Exxon Mobil Corp. (XOM) plans to spend about $20 billion on refineries, petrochemical plants and other projects in and around the Gulf of Mexico, Chief Executive Darren Woods said Monday, underscoring how the giants of the global energy industry are turning to America.
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Mr. Woods outlined the 11-project spending plan, largely aimed at creating new outlets for U.S. natural gas, in a speech at the annual CERAWeek conference. It came after a meeting with analysts last week in which he said Exxon is poised to nearly double its production from U.S. shale basins in the next decade.
The spending plans were cheered by President Donald Trump, who released a statement Monday calling Exxon's projects "exactly the kind of investment, economic development and job creation that will help put Americans back to work."
Exxon's $20 billion in Gulf Coast spending began in 2013 and will continue through at least 2022, according to the company.
Chevron Corp. (CVX) is expected to unveil similar plans this week, ramping up its operations in the already booming Permian basin in West Texas and New Mexico. The company's output from the region could reach 900,000 barrels a day by 2020 if oil prices continue to rise, according to energy investment bank Tudor Pickering Holt & Co. That would mean production from one company in just one area would rival output from major world producers such as Azerbaijan.
Exxon's announcement underscored the extent to which new technology has unlocked vast new resources in the U.S., upending the balance of power in global oil. Even as the Organization of the Petroleum Exporting Countries and other nations moved late last year to put a floor under the oil price by cutting production, U.S. operators have vowed to return to the oil fields almost en masse to make up the difference.
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"Hydraulic fracturing has opened up a whole new energy future for the United States, and potentially for many other countries," Mr. Woods said Monday. "We have managed, in the United States, to accomplish what was practically unthinkable only a decade ago."
The conference is expected to be defined by similar bravado as energy titans from companies and governments gather, eager to show off their resilience after prices fell from more than $100 in mid-2014 to below $30 in February of last year before beginning a partial recovery. Prices have been hovering steadily above $50 for weeks.
In his remarks, Mr. Woods also praised industry efforts to respond to the threat of climate change, spending much of his high-profile address discussing what Exxon is doing to reduce emissions. The remarks, as well as others he has made since taking over as chief executive, such as expressing support for the 2015 Paris climate deal, have signaled the company's plan to stay the course in its environmental stance.
That comes even as some in Mr. Trump's inner circle have pushed to walk away from the deal, while others have urged the president to keep the country's part in the agreement.
"We have an opportunity to contribute and help mitigate that risk through technology," Mr. Woods said.
He also extolled the virtues of free trade as having an elemental role in the U.S. energy renaissance.
Global energy executives have shown mixed responses to plans by U.S. Republicans to change tax policy in a way that would favor exports and burden imports into the country.
"It's hard to be in our business and not support open markets and free trade," he said.
The U.S. will be the greatest contributor to new global supply through 2022, with production from shale rising to 1.4 million barrels a day if prices remain around $60 a barrel, according to the Paris-based International Energy Agency. If prices rise to $80, output from shale fields alone could reach 3 million barrels a day, about the same as Kuwait, the IEA said Monday.
Companies such as Exxon are making immense investments in their refining, chemicals and export operations to take advantage of the new opportunity. From 2010 to 2020, such investments are expected to reach almost $180 billion, according to the American Chemistry Council, about 70% of which will go to the U.S. Gulf Coast.
In addition to Exxon's plans to build new plants or expand facilities to turn natural gas into the building blocks of common plastics, companies including Royal Dutch Shell PLC (RDSA), Chevron Phillips Chemical and others plan similar investments or will expand production of fertilizer, polymers used to make lubricants, and even tennis racket strings.