Findlay, Ohio,
15
November
2017
|
02:35 PM
Europe/Amsterdam

MPC President on the moral imperative of our business

Donald C. Templin, MPC President
What we make possible is truly amazing.
Donald C. Templin, MPC President

At the October 2017 Texas Oil and Gas Association (TXOGA) Lone Star Energy Conference, MPC President Don Templin addressed the attendees about our industry and its noble purpose. Below is the full text of his address.

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Thank you, Todd, for that kind introduction. It’s a pleasure for me to be here addressing this group of leaders in the oil and gas industry. I would like to thank our employees who traveled from Texas City to be here today. I would especially like to thank TXOGA for the work you do representing us. I think it speaks well of our industry that we are joined here today by lawmakers, elected officials, and regulators. There is a deep appreciation for the oil and gas industry in this state, but more importantly, there’s an appreciation for what we make possible.

And what we make possible is truly amazing.

It would be understandable if you think I say that because I’m a petroleum industry executive being self-congratulatory. But I don’t say this just as the president of a refining company. When I was young, my parents were missionaries in Ethiopia, and I spent roughly ten years of my childhood there. So I have seen what life is like for people who don’t have access to the energy supplies that we take for granted – energy that is plentiful, affordable, reliable, and can be transported easily.

That is the combination of factors that make oil and gas the miraculous energy source fueling our world. Without oil and gas, people struggle to grow crops and livestock on a meaningful scale. Farmers and merchants can’t get their products to willing buyers. Without reliable electricity, people struggle to accomplish basic tasks, like studying or engaging in commerce, after nightfall. They can’t establish basic institutions that make life better, like reliable medical facilities, because incubators, x-ray machines, and climate control all require dependable power.

I have seen people who live in grass-roofed huts with no toilets, running water, or electricity, burning firewood or animal dung to cook their meals. These aren’t simply lifestyle differences… they are genuine threats to good health and longevity. So to me, what we make possible is not just an abstraction. And when I say it’s truly amazing, it has nothing to do with being self-congratulatory.

At the same time, as president of a refining company, I’m proud that the fuels we manufacture, transport, and sell make our modern lives comfortable, safe, healthy and prosperous. Virtually every aspect of our vast agriculture industry is fueled by diesel power – from tilling, planting and spraying crops, to harvesting, processing, and getting them to market.

The daily miracle of store shelves full of electronics, clothes, food and toys, we owe to our nation’s unparalleled logistics system of petroleum-fueled trains, planes, ships, and trucks.

A couple months ago, in the immediate aftermath of Hurricane Harvey’s massive flooding, it was petroleum-fueled rescue vehicles, supply transports, boats and helicopters that got help quickly to the people who needed it most. As many people here continue trying to return their lives to normal, it’s clear that disaster recovery is just one of the more obvious examples of how petroleum fuels not only make our lives better, but can in fact save lives.

So it’s disheartening that there is a dedicated group of people whose goal is to make our most reliable, plentiful forms of energy much more expensive, so that other, less reliable forms of energy seem more attractive. The Clean Power Plan was one of these efforts, and we can all be grateful to EPA Administrator Pruitt for his efforts to rescind that rule.

Some are advocating a carbon tax, which would hike energy prices even further. But when energy costs more, every aspect of our lives becomes more expensive – getting from point A to point B, buying items from the supermarket shelves, lighting and heating our homes… the list goes on and on. Because the cost of energy is embedded in every aspect of our economy, those who can least afford higher prices would suffer the most.

One of the more recent strategies being used by opponents of oil and gas is to create bottlenecks between production and the processing facilities that turn them into useful products. When they had an ally in the White House, they were able to help make affordable energy harder to access, at least temporarily. The Dakota Access Pipeline delay last year, and the multi-year holdup of Keystone XL, were both textbook cases of politics overriding facts and the rule of law.

And now that they no longer have an ally in the administration, they’re taking their strategy to the state and local level. Pipeline projects are being vilified and delayed in Minnesota, Michigan, Nebraska, Georgia, South Carolina, Louisiana, and even here in Texas.

Underlying these activists’ animosity toward our industry are two primary assumptions. First, they believe there is something morally wrong with what we do. And second, they say dirty oil and gas can easily be replaced by clean wind, solar, biofuels and other renewables.

For those of us familiar with our industry, not to mention the laws of thermodynamics, these seem like absurd assumptions. But it’s important to address them, because talking about the jobs we provide, our philanthropic efforts, and how indispensable our work is to a prosperous society… all of that falls on deaf ears if a vocal minority can simply say, “Yes, but it’s immoral and substitutes are readily available.”

So we must address the first assumption: the morality of what we do. I believe that to be moral means we value every one of our fellow human beings. If we accept this premise, then we must consider how vital affordable energy is to everyone’s well-being.

