North America is a high cost environment and ExxonMobil Corp. is working on new technologies to get the costs down so it can pursue development on the continent, Chairman Lee Raymond said Wednesday.

Speaking at the company’s annual financial analysts meeting, Raymond and his executive team laid out the oil major’s plans for the next few years. He acknowledged that the company has “substantial acreage holdings” in the United States, but it has to be able to develop the tight gas resources here to make it profitable for the company to operate. Raymond said small “developments” are underway now to get the cost down on tight sands.

“Moving out of North America is effectively what’s happening today” because of the high costs to operate and the current low returns, he said. But once the company can move past the “hurdle” of making it profitable to operate, he said Exxon will move forward to develop some of its holdings. “North America is a much higher cost area of operation. It has a much more attractive tax structure, but a less attractive operating structure.”

An Alaska natural gas pipeline is one project Exxon would like to see developed, but Raymond and other executives suggested that the passage of a revamped energy bill would have to happen before the company takes any big risks money-wise.

“We are working on a project in Alaska,” said Rex Tillerson, who was promoted to president last month and is seen as Raymond’s heir apparent. “But a project of this size and magnitude cannot stand long delays or being held up over some permit or incremental review. Part of the energy bill does deal with that, and that’s what we want to see in place as well. We want to know what we’re dealing with before we start. And with all of those elements, we are continuing to evaluate some other way to get the cost down on this very large and very attractive resource that is there.”

Tillerson added, “It’s well known that Alaska has huge volumes of gas. But on the downside, this is a very huge single step investment to make. Our view is that Alaska gas will be put into the marketplace…slightly beyond the end of this decade, if we can find a commercial structure among ourselves or others on the North Slope. If we have confidence in the project and can control the costs and the risk being taken, obviously, we’ll be ready to move forward. We aren’t in that position yet.”

Raymond added that he believes it will take “several years to get the permits to build it.”

Tillerson also noted that Exxon’s production will fluctuate each year depending on what projects come on line. Major projects now underway are expected to result in an additional 25 billion boe, Raymond said.

But the chairman stressed that Exxon would not invest in “low return projects.” Instead, it will continue to focus on new technology to compete in any environment. “Research is the lifeblood that gives us the tools to compete and to meet new product demand,” he said. “In the upstream, we are supporting a full spectrum of initiatives, and our emphasis on technology opens new frontiers in the deepwater, the Arctic region and other challenging environments. There is a direct correlation between research and the leading results in all of our businesses.”

The company also is holding to an average annual production growth of 3% for oil and gas.

“Our growth forecast hasn’t changed,” said Harry Longwell, executive vice president. “We still expect low to single-digit growth year-to year. About 3% is a good outlook for us. We’re still on track and building the production capacity we talked about,” Longwell said.

“We’re a little more on liquids side, less on the gas side in the near term, but we don’t have any changes in our outlook.”

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