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MOSCOW (MRC) -- ExxonMobil has
slashed its 2025 global oil and gas production estimate to 3.7 million boe/d,
even as it focuses on growing output at the Permian Basin and in Guyana,
reported S&P Global with reference
to the company's top executives' statement on March
3.
Production will remain flat from 2020 levels through 2025 at 3.7
million boe/d, the company said during its Investor Day 2021 webcast. That is
down from the 5 million boe/d production estimate for 2025 ExxonMobil released
last year in its 2020 Investor Day, just as the coronavirus was beginning to
take its toll on global oil demand and prices.
While global production
will remain flat, the company's operations in Guyana and the Permian Basin will
ramp up over the next several years.
ExxonMobil expects its Permian
operation, which produced 370,000 boe/d in 2020, to average 400,000 boe/d this
year and potentially 700,000 boe/d by 2025, assuming favorable market
conditions, Neil Chapman, ExxonMobil's senior vice president of upstream, said
on the webcast.
That is down from the 1 million boe/d target the major
had set for 2024 just a couple of years ago.
A major ExxonMobil objective
for the Permian this year is to achieve double-digit returns while maintaining
five to seven rigs in the play, where it has a resource potential of 10 billion
boe with 70% higher-margin liquids at oil prices less than USD35/b WTI. As well,
it also aims to decrease emissions 50% from its Permian operation by 2025 versus
2016 levels, Chapman said.
ExxonMobil currently has eight rigs working in
the play, compared with 57 a year ago, according to investment bank Tudor
Pickering Holt.
In Guyana, ExxonMobil operates the country's offshore
Stabroek block, which produced the country's first oil under a partnership with
Hess Corp. and China's CNOOC in December 2019.
The block ramped to peak
first-phase output in the fourth quarter of 120,000 b/d, although two additional
projects are under development that will begin production in 2022 and 2024,
respectively. Those projects will utilize floating, production, storage and
offloading vessels with capacities of 220,000 b/d each.
The partners
envision more than 750,000 b/d from five FPSOs by 2026, as well as a sixth
Guyana project producing by 2027 from Stabroek, which currently has a resource
potential of more than 9 billion boe. The projects aim to deliver more than a
10% rate of return, and potentially more than 20%, at an oil price less than
USD35/b - and zero routine flaring by 2030.
"It's possible that 10
FPSOs will be needed to develop the resource we've discovered so far," Chapman
said. "We expect the potential of the basin to be more than double what we've
already discovered," or more than 18 billion boe.
Even as climate-change
initiatives and goals are gaining ground in the company's priorities, upstream
investment remains a critical part of its forward plan.
"The upstream
will need continuous investment going forward," Andrew Swiger, ExxonMobil senior
vice president, said during the webcast.
The company's chief aims for the
next several years are to grow its cash flow and earnings and cut costs, Swiger
said, while working toward commercialization of lower emission technologies. It
will continue to high-grade its portfolio, and retain capital investments that
generate the highest returns.
"That's the foundation on which we've
established the low-carbon futures business," company CEO Darren Woods said on
the webcast.
For instance ExxonMobil will reduce its North American dry
gas position 50% by 2025 - which it considers a lower-value asset, Chapman
said. The company took a total impairment charge of USD19.3 billion in Q4 to
reduce the carrying value of dry gas assets in the US, western Canada and
Argentina.
ExxonMobil's total 2021 capex will remain at the USD16
billion-USD19 billion level released last month in the company's Q4 conference
call, as well as its earlier-stated longer-term 2022-2025 average of USD20
billion-USD25 billion. At that time, ExxonMobil also said it expects permanent
structural cost savings of USD6 billion per year by 2023.
Oil and gas is
expected to play a smaller role in the shift towards a lower carbon footprint,
with demand focused mostly for making petrochemicals and transportation fuels so
the "cost of supply will be absolutely critical," said Woods, adding that its
upstream strategy is key.
Woods noted that International Energy Agency
data showed in 2019 that oil and gas accounted for 55% of global energy demand,
the equivalent of about 98 million b/d of oil.
In 2040, oil is expected
to have a 48% share, with demand at about 75 million b/d of oil and natural gas,
under a scenario used by the United Nation's Intergovernmental Panel on Climate
Change.
While the lion's share of ExxonMobil's reduction in greenhouse
gases come from the upstream sector, in the downstream and chemical sectors, the
company is "very focused on energy efficiency", said Jack Williams, ExxonMobil's
senior vice president for downstream and chemicals.
"It's the best way to
reduce greenhouse gas emissions," he said.
ExxonMobil is also shifting
the product mix from its refineries and petrochemical facilities toward higher
margin products by reducing output of fuel oil and gasoline and increasing
output of diesel and jet. In Singapore, it is turning uneconomic fuel oil into
higher value lubricants and distillates.
Refining product upgrades are
underway around the world, including adding a hydrofiner to the Fawley refinery
in the UK to increase diesel output, adding light, sweet crude processing
capacity at the Beaumont, Texas, plant to match increased Permian output, and
connecting its other two US Gulf refineries to its Permian crude
assets.
ExxonMobil's previously announced creation of a new business
unit - ExxonMobil Low Carbon Solutions - is focusing on creation of
hydrogen and using carbon capture and sequestration technologies to mitigate
carbon emissions.
While the carbon sequestration project underway at
Rotterdam is cutting edge today, the new business unit is looking to find uses
for captured carbon beyond sequestration, such as in steel and cement as well
its application for e-fuels.
"It's promising, but there's a long way to
go," said Swiger.
As MRC wrote before,
ExxonMobil's recent operational shutdowns include polyethylene (PE) facilities
amid power outages prompted by the deep freeze that has enveloped the US Gulf
Coast. "This event has caused widespread power outages across Texas and
Louisiana" Feb. 15," the letter, dated Feb. 16, said. "As a consequence, several
ExxonMobil Chemical operations have experienced loss of power and other key
utilities, impacting our ability to resume full operations." ExxonMobil operates
three PE units in Mont Belvieu, Texas, with combined capacity of 880,000
mt/year, according to S&P Global Platts Analytics.
Exxon is among
many petrochemical producers that shut Feb. 14 and subsequent days because of
sustained extreme sub-freezing temperatures in the region. ExxonMobil previously
confirmed Feb. 16 that the company had shut all refining and chemical operations
at its Baytown and Beaumont, Texas, complexes. Ethylene produced at Baytown
feeds the Mont Belvieu PE operations.
According to MRC's ScanPlast report,
Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2%
year on year. Only shipments of low density polyethylene (LDPE) and high density
polyethylene (HDPE) increased.
ExxonMobil is the largest non-government
owned company in the energy industry and produces about 3% of the world"s oil
and about 2% of the world's energy. |
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