Say what? Say its not so? Exxon’s Permian Production to Yield $64B for New Mexico

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Exxon’s Permian Production to Yield $64B for New Mexico

 

ExxonMobil Corp.’s development of its Permian Basin resources could yield $64 billion for the state of New Mexico, according to a study conducted for the company.

Findings from the study, done by Impact Data Source, found that the focus on the Permian would generate $64 billion in net economic benefits for the state and local communities for the next 40 years.

With an assumed oil price of $40 per barrel, the study said the state government would receive $44 billion from new leases and royalties and $8.5 billion from state oil and gas severance taxes.

“The Permian Basin is the engine of America’s energy renaissance and New Mexico residents will see direct economic benefits and opportunities from our planned investments,” Exxon CEO Darren Woods said in a company statement.

Exxon’s Permian activity is also expected to create 4,100 direct job opportunities per year for New Mexico for the next 40 years and generate $29 billion in new wages, salaries and benefits.  

“The benefit to this state’s bottom line, as represented by investments from companies like ExxonMobil, has been enormous,” said New Mexico governor Lujan Grisham. “My administration has been and will continue to be responsive to changes in the energy sector and the need for meaningful regulation and diversification as a means of ensuring a sustainable future – for our children, their education, the infrastructure that will support our collective future and more.”

In March, Exxon revealed its plans to increase Permian production to more than 1 million barrels of oil equivalent per day by 2024.
 

The southeastern New Mexico communities where ExxonMobil operates will receive $1.8 billion in net tax revenue, according to the study.

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Another first for US LNG exporters as six facilities receive gas same day

Gas deliveries were observable Wednesday at all six US LNG export facilities in the Lower 48 states, the first time that has happened as America is poised to increase its share of the global supply market, S&P Global Platts Analytics data showed.

Four of those facilities are currently operating, following Cameron LNG’s startup Tuesday in Louisiana, and two more are preparing to begin production – Kinder Morgan’s Elba Liquefaction in Georgia and Freeport LNG in Texas.

Combined, total LNG feedgas demand from all six fully operational LNG terminals could be upwards of 11.3 Bcf/d, Platts Analytics data showed. Total deliveries set a new record of 5.9 Bcf/d on May 12 and were near that level on Wednesday, with all six facilities reporting incoming gas deliveries, albeit tiny in Elba’s case.

US LNG market growth will depend on the utilization of those facilities, as well as the success of a dozen other second-wave projects that are actively being developed for service in the early- to mid-2020s.

The increased activity will provide new outlets for gas supplies from US shale drillers in key Gulf Coast, Midcontinent and Northeast basins. A proposed West Coast facility, if built, would be able to tap Rockies gas production. US midstream operators will also benefit as pipeline volumes are expected to get a lift.

With the startup of LNG production at Cameron LNG, feedgas deliveries to the facility are expected to ramp up there in the days ahead. Majority owner Sempra Energy said the first commissioning cargo would be loaded in the coming weeks. Project officials said during a tour of the facility in February that the number of commissioning cargoes that are shipped before commercial service begins could range from one to seven, depending on customer needs.

Netbacks from the Platts JKM, the benchmark price for spot-traded LNG in Northeast Asia, to the Cameron LNG export facility were estimated at just over $1.10/MMBtu on Tuesday, down roughly 30 cents/MMBtu since the beginning of the month, largely due to weakening bids in Asia and rising Atlantic Basin day rates. Despite this drop, the JKM has maintained a roughly 60 cent/MMBtu premium over the UK’s National Balancing Point, suggesting that initial exports from Cameron will be incentivized to deliver into the Asian markets.

This trend is also demonstrated by the forward markets, which indicate that the JKM netback will continue to outpace the NBP netback through late-summer, Platts Analytics data showed.

Besides Cameron LNG and the two export facilities preparing to start up, Cheniere Energy operates Sabine Pass in Louisiana and a terminal near Corpus Christi, Texas. Dominion Energy operates Cove Point in Maryland.