Commentary

PR reordered

 

ExxonMobil on the Iditarod bib no more/Wikimedia Commons

ExxonMobil’s departure as a sponsor of the Iditarod Trail Sled Dog Race this week might have come as a surprise to some fans of the self-identified Last Great Race, but it shouldn’t have.

Forget the posturing by People for the Ethical Treatment of Animals (PETA) which has claimed credit for the split. The rat-is-a-pig-is-a-dog-is-a-boy organization is ready and happy to claim credit for anything anywhere that it believes a benefit to its agenda.

But the reality is a plethora of environmental organizations and activists regularly beat on Exxon like a drum, and PETA is the least of them. Exxon has bigger problems to worry about than an environmental fringe group.

Which is why the Iditarod exit shouldn’t have come as a surprise.

As Loren Steffy wrote at Texas Monthly back in November, “Exxon reported a third-quarter loss of $680 million. That’s a big number, but it’s actually an improvement from the record $1.1 billion loss it saw in the second quarter. So far this year, Exxon has lost a staggering $2.4 billion—the first time in the Irving-based company’s 138-year history that it’s reported three consecutive quarterly losses. In August, Exxon was ousted from the Dow Jones Industrial Average, America’s preeminent stock market index, after being a member for almost a century. One of the companies that replaced it was Salesforce, a cloud software company. Apple, with a market value of some $2 trillion, is now worth more than all the major oil companies combined.”

Put simply, Exxon has some money problems. When businesses have money problems, they look around for unnecessary expenses that can be eliminated whether big or small.

All of which begs a question bigger than Iditarod.

Bye-bye Alaska?

Does Exxon’s departure from Iditarod signal an impending departure from Alaska? BP –  the British-based company considered another of the oil industry supermajors – is already gone, and it’s assets in the 49th state were more valuable than Exxon’s.

Exxon’s big play in Alaska has been Point Thomson, and Point Thomson has been largely nothing but headaches for the company.

At least $4 billion has been poured into trying to develop what is largely a very high-pressure gas field, and the return has been a trickle of gas condensates that are mixed in with crude oil and pumped down the trans-Alaska pipeline.

The company describes this “phase” of development as an effort to build the “critical infrastructure and provides the experience and learning for current and future Point Thomson development. Lessons gained from this high-pressure gas condensate cycling project on the North Slope will be key to helping unlock Point Thomson’s potential.”

There is no doubt potential beneath the ground at Point Thomson. The field on the state’s North Slope is estimated to be situated over about 8 trillion cubic feet of natural gas.

The gas would be highly valuable if there was some way to economically move it to market, but at the moment there isn’t. Low market prices for gas, and the $40 billion or more cost of a long discussed Alaska gas pipeline makes construction look unlikely any time soon.

Exxon did in late 2019 reveal it was working with Qilak LNG Inc., a subsidiary of Lloyds Energy of Dubai, on a plan to pump gas to an offshore liquefied natural gas facility in the Beaufort Sea where ships could pick up the cargo for transport to Asia.

“As the largest holder of discovered gas resources on the North Slope, ExxonMobil has been working for decades to tackle the challenges of bringing Alaska’s gas to market,” ExxonMobil Alaska president Darlene Gates told Petroleum News at that time. 

The Beaufort Sea is shallow. When the Alaska Outer Continental Shelf Office of the federal Bureau of Land Management examined the idea of shipping oil and/or gas off the North Slope in 1981, it concluded that “ice-breaking tankers would require a minimum of 30 meters (of water) which might require a loading facility offshore.”

Such a facility would likely need be built on a manmade gravel island. Costs and environmental opposition can be counted on to increase the farther offshore the site. 

ExxonMobil has said little about its long term vision for Point Thomson. Others in the oil industry are of the opinion the company is sort of stuck with the project because of the lack of a buyer willing to purchase it for anywhere near the worth of the potential gas production.

Cutting losses

Oil production is a tough business with huge upfront development costs. Were Exxon to decide to bail on Alaska after investing billions in a problem-plagued project, it wouldn’t be the first supermajor to do so.

Royal Dutch Shell spent about $7 billion trying to develop offshore oil in the Chukchi Sea west of Point Thomson before its 2015 decision to abandon the Arctic as too problematic.

The odds are Exxon will stay the course in Alaska for the simple, earlier stated reason that Point Thomson appears too good an asset to just walk away from. But one does have to wonder.

