It’s unfortunate that ExxonMobil doesn’t like to talk. It would have quite a story to tell, not just about oil and gas development, but how the use of advanced technologies helps to keep energy prices affordable, creating tens of thousands of jobs, and most importantly helps to raise the standard of living for millions around the world.
This column is not intended as a puff piece for ExxonMobil. Rex Tillerson & Co. have a lot more on their minds these days than what the editor of a niche energy magazine has to say, like what are they going to do about their growing portfolio in Russia unless President Putin returns to normalcy.
What motivated me was an unusual four-page advertisement in the Aug. 22 issue of the Houston Chronicle entitled “Thousands of jobs are coming to Houston.”
The write-up briefly describes a new multibillion-dollar project to expand ExxonMobil’s chemical manufacturing complex on the Houston Ship Channel in nearby Baytown. It mentions the project’s economic benefits study which estimates that about 10,000 construction jobs and 4,000 permanent jobs will be created in the community with 350 new jobs at the complex. This, it says, will add nearly $1 billion annually to the local economy and generate $90 million in tax revenue annually for local communities.
The ad notes that the project will place great demand for skilled workers, so ExxonMobil says it has committed $1 million at nine local community colleges to train students for high-paying jobs in the chemical industry.
The expansion is a direct result of the shale revolution in which low prices and ample supplies have led energy companies such as ExxonMobil to build or expand chemical plants that rely on cheap natural gas as a feedstock. It’s also a result of some good long-range planning by ExxonMobil executives.
One of Tillerson’s biggest moves after replacing Lee Raymond in 2006 was the 2009 purchase of XTO Energy. ExxonMobil paid a premium price of $31 billion which led to some criticism because of abnormally low natural gas prices at the time.
But CEOs of energy companies are paid to plan 10 years ahead. Buying XTO signaled that ExxonMobil realized the shale revolution was here to stay but that to manage their stake required an experienced top-drawer independent natural gas company that would become its domestic E&P operation.
That’s why today ExxonMobil is the leading oil and gas producer in the U.S. and now the nation’s largest chemical company. Now it can produce higher liquids and liquids-linked natural gas volumes that will increase profitability thanks to low gas prices.
Not so much anymore, but remember when ExxonMobil was unfairly excoriated for its seemingly huge quarterly profits? As anyone who follows the industry knows, it takes years for an oil and gas company to recoup its investments. Sometimes they don’t.
In addition to the billions ExxonMobil is spending to expand the Baytown complex, where it also operates a huge refinery, it is investing billions in developing more than 120 projects that it says represent about 24 billion oil-equivalent barrels of oil and gas. That’s according to ExxonMobil’s website.
One of them is the LNG project in Papua New Guinea – completed under some of the most difficult physical and geographical conditions imaginable – that is expected to develop 9 Tcf destined for the Asia-Pacific.
ExxonMobil says this is just one of 10 projecs that is either in production or will be onstream this year. They say they plan to begin production at 11 more major projects over the next three years. All told, these combined projects are expected to add about 1 million net oil-equivalent bpd of production capacity by 2017. That’s just a drop in the bucket since global demand is nearing 100 million bpd, but that’s why it costs so many billions to keep the world moving.
Closer to home, construction is continuing on the enormous office complex ExxonMobil is building about 25 miles north of Houston. This multibillion-dollar project has been called the largest single construction job in North America and if you’ve tried to buy building supplies recently you’d probably agree. It’s expected to house about 10,000 employees but even that may not be enough room so they’re also working on a satellite complex for another 4,000-5,000 employees.
I’ve always dreamed of having an interview with an ExxonMobil executive who would actually say something. But that’s never beenpart of the company’s culture.
Maybe they think that their work speaks for itself. And you know what? It does.