Exxon Was Hit Hard In 2020. How It Rebounds Could Shape Houston’s Future.
Last October ExxonMobil CEO Darren Woods delivered news to his staff that he had hoped to avoid: the company had been hit hard enough by low prices and the Coronavirus downturn that it would have to cut employees.
This came after the Texas-based oil major — and once the third largest company in the world — had reported three straight quarters of losses totalling more than $1 billion. Throughout 2020, as oil prices fell to historic lows, ExxonMobil slashed spending, halted some international projects, and eventually announced it would cut 700 employees from its Houston workforce.
On top of all of that, the world is undergoing what is expected to be a decades long shift away from Exxon's main product: fossil fuels.
But this doesn’t mark the downfall of ExxonMobil, according to many energy experts. The company has a strong balance sheet, and will most likely emerge from the downturn in better standing than most oil and gas companies in Texas. However, how the company responds to current challenges will have more than just financial impacts on the Houston community.
"Houston is not going to stop being a world oil capital, but that business is changing really rapidly," said Steve Coll, author of Private Empire: ExxonMobil and American Power. "What kind of long term commitment companies like Exxon are going to make to the way they now operate globally is something that everybody is going to be rethinking."
ExxonMobil — a direct descendent of John D. Rockefeller's Standard Oil — moved its headquarters to Irving, Texas in 1989. However, Coll says Houston increasingly became the company's central hub.
"Houston became the place where not just broad policy was decided," Coll said, "but actual negotiations, operations decisions were made."
In 2014 the corporation opened its main campus just south of The Woodlands. As ExxonMobil employees and their families relocated to the area, they bought up homes in the area, and their commute was made easier by the completion of State Highway 99.
"This is the operating headquarters for the US, and really the crown jewel of the company in a lot of ways," said energy expert Loren Steffy. "I think the company identifies very closely with Houston, and I think Houston has always been very proud to have Exxon here."
A lot of ExxonMobil employees live near the main campus in The Woodlands, and Steffy said that's by design. He wrote a biography of Woodlands' founder George Mitchell, who owned an oil company and helped make hydraulic fracturing, or fracking, commercially viable. Mitchell helped create the master-planned community, and Steffy says it became an attractive area for oil and gas workers with companies headquartered nearby.
However, when Exxon showed up in 2014, The Woodlands was running out of space.
"There was not a whole lot of available real estate in the Woodlands that was on the market when Exxon opened that campus," Steffy said. "What little there was was pretty quickly scooped up…but what you saw was a lot of development south of the Woodlands, and actually the southernmost village in the Woodlands was really built out around that time."
Exxon's arrival helped speed up the northward spread of the Greater Houston area, and today Exxon's impact can be seen in more than just an increase in housing.
"I think that you’re going to continue to see Exxon play a leading role in the community," Steffy said. "And in charitable organizations and things like that."
Linda Head, with Lone Star College, said she expects Exxon's support of the school to continue even though it’s been a rough year for oil and gas companies. The company has supported a variety of programs, like a continuing education program for senior citizens.
"(In the past) they partnered with all nine community colleges that are in the greater Houston area and funded half a million dollars that we were permitted to use to help recruit students into petrochemical jobs, to support their processing plant and also to help train our faculty," she said.
No one from ExxonMobil would agree to an interview for this story, but in a statement, the company said that in response to COVID-19, it contributed $100,000 to the Texas Medical Center and area firefighters for personal protective equipment, and donated another $100,000 to other relief efforts.
"ExxonMobil employees living and working in the Greater Houston area remain focused on keeping its workforce safe and healthy," the statement read, "to maintain its operations and maximize production of materials critical to the global response."
ExxonMobil doesn't have a very good reputation with the public — mostly because for years the company refused to acknowledge human activity was driving climate change. But University of Houston Energy Fellow Ed Hirs said the company has nonethless often been a good neighbor and corporate citizen.
"Exxon has the benefit of being extremely well capitalized," Hirs said. "And so while the independent oil companies in Houston are really suffering, Exxon — as an operating company — has a very, very strong and sound future."
Exxon is expected to maintain its title as one of the leading U.S. oil producers, and no one doubts it will continue to be a part of Houston's philanthropic community.
But the oil market drives about 30% of Houston's economy, and Hirs said the overall impact to the region will be felt in lost jobs and lower wages.
"Will those wages and salaries be replaced? No," Hirs said. "Will the jobs be replaced? There may be a trade out, if you will, in terms of employment, but it won’t be for the same high dollar jobs."