Exxon’s contribution to Iditarod was what is considered “image advertising.”  It was intended to make Alaskans – the biggest fans of the Iditarod – feel better about a company that spilled 11 million gallons of crude oil in Prince William Sound in March 1989.

The spill created the biggest manmade mess in state history. Exxon’s image has never fully recovered. Backing the Iditarod certainly didn’t hurt the company’s reputation in the 49th state and probably helped.

And there have been no reports of motorists in the Lower 48 boycotting Exxon gas stations because of the company’s involvement with Iditarod. Proposed boycotts, the effectiveness of which are hard to judge, have focused more on Exxon’s role in global warming.

“Exxon is a gasoline company that is one of the top 100 companies producing 71 percent of climate change,” says the “Boycott Exxon” page at Change.org. “They originally discovered their effect on the environment in 1977, but kept it a secret so that they could sell gasoline.”

The boycott was posted a year ago and has but 439 signatories. With so few willing to boycott Exxon to save the planet, it’s hard to believe sponsorship of a dog race in far-off, out-of-sight, out-of-mind Alaska could pose much, if any, threat to the company’s bottom line.

But the company does have problems on that front. The Connecticut attorney general has accused Exxon of covering up the environmental problems caused by hydrocarbon development and sued for “remediation for past, present and future harm from climate change, restitution for investments already made due to climate change, disgorgement of corporate profits, civil penalties, disclosure of all climate research, establishment of a third-party controlled education fund….”

 

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23 replies »

  1. Biggest issue with Pt Thomson is the fact that under our Constitution, oil and gas taxes can only be set for two years at a time. Potential gas buyers have 35 years of oil taxes jumping all over as a warning.

  2. Who cares? The race isn’t Alaska anymore. NASCAR with dogs. It was charming in the beginning because we all could relate. Now it’s just a bore.

  3. Bryan is again parotting nonsense. The American Recovery and Reinvestment Act of 2009 did have beneficial results in Alaska. For years Cordova dreamed of a travel lift. The project was designed but lacked funding. The Act delivered the funding and the project was completed, The project provided construction jobs of which I was part of. Most importantly it made it possible for larger boats to get repairs in Cordova which previously went to other ports primarily in Washington. This has created associated businesses and long term jobs in the community.

    • I agree that Obama’s stimulus did reach AK…as a small business owner at the time, I can verify that many contracts in the Mat/Su borough were a direct result of that project.
      Wildfire mitigation around homes was one service that was supported through this funding.
      After the two devastating Wildfires in Willow, I like to think that at least a few houses were sparred due to these clearing operations.
      The negative aspect was B/C of all this federal money getting poured into the economy, Gasoline eventually shot up to over $5 bucks a gallon and put the exact same group of contractors out of business in the long run.
      “Goovie” subsidies are most definitely a two-sided sword.

  4. Here is different, simple take on recent history. The last administration to create a budget surplus was during Clinton’s eight years. Cut to republicans (in suits at least then) storming the Florida vote count chanting “Stop the Count!” We therefore get Bush, 9/11, tax cuts (of course), and three plus wars over his eight years of spiraling debt, (plus other fine patriot related stuff). Bush drives the economy off the cliff in 2008 and can only toss the keys to Obama, riding off to the ranch with that idiot grin intact. In eight years, Obama rights the economy, kills OBL, and earns the world’s respect in the process and leaves office still a popular president. The next R administration, again after significantly losing the popular vote, takes even less time than the last to tank the US economy, increase the debt, (cut them taxes though), allow more citizens to needlessly die than did in WWII, and significantly diminish the USA’s standing in the world, and leave office with the worst approval rating since James Buchanan. Biden wins.

    That means it’s time to cue the keyboard fear mongers to sound their “Socialism/Commie/Nazi/gun takers/Antifa alarm bells”. “We’re all Doomed fer sure now”. Get a grip on reality, not your guns you “patriots”.