For those who still must farm with human or animal power… for those who don’t have electric lights… for those who can’t transport themselves to markets, schools or medical facilities quickly or efficiently… for these people, treating petroleum fuels as if we can do without them is unrealistic. For the foreseeable future, no other energy source can meet the world’s needs on the required scale. To pretend otherwise dismisses the dignity of our fellow human beings in need, and devalues their lives.

I believe we should reject this mindset – that some people are expendable. In an ideal world, that would be an uncontroversial statement. But consider this: Even as developing nations face problems that could be alleviated with plentiful, reliable, proven energy technologies, organizations like the United Nations, the International Monetary Fund and the World Bank have made greenhouse gas reductions their priority. This means they favor costly, less-reliable sources of energy like solar and wind for development projects, rather than the types of energy that can spur genuine prosperity.

Here in the U.S., we consider wind and solar energy to be supplemental, because together they supply a small percentage of our electricity. And that’s after decades of government subsidies to try to make them more attractive. And yet, our official policy under the previous administration was that when helping developing nations build power infrastructure, we opposed the reliable fuels that got us to our own level of prosperity, and instead encouraged the unreliable supplements. Today, that remains the position of far too many people in positions of power around the world.

Ladies and gentlemen, this is hypocritical. The message we are sending is that we are already rich, and we don’t care if others have to stay poor longer. Why? Because we want the satisfaction of seeing them use alternative energy.

This hypocrisy is unpalatable. But what’s worse – much worse – is what I referred to earlier: treating hundreds of millions of people as expendable... As if they are simply statistics. This is the result of an ideology that places human life far too low on the priority list.

What’s ironic about this ideological outlook is its ability to be blind to one reality, while seeing another so clearly. Consider this quote from the World Bank:

Quote: “Inclusive economic growth is the single most effective means of reducing poverty and boosting prosperity. Yet most economic activity is impossible without adequate, reliable and competitively priced modern energy. This is why access to energy is so important in the fight against poverty.” End quote.

This is a remarkably clear-eyed view of energy’s importance, and I couldn’t agree more. But the World Bank seems oblivious to energy’s role in alleviating poverty when it talks about climate change. Just last year, the World Bank launched its Climate Change Action Plan, calling it “the defining issue of our time.”

I’d like to pause to emphasize that. The World Bank’s own research shows that in the developing world, thousands of people are dying each day from burning dirty biomass energy indoors – yet they call climate change the “defining issue of our time.” In their own words, climate change “could” push millions into poverty. But we know for a fact that millions of people are actually dying each year, and we know that proven, reliable energy sources could help alleviate that. So it seems that to some, an ideological conviction is more important than addressing today’s reality… more important than our fellow human beings.

But as a result of the energy renaissance here in the United States, we are playing an even larger role in supplying the world with affordable, reliable, portable energy. Ladies and gentlemen, we are watching a long-standing American dream come true. For decades, we have talked about energy independence. And thanks to massive investment and innovation from our industry, the United States is becoming a dominant player in the world’s energy mix. Just last month, our crude oil exports reached almost 2 million barrels per day, about the same level as the North Sea.

When it comes to refined products, the U.S. was net importing more than 2 million barrels per day of refined products from overseas as recently as 2007. Today, we are net exporting almost 3 million barrels per day.

In short, we have played a prominent role in making the most plentiful and affordable sources of energy in the world even more plentiful and affordable.

As I mentioned earlier, there are two main assumptions made by our detractors, and I believe it’s clear where we should stand on the first – the morality of our business is undeniable. In fact, it may be one of the most moral of all pursuits. Now I’d like to address the second assumption: that oil and gas are dirty and can easily be replaced by clean renewables.

The effort to portray the oil and gas industry as antiquated and dirty is especially deceptive, because we produce fuels more cleanly than ever before. In the refining industry, we have consistently modernized our manufacturing processes over the decades. We have helped to reduce U.S. air pollutants by more than 70 percent from 1970 through 2015, even as vehicle miles traveled increased more than 180 percent.

As a refiner, Marathon Petroleum is a good example. Despite increasing our throughput by over 400,000 barrels per day since 2002, we have reduced our criteria air pollutant emissions substantially. During that same period, our greenhouse gas intensity has gone down by more than 15 percent, without government mandates or incentives.

When I point out that our emissions are down while throughput is up, there’s an acknowledgement that yes, there are emissions associated with our manufacturing processes. And we are transparent about it, just as we are transparent about our safety performance and other measures for which we hold ourselves accountable.

As I’m sure everyone in this room knows first-hand, the media and the public hold us accountable as well. And that’s how it should be. Unfortunately, this doesn’t hold true for all energy sources. In our line of work, petroleum is often vilified as dirty by activists and their allies. They scrutinize and exaggerate all of the trade-offs inherent in our industry. Meanwhile, they ignore the progress we have made – and continue to make – to reduce those trade-offs, and ignore the fact that every facet of their lives is made possible by what we do every day.

