U.S. Headed For Energy Self-Sufficiency - Exxon CEO

Exxon Mobil's CEO Rex Tillerson believes the U.S. will be self sufficient and energy secure by 2020. The country is the largest natural gas producer in the world and is producing oil at rates not seen since the 1980s. Production of crude oil is expected to continue growing over the next few years and Tillerson thinks it's "realistic" that the U.S. will be secure in energy by the end of the decade. 

Tillerson discusses the difficulty of developing shale gas reserves in China. There is a lot of potential, but the formations are deeper and in more remote locations. There are a number of challenges that will delay development.

He also touches on unknown fiscal policy and how the uncertainty might be hurting economic growth here at home.

Largest Refineries in the U.S. Benefit From Eagle Ford Crude

In about a month's time, Motiva Enterprises' Port Arthur refinery will become the largest in the U.S., with 600,000 barrels per day of crude refining capacity.  The facility will surpass ExxonMobil's Baytown refinery that has a capacity of approximately 560,000 barrels per day. Both will benefit from growing U.S. crude supplies. Motiva is a joint venture owned by Shell and Saudi Aramco. The expansion of the Port Arthur refinery was planned over five years ago without the knowledge of growing production in the Eagle Ford Shale and Permian Basin. That's a bonus that will be welcomed with open arms. Local supply generally leads to better margins for refineries.

While parts of the refining industry have made little to negative returns over the past few years, new facilities like Motiva's will be the benchmark for the future. The economies of scale and modern technology will give it an even greater advantage over other U.S. refineries that are near the end of their useful lives.

If you'd like to learn more, you can read an entire article on the subject at minyanville.com

Exxon - Rosneft Trade Artic Oil for Eagle Ford Interest?

ExxonMobil agrees to enter a partnership with the Russian oil & gas giant Rosneft in the Artic and Black Sea in exchange for a development carry and the potential to participate in Exxon's tight oil assets in Texas. Is it the Eagle Ford? Exxon has been tight lipped when it comes to the Eagle Ford and this might be the first indication that the company has a material position in the play. XTO was leasing in South Texas when the company was acquired by Exxon in 2010. XTO had built a significant producing position through the acquisition of Dominino Resource's South Texas properties not long before it was acquired itself. The assets were largely producing and acreage was held by production. That luxury is likely the reason we have not seen Exxon add as many rigs in South Texas as other operators. I'll update this post as more details emerge.

The agreement, signed by Rosneft President Eduard Khudainatov and ExxonMobil Development Company President Neil Duffin in the presence of Russian Prime Minister Vladimir Putin, includes approximately US $3.2 billion to be spent funding exploration of East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea and the Tuapse License Block in the Black Sea, which are among the most promising and least explored offshore areas globally, with high potential for liquids and gas.

In the course of these projects, the companies will use global best practices to develop state-of-the-art safety and environmental protection systems.

The agreement also provides Rosneft with an opportunity to gain equity interest in a number of ExxonMobil’s exploration opportunities in North America, including deep-water Gulf of Mexico and tight oil fields in Texas (USA), as well as additional opportunities in other countries. The companies have also agreed to conduct a joint study of developing tight oil resources in Western Siberia.