Rice University
Rice Magazine| The Magazine of Rice University | No. 1 | 2008

Lynn Elsenhans

You’d think that Lynn Laverty Elsenhans ’78 might be ready to retire after serving at nearly every executive level in Royal Dutch Shell during her 28-year career there. But Elsenhans isn’t the retiring sort. Beginning this summer, she’s taking on fresh challenges as CEO and president of Sunoco — and as the first woman to lead a major oil company.

Lynn Laverty ElsenhansIt seems like every one of Elsenhans’ experiences has led her to this destination. Her father spent his career in a variety of research and marketing jobs for Exxon USA, and his work kept the family moving between metropolitan New York and Houston. All the moving taught Elsenhans to be adaptable, and her exposure to various high school curricula helped balance her academic strengths. When it came time to investigate colleges, she was immediately attracted to Rice because of its reputation in math, engineering and the sciences.

Elsenhans embraced every aspect of life at Rice. She played on the school’s first women’s intercollegiate basketball team; she was in the Marching Owl Band; she was elected to student government; she was the sports editor for The Thresher; and she was a student representative on the Examinations and Standings Committee. Yet somehow, she still managed to find time to excel in school and become social in a way she’d never been. “For me, it was the total experience, both inside and outside the classroom,” she said. “It was absolutely excellent for me.”

There also were glimmers of the kind of success she would later achieve. “People listened carefully when she spoke,” said Ronald Stebbings, who was master of Jones College when Elsenhans was there. “She gathered her thoughts and had something useful to say.”

After leaving Rice, Elsenhans went straight to Harvard Business School. By the time she finished, she was more than ready to make the leap into the work world. “It sounds corny, but it really mattered to me to work for something that made a difference,” she said. “I couldn’t think of anything that had more of an impact on our society than energy.”

During her tenure at Shell, Elsenhans steadily increased her authority and responsibility. After starting her career at the company’s U.S. headquarters in Houston and then moving to the nearby Deer Park refinery, she had assignments in virtually every aspect of the company’s downstream business. In 1999, she was made president and CEO of Shell Oil Products East, based in Singapore. Since then, she has served co-currently as president of Shell Oil Company and president and CEO of Shell Oil Products U.S. and, most recently, as executive vice president of global manufacturing for Royal Dutch Shell.

It’s an enviable career trajectory made even more remarkable by the fact that it occurred in an environment that has not always been encouraging to women. “When I first started, there weren’t many women in the industry, and women’s credibility was very much questioned,” Elsenhans said. Much has changed since the early 1980s, thanks, at least in part, to Elsenhans’ success. As she rose in the corporate hierarchy, she made a concerted effort to pave the way for women who followed by mentoring them and helping establish women’s networking opportunities within Shell.
This year, however, Elsenhans hit a ceiling that was geographic rather than glass. The only place left to go within Shell was to the company’s European headquarters, and for family reasons, she and her husband, John ’74, wanted to remain in the United States. Facing retirement, even if she wasn’t ready to retire, she was asked to take the helm of Sunoco.

“It’s a really good fit for me,” Elsenhans said. “I worked for 28 years in the downstream part of the oil business — oil and chemical products — and that’s what Sunoco does.” It also was good from a personal standpoint because the company’s headquarters are in Philadelphia, which allows the Elsenhanses to remain close to John’s mother, who lives in the Northeast.

Elsenhans assumed her new role in August, but she graciously took a little time to talk to Rice Magazine about energy, women in the corporate world, leadership and, of course, her favorite university.

“One of the hardest lessons for me to learn as a leader was the need to give up being right. If you’re always advocating your position, you aren’t being open to the ideas of others.”
- Lynn Elsenhans

Lynn Elsenhans Q&A

Rice Magazine: Energy is one of the most important issues of our day. What is your projection for the oil and gas industry in the mid- to long term?

