{"id":23371,"date":"2017-11-15T01:08:02","date_gmt":"2017-11-15T06:08:02","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/in-the-eye-of-the-storm-an-energy-giants-view-on-climate-change\/"},"modified":"2017-11-15T01:09:10","modified_gmt":"2017-11-15T06:09:10","slug":"in-the-eye-of-the-storm-an-energy-giants-view-on-climate-change","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/in-the-eye-of-the-storm-an-energy-giants-view-on-climate-change\/","title":{"rendered":"In the Eye of The Storm: An Energy Giant\u00b4s View on Climate Change"},"content":{"rendered":"
\n

“Exxon knew about climate change half a century ago. They deceived the public, misled their shareholders, and robbed humanity of a generation\u2019s worth of time to reverse climate change.\u201d [1]<\/em><\/h3>\n<\/blockquote>\n

#ExxonKnew?<\/strong><\/p>\n

ExxonMobil has been at the center of the debate on climate change for decades, and as the largest publicly traded international oil & gas company, Exxon is no stranger to controversy. The quote above is the headline to the exxonknew.org website, which centralizes the efforts from a group of environmentalist and officials that consider the company knew about the effects on climate change due to greenhouse gas emissions decades ago, proactively tried to steer away the public\u00b4s perception via lobbying and funding of alternate research, and are calling for action by the Government for Exxon to ultimately \u201cbe held accountable\u201d [1].<\/p>\n

Various Attorney Generals have launched probes into the matter, including 2016 investigations by the states of Los Angeles, New York and Massachusetts which have been inconclusive [2].<\/p>\n

More Than Politics<\/strong><\/p>\n

Aside from the political and media controversy, the climate change megatrend has other significant impacts for ExxonMobil\u00b4s complex worldwide supply chain. 2017 has given us many sobering reminders of the very real effects of climate change, with devastating impacts from Harvey, Irma and Maria along many states. The scientific community still debates whether the raising temperatures will make the storms more frequent or not [4], however there is general consensus that due to rising water temperatures, tropical storms are likely to become more powerful and rainier [5].<\/p>\n

\"\"<\/a>Figure 1<\/strong>. EPA tracking of number of hurricanes in the North Atlantic<\/p>\n

 <\/p>\n

\"\"<\/a>Figure 2<\/strong>. EPA tracking of Power Dissipation Index – a measure of hurricane strength and sea surface temperature<\/p>\n

 <\/p>\n

ExxonMobil holds many productive assets, namely refineries and blending plants, in the Gulf of Mexico [3]. The company\u00b4s Baytown, Texas, refinery, the second largest in the country, and its Beaumont, Texas, large-scale petrochemical complex took damages during Harvey, and remained shut down, along with various others, taking 23% of the U.S. refining capacity offline for several days.\u00a0 Supply chain disruptions have also come from the Gulf\u00b4s ports, the gateway to the Company\u00b4s worldwide exports of its refined products; these ports and the related commercial activity collapse in the aftermath of the tropical storms. Port Houston, one of America\u2019s largest seaports, as an example, remained closed for more than a week after Harvey made landfall [9].<\/p>\n

\"\"<\/a>Figure 3.<\/strong> \u2013 Location of ExxonMobil\u00b4s USA and Canada Refineries [3]<\/p>\n

The Road Ahead<\/strong><\/p>\n

The company has already taken some steps to mitigate the impact. The most visible one was integrating a comprehensive business continuity plan (BCP) into their Operations Integrity Management System (OIMS) that addresses disruptions on the Gulf Coast facilities on various grounds, including natural disasters, oil spills, and hazmat situations, among others [12].<\/p>\n

The full plan can be reviewed at the SCAA (Spill Control Association of America) [12]; it incorporates chapters on alternative routes of supply from other plants from across the globe, which impacts cost but ensures reliable supply to its customers. It also has a chapter on preemptive safety stock increases in warehouses and distribution centers, as well as in other country\u00b4s distribution operations which are triggered prior to the \u201churricane season\u201d, and are well-measured to last for a significant disruption. In another chapter, the plan also encompasses manufacturing operations that use the Company\u00b4s own base-oils as raw materials, and defines alternative manufacturing recipes for refined products using non-U.S. base oils as an alternative for U.S. supply chain disruptions.\u00a0 Finally, the plan also considers alternate suppliers and long-term backup contracts to procure finished products or raw materials from third parties as a potential fallback plan.<\/p>\n

Further to the company\u00b4s current actions, a recommendation would be made on investing on developing different refineries in other geographies, or regions of the country, that might be less subject to the impact of rising temperatures and rising strength of storms.\u00a0 The company announced a $20Bn plan to strengthen its refining assets along the gulf coast; the plan, which runs through 2020, will add extra capacity at 11 sites, the reason they argue is that the zone is strategically advantageous to reap the benefits of cheap shale oil available in the region [13].\u00a0 However, the question remains on whether from this major megatrend on climate change, holding all the productive assets in a region so susceptible to natural phenomena is the right answer.<\/p>\n

