CERAWeek '17: Exxon unveils $20-billion Gulf Coast project, Novak says no to joining OPEC
HOUSTON -- The upstream technology breakthroughs that led to the U.S. shale revolution have, in turn, enabled a new downstream manufacturing renaissance, said Exxon Mobil CEO Darren Woods at the IHS CERAWeek event on Monday in Houston.
After increasing the company’s Permian basin holdings to 250,000 acres earlier this year, Woods announced at the conference that the company plans to capitalize on its shale resources with a $20-billion manufacturing expansion along the Gulf Coast, called “Growing the Gulf,” which will take place through 2022. The project includes 11 new chemical, refining and LNG manufacturing facilities along the coastal regions of Texas and Louisiana, and will provide about 45,000 new jobs to the Gulf Coast community. Many of these will be skilled jobs, with salaries that average about $100,000 annually, said Woods. Investments in Growing the Gulf began in 2013, he noted.
“Growing the Gulf is about more than increased manufacturing capacity, though. It is also about increased exports,” said Woods. “These projects are export machines, generating products to fast-growing nations needed to support larger populations and higher standards-of-living.”
The Exxon CEO said U.S. natural gas production from shale plays will play an important part in providing energy to the world while reducing emissions in the future. “Natural gas, including the gas produced from shale, is cleaner-burning than coal,” he said. “The United States is now emitting fewer greenhouse gases than it has in a generation, thanks largely to natural gas.”
No plans to join OPEC, LNG production to grow. Russian Minister of Energy Alexander Novak said during a ministerial address at the conference that Russia has no current plans to join OPEC. Still, he said, the late 2016 agreement to cut production between OPEC and 11 non-OPEC countries, including Russia, was important for long-term balancing of global supply and demand. “Russia is not considering joining OPEC, but there is a need for cooperating between different companies and different countries,” Novak said. Russia expects to reduce output by 200,000 bopd by March, 300,000 bopd by April, and has already achieved 50% of its total, agreed production cut.
The agreement comes after Russia’s production output grew by about 400,000 bpd in the past two years, “despite the price decline and sanctions imposed on some Russian companies,” he said. “Russia has been able to adjust itself to the low-priced oil economy.”
The country plans to continue targeting its tight oil plays in the near future, as well as fields in eastern Siberia and its resources in northern Yamal, which are fueling Russia’s LNG growth, said Novak. Claiming 5% of the global market share of LNG, he said the country has a goal to reach 15% market share by 2020. “LNG is the product of the future.”
Leadership in challenging times. During a leadership dialogue session at the conference, Statoil CEO Eldar Sætre said that while the downturn has been painful, it presents an opportunity for companies to innovate and strengthen competitiveness. “Never waste a good crisis,” he said. “Now is the time to change the way we operate.”
Sætre said that global collaboration and integration are also important for the industry to remain competitive with the cost of renewables, and also to become more environmentally friendly. “Oil and gas will be a significant part of the future energy mix, but we need to more aggressively pursue carbon efficiency,” he said. “Technology and innovation is helping renewables become increasingly cost-competitive.” He said Capex reduction for renewables is expected to reach 15%-20% by 2030. “Oil and gas is global by nature … cooperation is necessary for industry success.”
In Brazil, Petrobras has had to overcome not only financial challenges, but political ones as well, noted Petrobras President Pedro Parente during the leadership panel. Since political corruption was uncovered involving the company in 2014, resulting in indictments, arrests and criminal charges in 2015, the company has been working to recover and gain back trust from the public, “moving from the scandal page to the business page,” Parente said. “Since 2015, things have started to change at Petrobras … this is just the beginning of a long road.”
“We are humbled by the responsibilities and challenges ahead of us. We will improve profitability, and we will deliver the results we promise,” he said.
In the UAE, Abu Dhabi National Oil Company (ADNOC) has created a new operating model, according to remarks made during the leadership dialogue session by Sultan Ahmed Al Jaber, Minister of State in the UAE and CEO of ADNOC. The new operating model centers around four pillars, which are people, performance, profitability and efficiency. It is designed to ensure ADNOC’s preservation into the future, he said.
“We want to make sure that anything we do has a more profitable upstream [and] a more valuable downstream.” Key points that have caused the company to examine its operations include shifts in global energy demand; recognition of innovative new technologies, such as enhanced oil recovery techniques; and the goal of continued growth in the UAE’s petrochemical sector. The company also strives to achieve continued sustainability in providing energy to supply domestic demands, he said.