    • Dan, ever heard of Clinton’s Community Reinvestment Act? Not to mention the Democrat led Congress “forcing” banks with a wink to give loans to those that didn’t deserve them because “everybody deserves a home, because it is a ‘right'” right. As for 9/11, that is like blaming Trump for debt because of Covid when his policies oversaw the strongest economy since WW2. Trump had the lowest black. Hispanic, and female unemployment. Well, all that was before the Chinese created and Democrat cheered Covid. What did Fonda call it? “A blessing for Democeats”. Real coincidence huh? Perfect timing huh? As for the economy during Obama it performed well not because of Obama, but in spite of Obama.
      Communism/Marxism/Socialism has failed every place it has been tried. So, we can assume Democrats also have failed at everything they touch and they do. Just look to every blue state.. Utter failures. Thank God Trump was in charge during the orchestrated Covid outbreak. We have seen the failed continuation of Team Obama this past week, wait until 4yrs is up and large companies have gone back to China due to overburdensome taxes and job killing regulations.. I could go on and on but I can’t force you to stop getting your news from propaganda outlets like CNN or MSDNC who work for the “party”.

      • Dan, Oh and it took Obama 9 MONTHS to finally kill OBL. Clinton could have done it 3 times and wipimped out each time, so whose shoulders does 9/11 fall on? Blaming Trumps for Cuomo’s and Newsomes deaths is a bit silly isnt it? After all it is the STATES who set their Covid policies RIGHT? Bide can force masks on FEDERAL land and that is all. Florida, TX, SD can tell him to shove his mask right? I guess it is pretty easy to rewrite history huh?

      • “Never underestimate Joe’s ability to F things up.”
        -Obama

        Bidenn has been in 4 days and the country is already in disarray. I guess Democrat Covid “experts” think opening the borders to Covid Hotspots will slow the curve huh?

    • Dan,
      The reason that the Clinton era was so productive was B/C our country still manufactured things.
      Clinton did a great job of destroying the American Economy with NAFTA & he also raised taxes on many business owners which further cut jobs…lastly Clinton got us into the debacle in Yugoslavia that started the largest migration of Muslim refugees in world history.
      It’s easy to cherry pick accomplishments from either side, but harder for Dems to see the negative in their party…lastly we do not see the results of a president’s policies until after he leaves office, so the $hit$torm that Bush inherited up to 9/11 was a direct result of Clinton’s failed policies most famously the Dot Com crash of the stockmarket which led to one of the largest losses in personal wealth since the 1929 crash.

  5. Steve-O,
    Look forward,or look like a fool.Cant pass infrastructure without Congress,in meantime, more free $’s.
    Transitions are forward looking,look across the valley.This state will get its share,and that means more sub standard engineering and paving, which means more equip mntnce. But the state will still be stuck in the past, still more bandaid solutions (with more PFD drawdowns)without any forward looking progress.
    Ill be fine, but all the young adults who will either leave or become crack heads, or just less than they could be,will be let down by the state and leadership.I hope Im wrong, but the two parties are stuck in the past.
    Big airport projects will keep me fine for my last few years till retirement.2 written in stone,a third has a serious fat deposit on it, and the other 4 proposals I know nothing about.These are all private $’s projects from companies with forward thinking and planning.

    Again,wayne gretzky :A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”

  6. I personally look forward to the day when Alaska is no longer a dumping ground for privileged white euros who’s only purpose in state is to establish a commercial dog lot with over 100 huskies on chains. Thank you Exxon for listening to your shareholders & voting to end sponsorship!

  7. I just want to know what “Lunch Bucket” Joe’s favorite flavor of Tapioca pudding is and if it is now nude hour at the White House after 5pm? Cobra, Cobra, Cobra….
    Let’ s take guess at how many jobs will be killed in the next 4yrs? I say 25 million. We are up to a couple hundred thousand already and it hasn’t even been a week.

    • After months of hearing Biden slam Trump for supposedly not having a COVID plan … we now hear Biden say:

      “Nothing we can do about the virus”.

      Then again, why should we expect anything less from a lifetime politician who’s accomplished ” nothing” his entire career.

      Frankly all he has done so far is overturn as many Trump decisions as you can. Wait until the Dems try to shut the whole country down.. XOM, the I-Rod, and saving the planet from fantasy will not mean much.

    • Bryan,
      To my knowledge he hasn’t lied yet ,so we already have an improvement, over the last failed presidency.A very large infrastructure bill will be coming down the pike, something that should have been done a year ago under Republican government control.
      People need to see other people going to work, not sitting around checking there bank balance on there smart phone for the next free deposit.
      Trump and his party have left the country in shambles, much as it was during the last republican government before him.
      I think your going to see near unprecedented bi partisanship in the Senate,its already taking place.
      Rise we shall,we have no choice…

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