Finally, we have reviewed at large the adaptation measures that Exxon can take to accommodate to climate change; the larger question, particularly in Exxon\u00b4s alleged position as the world\u00b4s second largest pollutant emitter in the sector – responsible by some accounts for 3.2% of the world’s total fossil fuel emissions from 1751-2010 [14], is what could they do to reduce its own contribution to climate change?<\/p>\n

(Word count: 791)<\/p>\n

 <\/p>\n

[1] 350.org, \u201c#ExxonKnew\u201d, http:\/\/exxonknew.org<\/a>, accessed November 2017.<\/p>\n

[2] The Washington Free Beacon, \u201cMemo Shows Secret Coordination Effort Against ExxonMobil by Climate Activists, Rockefeller Fund\u201d, http:\/\/freebeacon.com\/issues\/memo-shows-secret-coordination-effort-exxonmobil-climate-activists-rockefeller-fund\/<\/a>, accessed on November 2017.<\/p>\n

[3] Oil Change International, \u201cRefinery Report\u201d, http:\/\/refineryreport.org\/nucomp.php?id=7107<\/a>, accessed on November 2017<\/p>\n

[4] MIT Center for Global Change Science, \u201cCGCS NEWS IN THE NEWS: Hurricanes Could Be Stronger- and More Frequent\u201d, http:\/\/cgcs.mit.edu\/news-hurricanes-could-be-stronger-and-more-frequent<\/a>, accessed on November 2017<\/p>\n

[5] EPA, \u201cClimate Change Indicators: Tropical Cyclone Activity\u201d, https:\/\/www.epa.gov\/climate-indicators\/climate-change-indicators-tropical-cyclone-activity<\/a>, accessed on November 2017<\/p>\n

[6] Climate Central, \u201cHurricanes Likely to Get Stronger & More Frequent: Study\u201d, http:\/\/www.climatecentral.org\/news\/study-projects-more-frequent-and-stronger-hurricanes-worldwide-16204<\/a>, accessed on November 2017<\/p>\n

[7] The Washington Post, \u201cExxonMobil refineries are damaged in Hurricane Harvey, releasing hazardous pollutants\u201d, https:\/\/www.washingtonpost.com\/news\/energy-environment\/wp\/2017\/08\/29\/exxonmobil-refineries-damaged-in-hurricane-harvey-releasing-hazardous-pollutants\/?utm_term=.1adfbeda60dc , accessed on November 2017<\/p>\n

[8] Reuters, \u201cFactbox: U.S. Gulf Coast energy infrastructure shut due to Harvey\u201d, https:\/\/www.reuters.com\/article\/us-storm-harvey-oil-factbox\/factbox-u-s-gulf-coast-energy-infrastructure-shut-due-to-harvey-idUSKCN1BG2Y8<\/a>, accessed on November 2017<\/p>\n

[9] USA Today, \u201cHouston port reopens cargo terminals while waterways access remains limited\u201d, https:\/\/www.usatoday.com\/story\/money\/2017\/09\/01\/houston-port-reopens-cargo-terminals-business\/625479001\/<\/a>, accessed on November 2017<\/p>\n

[10] Hydrocarbons Technology, \u201cTop 10 large oil refineries\u201d, http:\/\/www.hydrocarbons-technology.com\/features\/feature-top-ten-largest-oil-refineries-world\/<\/a>, accessed on November 2017<\/p>\n

[11] Singapore Business, \u201cExxonMobil unveils expanded Jurong lubricant plant\u201d, http:\/\/www.straitstimes.com\/business\/exxonmobil-unveils-expanded-jurong-lubricant-plant<\/a>, accessed on November 2017.<\/p>\n

[12] ExxonMobil, \u201cOverview of ExxonMobil Emergency Response Processes\u201d, http:\/\/www.scaa-spill.org\/presentations\/2015-annual-meeting\/Overview%20of%20ExxonMobil%20Emergency%20Response%20Processes.pdf<\/a>, accessed on November 2017<\/p>\n

[13] ExxonMobil, \u201cExxonMobil Plans Investments of $20 Billion to Expand Manufacturing in U.S. Gulf Region\u201d, http:\/\/news.exxonmobil.com\/press-release\/exxonmobil-plans-investments-20-billion-expand-manufacturing-us-gulf-region<\/a>, accessed on November 2017<\/p>\n

[14] Heede, R. Climatic Change (2014) 122: 229. https:\/\/doi.org\/10.1007\/s10584-013-0986-y<\/p>\n","protected":false},"excerpt":{"rendered":"

Climate change is disrupting the supply chain of Oil & Gas companies located along the Gulf of Mexico, how is a major player adapting to the rising temperatures that it has allegedly helped foster?<\/p>\n","protected":false},"author":10157,"featured_media":23372,"comment_status":"open","ping_status":"closed","template":"","categories":[3629,3645,3644,1800],"class_list":["post-23371","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-climate-change-and-supply-chains","category-exxon","category-gulf-of-mexico","category-hurricanes","hck-taxonomy-organization-exxon-mobil","hck-taxonomy-industry-energy","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nIn the Eye of The Storm: An Energy Giant\u00b4s View on Climate Change - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/in-the-eye-of-the-storm-an-energy-giants-view-on-climate-change\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"In the Eye of The Storm: An Energy Giant\u00b4s View on Climate Change - 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