Exxon Boosts Exploration in a Maturing US Gulf of Mexico
HOUSTON (Dow Jones Newswires), Mar. 31, 2009
After years of flirtation, it seems that the U.S. Gulf of Mexico has finally seduced Exxon Mobil Corp.
The Irving, Texas, oil giant said in a financial and operating review released Monday that in 2008 it obtained 142 leases to explore for oil and gas in the offshore Gulf -- up from five tracts a year before and seven in 2006. This level of interest is a sign that the area, once considered a wild frontier, has reached maturity in the eyes of the largest oil company in the U.S.
"There's more oil to be found than they thought before," said Jason Gammel, a New York-based analyst with Macquarie.
Exxon has lagged behind rivals Royal Dutch Shell PLC, BP PLC and Chevron Corp. in extracting oil and gas from the Gulf of Mexico's rich deep water subsoil, although the company has accumulated significant offshore acreage and invested in major projects such as the BP-operated Thunder Horse platform, the second-largest oilfield in the U.S.
Now Exxon seems eager to catch up - or at least willing to gear up for a major wave of exploration. The firm is being especially aggressive in the western part of the Gulf, where it was the top bidder at a lease sale last August, winning 128 tracts. Exxon was also among the top 10 bidders at a Central U.S. Gulf of Mexico lease sale held in New Orleans earlier this month, with 15 high bids.
Lysle Brinker, an analyst with IHS Herold, said that the shift is partly due to Exxon's troubles with governments in Venezuela, Indonesia and other countries intent on gaining more control over their natural resources. Lack of access makes Exxon and other international oil firms fight an uphill battle to replace the hydrocarbons they extract with new reserves.
Exxon highlighted in its report that it added 2.2 billion oil-equivalent barrels to its resource base due to significant contributions from drilling programs in the U.S. Gulf of Mexico, western Canada, the onshore U.S. and West Africa.
In the deepwater Gulf, where multibillion-dollar platforms and $50 million wells are the norm, "the economics are much tighter, but nonetheless it's still an area where you're free to roam," Brinker said.
Macquarie's Gammel said that the cost of operating in the deepwater Gulf has come down because a decade of aggressive investment by other oil firms has created a critical mass of infrastructure.
In addition, the risk of not finding enough oil and gas to make a big investment profitable has decreased in the wake of recent, rich hydrocarbon discoveries in the lower Tertiary area of the Gulf. These new conditions have created an environment that famously disciplined Exxon is comfortable with. "This is a very return-driven company," Gammel said.
In 2008, Exxon produced an average of about 48,000 barrels of oil and liquids and 429 million cubic feet of gas per day, or about 4% of oil and 6% of the Gulf's oil and gas output, respectively.
The company declined to comment on its participation in specific lease sales, but said that the U.S. "continues to provide a significant contribution to ExxonMobil's profitability."
Copyright (c) 2009 Dow Jones & Company, Inc.
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- UK Oil Regulator Publishes New Emissions Reduction Plan
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- PetroChina Posts Higher Annual Profit on Higher Production
- McDermott Settles Reficar Dispute
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil Demand Outpaces Expectations, Testing Calculus on Peak Crude
- House Passes Protecting American Energy Production Act
- TotalEnergies Restarts Production in Denmark's Biggest Gas Field
- USA Oil and Gas Job Figures Jump
- Republican Lawmakers Say IEA Has Abandoned Energy Security Mission
- Blockchain Demands Attention in Oil and Gas
- Houthis Warn Saudi Arabia of Retaliation If It Backs USA Attacks
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- Summer Pump Prices Set to Hit $4 a Gallon Just as Americans Hit the Road
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Equinor Makes Discovery in North Sea
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension