Exxon Mobil Gets Into the Algae Game

Exxon Mobil is dead set to prove algae-derived biofuel critics dead wrong (link):

On Tuesday, Exxon plans to announce an investment of $600 million in producing liquid transportation fuels from algae — organisms in water that range from pond scum to seaweed. The biofuel effort involves a partnership with Synthetic Genomics, a biotechnology company founded by the genomics pioneer J. Craig Venter.

The agreement could plug a major gap in the strategy of Exxon, the world’s largest and richest publicly traded oil company, which has been criticized by environmental groups for dismissing concerns about global warming in the past and its reluctance to develop renewable fuels.

[...]

Algae also has another benefit, which could eventually help cut greenhouse gas emissions that cause global warming. Like any plant, it needs carbon dioxide to grow. But Exxon and Synthetic Genomics hope to genetically engineer new strains of algae that can absorb huge amounts of carbon dioxide — like that emitted by power plants, for example.

Exxon’s investment includes $300 million for in-house studies and “potentially more” than $300 million to Synthetic Genomics “if research and development milestones are successfully met,” Exxon said.

- Brewskie

Exxon Discovers Canadian-Sized Gas Prize

Folks... you thought shale gas was big. You've been impressed by the America's jump in gas reserves - a prelude, to be precise. You've been impressed with the size of shale fields, that we have a 100-year supply of gas, that the whole world now wants to learn from our success. Folks... this isn't going to end anytime soon.

Congratulations, Canada. The Horn River Field, it turns out, may be the best shale play in N America:

Exxon is most encouraged by the exploration of 250,000 acres it has leased in the Horn River Basin, in northern British Columbia. Mr. Cejka said results from the first four wells lead the company to conclude that each well will produce between 16 million and 18 million cubic feet of gas a day.

That's five times the size of average wells in Texas's Barnett shale and comparable to big wells in Louisiana's Haynesville shale, two major shale-gas fields that already have moved the U.S. natural-gas market from scarcity to abundance.

Though Exxon is better known as the nation's largest oil company, "We are really interested in shale gas," Mr. Cejka said, detailing the company's push into the energy-exploration business, which was once dominated by scrappy independent companies.

[...]

Other energy companies also are excited about the Horn River field. "This may be the best shale play in North America," said Michael Graham, an executive vice president at EnCana Corp., a Calgary company that already has a big Horn River presence. Mr. Graham said EnCana's latest wells are approaching Exxon's in terms of initial production.

Exxon's Mr. Cejka said that his company also has pieced together substantial leases in prospective shale-gas formations in Germany, Hungary and Poland, and is still adding acreage. Tests on two wells in Hungary, where Exxon and partners hold 400,000 acres, are expected this year. It will be the first time the shale there has been tested.

"Depending on how that goes, we'll either be patting ourselves on the back or walking away," Mr. Cejka said.

The company also plans 10 wells on 750,000 acres it holds in northern German's Lower Saxony Basin this year to better study the geology.

- Brewskie

Exxon Mobil's Shiny New Gas Facilities

This is an article about some new gas production facilities Exxon Mobil has:

Tuesday, dozens of Western Slope business and government leaders toured Exxon Mobile's new facilities to learn more about how the company operates. The new facilities are located between Rifle and Meeker on County Road 5.

Exxon Mobil has started using a new Central Treating Facility that can process 200 million cubic feet of natural gas per day. That's four times what their old facility could handle.

[...]

At the processing facility, carbon dioxide and water are removed from the gas. This is the first step in the process of getting the gas pipeline ready.

Exxon Mobile has 6 to 7 rigs working right now. The new facility will allow the company to move that natural gas from the ground to the pipeline faster.

[...]

Exxon Mobile says some of the new technology it uses also helps the company reduce it's environmental impact.

For example, rigs can drill 9 to 10 wells on a single pad. This cuts down on the number of pads being built in the area, reduces traffic and means crews will be on the land for a shorter amount of time.

- Brewskie

Exxon to Boost Gulf of Mexico Exploration

America's biggest buccaneer is gearing up its motley crew to plunder the Gulf of Mexico:

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 (RDSA), BP PLC (BP) and Chevron Corp. (CVX) 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.

[...]

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.

[...]

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.

- Brewskie

New Brazil Find by Exxon Mobil May Hold 8 Billion Barrels

Man! I wish I knew of some ETF that betted against the idea the world was running out of oil - Brazil is the place to bet on. Exxon Mobil's latest find may hold 8 billion barrels. From Bloomberg:

Exxon Mobil Cor.’s oil discovery off the coast of Brazil may hold enough crude to rival the nearby Tupi prospect as the Western Hemisphere’s largest find in three decades.

Exxon Mobil’s Azulao-1 well tapped a reservoir that could contain 8 billion barrels of recoverable oil, said Luiz Lemos, a partner at TozziniFreire Advogados, a Brazilian law firm that represents foreign energy companies with projects in the South American nation.

[...]

Exxon Mobil, which pumps more crude than every member of OPEC except Saudi Arabia and Iran, in January announced the discovery of petroleum in the Azulao-1 well in an offshore region designated BM-S-22. The company operates the project
on behalf of partners Petroleo Brasileiro, known as Petrobras, and Hess Corp.

