ExxonMobils Southland Development

Document #1: Basic Project Description

Physical Description of the Project
ExxonMobil has had a presence in Southland for more than 20 years. It is producing oil from an inland field
that first produced oil in 1985. The oil produced at the field travels by pipeline to ExxonMobils refinery in
Southport. The refinery has been operating since 1988, and has been owned by ExxonMobil since 1991.
The field is in the latter stages of production, and produces about 80,000 barrels per day. In the early years of
the field's production life, ExxonMobil and its predecessor flared any associated gas produced at the field.
Now gas is reinjected for enhanced oil recovery.
Recently, Exxon this was granted a concession by the government of Southland to exploit a large offshore
field near Southport. This new offshore field is estimated to include 4 billion bbl of ultimately recoverable oil
or gas equivalent. The offshore project will consist of a floating platform, with connections to multiple wells
and associated seabed structures. ExxonMobil plans to expand the capacity of the refinery at Southport,
which is the industrial hub of the country. Some of the refinerys product will serve the domestic market, but
the bulk will exported from a 150,000 b/d refined products terminal at Southport at the refinery facility. This
will require an upgrade and expansion of the existing ExxonMobil refinery there. ExxonMobil also expects
to produce a very substantial amount of natural gas from the field for export as LNG. ExxonMobil will build
an LNG liquefaction facility receiving 200 million scf/d, about a mile offshore near Southport.

Figure 1: Diagram of Project

Offshore platforms
Pipelines
Onshore terminals
Rail lines

Southport

Black River
Bird sanctuary and
national seashore

Terminals are for (a) refined products/export, and

(b) liquefying and exporting LNG

ExxonMobil will develop the project jointly with the Southland National Oil Company (SNOC), through a
joint venture known as JVP. ExxonMobil executed an agreement with the government under which it owns
60 percent of JVP and the SNOC owns the remaining 40 percent. The full division of responsibilities
between ExxonMobil and SNOC has not been worked out yet; however, the concession agreement specifies
that while ExxonMobil remains responsible for managing the project, SNOC has access rights to all
Copyright 2009 David B. Spence

information used or generated by ExxonMobil in connection with project development, and shall participate
in all important project development and management processes. Furthermore, SNOC retains operational
control under the agreement over all contractor and hiring decisions made to satisfy the agreements local
content requirements. Under the agreement between ExxonMobil and the government, the topsides portion of
the offshore platform will be assembled and partly constructed within Southport, though the spar will be
constructed elsewhere. The parties have yet to decide which (if any) components of the refinery expansion,
pipelines and LNG facility will be constructed within Southland.
Southland
Southland is a developing country that has nevertheless experienced strong export driven growth over the last
10 years. Foreign investment flowed into Southland after the establishment of a multiparty democracy nine
years ago, after 25 years of misrule by a succession of military governments. Prior to that, Southland was a
colony of France for 60 years. Southland's young democracy is fragile, and the center-right Christian
Democrat party has controlled the parliament and the presidency for all of its 10 years of democracy. During
military rule, ethnic groups, families and warlords provided what social organization there was. Fortunately,
there has been very little violence since the transition to democracy, though many of the political parties and
the multiparty system grew up around ethnic and extended family groups. Corruption in government remains
a problem.
With its abundant supply of cheap (mostly unskilled and semi-skilled) labor and good ports, the Southland
economy has been growing rapidly over the last decade. Most of that growth is centered in Southport, and is
driven by foreign mining and manufacturing companies. Its average GDP per head is just over 5000 USD,
but is growing at the rate of 8% per year. Many of the darker-skinned aboriginal people of Southland, known
as the Tiska, live inland and make out a subsistence existence on huntingand farming in and around the
central forest, and by some offshore fishing during particular times of the year. The wealth generated recently
in and around Southport has caused a great deal of migration from the central part of the country to the coast,
particularly to Southport. This has caused social dislocation, including increased presence of squatters and
increased incidence of crime; it has also strained the capacity of Southland to provide for the welfare of these
migrants.
While Western corporations have tried to promote development of modern infrastructure in and around
Southport, those efforts have produced only slow and negligible progress to date. The labor pool continues to
lack a satisfactory skill base, though that skill base is being developed slowly, mainly through the cooperative
efforts of unions and manufacturers in Southport. Unionization is proceeding at a rapid rate, and about 20%
of the workforce in Southport is now unionized, though that figure is much higher among skilled trades
people. The primary umbrella union of Southland is the Southland Federation of labor ("SFL").
Southlanders of European (mostly French) descent, dominate the upper socioeconomic classes of Southland.
Some of their ancestors came to Southland more than 100 years ago. This group now comprises about 30%
of the population, while the ethnic Tiska people comprise another 50%, with mixed race groups comprising
the remaining 20%. The wealthier, business leaders of Southland tend to live either in Capital City, about
100 miles up the coast from Southport, or in the southeastern suburbs of Southport.

Copyright 2009 David B. Spence