Chairman and CEO of ExxonMobil Darren Woods gestures as he speaks during a session at the Qatar … [+] Economic Forum in Doha on May 15, 2024. (Photo by KARIM JAAFAR / AFP) (Photo by KARIM JAAFAR/AFP via Getty Images)
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ExxonMobil announced plans on Wednesday to raise its oil production by 18% by 2030, investing between $28 billion – $33 billion annually to make it happen. While most of the capital will be dedicated to the company’s core oil and gas business, the plans call for as much as $30 billion to be invested in low emissions projects through the company’s Low Carbon Solutions business unit.
“ExxonMobil has a unique set of highly valuable competitive advantages that equip us to do what few companies have ever done – create world-scale solutions to society’s biggest challenges, decade after decade,” said Darren Woods, ExxonMobil Chairman and CEO said in a release.
Key Positions In The Permian Basin, Guyana
ExxonMobil’s plans to raise its overall production from the current 4.58 million barrels of oil per day (bpd) to 5.4 million bpd focus mainly on its massive position in the Permian Basin of West Texas and Southeastern New Mexico, and on its rapidly growing production in the deep waters offshore Guyana. “By 2030, at a 2024 dollar real Brent price of $65 per barrel, a real Henry Hub price of $3 per mmbtu, and a real TTF price of $6.50 per mmbtu, the company plans to deliver an additional $9 billion in Upstream annual earnings potential – more than 50% higher than in 2024,” the company notes.
The Woodlands-based US giant’s dominant position in the Permian Basin was enhanced last October with its buyout of big independent producer Pioneer Natural Resources, a deal that was completed in May of this year. As a result, ExxonMobil enjoys the biggest acreage position in the most active and prolific oil producing basin in North America, with “with double the number of low-cost net drilling locations versus the next closest competitor.”
As early as 2017, ExxonMobil and other big players in the Permian, like fellow US major Chevron, talked of plans to essentially convert the exploration drilling operations ongoing at the time to more of a repetitive manufacturing process through the application of advancing technologies and steadily-more sophisticated drilling and fracking programs. In its release Wednesday, ExxonMobil says it is “applying its technology advantage to increase capital efficiency and resource recovery and expects to roughly double production in the Permian Basin to approximately 2.3 Moebd by 2030.”
Aerial shot of gas wells near Pyote, Texas in the Permian Basin, a large sedimentary basin, on a … [+] warm Summer evening.
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It is an ambitious goal, but one that seems entirely doable given the company’s proven ability to make big things happen and its strong inventory of high-quality drilling opportunities.
ExxonMobil’s ability to execute ambitious projects has paid off in a big way in its development of the Stabroek block offshore the tiny South American nation of Guyana, where total production rose to 660,000 bpd in September. In Wednesday’s release, the company detailed plans for “two additional developments in Guyana, Hammerhead and Longtail, bringing the total number of developments to eight by 2030. Total production capacity in Guyana, on an investment basis, is expected to reach 1.7 million barrels per day with gross production growing to 1.3 million barrels per day by 2030.”
ExxonMobil Zeroes In On Three Low Emissions Areas
Since the creation of its Low Carbon Solutions business unit in 2021, ExxonMobil has focused its capital deployment on three key areas: Carbon capture and storage (CCS), hydrogen, and lithium production. As it notes in its release, projects in these areas align with the company’s long-time core competencies, reducing the need for hiring big numbers of new talent with expertise not currently on staff.
As its first major project in April 2021, ExxonMobil rolled out plans for a major CCS network centered along the Texas and Louisiana Gulf Coast region. As it has expanded plans and investments in this area, the company also invested $4.9 billion in 2023 to acquire Denbury Resources, which had developed the largest network of carbon dioxide pipelines throughout the same region.
Roughly a year later, in March 2022, ExxonMobil announced plans to develop a major blue hydrogen project centered in its long-time Baytown refinery and chemicals operation. Once completed, the hydrogen produced from natural gas will be used to power the refining and chemicals plants, as well as producing ammonia, a key ingredient in fertilizer, for both domestic and international uses. In Wednesday’s release, ExxonMobil said it expects the Baytown hydrogen production to become the largest in the world, “producing up to 1 billion cubic feet of virtually carbon-free hydrogen per day with about 98% of the CO2 captured and stored.”
Then, in November 2023, the company announced plans to become the largest US producer of lithium, to be obtained from the Smackover formation in Southern Arkansas. The lithium will be extracted from the brackish water produced from the Smackover via the drilling of wells using traditional oil industry techniques and rigs.
ExxonMobil said Wednesday it expects the Low Carbon Solutions unit to “grow earnings contributions by $2 billion in 2030 versus 2024.”
The Bottom Line
Taken together, these updated business plans show a company focused on maximizing profitability and returns to investors with a heavy focus on its core oil and gas projects, while still making significant investments in carbon reduction opportunities that provide strong synergies to its areas of core expertise.
The plans also portray a company management team focused on dealing with the realities of an energy transition most agree is now faltering, rather than on signaling virtue by supporting prevailing narratives. For ExxonMobil, it’s an approach that has produced record financial performance in recent years, one that seems well positioned to continue to do so well into the future.
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Publish date : 2024-12-11 06:22:00
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