Q&A: ExxonMobil looks beyond Guyana bonanza

: Crude oil, Natural gas
24/03/25

ExxonMobil is not resting on its laurels after its giant Stabroek discovery offshore Guyana, where production is set to double to 1.2mn b/d by 2027. John Ardill, the company's vice-president of exploration, spoke with Argus' Stephen Cunningham on the sidelines of the CERAWeek by S&P Global conference in Houston, Texas.

What's the outlook for exploration?

All of the investments that we're making in Stabroek today to fully explore and develop that — we're looking at what the next basins are. We're going to drill wells in eastern Canada later this year — that's an oil prospect, well over 1bn bl. We will drill in southern Angola in the Namibe basin, north of the Orange basin. We have blocks in both northern Namibia and southern Angola. If successful, there's a lot of potential and running room. In the east Mediterranean, we've amassed a 60,000km2 exploration acreage position across Cyprus, Egypt and Greece. We've already made gas discoveries there. We're getting ready to go to a very focused drilling programme next year, to see if we can discover large gas resources. We know Leviathan, Tamar, that level of potential can exist.

Will there ever be another find on the scale of Guyana?

When I started with Exxon — almost 30 years ago — we were working the Lower Congo basin in Angola, a big new deepwater play — Block 15/17. Someone said, "Do you ever think we'll be doing this again at this scale?" I said, I don't know, but I'm pretty sure that the geology is going to work again. Guyana is bigger than Block 15 — it's more analogous to the whole of the Lower Congo basin. So I absolutely do believe that the resources exist, and that's what drives us to explore for those.

Will we see more mega projects in future?

Absolutely. We have to always think probably bigger and more aggressively than we have in the past. The world needs more energy and we need to reduce emissions. We're not going to do that through small projects. It doesn't fit for ExxonMobil's strengths and capabilities. We're looking for very large projects — a great example is Guyana. We shouldn't think we can never do that again. We're thinking that, or bigger and faster. We're trying to find those large resources, very high quality, that don't allow us just to do one FPSO [floating production, storage and offloading] project, but multiple, and that's where we can leverage the full scale and pace of ExxonMobil. In exploration, we are a flatter, more agile organisation and extremely disciplined.

What about Algeria and its shale prospects?

There's great potential beyond what [NOC] Sonatrach has done already. We're in discussions with Sonatrach around how can ExxonMobil come and potentially help. It's coming from our unconventional experience in the Permian and bringing that unconventional development, pace, scale and experience to a country like Algeria that has that type of resource that needs to be unlocked. It's a significant challenge to make unconventional work at scale outside of the [US] Lower 48. Many have tried and really not succeeded fully yet to that scale and pace.

What's the status of the Stabroek drilling campaign?

We've sustained a six-well drilling programme. About two to three rigs are running exploration-appraisal focus, the others more appraisal development, and we continually adjust and optimise that based on what we're finding. This year, we're spending time to really understand the gas and condensate resource.

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25/01/13

US tariffs on Canada likely, oil cut-off not: Alberta

Calgary, 13 January (Argus) — Tariffs threatened by the US against Canada will become a reality, according to the premier of oil-rich Alberta , but any retaliation will not entail cutting off energy exports. "They're likely to come in on January 20th," Alberta premier Danielle Smith said of the tariffs on Monday after she met with US president-elect Donald Trump at his Mar-a-Lago estate in Florida over the weekend. "I haven't seen anything that suggests that he's changing course." Trump in late-November said he plans to impose a 25pc tariff against all imports from Canada, citing inadequate border controls and a US trade deficit. Canada has since pledged to spend more money on border security while Smith reckons Canada would have a deficit if not for energy trade. "We actually buy more goods and services from the US than they buy from us," Smith said in an online interview with reporters. "We actually have $58bn in a trade deficit with the Americans when you take energy out." Smith wanted assurances the US is still interested in buying Canadian oil and gas, with her province being the heart of the country's energy sector. "Oil and gas is going to be key for being able to get a breakthrough, once the tariffs do come in, in getting them off," said Smith. Canadian foreign affairs minister Mélanie Joly said in a 12 January interview broadcast on CTV that the country could consider stopping the flow of Canadian energy in retaliation to tariffs. But Smith said that would not happen since the oil are owned by the province, not the federal government. "[The federal government] will have a national unity crisis on their hands at the same time as having a crisis with our US trade partners," said Smith. About 80pc of Canada's 5mn b/d of crude production is consumed by refineries in the US, with many in the Midcontinent having no practical alternative , according to the American Fuel and Petrochemical Manufacturers (AFPM). The region imported 2.7mn b/d of Canadian crude in October, the latest data point from the Energy Information Administration (EIA). "I hope cooler heads prevail," said Smith, adding that Trump seemed interested in buying more oil and gas. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexico’s industrial output up 0.1pc in November

