Jennifer Tan and Chen Aizhu, Reuters 7 Jun 10;
Kuala Lumpur: ExxonMobil warned against quick reactive changes to deepwater drilling laws that damage long-term investment decisions and urged governments to take time to assess the reasons for the Gulf of Mexico oil spill.
Senior executives of oil major Exxon Mobil Corp also underscored the importance of production from deepwater drilling in meeting global energy demand.
"We need to guard against premature reactive changes to legislation that may not in the longer term be helpful but detrimental to the industry," ExxonMobil senior vice president Andrew Swiger said.
"It is too early to speculate on any changes to legislation until the investigation is complete," he told reporters at an industry conference in the Malaysian capital.
The Obama administration recently put on hold new deepwater exploratory drilling in the U.S. for six months pending the findings and recommendations of a presidential commission investigating the causes of the explosion in April that sank Transocean's Deepwater Horizon rig leased by BP Plc.
The review may lead to new laws on drilling.
Mark Albers, ExxonMobil's senior vice president told Reuters the impact of the moratorium on deepwater drilling in the Gulf would be much longer than the six-month ban Washington slapped, as it takes time to understand the effect of possible new regulations and bring the rigs back to work.
"It's important that in the next five years, deepwater will contribute 10 million barrels per day of oil (equivalent). That's equivalent to what Saudi Arabia is producing," Albers said in an interview in Beijing.
"It's a very important element of meeting the world's energy demand."
HIGHEST SAFETY STANDARDS CRUCIAL
Following the order to idle 33 deepwater rigs, Royal Dutch Shell, ExxonMobil, Chevron, Marathon and other firms have begun curbing Gulf operations, which some argue exacerbates the harm to a Gulf Coast economy already losing fishing and tourism business to the spill.
A lengthy deepwater drilling moratorium could also hit future U.S. oil and natural gas output. U.S. Gulf offshore oil operations produced 1.6 million barrels of oil per day in 2009, accounting for 8 percent of U.S. liquid fuel consumption, said the U.S. Energy Information Administration.
The Interior Department has also outlined a series of potentially costly new safety rules and standards that oil companies will have to contend with.
"There will be significant impact to the thousands and thousands of people who work not only in the industry but those who support the industry, from catering, to diving to inspections," Albers said.
The Louisiana Mid-Continent Oil and Gas Association estimates the moratorium could sideline up to 7,000 highly paid rig workers and cost four to five times as many support jobs at catering, service boat and drilling supply firms.
Swiger added that the U.S. oil giant has been providing assistance in response to the oil spill in the Gulf, which highlighted the importance of upholding the highest standards of safety.
"We stand ready to support efforts to determine how such an incident can be prevented from happening again," he said.
BP is facing another difficult week of tough questions from investors and U.S. lawmakers despite making progress in capturing an increasing amount of oil spewing from the ruptured well.
The major said on Sunday its containment cap had captured 10,500 barrels of oil (439,950 gallons/1.67 million liters) in 24 hours and a second system should be in place soon, enabling it to siphon the vast majority of oil spewing from the leak about a mile below the water's surface.
But the U.S. admiral leading the government relief effort said the coast will be under siege from the spill for many more months.
(Editing by Ed Lane)
Enough oil to meet global needs: Exxon
Developing supplies in environmentally responsible ways is the real challenge
Pauline Ng, Business Times 8 Jun 10;
GLOBAL demand for energy is expected to grow slightly more than a third by 2030 from 2005 as developing economies grow, an Exxon Mobil executive said yesterday.
But this demand can be met because current hydrocarbon reserves are huge, said Exxon Mobil senior vice-president Andrew Swiger.
The US Geological Survey estimates conventional oil resources alone at three trillion barrels, he said: 'The real challenge is not one of resource scarcity, as some may suppose, but developing these abundant supplies in economic, efficient and environmentally responsible ways.'
Speaking at the Asia Oil & Gas Conference 2010 in Kuala Lumpur yesterday, Mr Swiger also touched on the environmental disaster in the Gulf of Mexico after BP's Deepwater Horizon rig exploded on April 20, spewing millions of gallons of oil into the sea.
'Events of the magnitude of the BP incident are tragic and notable exceptions,' he said. 'The reality is that our industry has consistently improved its environmental performance while working in increasingly challenging locations.'
Mr Swiger said more investments, technology and skills are required to overcome these challenges. And the best way to combine these elements is strong international energy partnerships.
'Specifically, partnerships between international oil companies and national oil companies are the lynchpins of the global energy industry today,' he said.
For instance, Exxon Mobil has invested more than US$15 billion in Malaysia in the past 40 years and is scheduled to spend more than US$1 billion on an enhanced oil recovery project with Petronas, starting 2013.
Iraq is taking a different route - auctioning its oil fields to international players. It has already conducted two bidding rounds, and the third is for contracts to develop three untapped natural gas fields, Iraqi Oil Minister Hussain Al Shahristani told a news conference in KL yesterday.
One of the biggest oil producers - with reserves of 115 billion barrels or 15 per cent of the global total - Iraq believes using the expertise of international oil companies is the most effective way to convert its resources into wealth, Mr Shahristani said.
By 2017, the country's forecast production capacity will exceed 12 million barrels per day (bpd), he said. Its current production is 2.5 million bpd, with another 150,000 bpd to be added by year-end, followed by an additional 250,000 bpd next year.
'By 2012 onwards there will be a more incremental increase in production,' he said. And until Iraq reaches 4 million bpd, 'there is no need to talk about quotas'.
In a special address at the energy conference, Mr Shahristani, who spent more than 10 years in prison because of his refusal to work on Saddam Hussein's military nuclear programme, said wars, embargoes, inadequate investment, an exodus of management and technical personnel and ageing infrastructure have resulted in Itaq's petroleum sector operating below potential.
Petronas president and chief executive Shamsul Azhar Abbas raised the issue of recent cutbacks in energy investments. He said the upstream sector has seen about US$170 billion of investments involving two million bpd of oil capacity and almost one billion cubic feet per day of gas capacity, either locked up or delayed due to fears of excess capacity and unfavourable financing conditions.
'The key question for us is how quickly we can reverse these cutbacks to avert a potential supply shortfall several years hence,' he said, adding that some upward pressure is likely to materialise as industrial demand gains traction.
