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Exxon doubles gas supplies; eyes strong Asia demand

Exxon's gas supplies doubled in Q3 on new Qatar trains.

November 2, 2010 2:40 by



Exxon Mobil Corp expects strong demand in Asia Pacific to absorb fresh gas supplies after doubling third-quarter output from a year ago on production from new liquefied natural gas (LNG) trains in Qatar, a senior executive said on Tuesday.

However, unconventional gas in Asia will take longer to develop unlike in the United States due to the lack of pipeline infrastructure, even as ExxonMobil prepares to start exploratory drilling in coalbed methane (CBM) blocks in Indonesia.

“In my mind, we can’t get gas fast enough as an industry because of the demand out there,” Linda DuCharme, Vice President at ExxonMobil Gas and Power Marketing Co told Reuters at the Singapore Energy Week.

In Asia’s developing countries, total energy demand will double in the next 20 years while natural gas demand will grow by 125 percent, she said.

ExxonMobil’s available gas supplies for sales have risen to 12 billion cubic feet (339.8 million cu metres) per day in the third quarter, up from 8 billion cubic feet per day in the same quarter last year.

Supplies from Asia Pacific and the Middle East are around 5 billion cubic feet per day, DuCharme said.

Producers are eyeing Asia to provide homes for new capacity as the world struggles to absorb supplies with many developed economies still in recovery mode.

Qatari oil minister Abdullah al-Attiyah said that demand and supply could become balanced in three years but the International Energy Agency (IEA) says the oversupply could last a decade.

Between 2009 and 2010, ExxonMobil and Qatar Petroleum started up four 7.8 million tonne-per-year (tpy) LNG trains.

The U.S. energy major also has stakes in two LNG projects in Australia and Papua New Guinea with total output of 21.6 million tpy and will be completed in 2014.

INDONESIA EXPLORATORY DRILLING

Besides the large emerging economies of China and India, Southeast Asia also holds huge potential for gas consumption, DuCharme said.

“Pipeline gas is very much a potential for a lot of countries in Southeast Asia,” DuCharme said, adding that the company is actively exploring for resources in countries such as the Philippines, Vietnam and Indonesia.

In Indonesia, ExxonMobil has signed agreements with state utility Perusahaan Listrik Negara (PLN) and fertiliser producer PT Petrokimia Gresik (PKG), for evaluating gas sales from the Cepu block in Java which has 2-3 trillion cubic feet of proven and potential natural gas reserves.

Exxon Mobil said in January it expected peak crude oil production of 165,000 barrels per day (bpd) from its Cepu block to be delayed until the end of 2013.

The company expects to start exploratory drilling in coalbed methane blocks in South Kalimantan in six months using technology it acquired after buying shale gas producer XTO Energy Inc last year, DuCharme said.

But the lack of pipeline infrastructure means that unconventional gas would not be coming online as quickly as it did in the U.S., she added.

Local media had reported that PLN was targeting to use gas from the Kalimantan CBM blocks to fire an 8-megawatt power plant by end-2011. ExxonMobil operates the blocks with local partner PT Sugico Graha.

In Singapore, ExxonMobil is looking at importing its own gas in the long term for its power plants, DuCharme said.

ExxonMobil operates a 140-megawatt cogeneration plant, which currently uses imported pipeline gas. It is building another 220-megawatt unit to supply electricity to the Jurong Island oil and petrochemical hub.

“We’re a big consumer of gas here,” DuCharme said. “In the long term, we love to have the opportunity to look at supplying ourselves.”

(Editing by Ramthan Hussain)



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