25/01/13

Mexico’s industrial output up 0.1pc in November

Mexico City, 13 January (Argus) — Mexico's industrial production edged up 0.1pc in November, as gains in autos and other manufacturing offset weaker construction, national statistics agency Inegi said. Mexican bank Banorte described the monthly increase as "rather small," noting it followed a 1.1pc decline in October and was largely driven by base comparison effects. The bank added that the overall industrial outlook remained "fragile." Manufacturing, which represents 63pc of Inegi's seasonally adjusted industrial activity indicator (IMAI), increased by 0.7pc in November, though it failed to fully recover from a 1.7pc drop in October. Transportation manufacturing, a key subsector accounting for 12pc of the sector, rose by 3.8pc after a steep 4.3pc decline the prior month. Despite recent volatility, Mexico's auto sector achieved record annual light vehicle production in 2024, reaching 3.99mn units. Yet, automaker association AMIA warned of potential challenges in 2025 because of economic uncertainty, which could affect investment and demand. Mining, which makes up 12pc of the IMAI, increased by 0.1pc in November following a 1.1pc decline in October. Growth was driven by a 41.4pc jump in mining-related services, while oil and gas output fell by 2.4pc, marking a fifth consecutive monthly decline for hydrocarbons. Construction, representing 19pc of the IMAI, contracted by 1.8pc in November after modest gains of 0.2pc in October and 1.1pc in September. As industry eyes potential policy shifts under US president-elect Donald Trump, Banorte projected a weak start to 2025 for Mexico's industrial output. But it expects momentum to build as government spending on priority infrastructure projects "moves more decisively." By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

