Citing Tax Reform, ExxonMobil to Spend $50 Billion in U.S. Over Five Years

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Researched by Industrial Info Resources (Sugar Land, Texas)--Exxon Mobil Corporation (NYSE:XOM) (ExxonMobil) (Irving, Texas) plans to spend billions to expand its U.S. operations over the next five years, investments that were "enhanced" by the historic tax reform recently signed into law. Industrial Info is tracking $18.9 billion in active U.S. projects involving ExxonMobil, including $8.1 billion under construction.

Darren Woods, chairman and chief executive officer of ExxonMobil, said in a blog post on Monday the investment plan is due in part to recently passed corporate tax cuts. The announcement puts the world's largest publicly traded companies on the board with a number of other firms that have announced employee bonuses and investments following President Donald Trump and GOP lawmakers' tax code rewrite.

"These investments are underpinned by the unique strengths of our company and enhanced by the historic tax reform recently signed into law," Woods said in the blog post on the company's website. "These positive developments will mean more jobs and economic expansion across the United States in a myriad of industries."

The long-running debate over tax reform finally came to an end December 20 as the U.S. House and Senate voted along party lines to pass the largest overhaul of the nation's tax bill in 30 years. The Republican tax reform, which President Trump signed into law two days later, lowers the corporate income tax rate from 35% to 21%, rewards investment in new projects and is widely seen as benefitting the oil and gas industry - refining companies in particular. Industrial Info is tracking $10 billion in project kickoff activity involving refiners in 2018. See Industrial Info's January 16, 2018, article - U.S. Refiners to Benefit Most From Tax Code Rewrite or the most recent edition of Industrial Info's NavigatIIR online newsletter for more information.

But unlike its peers, the energy giant provided few details about where and how it would spend the money, leaving it unclear which parts of ExxonMobil's operations and which U.S. regions would benefit the most from the $50 billion--roughly half the amount U.S. oil producers collectively plan to spend on drilling operations in 2018.

In a follow-up statement, Exxon spokesman Scott Silvestri clarified that $35 billion of the $50 billion spending plan is earmarked for new projects, and $15 billion is linked to previously announced ventures.

In disclosing the capital spending program, Woods singled out drilling operations in the Permian Basin in Texas and New Mexico as areas where ExxonMobil will be "investing billions" to boost production, expand existing operations, improve infrastructure and build new manufacturing sites. In 2017, ExxonMobil invested more than $6 billion to acquire the Permian acreage of Fort Worth's prominent Bass family to vastly expand its holdings in that area. For more information, see Industrial Info's October 30, 2017, article- ExxonMobil Sees Stellar Quarterly Results, Pushes Forward with Onshore, Offshore Drilling Globally.

A day after announcing its $50 billion spending plan, ExxonMobil reiterated its plans to grow its Permian natural gas and oil production to 600,000 barrels per day by 2025 and to invest more than $2 billion in transportation and terminal upgrades in West Texas, including the expansion of a crude oil terminal in Wink, Texas. "This comes on top of our massive build-out of operations along the Gulf Coast where we are investing billions of dollars on a number of major chemical, refining and lubricant projects," Woods said.

On the chemical processing side, a $10 billion petrochemicals complex in Portland, Texas, is being developed by a joint venture of ExxonMobil and Saudi Basic Industries Corporation (SABIC) (Riyadh, Saudi Arabia). For more information, see Industrial Info's project report and January 9, 2018, article - Texas Chemicals Plant One Step Closer with Tax Breaks.

Woods said ExxonMobil could expand its facilities on the Gulf Coast further, pending an evaluation of the impact of lower tax rates on several projects currently in the planning stage.

The Gulf Coast, which is part of the South market region, will see $160.6 billion in spending in 2018--up 2% from last year and more than half of all the forecast spending in the U.S. The forecast includes a strong build-out in natural gas and crude oil pipelines. At least two LNG trains are expected to advance this year, and the export of more propane is leading to significant project development.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle TM, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com