Of the eight major projects the company plans to start up in the near future, six were unconventional. They include two liquefied natural gas facilities, in Qatar and Texas, an Arctic oil production facility in Sakhalin Island off Russia's far east coast, two deep water projects off Angola, and an oil sands project in Alberta, Canada.
Liquefied natural gas is harder to bring to market than regular gas. First the gas must be converted to liquid to transport it from its source in remote areas to where it can be used, generally close to major population centers. Then it must be converted back into a gas for usage.
Oil sands are a heavy, tar-like substance that requires lots of processing to turn into a usable oil. Shale gas lies in rock that must be cracked with chemicals and water to bring it to the surface. Projects in deep water or the Arctic require expensive infrastructure to reach the oil.
Honestly speaking, please do not expect the oil prices to go down because of two reasons that exacerbated the situation.
1. There is increasing demand for oil.
2. The supply of oil is becoming more inelastic than before, meaning to say that the supply is falling.
That is precisely why Exxon is now walking the unconventional path in the mining of oil.
In the past, Exxon enjoys mining a huge area of land for oil and people criticised their way of mining because they feel that Exxon could have just used technology to pin-point the enclosed area of land that has the most amount of oil.
But, Exxon proved all of them wrong but outwitting technology. In the end, Exxon managed to uncover an abundance amount of oil that technology could not detect.
However, right now, Exxon can no longer do that because the competition is extremely stiff. Many companies are joining in, in the tight search for oil. Hence, the only way to beat them is to mine the unconventional areas.
By doing that, the smaller companies cannot tag along because they simply do not have the necessary funds. It comes at an exorbitant cost in order to be able to mine the unconventional areas like the ocean and the sands and the liquified natural gas. Smaller companies will go bankrupt if they enter this field. What they can do now is only to stare at Exxon walking down the tight rope and hopefully try to learn some of the techniques they can use later on when they think that they can do it too.
Before the smaller companies build up their funds to join in, Exxon had better enter the unconvential field and mine whatever they can possibly mine and hopefully, they will be able to come up with a cheaper way of mining, perhaps by developing unique equipments that can enable them to mine more effectively.
No doubt this is going to be a dire period for Exxon, I'm sure they will prevail for they are famous for coming up with innovative ways to mine at a lower costs. On top of that, they make sure that the process of mining and distillation is handled carefully such that they can mine the optimum amount of yield from what they mined.
Definitely one of the powerhouse in the oil field, Exxon will not be defeated so easily for sure!
Credits -oceanquigley, -etftrends, -cnn
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