Quantcast
Get breaking news alerts via email

Click here to manage your alerts
Exxon pegs spending at $185B over next 5 years

By CHRIS KAHN

First Published Mar 10 2012 01:01 am • Last Updated Mar 10 2012 01:01 am

New York • Exxon said it will spend about $150 billion over the next five years to find more oil and natural gas to satisfy the world’s growing energy appetite.

Exxon Mobil Corp., the world’s largest publicly traded energy company, expects global energy demand to increase 30 percent by 2040, compared with 2010 levels. As demand grows, CEO Rex Tillerson said Exxon will plow more money into a global search for new resources. Including investments in its refining and chemicals business, Exxon’s capital budget for 2012 through 2016 will total $185 billion, up 29 percent from the prior five-year period.

Join the Discussion
Post a Comment

While pledging to boost spending, Exxon at the same time cut its long-term expectation for average annual production growth to 2-3 percent, from a previous forecast of 4-5 percent. And Tillerson said Exxon’s production could fall by 3 percent this year, after rising just 1 percent in 2011.

This highlights a key challenge for the oil and gas industry: It’s spending increasing amounts of money to achieve marginally higher, if not lower, rates of production.

Major oil companies are struggling to tap new sources of oil fast enough in an environment where big finds are rarer and costlier to exploit. Potential fields lie deep under the seabed, or in shale rock formations that require expensive technology to crack open. The cost to produce a barrel "clearly is going up," Tillerson said, with "the size, the magnitude and the conditions with which we’re making some of these investments."

When companies can’t find oil fast enough, they’re stuck with aging fields where output is declining. International production agreements also limit the amount of oil they can sell as prices rise.

Chevron Corp., BP and Royal Dutch Shell all produced less oil last year than in the prior year.

Exxon and the other have in the past few years increasingly focused on developing natural gas. Exxon believes natural gas will replace coal as the second-most popular fuel by 2025. Natural gas has accounted for more than half of Exxon’s proven reserves since 2009, and in 2010 the company spent $30 billion to acquire XTO Energy to become the largest natural gas producer in the U.S.

Its natural gas bet so far hasn’t paid off. Prices have plummeted this year following a production boom in North America and weak winter heating demand. Natural gas futures hit a 10-year low of $2.302 per 1,000 cubic feet on Wednesday.

Competitors such as Chesapeake Energy Corp. and ConocoPhillips are cutting back on natural gas production in an effort to reduce a national surplus.


story continues below
story continues below

Exxon says it won’t reduce gas production, though it will focus its future projects on bringing more oil to market. The company said that production of crude and other liquid hydrocarbons will increase by 2 to 3 percent per year through 2016, outpacing increases in natural gas production.

Altogether, Exxon said 21 oil and gas productions will begin production by 2014, and it expects to add more than 1 million barrels per day of oil and gas by 2016.

Tillerson also shared his views about a variety of other topics at a news conference following the analyst meeting.

—Gas Prices: The price of a gallon of unleaded regular has risen — more than 40 cents this year — because the cost of oil has gone up, Tillerson said. He noted that the price of crude, combined with taxes, makes up about 88 percent of the price that motorists see at the pump.

—Iran: If Iran tried to make good on threats to block off a key shipping route into the Persian Gulf, it could create "a significant amount of volatility" in world oil prices. But Tillerson thinks such a situation would be resolved within months because "the world would put all of its efforts toward reopening those straits."

—Tax Reform: Tillerson said President Obama’s proposals to cut government subsidies for oil and gas companies were unfair. "You don’t treat people differently who are in different industries, and you certainly don’t treat companies differently from their competitors."

—Iraq: Exxon remains committed to production agreements it signed with leaders in Iraqi Kurdistan. Iraqi officials have criticized Exxon’s dealings with the semi-autonomous region and have asked the oil giant to choose between its contract with the Kurds and another production contract with the central Iraqi government. "We’re committed to both of those" contracts, Tillerson said. He wouldn’t comment further.

Exxon shares fell 87 cents in afternoon trading Thursday, to $84.96.



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Login to the Electronic Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.