UPDATE 3-Exxon sees spending of $20 billion a year through 2011
Wed Mar 7, 2007 6:31pm ET
NEW YORK, March 7 (Reuters) - Exxon Mobil Corp. plans to spend about $20 billion annually through 2011 and start production at 25 major oil and gas projects over the next three years, the world's largest publicly traded oil company said on Wednesday.
The projects will add about 1 million barrels of oil equivalent per day (BOEPD) to its base volumes when they reach their peak, Exxon Mobil said. The company was producing about 4.2 million BOEPD at the end of 2006.
Still, the company's projected oil and gas production capacity toward the end of the decade is lower than last year's estimate due to delayed projects, divestments and changes to production sharing agreements at some of its projects.
Chief Executive Rex Tillerson, speaking at the company's analyst meeting in New York, said he expects company capital spending to be at around the $20 billion level a year through 2011.
"I expect very active levels of investment beyond the end of the decade," Tillerson said.
Exxon Mobil's capital spending in 2006 was about $19.9 billion. Exxon posted the largest corporate profit in U.S. history in 2006 thanks to record high crude oil prices.
The oil industry's costs also have climbed, as high oil prices have fueled demand for drilling rigs, steel and other materials.
Tillerson said the company has seen a 9 to 10 percent increase in drilling costs over the past year or so.
"Rig rates are not likely to abate until some of the new rigs that are being built come out of the yard," which should happen over the next two or three years, he said, speaking to reporters after the meeting.
Costs seem "to maybe have reached a plateau. We're not going to see the same year over year increase," Tillerson said.
Oil prices rose nearly 2 percent on Wednesday, pushing up energy stocks. Exxon's shares rose nearly 1 percent on the New York Stock Exchange to $71.64.
SEVEN NEW PROJECTS IN 2007
Exxon Mobil Senior Vice President Stuart McGill said the company plans to start production at seven new projects in 2007 that will add about 200,000 barrels of oil equivalent per day to the company's base volumes.
The projects the company plans to bring on line this year include four projects in Europe, two projects in Angola, and a liquefied natural gas (LNG) unit at its RasGas project in Qatar.
It plans to start up 18 additional projects over the course of 2008 and 2009, including the company's Thunder Horse joint venture with BP Plc in the Gulf of Mexico, several projects in Qatar and West Africa, and three LNG terminals.
The company also said it has more than 30 other major projects it plans to start up in 2010 or later. It said its current project inventory is expected to produce 24 billion oil-equivalent barrels over the life of the projects.
Exxon said it expects its production capacity to rise to less than 5 million BOEPD in 2011.
Last year, the company had projected its 2010 production capacity would be close to 5 million BOEPD. Several of the companies projects have since been delayed, including Thunder Horse and the huge Kashagan oil field in Kazakhstan.
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