Anticipating greater second-half spending on projects where Guyana is integral, ExxonMobil yesterday said that higher prices for crude oil coupled with continued low production costs will ensure sound returns on investments.
“Also of significance in the quarter was the continuing market recovery, which obviously underpins our results. As you will hear, the organization remains very focused on continuing to leverage the changes we’ve implemented over the last several years and on delivering the plans we’ve discussed with you in March,” ExxonMobil’s Chairman and Chief Executive Officer Darren Woods yesterday told the company’s second quarter (Q2) Earnings Call.
“Earnings, excluding identified items, were (US)$4.7 billion, an increase of approximately (US)$2 billion versus the first quarter, primarily due to higher prices or margins and strong reliability…,” Vice President of Investor Relations Stephen Littleton noted during the call.
Explaining that its operations in the Permian, an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico are delivering positive free cash flow across a broad range of price scenarios, Senior Vice President Jack Williams said this could see double-digit returns with a production cost of US$35 a barrel or less. He added that “the same low price resiliency” also applies to the deepwater developments in Guyana and Brazil.
On its Guyana operations, he noted that the company has added three new discoveries since the first quarter, including two at Whiptail announced this week.
“This additional resource will add to the 9 billion oil-equivalent barrels we discussed at Investor Day, further increasing our confidence in the resource size and quality in the area east of Liza and supporting our view of an ultimate block-wide footprint of seven to 10 developments,” he said.
He noted that the projects in progress remain on schedule, with the expected arrival of the Liza Phase 2 Unity FPSO in Guyanese waters early in the fourth quarter
Payara, the third major development on the Stabroek Block is on track for a 2024 start-up, with topsides construction ongoing.
And pending government approval, the company said that it was “targeting a final investment decision on Yellowtail”, the fourth major development, later this year, with start-up planned for 2025.
And while the company has flared huge amounts of gas this year, contributing to a large carbon footprint for Guyana, ExxonMobil announced that in this quarter it signed an MOU to explore the development of carbon dioxide (CO2) infrastructure to help decarbonize the industrial basin in the Normandy region of France, and an MOU to participate in the recently announced Acorn carbon capture project in Scotland. The collaboration in the Normandy region of France seeks to develop carbon capture technology with the objective of reducing CO2 emissions by up to 3 million metric tons per year by 2030.
Houston hub
“We are continuing to pursue several Gulf Coast opportunities, including our Houston hub concept, which are all gaining industry and third-party support. In addition to carbon capture and storage, we’re advancing a number of options to produce low-emissions biofuels. These include new projects, repurposing existing refinery units, co-processing bio feeds and purchase agreements. These plans would enable the production of more than 40,000 barrels per day of low-emission fuels by 2025.We also recently completed a successful trial to co-process bio feed across our existing refining circuit. Co-processing bio feeds is a key technology that can be rapidly scaled to help society quickly lower emissions, provided the right policies are in place,” Woods said.
As the company continues to advocate for new policies, such as a carbon tax or low carbon fuel standard and develop future projects, Woods said that ExxonMobil continues “to lead the industry in developing and deploying new technologies to address another important issue, reducing methane emissions. To that end, we have conducted more than 23,000 leak surveys on more than 5 million components at over 9,500 locations.”
ExxonMobil, according to Woods, is also the first company to file an application with the United States’ Environmental Protection Agency to use airplanes equipped with methane detection technology to conduct large flyover inspections, and they are evaluating satellite technology in support of its 2025 reduction plans for both methane intensity and absolute methane emissions.
“These ongoing efforts to commercialize Low Carbon Solutions and reduce emissions are central to our long-term plan to grow shareholder value. As markets and policies continue to evolve, we will be there playing our part, contributing where we bring the most value,” he said.
In the near term, as we begin the development of next year’s plan, our organization is focused on continuing to deliver industry-leading operating performance, building on last year’s record results in safety and reliability, and extending our trend of annual reductions in emissions intensity by accelerating the pace of reductions and establishing more aggressive objectives. This will enable us to reduce our own emissions at a pace faster than what the countries have committed to under the Paris Agreement. It will also help accelerate our objective of industry leadership in greenhouse gas performance by the end of the decade,” he added.
Though it made these commitments yesterday, ExxonMobil has raised the ire of local environmentalists by flaring in excess of 14 Billion Standard Cubic Feet (Bcf) of gas here this year from its Liza-1 well offshore as a result of faulty gas compression equipment. The environmentalists have argued that the government and regulatory authorities have been lenient with the oil company and had agreed only a paltry fine for flaring in excess of 14 Billion Standard Cubic Feet.
Meanwhile, ExxonMobil last evening announced that flaring here had been cut to a minimum. In a post on its Facebook page, it said “The full gas compression system on the Liza Destiny FPSO is now operating. We are currently reinjecting and consuming more than 96 percent of the gas produced. Production Manager, Mike Ryan said the team continues to perform maintenance and optimization activities with the aim of keeping the flash gas compressor on-line and minimizing flaring until arrival of the new flash gas compressor at the end of the year”.
ExxonMobil is also embarking with the Guyana Government on a gas-to-shore-to-energy project which has raised environmental concerns.
