Least surprising headline of the day: “Exxon Struggles To Find New Oil”

Exxon Mobil Corp., the world’s largest publicly traded oil company, is struggling to find more oil.

In its closely watched annual financial report released Tuesday, the company said that for every 100 barrels it has pumped out of the earth over the past decade, it has replaced only 95.

This news is not in the least bit surprising to those who follow oil (see Science/IEA: World oil crunch looming? Not if we can find six Saudi Arabias!).

Ironically, the news comes from the Wall Street Journal, whose editorial page remains an opponent of all strategies to end our addiction to oil before the brutal dislocations of peak oil force us to.  Here’s more of the story:

It’s a conundrum shared by most of the other large Western oil-producing companies, which are finding most accessible oil fields were tapped long ago, while promising new regions are proving technologically and politically challenging.

Exxon said in the report that it more than made up for the shortfall in oil by stocking up on natural gas, mostly through its acquisition of XTO Energy Inc. last year.

But the shift toward gas is troubling some investors, because gas sells for less than the equivalent amount of oil. Many observers feel the move toward gas””a trend across the oil industry””is dictated more by shrinking access to oil fields than by a strong desire to emphasize gas production.

The good old days are gone and not to be repeated,” says Fadel Gheit, an analyst with Oppenheimer and Co. Bringing additional reserves from gas “is not going to give you the same punch” that oil would, he said….

Big oil companies are having trouble cashing in on the strong prices for crude oil. They have limited ability to drill in many oil-prone regions, such as Russia and part of the Middle East, due to politics. And even in promising Iraq, where many Western companies have won contracts, much infrastructure must be rebuilt. Exxon and others have also flocked to the oil-rich sands of Northern Alberta, Canada, but digging out the oil across vast swathes of forest comes at relatively high cost and generates concerns about the environmental impact.

Of course, “One place where Western oil companies have found open doors is in deep-water exploration” — something we can all look forward to in the wake of the BP oil disaster.

Some companies also are seeking permission to drill exploratory wells above the Arctic Circle. The Arctic remains one of the few unexplored regions of the world and the region above Alaska and western Canada is believed to be oil rich. But deep-water projects take a long time to turn from a prospect that a geologist has identified into a producing asset.Chevron Corp.’s chief executive said last week that he expects to add new barrels of oil to its reserves from “several major deep-water projects” in future years. In 2010, he warned that Chevron added only one new barrel for every four it produced.

Drill, baby, Drill

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12 Responses to Least surprising headline of the day: “Exxon Struggles To Find New Oil”

  1. Prokaryotes says:

    The protests – because of climate change / food supply stress will not help Exxon and other so called dirty fossil fuel companies, either.

    Protests spread to Libya

  2. K. Nockels says:

    No matter where or how deep they drill they are never going to find the two Saudi Arabia’s needed to replace the decline in production we are encountering now. Can’t turn natural gas into transportation fuel, and still we hear the standared lines that new discoveries and new advanced drilling will save us from depletion. Do they still think that somehow they will gain control of what’s left in the Middle East and are secretly working toward that end, because they have been told by their own scientists that inproved drill tech will do no more than lead to faster depletion and collape of any new wells? Demand is still raising and so are prices, if they thought there was profit in it (meaning oil) they would already be drilling in the Gulf where they have a lot of leases right now and premission to drill. If they were really worth anything they wouldn’t be looking at drilling in the Arctic. So all that bitching over the moratorium in the Gulf was so much smoke once again. This country seems to fall for their line every time. You would think we would know better by now. Like the prattle they put out there about the Alaska pipeline leaks: the pipeline is leaking because it is under full volume so if you let us drill in ANWR we’ll fill it back up and no more leaks. I never laughed so hard in my life as when I read that wopper.

  3. Prokaryotes says:

    Nockels,”Can’t turn natural gas into transportation fuel”

    The liquefication process involves removal of certain components, such as dust, acid gases, helium, water, and heavy hydrocarbons, which could cause difficulty downstream. The natural gas is then condensed into a liquid at close to atmospheric pressure (maximum transport pressure set at around 25 kPa/3.6 psi) by cooling it to approximately −162 °C (−260 °F).

    The reduction in volume makes it much more cost efficient to transport over long distances where pipelines do not exist. Where moving natural gas by pipelines is not possible or economical, it can be transported by specially designed cryogenic sea vessels (LNG carriers) or cryogenic road tankers.

    The energy density of LNG is 60% of that of diesel fuel

    While natural gas power plants emit approximately half the carbon dioxide of an equivalent coal power plant, the natural gas combustion required to produce and transport LNG to the plants adds 20 to 40 percent more carbon dioxide than burning natural gas alone.[16] With the extraction, processing, chilling transportation and conversion back to a usable form is taken into account LNG is a major source of greenhouse gases.

    LNG vaporizes rapidly, turning into a gas (methane plus trace gases), and mixing with air. If this mixture is within the flammable range, there is risk of ignition which would create fire and thermal radiation hazards.

