Business

ExxonMobil is recovering from the pandemic downturn with $23 billion in profits and plans to expand in the Permian Basin

Texas-based oil giant Exxon Mobil had a big week. The company reported a dizzying $23 billion in profits, said it plans to raise output in the Permian Basin, and is moving headquarters to Houston.

In this Wednesday, March 1, 2017, file photo, Exxon Mobil Corporation Chairman & CEO Darren Woods, third from left, joins the applause during opening bell ceremonies at the New York Stock Exchange.

Sometimes things get worse before they get better.

That appears to be the case for ExxonMobil, which made a few announcements this week showing the company may have rebounded from the pandemic: it raked in billions last year, announced it would up its oil and gas production volumes in West Texas for the second year in a row, and will relocate its headquarters to Houston in an effort to further streamline its business structure.

As the world grappled with the Coronavirus pandemic in 2020, the Texas-based oil major slashed spending, sold off assets, and cut 1,900 US workers – including more than 700 employees in Houston. Still, the multinational corporation reported historic losses totaling around $22.4 billion dollars.

However, on Tuesday the company announced $23 billion in profits in 2021.

"Our effective pandemic response, focused investments during the down-cycle, and structural cost savings positioned us to realize the full benefits of the market recovery in 2021," ExxonMobil CEO Darren Woods wrote in a statement. "Our new streamlined business structure is another example of the actions we are taking to further strengthen our competitive advantages and grow shareholder value."

Part of ExxonMobil's strategy includes focusing on certain oil and gas exploration and production projects, and the company has raised investment and output in the Permian Basin of West Texas and New Mexico. As part of its 2021 earnings announcement, ExxonMobil said it will increase production volumes by 25% this year.

Scientists are clear that we are not moving away from fossil fuels fast enough to avoid catastrophic damage from global warming. Devastating predictions about climate change are already coming true in the form of massive wildfires, intensifying hurricanes, and events like Winter Storm Uri, which resulted in widespread power outages and hundreds of deaths across Texas. Those events disproportionately impact marginalized communities that are already under-resourced.

"The International Energy Agency clearly stated last year that if we’re serious about the climate crisis, ‘there can be no new investments in oil, gas and coal, from now – from this year,'" said Luke Metzger, Executive Director for Environment Texas. "Increased drilling by Exxon is incompatible with a safe climate for the planet and shows their recent climate claims aren’t worth a bucket of warm spit."

Scientists say that to keep global warming to a slightly more manageable — but still harmful — 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels, 60% of existing oil and gas reserves currently underground need to stay there.

ExxonMobil has been clear it does not plan to give up drilling, and has focused a lot of its climate action on carbon capture, utilization, and storage – essentially capturing carbon emissions from drilling and refining, and either storing it or re-using it.

If carbon capture and storage was already standard practice it could be helpful in the fight against climate change. Speaking at a recent U.S. Chamber of Commerce virtual event, U.S. climate envoy John Kerry noted that many carbon capture projects, such as a massive one proposed for the Houston Ship Channel, are still months or years away.

"If you can capture (emissions) 100% and it makes it affordable, that’s wonderful," Kerry said specifically of natural gas production and use, "but we’re not doing that, and gas is 87%-plus methane, and methane is leaking in most places, somewhere between five and 10%, and that leakage is 80 times more damaging than carbon dioxide. So we have to be thinking hard about deploying more renewables."

Some in Houston see the city as a global leader in the transition away from fossil fuels and towards clean energy, and will be watching to see if ExxonMobil helps or hinders that effort. The oil major also announced this week it's relocating its headquarters from Irving, Texas to the Houston area.

Exxon says the move to their campus nestled between Houston and the Woodlands will be completed in the middle of 2023.

“We greatly value our long history in Irving and appreciate the strong ties we have developed in the North Texas community,” Woods wrote in a statement. “Closer collaboration and the new streamlined business model will enable the company to grow shareholder value and position ExxonMobil for success through the energy transition.”

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