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Corporate Strategy

Q&A: Exxon Builds Heft, Longevity Into LNG Plans

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Exxon Mobil may not be building out the geographically diverse LNG footprints of Shell or TotalEnergies, but the US major is firmly fixed to be a significant “portfolio” LNG player this decade and beyond. Fresh off the award of a stake in Qatar’s North Field East (NFE) expansion, Exxon Head of Global LNG Peter Clarke sat down with Energy Intelligence to discuss his company’s vision. Of note: Exxon expects its LNG supply to double by 2030, and sees decarbonization as key to ensuring that portfolio’s resiliency through the energy transition.

Exxon Mobil's LNG Portfolio
ProjectNet Equity (million tons/yr)
Operating
Rasgas (Qatar)10.6
Gorgon (Australia)4.1
Qatargas (Qatar)3.8
PNG (Papua New Guinea)2.8
Total21.3
Under Construction
Golden Pass (US)5.4
NFE (Qatar)2.0
Coral (Mozambique)0.9
Total8.3
Proposed
Rovuma (Mozambique)3.8
Papua (Papua New Guinea)2.0
Gorgon Train 4 (Australia)1.3
Total7.1

Excerpts from our conversation follow:

 Q: What is LNG for Exxon? Where will your portfolio be in 2030 relative to today?

A: We’ve been pretty clear in our discussions of where we're going in the upstream portfolio that the LNG elements are a core part of that. Today we're very pleased with the robustness of our LNG portfolio. It's made up of a group of very advantaged, low-cost opportunities that, taken together, create an extremely good portfolio in terms of their competitiveness — and of course [are] underpinned by long-term contracting, which traditionally we've been leading in.

We’ve found that portfolio to be … a great platform as we build onto it, which is what we're planning to do with new equity developments as well as other supply points that we're adding in. We're developing a broad portfolio and taking that portfolio approach to our customers, which enhances the security of supply characteristics as well as our deep, long history as a reliable supplier.

Ultimately, between now and 2030, we actually see ourselves doubling our portfolio. But again, we're very strategic in how we go about that. We're looking for a low-cost, capital-efficient, low-carbon footprint — leading in terms of GHG [greenhouse gas] intensity — [and] enabling us to participate appropriately in the value chain. Those mutually beneficial long-term relationships — we see that continuing.

That of course enables us to continue to build our optimization and trading elements, which captures more value and provides flexibility and value to our customers.

Even longer term, as we think about LNG value chains, we see LNG-into-power with CCS [carbon capture and storage], or LNG-into-hydrogen. So as we work with our customers to address emissions on that end of the value chain, that's also an important part. What we see there is the infrastructure investments that will be needed as we think about the transition also very consistent with long-term contracting.

Q: How are current events influencing your plans? Is there any rethink around flexible volume? Development timelines? Targeted markets?

A: Obviously this current situation is unprecedented, and as we think about Ukraine and Russia, we think first of all of the humanitarian crisis, and then obviously what we can do as an energy company to address the energy needs that are perhaps now clearer to many in terms of the role that gas was playing and needs to play going forward. That is helping to maybe accelerate some of the activities that had been planned.

From our perspective, I go back to thinking through the long term and the fundamentals. We were investing through the downturn. From 2017 to 2021, we invested more in new oil and gas production — about double what we earned in that period. So we were taking that kind of countercyclical approach because we had a view to the fundamentals and the long term. That's now paying off in many respects — but definitely on the LNG side too, because we have [Eni-operated] Coral in Mozambique coming on stream later this year, which is 3.5 million tons [per year] of new LNG. A new supplier, a new entry to the global LNG market, and that will certainly be welcomed. And of course we have Golden Pass that we've been developing [with QatarEnergy] right through that period. That remains on schedule — and in fact, [has] good support from regulators to allow us to continue to build that facility as quickly as possible on schedule to come on stream in 2024. There, up to 18 million tons per annum of new supply out of the Gulf Coast — again in a period where there aren't too many other projects entering.

Clearly there are opportunities to go quicker if we can, so we’re looking at what's feasible. We’re well positioned in the base case with capacity in Europe, with the flexibility we have in our portfolio to move cargoes if they're needed. But obviously the situation today is unprecedented in terms of demand for LNG, and the realization of this flexibility has grown dramatically. So we're going to see a little bit of a supply crunch here, and it's going to take a bit more time to bring new supplies on.

Q: My understanding is not a lot of your offtake from Golden Pass is committed under long-term contracts. Is this the primary lever you’ll pull to meet Europe’s rapidly evolving gas needs?

A: There's no question that Golden Pass will be a key supply source. Typically those US supplies are different types of projects than the integrated projects we have. They tend to be quite flexible. There's not much additional volume coming on between now and 2024. So our focus is very much in ensuring that project comes on line on time. We've got over 4,000 people working there now.

We think in general the US as a potential exporter of LNG or as a substantial exporter of LNG has a very important role to play going forward. We've been selective in terms of looking at opportunities beyond Golden Pass in the US. We have supported some trains with Venture Global, at Calcasieu Pass and Plaquemines, and also with NextDecade, we’ve financed those recently. So with our offtake agreements, we're supporting that liquefaction capacity, which of course allows export of the vast quantities of natural gas that are available competitively in the US. …

But we still see the vast majority of our portfolio as being underpinned with long-term contracts, and that's probably not going to change. Even as we come through this next wave, we’ll be looking for those types of long-term commitments — which I think customers, buyers have recognized the importance of even in Europe, where they’re now re-entering, or are looking again at the LNG market perhaps with a slightly different view around securing those.

Q: What balance are you looking for in your portfolio between offtake and equity positions?