[...]

Jon Pepper, a spokesman for New York-based Hess, referred inquiries to the field’s operator, Exxon Mobil. Rio de Janeiro- based Petroleo Brasileiro’s investor relations department didn’t respond to an e-mailed message seeking comment. Exxon and Hess each own 40 percent stakes in the field and Petrobras owns the other 20 percent.

[...]

At current energy prices, 8 billion barrels of oil is worth about $380 billion, which exceeds the economic output of Taiwan, South Africa and Ireland.

Tillerson, entering his fourth year as the head of the world’s largest oil company, expects to boost production by 2 percent this year to the equivalent of 4 million barrels of crude a day.

Searching for Oil

Exxon Mobil is spending $79 million a day this year to search for oil fields, construct platforms and renovate refineries. The company had $45.2 billion in profit last year, the highest in U.S. corporate history.

Quit finding oil, boys. Some of us have work to finish:)

- Brewskie

Exxon Mobil Barrel Chests Through Economic/Cheap Oil Hailstorm

"Good times are good and bad times are better," says the wise investor. Exxon Mobil rattled the public last year with its stout refusal to to take its monster cash horde, and step up oil exploration. Now with the themed "terrible triplets" on the IR - oil, commodities and the global health of the economy - Rex Tillerson is licking his chops like any good buccaneer: "It's time to spend, maties."

Looks like Rex is using a little plunder to pull out the big guns. Exxon is looking to increase capital spending to $30 billion, a 20% increase. Excerpts include (link):

The increase will mark his biggest push to discover oil fields and boost fuel and chemicals production.

Exxon’s $36.7 billion cash hoard, which exceeds those of Microsoft Corp. and Warren Buffett’s Berkshire Hathaway Inc., gives Exxon Mobil the unique opportunity to buy assets cheapened by a $100-a-barrel plunge in crude prices, said analyst Neil McMahon of Sanford C. Bernstein & Co. in London. Investing now will mean a return to record profits when the world’s largest economies recover and fuel demand rebounds, McMahon said.

“I consider it a very wise move on the part of Exxon because they’re taking a long-term strategic perspective on energy,” said Nansen Saleri, president of Quantum Reservoir Impact, an advisory firm in Houston, and former chief manager of oil fields for Saudi Arabia’s state oil company. “The energy requirements of the planet will go up once the financial markets shake off the current crisis.”

Profits are in decline, but...

Full-year profit for 2009 will probably fall 45 percent to $24.9 billion, analyst estimates showed, halting a five-year streak of gains during which profit more than tripled and cash on hand ballooned fivefold. Exxon Mobil reaped $186 billion in net income in the past five years, exceeding the annual economic output of Malaysia, the Philippines and Pakistan.

Exxon Mobil shareholders were left behind when crude futures surged to a record $147.27 a barrel in July. While oil producers such as Chevron Corp. and Petroleo Brasileiro SA benefited from oil’s rise during the first half of 2008, Exxon Mobil dropped almost 6 percent as Tillerson amassed cash and bought back stock rather than bolstering output.

After Lehman Brothers Holdings Inc.’s Sept. 15 bankruptcy filing started a meltdown of global credit markets, Exxon Mobil’s cash became a source of strength rather than a sign of weakness, said Gianna Bern, president of Flossmoor, Illinois- based Brookshire Advisory & Research Inc. and a former BP Plc oil trader.

On Brazil...

Conserving cash put Exxon Mobil in a position to fund exploration without resorting to borrowing, Tillerson told reporters last month after giving a speech in Chicago.

Exxon Mobil's biggest opportunities to load up on reserves are in Brazil, home of the Western Hemisphere’s largest petroleum discovery in three decades, and West Africa, Bernstein’s McMahon said in a Jan. 9 note to clients.

Brazil’s state-controlled oil company, Petroleo Brasileiro SA, is short of cash to develop deepwater fields hundreds of miles from shore, McMahon said. Petrobras, as the Rio de Janeiro-based company is known, failed to replace 73 percent of the oil and gas it pumped from the ground last year, according to a Jan. 16 public filing with U.S. securities regulators.

The Brazilian company said last week that it plans $174.4 billion in capital spending over the next five years, financed partly with state loans.

“With Petrobras seemingly struggling for financing, while deep-pocketed Exxon Mobil wants a much bigger position in Brazil, this could be the ideal time for the two companies to form a joint venture,” McMahon said.

Tillerson said he’s unlikely to lead acquisitions of entire companies because prices remain inflated. Partnerships with oil- rich nations work better because they allow Exxon Mobil to obtain reserves in exchange for financing and technical expertise, he said.

Is the economic/cheap oil maelstrom causing other oil producers to cut back? Some, yes; but not all, and here's an article on how the Abu Dhabi National Oil Company is charging forward. Again, commodities' free fall and the torrid world economy is reducing production costs.

- Brewskie

UPDATE: Here's a bit on Imperial Oil, Canada's largest oil company, aims to boost spending by 60%.