ExxonMobil earmarks $15 billion for lower-emission spending over next six years
U.S. energy major ExxonMobil has finalized its corporate plans, which increase spending to $15 billion on greenhouse gas emission-reduction projects over the next six years while maintaining disciplined capital investments in its portfolio. Exxon has also increased its annual dividend payment for the 39th consecutive year.
As explained by ExxonMobil on Wednesday, the plans support the corporate strategy of continued structural cost savings, investment in low-cost-of-supply and lower-emission products, and further portfolio high-grading, positioning the company to double earnings and cash flow by 2027 versus 2019.
The company also announced it is on track to meet its 2025 greenhouse gas emission-reduction plans by year-end 2021, four years ahead of schedule. In addition, ExxonMobil has developed more aggressive plans for further Scope 1 and Scope 2 reductions through 2030, consistent with Paris Agreement pathways.
ExxonMobil revealed it plans to maintain capital investments in the range of $20-$25 billion per year through 2027 with the flexibility to adjust to adverse market conditions or changes in policy and technology for low-emissions projects. For comparison, the company’s capital spending in 2021 was projected to be in the range of $16 billion to $19 billion while its previous projection of $20-$25 billion per year through 2025 has now been reaffirmed.
“The restored strength of our balance sheet and improved financial outlook support accelerating investment in our industry-advantaged, high-return projects, and a growing list of financially accretive lower-emission business opportunities,” said Darren Woods, chairman and chief executive officer.
The projected growth of cash flow and earnings in the Upstream business results from aggressive cost reductions and progressing advantaged investments in low-cost-of-supply projects in Guyana, Brazil, and the Permian Basin in the United States. More than 90 per cent of Upstream planned capital investments through 2027 are expected to generate returns of greater than 10 per cent at prices less than or equal to $35 per barrel of oil equivalent, while reducing Upstream GHG emissions intensity by 40-50 per cent through 2030, compared to 2016 levels.
Downstream and Chemical earnings and cash flow growth plans are focused on high-return projects, which are expected to double the volume of valuable performance chemicals and lower-emission fuels and lubricants.
To date in 2021, the company has repaid $11 billion in debt and expects to be comfortably within the range of its targeted debt–to-capital ratio of 20-25 per cent by year-end. It has also announced a $10 billion share-repurchase program over 12-24 months that will start in 2022, and it increased its annual dividend payment for the 39th consecutive year.
Plans for greenhouse gas emissions cuts
As part of its plan, ExxonMobil has committed $15 billion for lower-emission investments through 2027. These investments will include a balance between projects to reduce greenhouse gas emissions from existing operations and increased investments in the Low Carbon Solutions business.
ExxonMobil is on track to exceed its 2025 greenhouse gas emission-reduction plans announced in December 2020. The company anticipates year-end 2021 results to show a reduction of 15-20 per cent in greenhouse gas intensity from Upstream operations compared to 2016 levels, four years ahead of schedule. This is supported by an anticipated reduction of 40-50 per cent in methane intensity and 35-45 per cent in flaring intensity compared to 2016.
The new medium-term greenhouse gas reduction plans for 2030 are consistent with Paris Agreement-aligned pathways and include 20-30 per cent reduction in corporate-wide intensity; 40-50 per cent reduction in Upstream intensity; 70-80 per cent reduction in corporate-wide methane intensity; and, 60-70 per cent reduction in corporate-wide flaring intensity.
These new plans include actions that are expected to reduce absolute corporate-wide greenhouse gas emissions by approximately 20 per cent. The company also reaffirms it plans to achieve the goals of the World Bank for zero routine flaring no later than 2030.
ExxonMobil’s 2030 GHG emission-reduction plans cover Scope 1 and Scope 2 greenhouse gas emissions from assets operated by the company compared to 2016 levels.