Well, ladies and gentlemen, good morning, welcome to ExxonMobil's Analyst Meeting. We do very much appreciate you being here today, especially given the inclement weather, we do look forward to a very engaging discussion this morning. For those that I've not had the opportunity to meet, my name's Jeff Woodbury. I am the Vice President and Secretary of the Corporation. Before we get started, maybe just a few administrative matters. Of course, first, safety. There are two exits from this room. The first is in the front to the left of the stage, that is to my right. The second is out the back to the right, both of which will take you to a stairwell that will take you down to the street level.
In case of an emergency, there will also be an audible with a message providing instructions, of course, there'll be staff here to guide us as well. I'd also ask that at this moment, if you haven't already done so, if you can silence your electronic devices so they don't disturb us during the meeting today. Before we move on, I'll just comment on the picture that's behind us. This is the Hebron platform in Eastern Canada, many of you will know that it started up in November of last year. The platform has capacity to produce about 150,000 barrels a day, it has capability to store about 1.2 million barrels of oil for offloading.
Next, I'll draw your attention to our cautionary statement, which is found at the front of the material in front of you, the supplemental information that is in the back of the notebook. Of course, these statements contain information that is pertinent to today's discussion. You may also access our website for supplemental information that provides definition on some of the terms that we'll use today. With respect to the agenda, Darren Woods, our Chairman and Chief Executive Officer, will lead the discussion today with, as you see, the members of the Management Committee. Darren will begin by sharing some perspective on the business and summarize plans for growing portfolio value. We'll showcase how we will deliver that value growth in each of our upstream, downstream, and chemical businesses. We'll close with a discussion on a review of our consolidated financial and investment plans.
You'll note that we have two open discussion periods, one right after the upstream review, the second one after all the remaining material is presented. I'll note also that we do have a break built in for a quick stretch. After the conclusion of the morning session, as we advertised, we are going to have lunch with the Exxon Mobil management on the seventh floor, for those that have confirmed. That will be at noon, we'll be back here in this room at 1:00 P.M. for a 90-minute session to talk about our global energy demand and how we are positioning the Corporation for a lower carbon energy, importantly, the technological solutions that we think we're going to bring to society. With that, it's my pleasure now to introduce Darren Woods.
Thank you, Jeff. Good morning, everybody. I want to start by apologizing for my voice. Yesterday I started losing it, so I'll try to speak as loudly as I can. If you have trouble hearing me, please raise your hand and let me know, and I'll try to take it up a little bit more. Thanks for coming out. Thanks for braving the threat of inclement weather. I can tell you, we are all very excited to be here. We're hoping to have a very productive conversation. I think you'll see from some of the materials, we've upped our disclosure a little bit with the intent of trying to have a more substantive conversation about our business. There's a lot different today, a lot more than just style.
What you have in front of you, what we're going to be talking about is a lot of work that our organization has put in over the last several years that really came together and culminated in last year's plan for this year and into the future. It reflects this management team and our organization's commitment to try to fully leverage the competitive advantages that we have built up in this business over decades. It also reflects our work to make sure those advantages are being leveraged in each of our businesses. I think you'll see that as we talk through the day. I've asked the management team to join me today. I think you know most of them. Mark Albers, been with the management committee since 2007. Mike Dolan, with the committee since 2008. Andy behind me here since 2009.
Of course, Jack joined the management committee with me in 2014. Our latest member to join is Neil Chapman, which was the beginning of this year. You'll get a chance to talk to all of them today. I would tell you that any one of us up here could give this presentation today. What I asked the folks to do is the lead contact for each of the business to give the presentation, and the intent then is for the whole management committee to participate in the discussion. As Jeff indicated, we've left lots of time for questions, and then we've got the lunch where we can continue our conversation. In the afternoon, we'll then talk about climate change and how we're positioning ourselves for a lower carbon energy future, and the work that we're doing to address the risk of climate change.
I guess one final point before I get into the meat of the presentation. A number of our external parties, and it was clear over the course of that conversation that people did not have a good understanding of our business, how we were thinking about it, what we were trying to achieve, and why. One of the points that I want to make is I think that is my responsibility, to make sure not only this audience but the broader audience understands where we're trying to take the business and why we're trying to take it there, how we're going to do that, and the progress that we're making. While you see the conversation today will start to advance that better engagement, better understanding of our business.
It's the beginning of what I would expect to be a continuing process of engaging more broadly and more deeply in talking about our business and the progress we're making in that business. Let me turn to the presentation. I'm going to cover in the introduction three key areas. I want to talk about what I consider to be the foundation, which is the philosophy of how to run the business and give you the perspective of how I think about the business, what we're trying to do in running that business. I'll talk about the broader environment, the context in which we are applying that philosophy, and then summarize the results that we expect by taking that philosophy and that environmental context and driving the results. It'll be a very high-level summary.
