EXXON ACCENTS GAS FOR GROWTH, CELEBRATES START OF MOBILE BAY FLOW

Exxon Corp's world strategy for long term growth relies heavily on gas development, along with continuing cost containment and efficiency gains.

Lee R. Raymond, chairman and chief executive officer, says most of Exxon's 70 upstream development projects in the company's portfolio are prospects expected to boost its gas production about 25% during the 1990s.

"That's where the real upstream growth is for Exxon," Raymond told a conference in New Orleans. Sponsored by the Howard Well financial firm, sessions drew about 400 security analysts and institutional portfolio managers.

Exxon's annual report for 1993 lists the year's worldwide net production available for sale at 5.825 bcfd, up from 5.318 bcfd in 1990. Of those volumes, 1.764 bcfd and 1.778 bcfd, respectively, were produced in the U.S.

Underscoring Raymond's remarks, Exxon Co. U.S.A. late last month celebrated the opening of its $1 billion Mobile Bay gas project off Alabama (see map, OGJ, Jan. 10, p. 23).

The project includes three production platforms, 11 initial development wells, and an onshore gas treating plant. Production, which began late last year from three fields, has reached 30O MMcfd.

GROWTH PROGRAM

In 1993, Exxon U.S.A. bolstered its gas production with five major developments with combined investments of $3.7 billion, including its project in Mobile Bay.

Other major U.S. gas project start ups last year were the Point McIntyre field and Prudhoe Bay gas handling project on Alaska's North Slope, expansion of the Santa Ynez unit off California, and the deepwater Zinc development in the Gulf of Mexico.

Raymond also said continuing exploration is essential to maintaining Exxon's long term profitability.

The company in 1993 logged net discoveries of 730 million bbl of oil equivalent (BOE), its best exploratory results in a decade. Also last year, Exxon gained access to high potential exploration areas in Nigeria, Sakhalin Island, China, and Papua New Guinea.

Exxon's 5 year finding costs during 1989 93 averaged $1.94/BOE, compared with a 5 year average of $3.45/BOE in 1984 88.

In a year marked by low oil prices and generally difficult times in the petroleum industry, Exxon in 1993 posted net earnings of $5.3 billion, up 11% from 1992. The company achieved the results partly by trimming operating costs by $750 million, following cuts amounting to $900 million in 1992. With about 91,000 employees worldwide, its staff last year reached the lowest level in 70 years.

Raymond said keys to Exxon's downstream growth include tight cost control and increasing sales of higher value refined products. The company intends to capitalize on its refining and marketing network in western Europe to expand into eastern Europe. More than one third of Exxon's downstream capital spending occurs in the AsiaPacific region.

"Exxon's early lead in cost and asset management does not lessen its current and continuing focus," Raymond said. "With operating costs of $25 billion and assets of $84 billion, there is always more to do."

MOBILE BAY

Exxon calls its Mobile Bay development the world's largest sour gas project. Reserves are estimated at more than 1 tcf.

Ten of Exxon's 20,000 ft jurassic Norphlet wells are in state water and one in federal water. Flow rates range as high as 50 MMcfd/well.

They are among the deepest, most technologically challenging wells drilled in the U.S., says Mike Flynn, Exxon southeast production division manager.

Exxon cites extreme depths, high sulfur contents, and high reservoir temperatures and pressures. Bottom hole locations of some were are as much as 1 mile from their surface sites. Water depths are 10-50 ft.

The development includes 17 leases covering 61,000 acres, acquired in the early 1980s, encompassing three fields: Northwest Gulf, south of Dauphin Island; North Central Gulf, south of Ft. Morgan, Ala.; and Bon Secour Bay, northeast of Dauphin Island.

The project's 300 MMcfd onshore gas treating plant, about 15 miles south of Mobile, Ala., removes hydrogen sulfide, carbon dioxide, and water from the production stream.

During more than 3 years of construction, Exxon and contract employees worked 7.9 million hr on Mobile Bay onshore and offshore facilities without a lost time accident.