Most of Exxon’s new work to be in oil, not natural gas

Most of Exxon’s new work to be in oil, not natural gas

Exxon Mobil Corp. has positioned itself to benefit from growing worldwide demand for natural gas. But oil remains Exxon's largest source of new projects, DallasNews reported.

Eighty percent of Exxon's new production over the next five years is expected to be oil from Canada, Iraq, Kazakhstan and Russia. The Irving-based company says more oil will be needed in Asia, where consumption is growing as living standards rise and more cars hit the road.

Exxon's profit, which totaled $30.5 billion last year, increases when oil prices skyrocket, as they've done in recent weeks. Even so, Exxon isn't second-guessing its natural gas strategy to chase more oil, chief executive Rex Tillerson told the company's annual gathering of analysts at the New York Stock Exchange.

"There is no bias for us one way or the other," Tillerson told reporters after the meeting. "At the end of the day, what you put in your bank account are dollars. You don't put oil or gas molecules in the bank account."

So far, Exxon doesn't think U.S. consumers are curbing their appetite for oil because of higher prices, Tillerson said. High prices last depressed demand for gasoline in 2008, when prices eclipsed $4 per gallon.

"We have $4 in some locations around the country today," Tillerson said. "So we'll see if there is a greater tolerance for those prices this time or not. I know when it gets to that level for the average American family, this creates real challenges for them and their household budget."

Tillerson said he doesn't think oil prices will approach their record high of 2008, when the price surged above $140 a barrel. On Wednesday, prices hovered at around $105.

The world has enough oil despite the Libyan violence that has depressed oil production in that country, which typically accounts for about 1.5 percent of global output, he said.

"In terms of, could we get to significant levels like we saw two years ago, if you had a physical supply disruption that is significant, something beyond Libya's volume ... then certainly you would expect there would be a response in price to that," he said. "I don't anticipate that happening."

Exxon's resource base of 84 billion oil-equivalent barrels is evenly divided between oil and gas. Its natural gas holdings were boosted last year by the acquisition of Fort Worth gas producer XTO Energy Inc. Exxon's production grew 13 percent last year, with more than half of that amount due to the XTO acquisition.

Exxon executives also announced Wednesday that capital spending would be about $34 billion in 2011, a 5.6 percent increase from 2010. It expects production to grow between three percent and four percent in 2011.

Exxon now has 50 drilling rigs producing shale oil and gas on 6 million acres from northern Canada to South Texas, including 245,000 acres in North Texas' Barnett Shale. Its fastest growing sources of gas are from Arkansas' Fayetteville Shale and the Haynesville Shale, which stretches from East Texas into Louisiana.

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