I'm going to give you the answer first, and then we'll talk about how we're doing the math. Jack and Neil will take you through the details and the how for each of the major segment businesses and how we're driving and delivering on those results. Okay. Let me start with I know is a familiar theme for all of you. It's the fundamentals of how we think about growing long-term shareholder value. It hasn't changed. It's the basis on which we have built this business. I know you have heard it many times in these presentations. I will tell you, I have practiced it throughout my career. The work that we've done in the last couple of years has done nothing but reaffirm the strength of that fundamental platform on which we've built this business.
Our focus has been, and what we'll talk about today, is how to better leverage those fundamentals to drive long-term shareholder value faster. The fundamentals, I think, have stood the test of time, and they are tailored to our business. If you think about the business, capital-intensive large investments and depletion business, ones that have to be continually renewed over and over. It's a commodity business. We've got the supply and demand cycles that we're faced with, eroding margins, barriers to entry are falling. All the classical conditions of a commodity business. The upstream, as I said, is depleting on a continuous basis. It has to make decisions to renew on a continual basis. In the downstream, in chemicals, when we make an investment, you make it for life. That's the concept that we manage our business to. That's the fundamentals of this industry that we're in.
When you couple it with our products and the role that our products play in society. Energy fuels economies. For some economies, resource owners, energy drives their economy. Our products play a direct role, a role in people's livelihoods, their standards of living. If you think about that, the products have significant economic and geopolitical forces acting on them at the local level, the national level, and a global level. You combine the dynamics of our industry with the challenges and the influences on our products, and you get an environment that's very hard to forecast and predict. That's always been the case. That's not new. That's why we have built this business on these fundamentals and making sure that the business is robust to changes in all those variables. The way we think about doing that is to establish structured, sustained advantages on multiple fronts.
Irrespective of how the market changes, we're robust to those changes. Once we've got that in place, our challenge is to continuously improve upon that. It all starts with technology. We're a host, if not everything that we do is driven by and is tied to developments and advances that we've had in technology over the years. Think about it. Technology lowers our cost of capital. It lowers our operating cost. It allows us to improve the yields, not only in the upstream when we're up drilling and developing fields, but also in our manufacturing plants, higher yields, higher conversion. It also gives our chemical company the opportunity to develop performance products to meet the evolving needs of the marketplace. Technology is the start and the finish of how we create value in this business. We leverage that then in an integrated business model.
We've talked about integration for many years. I can tell you one of the real values we've talked about in the past around molecule management and the ability to optimize in our facilities where we have common facilities between our chemical and refining business. There's real value in participating all along the value chain. We'll talk today about how we're capturing some of that value. If you think about how the value will move down the value chain from the wellhead down through the midstream into our refining and chemical plants, participating in that chain and being able to see that value move along the chain, anticipate it, and step out and catch it is a huge advantage for us. A huge advantage for us. It also gives us the opportunity to capture scale across the different businesses, then huge synergies across our three businesses.
A couple of examples on that. We are using downstream optimization technology in our upstream facilities today. We're taking capital project processes, standards, and development cycles that we use in the upstream and applying them to our chemical plants. We're taking marketing concepts and processes that we use in the chemical company and leveraging them in our downstream, in our gas and power marketing company. A host of examples of synergies that exist between our different businesses. A huge advantage. Combine the technology advantage with the integrated business, you get unique value. We then translate that unique value structurally into advantaged assets and investments in advantaged assets. Once you've got the investment and the steel in the ground, the next job is to optimize that. We refer to it as operational excellence. I talk about sweating the steel, squeezing all the value out that you can.
That's an ongoing process day in and day out. When you do that consistently over a long enough period of time, you accrue a lot of value, and that leads to the financial strength. Financial strength that we've demonstrated over the years. That is a critical competitive advantage in and of itself. That financial strength, the financial flexibility that comes with it, allows us to have a constancy of purpose to ride out the cycles, stick to the principles and the philosophy of how we run the business, take advantage of counter-cyclical investment opportunities, look at our assets and sell them when it's optimum, not when we need cash. A lot of advantages in the strength of our financial. Of course, all that's built on this foundation of having a capable and motivated workforce. That has been the foundation of our organization, our people.
