ExxonMobil's CEO Sees European Shale's Potential

CANCUN, Mexico (Dow Jones), Mar. 31, 2010

European gas shale formations in Europe show promise -- but they need to be better studied before their potential can be unleashed, Exxon Mobil Corp. Chief Executive Rex Tillerson said Tuesday.

"We have to understand the shale resources better in Europe," Tillerson told reporters in a press conference at an energy conference here. ExxonMobil, the world's largest publicly-traded oil and gas company, has made big bets on shale -- a tight, natural gas-rich rock formation that U.S. oil companies have discovered how to tap profitably in recent years, creating an unprecedented boom in natural gas production in North America.

Last December, Exxon announced an agreement to buy shale producer XTO Energy Inc. for $31 billion, a move that would allow the Texas giant to take shale gas production to a global level.

Exxon has unconventional gas acreage in Central and Eastern Europe. But Exxon and other companies seeking to exploit those reserves will likely have to find ways to operate in heavily populated areas -- just like in the U.S., where some of the largest shales are in urban North Texas or the Northeast. "These are the same issues that we face in the U.S.," Tillerson said.

Tillerson said Exxon was "still engaged" in negotiations for a stake in the giant Jubilee field in offshore Ghana, owned by Dallas-based exploration company Kosmos. Exxon reportedly agreed to buy the stake for $4 billion, but the Ghanian government is opposed to the sale.

Tillerson added that Exxon sees plenty of opportunity in Latin America, where Exxon is prospecting in many countries and planning to drill a well at the BMS-22 block in offshore Brazil.

"We still see opportunities there, with the exception of Venezuela," where the terms are unfavorable. Exxon left the country after the country's government took majority control of its operations there and is currently fighting the takeover in international arbitration courts.

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