Lynn Elsenhans: We’re all concerned about the price of energy, particularly gasoline, being driven up by high oil prices. A lot of people don’t recognize that downstream oil companies like Sunoco do refining but not drilling and don’t benefit from the high price of oil. They’ve been put in a bind, too. Energy usage typically follows economic activity, and because the economy is sluggish and product prices are high, people are changing their behavior in the way they drive and heat their homes. Product demand has been down dramatically. At the same time, supplies are getting quite loose because of ethanol and other biofuels mandates. We also have refinery expansions coming on-stream. All of those factors really squeeze the margin for downstream producers like Sunoco and make it quite difficult to make money. That surprises most people, who think that oil companies are making tons of money. The companies that produce oil and gas are making a lot of money, but the downstream companies aren’t.

Lynn ElsenhansThere are really two pieces to the downstream oil industry. One is the manufacture of oil products, such as gasoline and other fuels. Right now, nearby, non-OPEC sources of supply, such as those in Mexico, are not producing as much as in the recent past, at a time when demand for crude in developing economies is soaring. That’s part of the reason the price of crude oil is going up. In the short to medium term, there will be tremendous pressure on product prices to go up even if the economic environment is not particularly good for the companies that make those products. That will tend to lessen the amount of investment in that part of the business. Over time, as the economy improves, we may, in fact, see a shortfall of product, giving us the double whammy of high crude oil prices plus tightness of product creating a tremendous increase in the price of the products. There will be a fair amount of volatility, but that volatility will be around a generally high price, so I don’t foresee consumer prices coming down in any dramatic way.

The other piece of the industry makes petrochemicals: base chemical feedstocks for plastics and other chemical products. I don’t see a very good picture in this part of the business for North American producers unless they are the most competitive and efficient producers. In the past, the industry depended on exporting chemical products, but the new capacity being built in the Asia–Pacific region, where the big demand for the products is, will push those exports back into the U.S. I predict that some refineries and petrochemical facilities will need to shut down. That’s a tough call for those businesses, and it’s a tough outcome for the communities where those plants are located.

Rice Magazine: What challenge are you least looking forward to as Sunoco’s president and CEO?

Lynn Elsenhans: I’m not looking forward to dealing with those politicians who are looking to paint Lynn Elsenhansthe industry as villains. Sometimes I get the impression that, for political reasons — meaning what they perceive it takes to get re-elected — they don’t really want to understand what our country’s energy challenges are and don’t have the will to do the kinds of things that need to be done for sound energy policy. It can be frustrating to try to get our story out, and that’s compounded by considerable distrust of the industry and almost a tuning out of what the industry has to say.

Rice Magazine: What are the issues that politicians may be unwilling to face?

Lynn Elsenhans: The first one has to do with energy conservation, which is a combination of better energy efficiency and changes in behavior in the way people use the products. While some of that happens naturally as the prices go up, there clearly are ways to encourage people to use energy more efficiently. But as a nation, we haven’t invested enough in new technologies that will make energy usage far more efficient than it is now.

The second has to do with supply. Biofuels are part of the answer, but they aren’t a complete solution, and they make sense only if they are not driving up the cost of food. Sunoco doesn’t drill for oil and gas, but for those companies that do, there needs to be more access. That includes drilling in wildlife preserves, in Alaska and offshore. I don’t understand why we would deprive ourselves of a secure supply based here in this country and continue to depend on parts of the world that aren’t necessarily friendly to our country. The industry knows how to produce oil and gas in a very responsible way with a minimum footprint on the environment, and as a country, we have to let them do that.

Rice Magazine: Can America eventually do without foreign oil?

Lynn ElsenhansLynn Elsenhans: In a word, no. Our appetite for oil is well beyond our ability to produce it from supplies just from the United States, or even from North America as a whole. In the very long term, we might become less dependent than we are today as other forms of energy come on-stream. Biofuels are a part of a mix that will help extend the life of liquid fuels, but there’s only so much cellulose and waste plant matter that you’re going to be able to turn into fuel without affecting the food supply and impacting the CO2 balance through deforestation. There’s been a lot of talk about hydrogen and hydrogen fuel cells, but that has its own problems. Where do we get the hydrogen? A main solution will be electrification. Predominantly, in the large scale, it’ll have to be nuclear generated. Wind and solar are great, but they’re not going to be enough to make a significant difference, though they’re part of the mix.