A: Every one of those [investments] is very much assessed from our perspective as to what are the characteristics that make it cost competitive. How do they fit into our portfolio strategically, or what's advantaged about those sources? And it's things like the technologies that have been deployed. Where do we stand on their ability to embrace CCS, to reduce the GHG footprint going forward? If you’ve got [electric-]drive — those types of technologies are interesting and give you some further potential in terms of meeting the needs of customers over the longer term.

We're looking at the supply-side opportunity — whether it's an offtake or an equity investment. … how it plays to our strengths. What do we bring? How do we add value? And then, what does it do for our customers and our portfolio? You're not going to see a kind of standard. It’s going to be a mix as we pick and choose the opportunities that best fit our portfolio, and how we build our portfolio will be different from others.

Q: Qatar NFE was a big win. How important is Qatari LNG to meeting these strategic objectives?

A: We have a long history in Qatar. We’re the biggest player in Qatar and have been involved in the enormous success of Qatar LNG in the world market today. It's clearly advantaged, low cost, hugely competitive — probably the world's most competitive LNG supplier. What QatarEnergy has done in developing it is extraordinarily successful, and so being a part of that is really foundational for us. It's a bedrock of capability, a part of our portfolio that's very, very important. NFE is another great example of our relationship continuing.

Q: Are you interested in the North Field South expansion as well?

A: Yes, we're always interested to work with the Qataris and we'll always look at opportunities in Qatar. There are many.

Q: Fast, or modular, LNG developments are gaining momentum post-Russia-Ukraine — including your partner Eni at Coral. Does this type of approach have applications in your operated portfolio? At Rovuma? Elsewhere?

A: Absolutely. As kind of the pioneers of large-scale big trains and big ships, they had an application and a very successful one, as we developed the Qatari resources very quickly, very successfully. As you go around the world, you think about different technologies, different sizes as you develop resources. So in PNG [Papua New Guinea], for example, we have smaller trains there to develop the first phase of PNG — 3.4 million ton [per year] trains. A very, very successful project and production there is way beyond nameplate today, and consistently so.

PNG for us is a fantastic engineering example of how you can take on multiple challenges, use the right technologies, get the right people and maintain an incredibly reliable, very efficient project that's been in operation since 2014 — even through an earthquake in 2018.

As we think about expansion with the Papua project, we're looking at what's the right approach to that about 6 [million ton/yr] expansion. What would we use there in terms of size of train, drives? In Mozambique as well. We have the offshore now, with Coral coming on. That's been very successful — on time, it’s going to start up in a few months. The question is, could you do another one of those [floating LNG trains]? And what can we do onshore as well? Obviously we continue to work onshore options to make sure that when we get back on the ground in Mozambique we have the most competitive development concept. We're continuing to review that. What size trains, how much modularization you do, how you do it. We have that capability in the organization to deploy the right technologies in the right locations.

Q: How specifically are you evaluating CCS and electrification technologies at your future LNG developments?

A: We look at that from an LNG perspective all the way along the value chain. … When we start thinking about the next phase of liquefaction expansion or new liquefaction capacity, how do we make sure that the kit we put there is the most efficient — in terms of its energy consumption, its cost competitiveness, and so on. What does its GHG footprint look like? That's what gets you into this discussion about: What's the drive? Is it a gas drive? Is it a hydrogen drive? Is it an electric drive? As you think through that, how [are] the electrons made? Are they made from a [combined-cycle gas turbine] that might have CCS associated with it so that you have got clean electrons to drive your liquefaction? Or do you have a hydrogen plant there? Is it blue hydrogen or green hydrogen driving your compressors? We're very focused on our GHG commitment — so, net zero by 2050 [and] our 2030 targets.

Then … We look down the value chain … what are we doing on the shipping side. And we look at our customers’ needs … The role of gas in providing that very quick reduction in GHG emissions with existing technologies cannot be overstated, and there has to be a pathway, if you like, to greener technologies. They're going to take a bit longer, and I think the critical point here is allowing that transition to happen from coal to gas and then gas onward in your transition. … That immediate benefit of gas as it displaces coal is incredibly important to get back on that trajectory, and then once you build that gas infrastructure, how do you then further reduce your emissions when you think about the consumption of that gas over the long term? There again CCS comes into play on the consumer end potentially — or hydrogen or ammonia on the customer end where you're seeking to reduce your GHG emissions as well.

What You Need to Know:

  • Peter Clarke says Exxon anticipates doubling its global LNG supply between now and 2030.
  • The company's expansion plans in the US, Qatar, Mozambique and Papua New Guinea are set to keep it the second-largest major in terms of LNG equity capacity, behind only Shell.
  • Qatar is interested in replicating its NFE equity structure for the 16 million ton/yr NFS expansion, suggesting Exxon — and other NFE awardees — have further scope to participate in the country's major LNG build-out.
  • Exxon's interest in integrating CCS into its LNG expansion comes as no surprise. The company is the biggest champion of CCS among the majors, and is pursuing CCS integration into biofuels and hydrogen ventures as well.

In the Spotlight: Peter Clarke

  • Peter Clarke's career with Exxon began in 1987, with Esso Ireland.
  • He has held various management positions in Exxon's natural gas and LNG marketing and supply and trading organizations over the past 3½ decades, including serving as president of Exxon Mobil Gas & Power Marketing Company just prior to his current role.
  • As head of Global LNG, Peter oversees the full end-to-end value chain management of Exxon's LNG portfolio, including project development, production and marketing activities.

Topics:
LNG Projects, Majors, Liquefaction, LNG Supply, Corporate Strategy , CO2 Emissions, Carbon Capture (CCS), Gas Supply
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