Anticipating a Growth of around 1-2% from its Upstream Projects; Still Missing the Game Changer Upcoming Projects

Friday 27 July 2012, Amsterdam

Exxon, like other big oil majors, has been continuously attempting to increase its overall production volumes. Production levels were declining until 2009, before increasing in 2010 and 2011. The company, however, operates with a long–term vision and has projects lined up to fuel its future growth.

Exxon has a strong geographically diversified portfolio of upcoming projects. Currently, the company’s upstream portfolio comprises of an inventory of over 120 major projects, located in different countries, the four most important of which started production during 2010 and 2011. These projects are RasGas Train 7, Golden Pass LNG Terminal, Sakhalin–1 Odoptu and Pazflor. The combined daily production from these projects is expected to be 345,000bbl/d and 1,250mcf/d of natural gas on reaching the peak production. Apart from these projects, the company has planned nine major start-ups during 2012–2013: Kizomba Satellites Phase 1, Turrum, Kearl Initial Development, Syncrude Aurora North Mine Sustaining, Kashagan Phase 1, Telok, Usan, Etim/Asasa Pressure Maintenance and Satellite Field Development Phase 1. Additionally, the company plans to commence 12 more projects in 2014. Those anticipated to start in 2014 include Cravo-Lirio-Orquidea-Violeta (CLOV), Kipper/Tuna, Cold Lake Nabiye Expansion, Hibernia Southern Extension, Syncrude Mildred Lake Mine Sustaining Project, Banyu Urip, Damar Gas, PNG LNG, Sakhalin-1 Arkutun-Dagi, Barzan, Hadrian South and Lucius. These projects will make significant contributions in the total production of the company in the future. Therefore, these projects will support the long term growth of the company.

Kearl Project

Exxon has been developing Kearl oil sands project, which is located 70 miles north of Fort McMurray, Alberta, in Canada. Exxon, through this project, will extract crude bitumen from the oil sands. Kearl is a joint venture between ExxonMobil Canada Properties and Imperial Oil Limited; Imperial Oil Limited holds 71% and ExxonMobil Canada Properties holds 26 %.( ExxonMobil has a 69.6% interest in Imperial Oil Limited and a 100% interest in ExxonMobil Canada Properties). The company’s acreages are expected to have a resource potential of over 4 billion bbl of bitumen. The company plans to develop this project in several phases, spread over a period of 40 years. Mining and facility construction for Phase 1 started in 2009 and is scheduled for completion in late 2012. As of December 2011, 87% of the Kearl Initial Development project was complete. The company, through the use of its superior technology, is constantly able to raise its production guidance for the project. The company initially forecasted to achieve 110,000 gross barrels of bitumen per day at plateau production; however, the expansion project, following the initial development, will increase the capacity to 345,000 gross barrels of bitumen per day. With the improved environment for oil prices, coupled with the company’s technical competence to make it a low cost project, Kearl is a good investment.

LNG Trains in Qatar

Exxon along with Qatar Petroleum Company has been making a series of investments in Qatar. The company intends to develop natural gas from the North Field in Qatar and supply it to other parts of the world. The company is present across the entire value chain of LNG; production, liquefaction, LNG ships and LNG terminals. The company has a working interest, ranging from 10 to 34 percent, in 12 LNG trains in Qatar. The QatarGas joint venture comprised of five trains, out of which three trains had a capacity of 9.9mtpa and the remaining two had a capacity of 7.8mtpa. The RasGas train 7 commenced operations in February 2010 and it had a capacity of 7.8mtpa. The total LNG production from all the 12 trains in 2011 was around 62 million tons. Exxon, through these trains, is able to serve the markets of Europe and Asia.

In addition to these projects, the company is also actively exploring opportunities across various countries. The company held 1.3 million net acres in the deepwater GOM as of December 2011. The Hadrian field discovery in Keathley Canyon and the Julia field discovery in Walker Ridge are the two major discoveries of the company in this region. Furthermore, in 2011, two exploration wells were drilled by the company in the Turkish and Romanian block of the Black Sea. Apart from the conventional oil plays, Exxon has amassed significant positions in unconventional oil and gas plays. The company has a 37 billion boe of unconventional resource base. Exxon has presence in the Marcellus Shale in the US, Horn River and Firebag in Canada. The company is running various exploration and appraisal programs in its unconventional plays. In order to strengthen its position in unconventional resources, the company acquired XTO Energy in June 2010. Through this acquisition, Exxon was able to expand its footprints in the Haynesville, Marcellus, Barnett, Fayetteville Woodford, and Bakken shales.

This report expects the company’s production to have a CAGR of 2.7% during 2012–2016. It has several development and exploration projects lined up for the future. Additionally, the projects are geographically diversified and span across all resource types. This indicates a balanced and strong portfolio of upcoming projects for the company.