NEW YORK (AP) — Exxon said Thursday that it will spend about $150 billion over the next five years to find more oil and natural gas to satisfy for the world's growing energy appetite.
Exxon, the world's largest publicly traded energy company, expects global energy demand to increase 30 percent by 2040, compared with 2010 levels. As demand grows, Tillerson said Exxon will plow more money into a global search for new resources. Including investments in its refining and chemicals business, Exxon's capital budget for 2012 through 2016 will total $185 billion, up 29 percent from the prior five-year period.
"Unprecedented levels of investment are needed to meet the scale of the energy challenge," CEO Rex Tillerson told analysts at the New York Stock Exchange.
Major oil companies are struggling to tap new sources of oil fast enough in an environment where big finds are rarer and costlier to exploit. Potential fields lie deep under the seabed, or in shale rock formations that require expensive technology to crack open. When companies can't find oil fast enough, they're stuck with aging fields where production is on the decline. International production agreements also reduce how much they can sell as prices rise.
Exxon Mobil Corp., Chevron Corp., BP and Royal Dutch Shell all produced less crude last year than in the prior year.
Tillerson said Exxon's production could fall by another 3 percent this year, when compared with 2011. He also reduced the company's long-term expectation for average annual production growth to 2-3 percent, from a previous forecast of 4-5 percent.
Exxon has steadily increased its access to oil and gas fields during the past several years through exploration and acquisition. But its focus recently has been on developing more natural gas, which the company believes will replace coal as the second-most popular fuel in 2025. Natural gas has made up more than half of Exxon's proven reserves since 2009, and in 2010 it spent $30 billion to acquire XTO Energy and become the largest natural gas producer in the U.S.
Its natural gas bet so far hasn't paid off. Prices have plummeted this year following a production boom in North America and weak winter heating demand. Natural gas futures hit a 10-year low of $2.302 per 1,000 cubic feet on Wednesday.
Competitors such as Chesapeake Energy Corp. and ConocoPhillips have cut back on natural gas production this year in an effort to reduce a national surplus.
Exxon says it won't reduce gas production, though it will focus its future projects toward bringing more oil to market. The company said that production of crude and other liquid hydrocarbons will increase by 2 to 3 percent per year through 2016, outpacing increases in natural gas production.
Altogether, Exxon said 21 oil and gas productions will begin production by 2014, and it expects to add more than 1 million barrels per day of oil and gas by 2016.
High oil prices have supported Exxon's financial performance. Exxon's net income rose almost 35 percent in 2011.
Exxon shares fell 90 cents in morning trading Thursday, to $84.93.