AI may boom on gas power, then turn to nuclear

25/01/13

AI may boom on gas power, then turn to nuclear

New York, 13 January (Argus) — The first tranche of new US data centers coming on line this decade to run electricity-intensive artificial intelligence (AI) software will probably rely mostly on power generated by natural gas, while the nuclear renaissance hoped for by Big Tech comes later in the 2030s. Microsoft, Amazon, Facebook-parent Meta and Google-parent Alphabet want clean, reliable power as quickly as possible so they can be early movers in the development of AI, which is rapidly advancing and finding new user bases around the world. While these companies do not relish the optics of powering AI development with fossil fuels, gas-fired power is widely expected to fulfill most of the gap between current supply and future demand through at least 2030. Unlike wind and solar, gas can be relied upon for steady, baseload power, a necessary ingredient for always-on data centers. And crucially, unlike nuclear, gas-related infrastructure can be built out quickly. The most recent additions to the US nuclear fleet, Vogtle units 3 and 4 in Georgia, took 15 years to build and cost $30bn, double the expected time and cost. A few decommissioned nuclear reactors can be restarted, as Microsoft is paying to do with a unit of Three Mile Island in Pennsylvania. But this low-hanging fruit will be quickly exhausted. Questions around the meter While there is broad agreement that gas will power the AI data center boom through at least 2030, questions remain about what this rapid gas-fired power build-out will look like. Data center operators can secure power in two ways: wade through the long, arduous interconnection process through which new customers connect to the grid, or bypass the grid altogether and secure their own personal electricity supply through so-called "behind-the-meter" agreements. Many in the gas industry are betting tech companies' need for speed will force them to opt for the latter. "The data centers are not going to wait," Alan Armstrong, chief executive of Williams, the largest US gas pipeline company, told Argus in an interview. "They are going to go to states that allow you to go behind the meter." In this scenario, construction of an AI data center in a state like Louisiana, for instance, might accompany construction of a new intrastate pipeline connecting the state's prolific Haynesville gas field with a new gas-fired power plant. Intrastate pipelines bypass the federal oversight triggered by interstate pipeline construction, and new gas power plants only take 2-3 years to build, East Daley Analytics analyst Zachary Krause told Argus . Most of the incremental power needed to run AI data centers this decade will be generated by new gas plants, Krause said. Even ExxonMobil in December said it was in talks to provide "fully islanded" gas-fired power to AI data centers. It claimed it could even capture 90pc of the CO2 emissions from power generation, appeasing tech companies' climate ambitions. ExxonMobil's non-grid gas generation fleet is "independent of utility timelines, so they can be installed at a pace that other alternatives — including US nuclear — just can't match," ExxonMobil chief financial officer Kathy Mikells said. But connecting to the grid may offer better reliability and economics than behind-the-meter gas power. If an off-grid gas generator trips off line, for instance, an always-on data center without back-up generation depending on that facility would be in trouble. Grid connection also allows generators to sell excess power into the grid. For those reasons, most new data centers this decade will rely on the grid as their primary power source, Adam Robinson, research associate at consultancy Enverus, told Argus . Small modular future But if the 2020s become the decade of gas-powered AI, the 2030s may be when nuclear-powered AI gets its due. The long-awaited nuclear renaissance may come not from conventional reactors, but from next-generation small modular reactors (SMRs), which can theoretically be built much faster and cheaper. No US SMRs yet exist, but given the number of SMR start-ups with expected start dates before 2030, and money pouring into the sector from the likes of Google and Microsoft, at least one of these next-generation reactors should be operating by 2030, Adam Stein, director of nuclear energy innovation at research center Breakthrough Institute, told Argus . SMRs' smaller price tag relative to conventional 1 GW nuclear reactors may also accelerate their adoption, Stein said. "Not every utility needs a GW-scale plant of any kind, but they might need a 300 or 600MW plant," he said. "So the total addressable market is larger for SMRs." By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trudeau exit may spur Canadian energy growth

