Shared from the 2/1/2022 Houston Chronicle eEdition

Exxon moving headquarters to Spring

Oil giant streamlining operations, preparing for low-carbon future

David Paul Morris / Bloomberg

With the relocation, Exxon Mobil will become the 25th Fortune 500 company to call the Houston area home.

Staff file photo

Exxon Mobil said it will move its headquarters to its Spring campus, becoming the largest Fortune 500 company in the metro area.

Exxon Mobil on Monday said it will move its headquarters to its massive Spring campus north of Houston from the Dallas suburb of Irving next year, becoming the largest Fortune 500 company in the region.

The arrival of Exxon’s top brass and some 250 workers will bolster Houston’s standing as the nation’s “energy capital,” attracting more energy companies and investment to the area, civic leaders said. Exxon is the world’s largest public oil company with about 72,000 employees worldwide.

“Exxon Mobil’s move further solidifies Houston’s position as the Energy Capital of the World,” said Bob Harvey, CEO of the Greater Houston Partnership, the city’s economic development group. “Exxon Mobil is a key participant in our Houston Energy Transition Initiative, and we look forward to working with the company as we continue to position Houston to lead the energy transition to a low-carbon future.”

Exxon’s relocation is part of a reorganization to prepare for a low-carbon future as well as an ongoing streamlining of operations that accelerated after the oil crash in 2020. Exxon on Monday said it plans to combine its chemical and refining businesses and centralize its technology and engineering operations, helping the company cut more than $6 billion by next year, compared with 2019 costs.

The reorganization would result in three business lines: Exxon Mobil Upstream, focusing on oil and gas drilling and production; Exxon Mobil Product Solutions, specializing in refining and chemicals; and Exxon Mobil Low Carbon Solutions, pioneering carbon capture, hydrogen and biofuels.

“We greatly value our long history in Irving and appreciate the strong ties we have developed in the North Texas community,” CEO Darren Woods said in a statement Monday. “Closer collaboration and the new streamlined business model will enable the company to grow shareholder value and position Exxon Mobil for success through the energy transition.”

Exxon becomes the 25th Fortune 500 company to call Houston home and the third Fortune 500 company to move its headquarters to the area in as many years. Information technology firm HP Enterprise moved from San Jose in 2020, and power company NRG Energy moved from Princeton, N.J., in 2021.

Houston has the third highest number of Fortune 500 companies nationally, eclipsed only by New York City and Chicago. Exxon last year ranked tenth on Fortune Magazine’s list of the 500 largest publicly traded companies by revenue.

Although Exxon has long had a major presence in Houston — Humble Oil, founded in 1911, became part of Exxon in 1973 — the company has been headquartered in North Texas for the past three decades. Formerly Standard Oil of New Jersey, Exxon moved to Irving from New York City in 1989.

At the time, many corporations kept their headquarters separate from operations, even if satellite locations were much larger than the head office. However, as oil companies face increasingly volatile markets and the existential threat of climate change, some are consolidating into one central location.

Exxon, which has pledged to spend $15 billion on lower-emissions projects through 2027, has proposed a $100 billion carbon hub in Houston that would capture and store up to 50 million metric tons of carbon dioxide per year from Houston-area industrial plants by 2030 and up to 100 million metric tons by 2040.

“Exxon’s decision further supports Houston as the center of the energy transition,” Mayor Sylvester Turner said. “We look forward to opportunities to collaborate in the future to benefit the Houston area.”

The move also will have wide-reaching implications for the the city’s economic development and real estate market as the Dallas-area employees, contractors and suppliers move south.

Exxon, which has long been active in Houston’s civic and philanthropic circles, will likely be even more engaged in the community after consolidating here. The blue-chip company also brings “prestige” to Houston and likely will aid the city’s corporate recruitment efforts, the GHP’s Harvey said.

The relocation likely will extend the so-called Exxon effect, which has reshaped the real estate landscape in north Houston. When Exxon announced plans in 2011 to build its 385-acre campus in Spring, the project brought thousands of new residents to the area, fueling development of new master-planned communities, offices, hotels, apartments and stores in the region. It even helped propel construction of the Grand Parkway’s northern section.

Exxon has been consolidating its business in Spring for some time. The company in 2014 moved its shale subsidiary XTO to Houston from Fort Worth, and in 2015 moved thousands of employees to the Spring campus from Greenspoint and Fairfax, Va., offices.

The pandemic, however, dealt a blow to Exxon, which lost $22 billion in 2020, its worst year in four decades. Exxon slashed its operations and capital budgets and laid off 1,900 U.S. employees, mostly in Houston, as crude demand and prices crashed.

About 8,500 Exxon employees work at the Spring campus, compared with 10,000 before the pandemic. Exxon is among the 20 largest employers in the region, according to the Greater Houston Partnership.

Even as oil markets have recovered with the rollout of coronavirus vaccines, Exxon continued to streamline its business to return more cash to shareholders and focus its efforts on its most profitable wells in the Permian Basin and offshore Guyana.

Exxon in October announced plans to move about 1,500 employees in The Woodlands to the Spring campus. The company recently put 290,814 square feet of office space in The Woodlands on the sublease market, according to commercial real estate firm Cushman & Wakefield.

Gil Staley, CEO of The Woodlands Area Economic Development Partnership, lamented the loss of Exxon in The Woodlands but said the corporate relocation to nearby Spring will benefit The Woodlands’ housing and retail markets.

“There are people out there that truly think that Exxon Mobil’s campus is in The Woodlands, because it is so closely located near our community,” Staley said. “They certainly are impactful to our community and will continue to be so.”

CDC Houston, the developer of the City Place community that is home to Exxon’s Spring campus, in June announced a partnership with DMB Development to build thousands of residential units within the community near Interstate 45 and the Grand Parkway. City Place is home to 1,100 apartment units and eventually will have 2,500 to 3,000 single family homes.

“We’re going as fast as we can (to build housing), but I think this (Exxon announcement) will probably help get deals done and it will probably increase builder interest,” said Warren Wilson, executive vice president at CDC Houston. “We’re basically going full speed ahead.”

Marissa Luck contributed to this report.

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