Let me make the point a little more specifically. This chart gives you the annual Brent crude price for the last 30+ years in 2017 dollars. Over this time frame, the low is $19 a barrel, which happened in 1998. The high is $122 a barrel, which was in 2011. Every refinery that we operated in 2017 was running this entire time frame. Most of our chemical capacity was online this entire time frame. If you look at our 2017 upstream production, 30% of it was online at the time of the merger in 2000. Prices then were $40 a barrel. 50% of that production was online 10 years ago when prices were $85 a barrel. 80% of that production was on five years ago when prices were $122 a barrel or $120 a barrel.
You can see operating, the timeline for success is long, and your results accrue over, excuse me, a very long period of time. That's why the investments have to be robust to this time horizon. That's why we believe the fundamentals are so important. I like looking back in time. Every time we talk about the future, we start by talking about the past. What have we demonstrated, what we're capable of doing, and what does it say about what we're capable of doing in the future? I think it's very important, particularly in our industry, as capital-intensive and has a depletion process associated with it. You get the opportunity to make similar decisions time and time again. Let me provide a proof point on that. This chart gives you perspective of what the market takes with less robust investments.
It shows 10-year average ROCEs with the dots, 10-year cumulative impairments with the bars. I know a lot of people in the community will say that write-offs on a money-forward basis don't matter. I would tell you in a capital time out, write-offs do matter. They're not robust to market dynamics. When you couple write-offs with a lower ROCE, it reflects multiple decisions on investment portfolios which are not robust to market dynamics. Again, why we emphasize the fundamentals. We're going to grow long-term shareholder value. We've got to secure structural sustained advantages on multiple fronts. The market giveth, and the market taketh away. The way we run this business is to make sure that when the market's ready to take, somebody else is in front of us. Let me talk about the market going forward. This chart provides you perspective of liquids and LNG.
The dark blue bars are slightly different on the two charts. On the liquids chart, the dark blue bar is production capacity decline in that production over time. The black line is demand. The light blue bar filling in between is the supply required to meet the demand. On the LNG chart, the dark blue is existing LNG capacity and capacity under construction. Then again, the light blue is the capacity needed to meet that demand going forward. What you can see from both charts is significant new supplies are going to be required to meet future demand. That's true under a variety of demand scenarios. You can see moving that black line doesn't affect significantly the amount of capacity that has to be brought on.
The critical value driver going forward is not forecasting the demand, it's the supply that you bring on to meet that demand. There's lots of options out there. There's plenty of supply in the market today to fill that gap. We're convinced that the lowest industry cost of supply is what's going to win in the long run. The work that we've been doing in the upstream is to make sure that we're developing advantage projects that deliver that supply at the lowest cost. That's one of our key strengths. If you turn to the downstream in chemicals, different drivers, same challenge. Long-term success in those businesses are going to require competitively advantaged investments. Now in the downstream, there's plenty of global capacity out there.
The investments needed in the downstream is to address this demand shift that you see on the chart behind me with growing diesel and jet and reducing fuel oil. Our downstream focus is developing projects that give you higher yield conversion at lower capital cost. For our manufacturing facilities to be able to manufacture valued products that address the evolving needs of the market. Another key in the downstream is once you've got advantage facilities, you got to have advantage access to the market. At the end of the day, in an oversupplied market, lowest cost delivered to the doorstep of the customer is going to win that game. That's what our downstream organization is focused on. In chemical, it's the highest demand growth segment of our businesses, the growth in and of itself is not enough.
There are relatively low barriers of entry into the chemical business, into the commodity chemical business, you can see that when you look at the Gulf Coast and all the capacities coming on there. Our focus in the chemical business is to penetrate the high-value segments where the technology that we have and the organizational capabilities that we have differentiate us from competition. We've also got to have globally efficient global reach in our supply chain. We've got to land premium product out of the Gulf Coast into Asia at a cost lower than they can manufacture it in Asia. That's what our chemical business is focused on. Of course, you got to have large-scale investments to do that. We're building large scale. We fill it with commodity products, over time, upgrade it to the premiums. That's what we do in our chemical business.
Each of those value drivers I just went through align very well with the advantages that we have in our three world-class businesses. Our plans that we'll discuss with you, differentiated investments with a strong return across a wide range of price environments. If you look across our portfolio today, it's the richest we've seen since the merger. I want to say that again. If you look across the investment opportunities that we have in front of us today, in each one of the sectors, it's the richest set of opportunities since Exxon and Mobil merged. To capture these, we're raising our CapEx. You see that in our profile here. This year, we anticipate spending $24 billion. Next year, we anticipate spending about $28 billion. As you look further out, 2020 through 2025, we're going to average somewhere above $30 billion a year.