25/01/13

Trudeau exit may spur Canadian energy growth

Calgary, 13 January (Argus) — Canadian prime minister Justin Trudeau's place in federal politics is winding down after nine years of driving change in climate policy, but those environmental advances came at a cost for the world's fourth-largest oil producer, helping to stifle foreign investment in the country's oil and gas sector. Support for Trudeau fell nationwide over the past year, as inflation and rising housing costs fueled by a relaxed immigration policy and carbon taxes became too much for many to bear. Trudeau, seemingly immune to scandal and high-profile exits on his team, was dealt his biggest blow when his deputy prime minister and finance minister Chrystia Freeland resigned in December, citing his approach to the "aggressive economic nationalism" of US president-elect Donald Trump's threatened trade tariffs, prompting his 6 January decision to step down. Canadian crude producers still managed to lift output by 30pc during Trudeau's tenure since 2015, even as major foreign players abandoned the oil sands for friendlier jurisdictions and upstream projects and pipelines were either mothballed or cancelled outright. Provincial jurisdiction over resources prompted frequent fights between Trudeau and Albertan premiers who guarded their claim to energy and the right to explore and extract within their borders. "We could've done so much more," Alberta premier Danielle Smith said hours after Trudeau's announcement, lamenting missed opportunities for Canada's oil patch over the past decade, including the failed Energy East, Northern Gateway and Keystone XL export pipelines. A tanker ban, tighter regulation and an onerous project approval process were among the tools Trudeau used to try to rein in the oil and gas sector, saying in 2017 that Canada's oil sands needed to be "phased out" before naming a former Greenpeace director as his environment minister. Smith did give Trudeau a nod for his commitment to keeping midstream giant Enbridge's Line 5 pipeline from shutting down, and for helping to get the massive Trans Mountain Expansion (TMX) pipeline and Coastal GasLink export projects from Alberta to Canada's Pacific coast across the finish line. But while Smith welcomes Trudeau's resignation, Canada now faces a period of lame duck leadership before it holds federal elections, while cross-border tensions are rising. Your new best frenemy Its largest trading partner is quickly becoming its newest antagonist, with Trump threatening a 25pc tariff on all imports from Canada and Mexico. Unencumbered movement of oil is critical on both sides of the border, with 80pc of Canada's 5mn b/d of crude production aimed at refineries in the US. Many landlocked Canadian producers have no practical alternative, like refiners in the US midcontinent connected by pipeline. As political chaos unfolds in Ottawa, Trump has lobbed insults at Trudeau and made calls for the northern neighbour to become the US' "51st state", a taunt that has struck a nerve in Canada. "There isn't a snowball's chance in hell that Canada would become part of the US," Trudeau said on X on 7 January. "Trump's comments show a complete lack of understanding of what makes Canada a strong country," wrote minister of foreign affairs Melanie Joly. Trump will have spotted Canada's weakness months ago, with support for Trudeau tumbling to the benefit of the Conservative Party and its leader Pierre Poilievre. Recent polls indicate the centre-right party would win a majority of seats in the House of Commons if an election were held today. That is likely to happen in May, assuming opposition parties bring down the government when Parliament resumes in late March. Should Poilievre win, Trump will have a partner better aligned on more policies than Trudeau was, but the suggestion that Canada could become part of the US will get the same response. "We will never be the 51st state. Period," Poilievre said. His primary ambitions are to undo Trudeau's work, with the federal carbon tax being the first to go. Rescinding the tanker ban, killing proposed emissions caps and promoting pipeline construction are also on the agenda. Poilievre plans to "take back control" of Canada's resources through permitting and cutting taxes on pipeline and LNG projects to become less reliant on the US. "Canadians will give me a mandate to take the country in a completely opposite direction," Poilievre said on the Jordan B Peterson Podcast earlier this month, describing how vanquishing Trudeau's energy policy will "cause a massive resource boom in our country." The lengthy exchange touched on minimising government, artificial intelligence and immigration, and was shared by Trump's ally, Tesla chief executive Elon Musk, who called it a "great interview". Priming for another Pacific pipeline Canada's energy industry has returned to profit and received a much-needed boost from the federally owned 590,000 b/d TMX pipeline, but rising oil sands production means the newly commissioned system is destined to fill up soon. The prospect of an industry-friendly federal government reinvigorating a relatively dormant midstream sector is positive for investment in Canada, and the US could play an unintended role in deciding where any pipelines are proposed. Enbridge and the Alberta government are teaming up to find ways to expand pipeline capacity. Smith singled out the US as a customer she wants to enhance ties with amid looming tariff threats, but those threats may prompt a revival of pipeline projects to Canada's west coast to reduce dependence on the US market. Enbridge's Northern Gateway pipeline was approved in 2014, but a Liberal Party led by Trudeau came to power in 2015 with sweeping changes for the oil and gas sector, including a tanker ban on the country's Pacific coast, effectively killing the project. The C$7.9bn ($7.3bn) Northern Gateway was not in the interest of local communities, Trudeau said in late 2016, when he officially reversed the previous government's approval. The pipeline would have shipped 525,000 b/d of diluted bitumen westward and 193,000 b/d of imported condensate eastbound to the oil sands region for blending. Construction would have avoided large populations and was seen as the most practical option for getting more Canadian crude to Asia-Pacific. Its northern terminal may not have had the same tanker limitations as TMX faces at Vancouver, and could have seen reduced voyage times. Enbridge now has added support from the Alberta government by way of crude volumes the province collects as tax from some oil companies in lieu of cash payments. These in-kind barrels would be the first to backstop a major pipeline expansion by Enbridge, giving both the midstream company and other producers something to latch onto to advance a future project. This is a new approach for Alberta, after sacrificing C$1.5bn it paid in a last-ditch effort to keep the doomed 830,000 b/d Keystone XL project to the US alive. Outgoing US president Joe Biden revoked that troubled line's permit in 2021. Like Keystone XL, Northern Gateway is no more. Reviving such a project would still require significant stakeholder engagement along any route, and face substantially higher construction costs than a decade ago. The C$34bn TMX put into service in May 2024 was originally pegged at C$5.4bn in 2013, even less than Northern Gateway as TMX was the twinning of an existing system. This would be a big hurdle to clear, even if governments were to allay regulatory concerns. But with an unpredictable Trump returning to the White House, the prospect of shipping more Canadian crude west might soon hold a heightened appeal. By Brett Holmes Canadian oil production Canadian upstream investment Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US issues 45Z tax guidance for low-carbon fuels

