FORT WORTH, Texas — Technology “has been the common denominator” that has powered the oil and gas industry to its current status in the world’s economy and will be vital for its future, according to the president of ExxonMobil’s XTO Energy Inc. unit.
“Think about the ingenuity and tenacity that it has taken to develop technological solutions to tackle” the industry’s challenges, said Sara Ortwein at an IPAA Leaders In Industry Luncheon July 27 at the Fort Worth Petroleum Club. Oil and gas have created “innovations that have transformed our nation and the world for the better,” she said.
The industry’s technology can be credited for U.S. job growth and economic opportunities, “and it unleashed a manufacturing renaissance, particularly along the U.S. Gulf Coast. Chemical plants are expanding due to low feedstock costs, for the first time in many years.”
Ortwein reviewed “the extraordinary changes, the transformation, that I have seen over the past, nearly 40 years” since she began her career at Exxon Co. USA. in 1980. She recalled that Exxon’s first horizontal well—all of a 500-ft lateral—was drilled in 1983 in the Austin Chalk.
“The well was dry,” she added with a chuckle but was viewed as a technological marvel at the time. Compare that with horizontal laterals in North America that go out for thousands of feet, or as long as eight miles in one Russian test, “and when we do we can hit something the size of a pitcher’s mound. It’s really phenomenal.”
She noted her previous assignment as president of the upstream research unit of ExxonMobil Corp. gave her “a front-row seat” on technological progress.
“The innovation that has taken place in our company can rival that of any other industry, especially when you look at the scale of the projects we do,” Ortwein said, adding the oil and gas business overall is now “in a period of extraordinary transformation.”
Ortwein was named XTO’s president in November 2016.
“The shale boom brought us out of years of domestic energy insecurity into an age of what we can call energy abundance. A combination of proven technologies and new techniques have allowed us unlock North American shales and other tight reservoirs, causing the Peak Oil theory to yield to a new reality for all of us,” Ortwein said. That success came in an industry that has “pioneered new technology since its earliest days.”
XTO now operates in all of the major U.S. unconventional plays “with a leading focus on the Permian at this point.” She noted recent acquisitions have given the firm 1.8 million net acres in the Permian with 140,000 barrels of oil per day production currently. Outside the U.S., it has projects under way in western Canada’s Montney and Duvernay, as well as Argentina’s Vaca Muerta play.
She discussed what she termed the successful 2009 combination of XTO and ExxonMobil, saying she is asked frequently how it was possible for the world’s biggest publicly held energy firm “to acquire a successful independent, maintain the business and enhance value without deviating the organization from its core mission.”
Ortwein called the acquisition a “win-win.” She said the XTO-ExxonMobil combination built on lessons learned in the 1999 merger of Exxon and Mobil.
For XTO and its new parent, “both companies brought significant strengths to the table and we’ve been able to leverage those strengths within the two organizations,” Ortwein said. “XTO brought expertise in unconventional resource development. We’ve been transferring that knowledge throughout the broader ExxonMobil Corp. and that enables us to be more effective in safely developing and producing these unconventional resources, not only in the U.S. but around the world.”
XTO’s “unique synergy from discovery to sales” has been shared with the rest of ExxonMobil’s upstream operations. “On the flip side, ExxonMobil has brought tremendous technology prowess, financial strength and an industry-leading commitment to safety, and that has enabled XTO to flourish while several other independents, quite frankly, have struggled.”
She said the pending move, to start next year, of XTO’s headquarters and much of its staff to ExxonMobil’s new campus in The Woodlands, north of Houston, will increase collaboration further.
“We will continue to have a presence in Fort Worth,” Ortwein emphasized. “The operating division that’s based here, that supports the Barnett Shale, is being expanded to support operations in the Bakken in North Dakota as well as our Appalachia operations.
“XTO, as most of you know, has a very long and storied history in Fort Worth” going back to the company’s founding in 1986 as Cross Timbers Oil Co. “I am extremely proud of XTO and its heritage in Fort Worth. We’ve done a lot of great things and I expect that to continue,” Ortwein said.
Looking ahead, she said XTO “is focused on the long term, because the need for energy is long term.” She invited the audience to download ExxonMobil’s 2017 “Outlook For Energy” report that projects worldwide energy trends through 2040. That study projects a significant growth in energy demand that will be heavily influenced by three primary forces: population growth, trade and economic development and energy efficiency.
Government policy also will impact the future—and the business must be ready for whatever comes from regulators through continuing technological innovation. She called for close ties between the industry and the agencies that oversee it.
“We have to be able to compete in a global marketplace regardless of who may be in office and what policies they may be driving,” Ortwein said, noting companies must protect the industry’s license to operate by operating safely and demonstrating environmental responsibility. “The companies that can do these things well will have tremendous opportunities in the U.S. as well as abroad.”
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