Exxon Mobil Corporation (ticker: XOM, exchange: New York Stock Exchange (.N))
News Release -
ExxonMobil Speaks On the Growing Importance of Deepwater DevelopmentsBOSTON, Sep 19, 2002 (BUSINESS WIRE) -- Exxon Mobil Corporation (NYSE:XOM), an
industry-leading holder of acreage in the world's most active deepwater regions,
said that deepwater oil and gas production is key to supplying future world
energy demand in a speech given today by Morris E. Foster, president of
ExxonMobil Development Company, at the A.G. Edwards Deepwater Energy Conference
in Boston, Massachusetts.
Commenting on ExxonMobil's diverse resource base from exploration discoveries
and industry-leading deepwater acreage position, Foster said that deepwater
production is expected to provide a significant portion of the company's total
production by 2010. A number of deepwater projects are being constructed or
planned in the U.S. Gulf of Mexico and West Africa, along with other areas.
Foster attributed the company's success in deepwater development to the
consistent application of a number of business fundamentals designed to lower
costs and improve cycle times while maintaining high safety and environmental
He also credited the restructuring of the company along functional lines,
following the merger between Exxon and Mobil, as a key strength from an
operational and financial perspective.
The critical role technology plays in realizing resources from increasingly
deeper water depths was emphasized throughout Foster's remarks. "Technology has
always been the lynchpin to success in our industry and at ExxonMobil, and it is
one of the keys to unlocking the resources required in the future. ExxonMobil
has a long-standing commitment to technology, investing at around twice the
level of competition and has a solid track record of integrating new technology
into proven designs."
Another key business approach for ExxonMobil is its application of standardized
design concepts. "By having robust standard designs on the shelf, we can very
quickly move a project from discovery to implementation without the lead time
and cost required to develop a new stand-alone design," said Foster. "Part of
our proprietary development toolkit is a concept of 'design one and build
multiple'. This approach makes new technical solutions developed for
mega-projects more attractive for other applications. The concept has already
allowed us to reduce the costs of LNG trains in Qatar by 30 percent. We expect
similar results from the use of this concept on deepwater applications.
"Another application of our development toolkit is the Early Production System,
or EPS. Rather than waiting for all of the project infrastructure to be in place
prior to starting production, we are beginning production while construction of
the permanent infrastructure is still underway. This allows us to accelerate
start-up by bringing volumes on stream 2-4 years early, significantly enhancing
overall project returns. In fact, our discounted cash flow economics can be
improved as much as 3 to 5 percentage points through the use of an EPS system,"
Foster said. ExxonMobil's first EPS system set sail from Singapore to Nigeria
late last month. It will be used to bring production at Yoho on stream in 2002,
three years earlier than under traditional approaches.
Just as on the project side of the business, ExxonMobil also has a toolkit of
drilling initiatives that yield additional productivity gains. The Company's
standardized drilling processes have delivered over $500 million in cost savings
during the years 2000 and 2001.
Not only is the design of the project important, but it is also critical to have
disciplined project management given the levels of investment and timelines
involved for mega-projects. ExxonMobil has used its own proprietary project
management system to execute these projects effectively with the highest of
safety and environmental standards. For example, this approach allowed
ExxonMobil to bring the 83-story, one-billion-dollar Hoover-Diana project -- the
deepest water production and drilling platform in the world -- on stream at $100
million under budget and four months ahead of schedule. Hoover-Diana started up
less than four years after discovery, a significant achievement given the
complexities of the project.
Foster concluded his speech by saying that ExxonMobil has a large slate of
upstream opportunities it is currently progressing. "During this decade, we have
the potential to spend $100 billion in capital on over 100 projects in the
Upstream. Around a quarter of this will go toward developing resources in
deepwater, a key piece of our portfolio. However, it is just one piece of our
portfolio. Through our geographic diversity and scale, we will continue to be
active in all high-potential areas."
ExxonMobil operates in nearly 200 countries and territories and has the largest
resource base of any nongovernment energy company, with 72 billion
oil-equivalent barrels. This includes 21.6 billion oil-equivalent barrels of
proved reserves as well as quantities of discovered resources the company
expects to develop in the future. ExxonMobil holds interests in over 750
deepwater blocks totaling some 71 million acres.
The slides from the Foster presentation and an outline of the speech contents
may be found on the ExxonMobil website at www.exxonmobil.com.
CAUTIONARY STATEMENT: Estimates, expectations, targets, and business plans in
this release are forward-looking statements. Actual future results, including
resource recoveries, production mix, cost savings, project economics, project
plans and schedules, and capital spending could differ materially due to changes
in market conditions affecting the oil and gas industry, technical or operating
factors, and other factors discussed under the heading "Factors Affecting Future
Results" included in Item 1 of ExxonMobil's most recent Form 10-K and posted on
our website (www.exxonmobil.com).
Marcia Zelinsky, 713/656-4376
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