Global oil, gas investment insufficient to meet rising demand: ExxonMobil’s Woods

The world is not sufficiently investing in oil and gas to meet rising medium and long-term demand, with worries about over-supply a very short-term issue, ExxonMobil CEO Darren Woods said Oct. 13. He went on to take aim at European energy policies in particular, describing them as "going in the wrong direction."

Woods, speaking at the Energy Intelligence Forum, highlighted the outsized decline rates characteristic in the shale sector, and a lack of deepwater exploration spending by the industry as causes for concern in the context of long-term growth trends in developing markets of the "global south."

"This discussion today about where the markets are going and the concern about over-supply -- to my mind that's a very short-, near-term issue," Woods said. "As you look at the growth going forward... economies continue to grow around the world, particularly the global south, people lifting themselves out of poverty," he said.

"That demand is going to continue to grow. Longer term, medium-to-long, you're going to have a challenge supplying the market. There's a lot of work that needs to be done, and I don't believe today that there's enough investments in the pipeline to meet that," he said.

On shale, Woods maintained that ExxonMobil's own production would continue to grow, despite signs of a production plateau in the sector as a whole, saying his goal of doubling recovery rates in shale was in sight.

Today, "5-10% of the oil that's in the ground is being recovered [by the sector]. There's a lot of oil left there, but it's difficult to access... Given how early the shale development is in its life cycle to develop technologies to unlock the rest of that 90% of oil we leave in the ground -- we've made huge progress," he said.

"We have made significant progress in applying new technologies to increasing recovery [rates] today. We have the chance to get to doubling recovery. We're going to continue to grow [shale] production," Woods added.

Europe withdrawal

Woods took particular aim at EU net-zero goals, which he said could not be achieved, in part due to a lack of accurate tracking of carbon emissions. He noted ExxonMobil's own gradual withdrawal from Europe -- seen in its recent moves to exit French refining, including a Sept. 25 agreement to sell subsidiary Esso SAF.

He also highlighted the EU's 2024 Corporate Sustainability Due Diligence Directive, requiring large companies to set out transition plans aligned with 2050 climate goals, describing the legislation as "frankly the worst, most irresponsible piece of legislation I've ever seen passed anywhere in the world."

"Our business in Europe is attriting. We have been slowly divesting, selling our assets because it's been less and less profitable, and less and less competitive on the world stage. Europe is much less competitive and going in the wrong direction frankly," Woods said.

"The goal of decarbonization is not the issue... They've tried to micro-manage and instruct the industry on how to achieve that, and frankly I don't think they have the expertise to dictate the how," he said.

More broadly, Woods contrasted tax incentives in the US for electric vehicles as being almost 10 times more costly per ton of CO2 emissions abated than the equivalent tax incentives for Carbon Capture and Storage.

"We have jumped as a society to a very narrow set of solutions -- wind and solar and EVs. We should also be focused on how to decarbonize what we already have. There are ways to do that today that are much more cost effective and can reduce much more CO2 and do it much quicker. We've got very fixated on getting rid of oil and gas," he said.