Exxon Mobil Struggling to Replace the Oil it’s Drilling

My dad tells me there’s a lot of oil left in the ground. So explain to me why Exxon Mobil is buying up other companies to pad their own oil and natural gas reserves to meet their one-for-one replacement quota?

The oil game is all about replacing what you pump out of the game. Without finding new oil reserves or acquiring other companies, eventually you will run out of fuel to sell. A company with nothing to sell isn’t going to last very long.

So you’d think a company like Exxon Mobil, the world’s largest publicly traded oil company should have no problem replacing the 6.3 million barrels of oil it refines every day. After all, they earn between $5 billion and $10 billion per-quarter, and the planet is a big place. But it turns out that for every 100 barrels of oil pumped out of the ground, they’re only replacing 95. It’s not a huge deficit, but as time goes on the gap is sure to widen. Not good for our petro-economy.

There is an upside however. For every 100 barrels-equivalent of natural gas Exxon pumps out, they find or have acquired 158 barrels. Natural gas is the least-refined fuel, mostly made up of methane, and while it has its own drawbacks its almost certainly a better short-term solution than sticking it out with oil. Exxon has managed to maintain its 1:1 quota for 17-straight years, but last year it was the purchase of natural gas producer XTO Energy that allowed them to make that quota.

What happens when they run out of places to drill, and companies to buy? Nothing good, I’d wager.

Source: Wall Street Journal

Chris DeMorro is a writer and gearhead who loves all things automotive, from hybrids to HEMI’s. You can follow his slow descent into madness at Sublime Burnout.

Christopher DeMorro

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.