Wednesday, 18 December, 2024 / Edition 38

This will be the last issue of 2024, as Well Read will not be published next week. We will see you in 2025. The Well Read team wishes you a happy holidays and happy New Year!

Here are a couple of energy news bits from last week.

Shangyou Nie

Editor, Well Read

Oil and Gas Expertise Could Make Geothermal Prices Competitive in 10 Years, Says Latest IEA Report

Vasily Gureev/ Shutterstock.com

The International Energy Agency recently published a report stating that technologies developed by the oil and gas industry, including horizontal drilling and hydraulic fracturing, could help unlock geothermal potential.

Context: The IEA recently published a special report “The Future of Geothermal Energy,” in collaboration with Project InnerSpace, a Houston-based nonprofit focused on accelerating geothermal development.

Geothermal potential:

• The report calls geothermal a “promising and versatile renewable energy resource with vast untapped potential for electricity generation, heating, and cooling.”

• In 2023, geothermal generated about 90 terawatt-hours of electricity, mostly in top ten countries, including the United States, Indonesia, Turkey, the Philippines, New Zealand, Iceland, Italy, Kenya, Mexico, and Japan.

• Geothermal currently provides less than one percent of the global energy need; in the future, geothermal could provide as much as 8 percent.

• By 2035, geothermal could be “highly competitive” with solar and wind power.

• Geothermal electricity generation could be around $50/megawatt-hour—on par or below costs for hydro, nuclear, and bioenergy.

How the oil and gas industry could help:

• The oil and gas industry has transferable skills, data, technologies, and supply chains that could underpin next-generation geothermal.

• These skills include horizontal drilling and hydraulic fracturing, as well as a deep understanding of subsurface geology, rock property and fluid flows, and well drilling and completion. Large project management and execution experience will also be key.

• With policy and innovation support and expertise from the oil and gas industry, geothermal costs could be reduced by 80 percent in 10 years.

Investment in geothermal is growing:

• In 2023, $47 billion was invested in geothermal power generation and heating. Ninety-five percent of investments in geothermal heating and 70 percent of total investments were in China.

• Diversifying investment in geothermal energy via oil and gas companies could be key to future growth.

• Total investment in geothermal could reach $1 trillion cumulatively by 2035 and $2.5 trillion by 2050—$140 billion per year.

• High tech companies such as Microsoft and Google are investing in geothermal projects to power data centers in Kenya and the United States, respectively, according to the Financial Times.

Challenges:

• Insufficient policy support: Permitting is taking too long. A new-generation geothermal takes up to 10 years to start.

• High costs: Geothermal electricity generation costs between $40–$240/MWH, on the high end.

• Lack of skilled workforce with relevant geological and technical knowledge

• Environmental and social concerns

What this could mean for geoscientists: In short, it could mean new jobs. The geothermal sector provides around 145,000 jobs globally, but it is projected to employ 1 million by 2030.

You can read the full report here.

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ExxonMobil Analyst Meeting Recap

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Last week, ExxonMobil held an analyst meeting to present its corporate plan update, with a focus on its upstream business. The world’s largest IOC said it would increase its capital investment from $27–29 billion in 2025 to $28–33 billion annually from 2026 to 2030.

On operations expenses and investments:

• ExxonMobil will invest a total of $140 billion between 2025 and 2030, representing 45 percent of cash flow from operations.

• For 2025, ExxonMobil’s CapEx will be $27–29 billion, with plans to do $20 billion in share buybacks.

• ExxonMobil aims to increase annual earnings from $26 billion to $45 billion by 2030.

• The pace of divestment will slow down. ExxonMobil will divest an additional $5 billion assets until 2030, compared to $19 billion in divestments total over the past five years.

On production and LNG:

• Production will grow from 4.7 million boepd to 5.4 boepd by 2030.

• ExxonMobil hopes to increase its Permian production to 2.3 million boepd by 2030.

• In Guyana, ExxonMobil will have eight projects and a gross production of 1.3 million b/d by 2030, a “conservative” projection according to an analyst report by TD Cowen.

• By 2030, more than 60 percent of production will come from three “advantaged assets:” The Permian, Guyana, and LNG.

• ExxonMobil will grow its LNG business to 40 mtpa by 2030.

• Golden Pass LNG will start up in 2025. Papua LNG in Papua New Guinea and Rovuma Phase 1 in Mozambique will take FIDs in 2025 and 2026, respectively.

Personnel changes:

• ExxonMobil announced that Dan Ammann, a former GM executive, will replace Liam Mallon as president of ExxonMobil Upstream. Ammann joined ExxonMobil in 2022.

• ExxonMobil also hired GM’s other executive Barry Engle as the president of its Low Carbon Solutions, to begin in 2025.

• The appointments of two outside top leaders are interesting, as ExxonMobil has historically grown its top executives internally.

Comparing ExxonMobil and Chevron’s approaches:

• ExxonMobil’s upbeat investment plan, especially in the upstream, contrasts sharply with Chevron’s downgrade of CapEx spend in 2025.

• Chevron announced in early December that it plans to reduce its capital program by $2 billion to $14.5–$15.5 billion in 2025.

What they are saying:

• When asked why ExxonMobil wants to invest more in oil and gas when the market might soon expect an oil price downturn, Neil Chapman, SVP, stressed the importance of having a lower cost per barrel and maximizing the net present value effect of its barrels.

• Mallon emphasized the company’s “higher flexibility” to react quickly to market conditions, with a high concentration of advantaged barrels in the Permian, Guyana, and LNG.

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✉️ To get in touch with Shangyou, send an email to editorial@aapg.org.