    2004, 19 January, Skikda, Algeria. Explosion at Sonatrach LNG liquefaction facility.[19] 27 killed, 56 injured, three LNG trains destroyed, 2004 production was down 76% for the year. A steam boiler that was part of a liquefaction train exploded triggering a massive hydrocarbon gas explosion. The explosion occurred where propane and ethane refrigeration storage were located.

  4. Some European says:

    The language in this piece is pretty revealing of how some people see the world.
    “They have limited ability to drill in many oil-prone regions, such as Russia and part of the Middle East, due to politics. And even in promising Iraq, where many Western companies have won contracts, much infrastructure must be rebuilt. Exxon and others have also flocked to the oil-rich sands of Northern Alberta, Canada, but digging out the oil across vast swathes of forest comes at relatively high cost and generates concerns about the environmental impact.”

    All of this sounds so much like the writer considers foreign countries’ sovereignty, international treaties, human rights, human health and environmental regulation as annoying obstacles to progress. The gap between world views is just so dizzyingly wide…

    This reminds me of the words of that ex-employee of a Louisiana oil firm interviwed in ‘The Age of Stupid’ when describing the smell of oil: “It just smells so much like money.”

  5. dbmetzger says:

    From VOA
    Algae Into Fuel
    A number of researchers, as well as energy companies, think biofuel made from algae could one day help power the world. Whether it’s created in a lab or grown organically in water, algae can be turned into fuel to power cars, trucks and even jets.

    yes pond scum as an oil alternative. Very green indeed.

  6. with the doves says:

    Ya gotta feel bad for Exxon …. Seriously, they don’t have access to some of the best fields, so they are getting s-l-o-w-l-y squeezed out a bit.

    Too bad.

  7. Jeff Huggins says:

    I Can Just Hear It Coming …

    On the same day (today), the WSJ reports that ExxonMobil is having trouble finding oil (the article covered here) and The New York Times reports that Russia is aggressively pursuing oil exploration in the Arctic — accompanied by BP and other major Western oil companies.

    Reading the two articles, it almost feels like a “set up” that ExxonMobil is pushing in order to bolster its arguments.

    I can hear it coming from “The Right”: “The Russians are doing it, so why shouldn’t we?! We’re going to fall behind. Blah, blah, blah.”

    If you haven’t already done so, read the NYTimes article (today) in the biz section about Russia.

    The whole thing makes me realize, and feel, like we need to get MUCH better at addressing this oil stuff (problem), because the folks who want to make a case for more and more and more oil, searching for it wherever, no holds barred, regardless of climate change and other environmental impacts, are just going to push harder and harder, making cases like, “The Russians are doing it, so why not us?”



  8. Barry says:

    Writer forgot to mention that Exxon isn’t even trying very hard to find oil anymore…because they found a better way to crank up short term profits.

    Analysts I’ve read over the last few years have pointed out that despite record profits, Exxon is not increasing its exploration budgets. Instead it is buying back shares. $100b worth in last four years.

    One analyst said that at current rates of share buyback the company would cease to exist as a public firm in a decade or two.

    Exxon has decided the best way to keep the stock price up is to reduce the number of shares to match the amount of oil they find. And less oil just happens to be selling for more money and more profit these days.

    All time record profits without all the bothersome risk of trying to find the new extreme oil. Perfect.

    Welcome to oil 2.0.

    Aren’t you glad you just bought that new SUV. Just 10,000 more gallons to buy than a Volt needs. What could go wrong?

  9. Mulga Mumblebrain says:

    Some European #5, you are so right. The utter contempt of the Right for Arabs and Moslems (amongst all the other global, non-Western, untermenschen) is partly explained by the fact that the world’s greatest material prize, the massive hydrocarbon resources of the Middle East, which by divine right belong to humanity’s highest type, the Western ubermensch, happens to lie beneath the sands of the Gulf, through some cruel accident of geology and geography. Trillions have been expended and millions killed since WW2 to ensure that this wealth flows to those who deserve it, the Western oligarchs and their kleptocratic stooges in the region. The greatest obstacle to humanity saving itself from the multiple disasters facing it is, in my opinion, the absolute refusal of the political Right and the global parasite elite to acknowledge that the whole of humanity are in this together and will sink or swim only through concerted co-operative, selfless, effort.

  10. Jeffrey Davis says:

    One of the measures of Peak Oil is production levels, but production levels can swing with the economy. Peak Oil is a physical moment: when we’ve burned through half the petroleum on the planet. A better way to gauge Peak Oil is the time when new discoveries no longer keep up with production.

    In recent years, the biggest discovery is huge, off the coast of Brazil, but it’s buried under 2 miles of open water in the Atlantic Ocean and it’s not sure if the field will ever be tapped. And it wouldn’t have made up for what’s been used.

    It’s maddening. We have several intractable serious issues: Peak Oil, AGW, a huge trade imbalance, national security linked to the unsettled MidEast. In each case, the rational answer is to develop domestic, clean, alternate sources of energy.

    And yet our national policy continues to emphasize foreign petroleum.

    There aren’t terms to describe these people that are both polite and accurate.

  11. Mulga Mumblebrain says:

    Jeffrey #11, the proven reserves discovered off Brazil, as far as I recollect, are sufficient to satisfy global consumption for about three months.