Rex Tillerson, chairman, president and CEO of ExxonMobil, told CNBC last week that despite the continued depressed state of natural gas prices that the company’s 2010 acquisition of XTO Energy for $41 billion will prove to be a shrewd acquisition in the long run.
“We’ve recognized for some time that natural gas would be the fastest growing of the conventional fuels – oil, gas and coal. We clearly see the important role that natural gas will play globally and more importantly its role in the United States in terms of meeting future energy demand,” he said.
ExxonMobil anticipates global demand for natural gas to grow by 60% over the 25-year period from 2005 to 2030. It is this anticipated growth in demand that served as the impetus for the company to invest so largely in natural gas with the XTO Energy acquisition, Tillerson said.
“The timing was good from our perspective, the current conditions were not unexpected by us. We anticipated because of the oversupply of natural gas that prices were going to decline…Our expectation for gas in the U.S. is it will be healthy in the years to come. It’s going to be extraordinarily important as a fuel source in the U.S. and we’re very, very happy with the resource position we have and extremely happy with the organization that we acquired as well,” he said.
While ExxonMobil is strongly focused on developing oil and gas projects in North America, Tillerson stated that its projects in Qatar with Qatargas that saw the two companies co-develop four liquefied natural gas (LNG) trains served as the perfect model of how to work with a national oil company.
“They [Qatar] have placed their emphasis on education, technology development, but they have centered their investment approach on honoring contracts, compliance with the rule of law and creating the right conditions where risks can be taken and rewards can be gained between investors and the government as well,” he said.
Tillerson compared the business culture and atmosphere for energy in Qatar to other countries around the world and said that many nations have large reserves of natural resources combined with a strong location to import and export markets, but what it comes down to do business are the government policies in place. “With resource development, it’s really about taking a long-term approach – creating conditions and sticking with those conditions for many, many years.”
In addition to North America and Qatar, ExxonMobil will invest up to $36 billion over the next five years on capital projects in the Middle East, West Africa and Australia among other regions. “There will continue to be opportunities available to us, particularly in the shale plays that are going to be very attractive…There are opportunities to acquire and develop in the unconventional space throughout all of North America from Texas to the Marcellus to the Bakken and we are participating in all of the major unconventional plays in the U.S. and in Canada we have a very large position in the Horn River basin and are evaluating other new areas of unconventional development as well,” Tillerson said.
Contact the author, Frank Nieto, at firstname.lastname@example.org.
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