25/01/10

US issues 45Z tax guidance for low-carbon fuels

Washington, 10 January (Argus) — US producers of low-carbon fuels can start claiming the "45Z" tax credit providing up to $1/USG for road use and $1.75/USG for aviation, following the US Treasury Department's release today of proposed guidance for the credit. The guidance includes proposed regulations and other tools to determine the eligibility of fuels for the 45Z tax credit, which was created by the Inflation Reduction Act to replace a suite of incentives for biofuels that expired at the end of last year. Biofuel producers have been clamoring for guidance from the US Treasury Department so they can start claiming the tax credit, which is available for fuels produced from 1 January 2025 through the end of 2027. "This guidance will help put America on the cutting-edge of future innovation in aviation and renewable fuel while also lowering transportation costs for consumers," US deputy treasury secretary Wally Adeymo said. "Decarbonizing transportation and lowering costs is a win-win for America." The creation of the 45Z tax credit has already prompted a change in US biofuels markets by shifting federal subsidies from blenders to producers. Because the value of tax credit increases for fuels with the lowest lifecycle greenhouse gas (GHG) emissions, it could encourage refiners to source more waste feedstocks such as used cooking oil, rather than conventional crop-based feedstocks. While the guidance is still just a proposal, taxpayers are able to "immediately" use the guidance to claim the 45Z tax credit, until Treasury issues additional guidance, an administration official said. The guidance on 45Z released today affirms that only the producer for the fuel is eligible to claim the credit, not blenders. To be eligible for the tax credit, the fuel must have a "practical or commercial fitness for use in a highway vehicle or aircraft" by itself or when blended into a mixture, Treasury said. Marine diesel and methanol suitable for highway or aircraft use are also eligible for 45Z, as is renewable natural gas that can be used as a transportation fuel. Treasury also released an "annual emissions rate table" offering providers a methodology for determining the lifecycle GHG of fuel. Treasury said a key emissions model from the US Department of Energy, called 45ZCF-GREET, used to calculate the value of the 45Z tax credit is anticipated to be released today, although industry officials said it may be delayed until next week. Treasury said it intends to propose regulations at "a future date" for calculating the GHG emissions benefits of "climate smart agriculture" practices for "cultivating domestic corn, soybeans, and sorghum as feedstocks" for fuel. Those regulations could lower the calculated lifecycle emissions of fuel from those crop-based feedstocks and increase the relative 45Z tax credit. US biofuel producers said they are still awaiting key details on the 45Z tax credit, including the update to the GREET model. Among the outstanding questions is if the guidance released today provides "enough certainty to negotiate feedstock and fuel offtake agreements going forward", said the Clean Fuels America Alliance, an industry group that represents the biodiesel, renewable diesel and sustainable aviation fuel industries. It is unclear how president-elect Donald Trump intends to approach this proposed approach for the 45Z credit, which will be subject to a 90-day public comment period. Trump has promised to "rescind all unspent funds" from the Inflation Reduction Act. But outright repealing 45Z would leave biofuels producers and farmers without a subsidy they say is needed to sustain growth, after the expiration last year of a $1/USG blender tax credit and a tax credit of up to $1.75/USG for sustainable aviation fuel. Biofuel and soybean groups were unsuccessful in a push last year to extend the expiring biofuel tax credits. The 45Z credit is likely to be debated in Congress this year, as Republicans consider repealing parts of the Inflation Reduction Act. House Republicans have already asked for input on revisions to the 45Z credit, signaling they could modify the incentive. In a tightly divided Congress, farm-state lawmakers may hold enough leverage to ensure some type of biofuel incentive — and potentially one friendlier to agricultural producers than 45Z — survives. By Chris Knight and Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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