But other forms of energy – solar, wind and biofuels in particular – receive the opposite treatment: their externalities are ignored, while their benefits are held up as defining characteristics. In fact, they are consistently and unquestioningly referred to as “clean” energy in news articles, and so that’s how they tend to be perceived by the public.

Recently, though, it seems there’s a modicum of balance emerging. As nations begin contemplating their commitments under the Paris Climate Accord, the World Bank studied the resource requirements those commitments would entail. The bank’s study concluded that many of the metals required in “clean” energy systems would grow in demand by more than 1,000 percent, and global mining operations would have to grow accordingly. The bank pointed out that solar, wind and other technologies routinely called “clean,” are actually “MORE material-intensive in their composition than current traditional fossil-fuel based energy supply systems.”

I don’t think it will surprise anyone in this room that since the study was published in June, it has garnered almost no media coverage whatsoever. After all, it doesn’t fit the narrative that has been prevalent for so many years – that fossil fuels are antiquated and dirty, while renewables are new and clean.

We also need to address the idea that so-called “clean” energy is ready to replace the oil and gas that makes our modern lives possible. After decades of government programs seeking to promote solar, wind, biofuels and other renewables, they now comprise about 10 percent of our total energy supplies in the U.S. By 2020, that’s projected to reach almost 14 percent, and by 2050, 18 percent.

The fact is, renewables are simply unable to match the reliability, scale, energy-density, and portability that oil and gas provide. Renewables have not yet overcome the stubborn fact that they are intermittent, difficult to store, and require huge amounts of land. This makes them more expensive and less reliable. We should never underestimate mankind’s capacity for innovation, and someday we may overcome these barriers. But renewable energy’s drawbacks have so far resisted our attempts at solutions.

So when it comes to responding to anti-fossil-fuel activists, where do we stand? It’s morally indefensible for us to restrict access to reliable, affordable fuel when we know it can make people’s lives better today. The oil and gas industry operates more cleanly today than ever before, and is constantly improving. And renewable fuels simply cannot replace oil and gas for the foreseeable future.

The conclusion is clear: the world needs more of the abundant, reliable energy we provide, not less.

As ground zero for America’s emerging energy dominance, Texas has a huge stake in our industry making this case for itself. Forty-five percent of all onshore oil production in the lower 48 is in the Permian. Last year, the Permian produced 2.4 million barrels per day, which is more than nine of OPEC’s 14 member nations. And when it comes to natural gas, Texas accounts for more than a fifth of U.S. daily production. Capital investment in Permian oil and gas is unprecedented, and downstream we are seeing more petrochemical manufacturing, refining capacity, and thousands of miles of new pipelines.

Our industry is responsible for hundreds of thousands of direct jobs here in the Lone Star State, where smart, science-based policies allow this widespread prosperity. This is a testament to the people of Texas, who recognize what our industry has to offer, and to TXOGA’s tireless efforts to make sure facts and evidence are made available to decision-makers and the public.

When lawmakers and regulators let evidence and the rule of law guide their decisions – instead of social agendas and political considerations – it’s amazing what can be accomplished. That’s why it is gratifying to see the current push toward regulatory reform from the EPA and other federal agencies. The administration’s willingness to address regulatory overreach on our industry is a welcome change that will benefit the 300 million Americans who rely on affordable energy to live healthy, prosperous lives.

Rescinding the Clean Power Plan, re-evaluating methane rules, and re-examining CAFE standards that were rushed through the rulemaking process are all positive steps. Administrator Pruitt’s Smart Sectors program is a perfect example of how industry and regulators can work together to benefit the public. Likewise, the Department of Interior’s moves to re-evaluate national monument designations, and offshore and onshore oil and gas leasing, are welcome. President Trump recognized the importance of midstream infrastructure when he approved Keystone XL and the Dakota Access Pipeline early in his administration.

In short, this administration is looking to protect the land, air and water we all share, while also ensuring that energy is plentiful, reliable and affordable. That balance is critical, because as our industry has proven, it’s not an either-or proposition. We can accomplish both responsibly.

From a legislative standpoint, our industry is grateful to Ways and Means Chairman Kevin Brady for his leadership on energy matters and on tax reform, and we are grateful for his presence here today. He and many of his colleagues in Congress recognize that our industry is critical to the ongoing prosperity of our nation.

Ladies and gentlemen, the work we do is noble. We not only make life comfortable and convenient. We make life healthy and prosperous. And in many cases, we make life possible. Reliable, affordable energy is indispensable, and there are no substitutes for what we do. We should never lose the sense of pride in the amazing things our industry makes possible in people’s lives. We should never sympathize with the idea that people in energy-poor regions should forego the reliable, affordable fuels that can help lift them from poverty. As an industry, we must reject the notion that people must live poorer, less fulfilling lives in the name of environmental preservation, because we make reliable, affordable energy and environmental stewardship possible every day.

At Marathon Petroleum, we are extremely proud of what we do to make people’s lives better. I encourage you to share that same pride.