Rice Magazine: When you started in the industry, it was unheard of for a woman to reach the level of president and CEO. Is the glass ceiling being broken or just cracked?

Lynn Elsenhans: Women in all kinds of fields have opportunities for leadership that didn’t exist Lynn Elsenhanswhen I started working. In the energy industry, I cannot think of a role that women don’t participate in, so I think the opportunities are out there. The numbers would suggest, however, that it’s still difficult for women to get to the highest levels, and one of the difficulties is in the ways people interrelate. Research shows that women leaders tend to be either competent or liked, but rarely both, and that’s a double bind. People don’t tend to trust people they don’t like, and it’s very hard in business to lead if there isn’t mutual trust and respect. It’s also difficult to go forward in a company if you’re not considered competent. As society gets more comfortable with the notion that women can be tough when there’s a reason to get tough, as well as taking the more traditional supportive role, it will tend to make it easier for women to have top jobs and break that glass ceiling. There have been inroads, but I don’t think we’re there yet.

Rice Magazine: What are the qualities of effective leadership?

Lynn Elsenhans: The critical thing I tell people is to be yourself. Authenticity is incredibly important, and if you’re trying to be someone you’re not, people see that, and it’s the kiss of death. Being self-aware also is important. Understanding the impact you have on others and being open to feedback. One of the hardest lessons for me to learn as a leader was the need to give up being right. If you’re always advocating your position, you aren’t being open to the ideas of others. Beyond that, a leader has to be more positive than negative and have a vision for the future and a belief that things can be better. People need a reason to believe and hope, and they will not follow a leader who doesn’t have the view that tomorrow will be better than today.

Rice Magazine: Some people define success by how far they rise and how much money they make. How do you define success?

Lynn Elsenhans: How much of a difference I can make to people’s lives. On the personal side, it’s: Who loves you? Who do you love?

Rice Magazine: You’ve lived in a lot of countries and traveled extensively. What are some of your favorite places and why?

Lynn Elsenhans: I really like Indonesia. The Indonesian people are incredibly friendly, welcomingLynn Elsenhans and gentle, and the colors, music and art are quite interesting and exciting. Bali really is a magical place. Another place that I think is magical is the Rajasthan region in India. It’s where the Taj Mahal is, and it’s the area of India where the Mughal Empire had trade routes from Pakistan down into India. Again, the food, colors and art are fantastic, and the Taj is just amazing. And I love Italy. There’s probably no place in Italy I’ve been that I didn’t think was just fabulous.

Rice Magazine: You’re a member of the Rice Board of Trustees, and you’re also a major contributor to scholarship funds as well as to the rebuilding of Autry Court. Why is this phenomenal level of service to the university important to you?

Lynn Elsenhans: I have a tremendous passion and deep love for Rice. I had a fantastic experience here as a student. It prepared me extremely well and is a part of my success. I still have relationships with many of the people I met here. A way for me to give back to Rice is to contribute my time and my money. I was fortunate enough to be asked to be a trustee, and I’ve really enjoyed it. The Rice Board is a tremendous group of dedicated and capable people.

Lynn ElsenhansIn terms of my personal giving, I try to stay tuned to what the university needs, and one of the things we’re trying to do is expand undergraduate enrollment while maintaining the exceptional quality of the students. A big part of our ability to attract students is scholarships, so that’s one of my concentrations. Also, I was approached by Athletics Director Chris Del Conte to give to Autry Court. I was convinced because I believe that having students of high academic achievement who have the ability and drive to compete in Division I is one of the things that sets Rice apart.

I’ve participated in sports throughout my life, and it’s a big part of who I am. In fact, one thing I tell anyone — women, especially — who is interested in going into business and being in leadership is to play a team sport. You learn a lot about yourself and what it means to interrelate with people and to work toward a common objective at the highest levels when you play on a good sports team. Being able to give toward the women’s basketball locker room in Autry was a small way for me to help keep that alive at Rice.