HOUSTON—ExxonMobil Corp. (XOM) CEO Rex Tillerson describes the flood of North American tight oil supply as a freight train that no one in the marketplace foresaw. That unexpected supply collided with a weakening global demand, causing the current oil price blowout, he said.

Tillerson, who spoke last week at IHS CERAWeek in Houston, said far-reaching changes are occurring in global oil supply and demand, and it will effect a dramatic transformation on the energy landscape.

“We are at a turning point,” he said “There is indeed a new world being made by the energy sector, yet the parameters of this new energy world remain to be determined.”

Contrary to popular opinion, Tillerson does not blame Saudi Arabia or OPEC as conspiring to strategically influence world oil prices by protecting its own production volumes and letting the market determine the marginal costs of those supplies.

“I don’t take the view that they are trying to threaten other suppliers. I just think it’s a pricing exercise,” Tillerson said, “and it will be very useful to the industry to have a clear understanding of the resilience of these resources, how robust they are and how they’ll respond to different price environments.”

Understanding how the resource behaves in a reduced price environment “is something we’ll all learn in this downturn,” he added.

He drew an analogy to shale gas, which in 2010 had 1,200 rigs targeting these reserves, with production near 55 billion cubic feet per day (Bcf/d) at $8 per Mcf. Today, the natural gas rig count sits below 300 at a $2.80 price, but production has ballooned to 72 Bcf/d.

“Clearly, the significant decline in rig activity did not diminish the continued growth of natural gas capacity, even in a very difficult price environment. Is that analogous to tight oil?,” he asked. “I think we’re all going to learn that.”

The way to prepare for the inevitable in a commodity business, he said, is what you do in the years preceding that will put you in a position to deal with it.

“Have an efficient workforce, and pay attention to cost efficiencies, capital efficiency, project execution excellence and deliver projects on time and on budget. The way we operate has made us more efficient and able to withstand the downturn.”

While ExxonMobil has reduced its budget by 12% and has delayed pursuing some opportunities, it still has “a healthy plate of things to keep us busy,” Tillerson said.

“My expectation is that this will be with us for awhile,” he said. “People need to settle in to a different price environment for at least the next couple of years. Then we’ll see how things respond.”

Contact the author, Steve Toon, at stoon@hartenergy.com.