Skip to main content

ExxonMobil leads new energy supplies with 5 year $185B investment

Multiple news releases and reports by Exxon Mobil Corporation filled the ticker during CERAWeek 2012, signaling multiple areas of energy are about to get a shot of money and time: Investment to the tune of $185B, technology like hydraulic fracturing, and disclosure initiatives for Europe.

One of the more interesting news pieces that crossed my ticker during CERAWEEK 2012 centered on a presentation by Exxon Mobil, its 10th year before analysts at the New York Stock Exchange. According to Chairman and CEO Rex W. Tillerson, $185 billion will be committed over the next five years to develop new supplies of energy to meet expected growth in demand.

He told a group of investment analysts, “During challenging times for the global economy, ExxonMobil continues to invest to deliver the energy needed to underpin economic recovery and growth.”

Tillerson also related the reason when he said that even with significant efficiency gains, ExxonMobil (NYSE: XOM) expects global energy demand to increase by 30 percent by 2040, compared to 2010 levels. For the record and full disclosure, I own some April call options on the stock and and short two March put options.

If you’ve been reading the comments here at TorqueNews, though, global energy demand is precisely where most of public gets swayed by the green movement. That group, although correct in its ultimate goal about clean energy sources, downplays the reality of the growing world. Fact is, more and more countries are modernizing to the point that America will no longer be the largest energy monger. Think China and India. And to meet that demand, present energy resources will not able to be turned off so quickly, such as coal and oil; albeit new supplies of nat-gas will help make a dent.

Tillerson also spoke at CERAWeek 2012 in Houston, Texas. In his speech, he noted that Exxon Mobil is breaking new ground in the United States and Canada in the safe and responsible production of shale gas, tight oil, oil sands, and ultra deepwater. He said, “We are seeing encouraging results – results that can be achieved elsewhere with the application of innovative technologies, proven techniques, and rigorous operational standards.”

He also noted that the energy industry has not and cannot achieve these results alone. Government has an indispensable role in this quest.

He also related the need to fully disclose the fluids used in hydraulic fracturing. Pointing toward Exxon’s efforts with U.S. authorities, he proposed extending that kind of disclosure in Europe as well. This comes at a time when nat-gas supplies have been limited in Europe, but could open up due to the introduction of fracking in Poland and elsewhere on the continent. Problem is, environmental watch-dogging seems larger in Europe than in America.

That is why the Fracfocus website, a new on-line registry created by Exxon Mobil and U.S. government agencies, was created. Companies can submit data about the chemicals used. So, Exxon proposes a similar initiative for Europe. In this respect, Exxon Mobil is playing it wise. It is bringing the public in on the discussions so as to mitigate any false information that would scuttle future plans.

In working to meet surging global energy demand, truth is the energy industry needs to be able to plan over ten-, twenty-, even thirty-year time horizons. And it those plans over time that gets difficult, especially when political parties exchange control and bring in a new set of ideas, while throwing out the old which were not that old to begin with. Point is, all energy sources require a tremendous amount of investment and multiple years to develop.

A new energy consensus is indeed emerging, but not everyone is onboard. As Mr. Tillerson put it, many American and Canadian citizens are asking questions about unconventional oil and gas development. Every new energy source raises new fears as it opens new opportunities.

If I could highlight a few lines in his speech, it would be this: “Where sound and thoughtful regulation once provided U.S. businesses and industries the rules for how to get things done, today the regulatory process, with its layers of complexity and oversight by multiple, duplicative agencies has become the obstacle to getting anything done. It has become the tool of opponents of development and special interest groups, providing 1,000 ways to say ‘no.’”

Asking questions and demanding answers is good for us all, provided its not used solely as a ruse to halt development for political gain. In this respect, that’s how this auto tech reporter sees the Keystone pipeline decision.