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Lloyds List: ExxonMobil to spend $20bn a year growing production profile

US major’s five-year plan for oil, gas and downstream projects should result in up to 5m boe per day output, writes Martyn Wingrove, Lloyds List
Published: Mar 13, 2007

US MAJOR ExxonMobil is planning to invest $20bn per annum over the next five years to develop a stream of new oil, gas and downstream projects.

The world’s largest publicly listed oil group has at least 20 upstream and liquefied natural gas projects in progress to start up by 2009, plus several more to undertake from 2010.

In an analyst presentation last week, ExxonMobil’s chairman and chief executive Rex Tillerson said capital expenditure would be $20bn a year to 2011.

Of this, around $15bn will be spent annually on upstream and LNG projects around the world, a further $2.5bn will go on downstream investment and the rest on chemical and other divisions.

Mr Tillerson added that 20 new upstream project start-ups would add 1m barrels of oil equivalent of daily production to the company’s base volume levels.

Analysts were told in New York that ExxonMobil’s project inventory held 24bn oil equivalent barrels so this could be added to its listed reserves over the next five years.

In 2006, ExxonMobil had the highest production of any international oil company at 4.2m boe per day. With all these projects in its portfolio, the US firm anticipates daily production of around 4.8m to 5m barrels, depending on mature field declines and these new start-ups.

Last year, its upstream capital expenditure was $16.2bn and it added 4.3bn boe of hydrocarbon resources, of which 2bn barrels oil equivalent were booked reserves, through drilling and sanctioning new projects.

Its existing resource base of 74bn boe is mostly centred on North America, Asia, the Middle East, Africa and Europe and is diversified with natural gas, heavy oil, conventional oil and reserves linked to LNG projects.

The proved reserves, those booked with the Securities ‘ Exchange Commission in New York, at the end of 2006 were around 23bn boe, with the majority of this in conventional oil and gas linked to LNG trains.

In 2006, ExxonMobil was involved in seven project start-ups including Dalia in Angola, Erha and the East Area oil recovery programme in Nigeria, Fram East in Norway, Gunhong off Malaysia and the second phase of Azeri-Chirag-Gunashli in the Caspian Sea.

This year there should be seven more programmes commencing production, mostly in Europe and Africa.

In Angola, the group is involved in deepwater developments Rosa and Marimba North and in Qatar it is a partner in the RasGas V LNG train.

In Norway ExxonMobil is a partner in Norsk Hydro’Shell’s Ormen Lange gas project, plus Statoil’s Statfjord Late Life and Volve developments, all due to start in 2007. In the Netherlands, ExxonMobil expects the Waddenzee gas project to begin.

In 2008 and 2009, the US major has a mixed bag of 18 projects to begin production, with a heavy focus on LNG and conventional oil resources.

In the Middle East, ExxonMobil expects trains six and seven to commence exports at RasGas and the fourth and fifth Qatargas II trains to come on line. There should also be a second phase of the Al Khaleej structure to be brought on stream.

Linked with these there should be three LNG reception terminals opened Adriatic in Italy, South Hook in England and Golden Pass in the US Gulf.

In West Africa, ExxonMobil expects the Kizomba C Mondo and Saxi-Batuque floating production storage and offloading vessels to begin exporting oil in 2008 and it will start the East Area natural gas project in Nigeria.

There will be more conventional oil projects to begin in the Caspian including a third phase at ACG and more expansion of the Tengiz field, as long as the export pipeline capacity can be upgraded.

ExxonMobil is also a partner in Shell’s Starling gas-condensate development in the North Sea and Statoil’s Tyrihans subsea project in the Norwegian Sea.

It expects BP’s deepwater Thunder Horse project in the Gulf of Mexico to begin in 2008 and will develop the Jerneh B area in Malaysia.

After 2010, ExxonMobil’s project inventory seems to be focused more on deepwater West Africa and Australasia, while there are a few around Asia and North America.

Angola will be a key country to the US group’s production growth as it will continue developing satellites to the existing Kizomba infrastructure of four FPSOs and two TLPs.

It will also be a partner in four Total FPSO-based projects, two in ultra-deepwater block 32 and the Pazflor and Clov developments in block 17.

It is Total’s partner in the Usan development in Nigeria, where it also has its own Bosi project to undertake and is Shell’s partner in Bonga north, northwest and southwest developments.

In Australia, ExxonMobil will hope to build a double train LNG plant for the Greater Gorgon projects and perhaps another one to develop the deepwater Scarborough gas field. It also intends to develop the Kipper and Tuna fields in the Bass Strait.

In that region, the New York-listed group wants to participate in the Papua Gas, Natuna Sea gas and Banyu Urip projects.

In North America there are very long term projects that may progress including Kearl heavy oil, Prudhoe Bay West oil and Alaska Gas, MacKenzie Delta gas in Canada and the offshore Hebron project.

Surprisingly there are no plans at present for more deepwater Gulf of Mexico projects, but the US major will start an enlarged exploration campaign this year.

After 2010, ExxonMobil is expecting another large volume of new oil production from the Caspian Sea when the giant Kashagan field is brought on stream.

There could be more phases of the Tengiz field in Kazakhstan and Sakhalin I project in Russia, plus the Barzan gas field off Qatar could be brought on line.

In Europe, the group anticipates first oil will come from the Tempa Rossa field in Italy and the main Fram field off Norway.

The projects highlighted by ExxonMobil up to 2009 are almost certain to be underway by then, but the post-2010 list is much more optimistic. But even taking this into consideration, the firm’s production profile looks to be growing at perhaps a faster rate than its main rivals.

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