls, etc. Acquire skills typically learned in a graduate program To achieve greatest success, engineers will also need to multi-skill and learn new skills not traditionally acquired in engineering programs such as Computing and computer control as well as optimization Molecular level modeling Economics, business, and leadership

10. Just a few words on globalization and its impact on today�s chemical engineering graduate. This is an important change. As you know, more and more businesses are becoming global organizations ChE�s of the future will be providing technical expertise and solutions that support the organization on a global basis� This is a new model for �Technology Transfer� New technology and innovation will be shared in near real time through global networks, which will be discussed more in a minute The willingness to be geographically mobile and the capability to adapt to different cultures quickly is critical Engineers will share knowledge and best practices with others through global networks while being physically located in a plant or regional office Utilization of technology and virtual teams will be used to deliver work products and meeting the needs of customers will be done globally Engineers with foreign language skills and/or global experiences will have an advantage working in a global organization Just a few words on globalization and its impact on today�s chemical engineering graduate. This is an important change. As you know, more and more businesses are becoming global organizations ChE�s of the future will be providing technical expertise and solutions that support the organization on a global basis� This is a new model for �Technology Transfer� New technology and innovation will be shared in near real time through global networks, which will be discussed more in a minute The willingness to be geographically mobile and the capability to adapt to different cultures quickly is critical Engineers will share knowledge and best practices with others through global networks while being physically located in a plant or regional office Utilization of technology and virtual teams will be used to deliver work products and meeting the needs of customers will be done globally Engineers with foreign language skills and/or global experiences will have an advantage working in a global organization

11. Lastly, a few thoughts on how our recruiting model is changing The need to achieve efficiencies in the process have changed the campus recruiting model significantly Campus graduates continue to be our primary source of new talent, but we have moved away from visiting all of the engineering schools and now focus our efforts on schools that have historically provided the greatest recruiting success Where ExxonMobil does not visit the campus for formal recruiting, opportunities will continue to be available through our on-line recruiting system and alumni campus visits Within and outside of the industry, the use of summer internships as a catalyst for identification and selection of candidates for employment offers is considered a �best practice� and is being used more and more Internships provide students with a practical experience and allow both students and companies to assess whether there is a good �fit� before an employment offer is made This concludes my remarks. I am happy to answer any questions. Lastly, a few thoughts on how our recruiting model is changing The need to achieve efficiencies in the process have changed the campus recruiting model significantly Campus graduates continue to be our primary source of new talent, but we have moved away from visiting all of the engineering schools and now focus our efforts on schools that have historically provided the greatest recruiting success Where ExxonMobil does not visit the campus for formal recruiting, opportunities will continue to be available through our on-line recruiting system and alumni campus visits Within and outside of the industry, the use of summer internships as a catalyst for identification and selection of candidates for employment offers is considered a �best practice� and is being used more and more Internships provide students with a practical experience and allow both students and companies to assess whether there is a good �fit� before an employment offer is made This concludes my remarks. I am happy to answer any questions.

12. The Chemical Engineer of the Future in the Oil and Petrochemical Industry Taking on the world�s toughest energy challenges.