Our new upstream projects give us an average return of 20% at $60 oil. At $40 oil, that same portfolio gives us returns greater than 10%. In the downstream, at a constant margin basis, returns we generate with our projects are 20%, and the chemicals on the same constant margin basis, 15%. Let me turn to how those projects benefit the business. I want to spend a little bit of time on this chart because I think it's important. It shows the ranges of earnings estimates for 2025 under different price assumptions. I don't think we've ever showed a chart that projected earnings out to 2025. There's a good reason for that. If you think back about all the dynamics that I talked about associated with our industry, it is very difficult. Why have we put this chart in this package?
We're tasked with growing shareholder value. For me, there's two fundamental drivers to shareholder value, growing your earnings and raising your return on capital employed. In a commodity capital-intensive business, you grow your earnings, and you do it while you maintain. As we talk about our business and what we want to do going forward, our starting point is the market will give you no help. As we built our plan last year going forward, we used the column that says 2017 prices, earnings in that price environment. That's what that bar shows you. You can see in 2025, with no help from the market, we more than double our earnings. We want to test the downside. What's the regret scenario? What's the realistic, challenging scenario that we could face over this timeframe?
We picked $40 a barrel, flat real over this entire time period. What does this business and the investments that we make look like in that type of environment? You can see in this chart, we will still raise our earnings by 35% over this timeframe. I don't think that the industry could last that long at $40 a barrel, but our investments could. Of course, we want to test the upside to say, if we see a price spike, how does that look from the business? That's our $80 case there, which shows an increase of 225%. The $60 case that we've shown is really for your benefit, trying to get to a standard across the industry so you have a basis to compare what we're trying to do with others.
As I said, I don't know what prices are going to be next month, let alone next year or 2025. I think the real point of this chart is our plan is robust, and we have confidence in the investments that we're making, and we have confidence in our ability to grow value of this corporation. With that earnings comes cash flow. We anticipate cash flow will be up 100% in 2025 at $60 oil. At the long-term low price of $40, cash flow is still up by 50%. This price range allows us to test our capital allocation priorities, looking out over this timeframe and the investments we've got placed. It gives us the confidence that we can continue to fund a growing dividend and make the investments this business needs.
Before we dive into how we're going to achieve this, just let me give you an overview of the results for each of our business segments. I want to start with the upstream, where we are going to significantly strengthen the portfolio. We estimate that earnings in 2025 will be three times 2017 earnings at $60 a barrel. That value growth is driven by the significant adds that we brought into the portfolio in 2017, 10,000 billion oil equivalent barrels of quality resource. That reflects the industry's most successful exploration and acquisition program. We anticipate a fivefold increase in the Permian production and 25 startups worldwide, adding net volumes of 1 million oil equivalent barrels. During that same timeframe, we'll bring on some of the industry's lowest cost LNG supplies. In the downstream, we're also making changes to strengthen the business.
You will have read that we recently reorganized the downstream along our key value chains, that is contributing to doubling the earnings in the downstream in this timeframe. The key driver in the downstream for value growth is the deployment of technology. That technology to improve our yields with less capital. That gives us projects with returns of 20%. If you look at the portfolio of our downstream, it raises our margins by 20%, about $2 a barrel, as we upgrade our product slates to meet the evolving demands of the market. We're also leveraging our downstream integration with our upstream production in the Permian, that's a unique advantage that we have, and we'll spend some more time talking to you about that. We've seen similar improvements in the chemical business, where we again expect to double our earnings by 2025.
The plans are taking advantage of the growth that we see in the chemical sector, we're increasing our North America and AP capacity by 40%. Our plans also reflect 13 new facilities, including two new world-class steam crackers here in the U.S. These new manufacturing facilities support our penetration of high-value products, performance products, which is where we're competitively advantaged. Performance products deliver about 50% of the earnings growth we're showing here. As you can see, in each of the sectors, a pretty exciting set of opportunities. When you take that all together, we see the full potential of the corporation. Significant earnings growth while improving our return on capital employed. These results reflect a very clear focus on the fundamentals that I covered. Innovative technologies, integrated businesses, disciplined investment in advantaged projects, and then operational excellence. Importantly, by leveraging the capability of our people.
With that, I'm going to turn it over to Neil and let him explain how the upstream is improving its business in driving these results. Neil?
Thank you. Thank you, Darren. I was pretty impressed there. I didn't think you'd get above two slides with that throat, so to get through the whole lot's pretty impressive. Good morning to everybody. As Darren said, I'm going to spend the next 30 minutes, 35 minutes or so talking about this upstream portfolio. My theme is going to be much more on looking forward than looking back, consistent with Darren's approach. Just before I turn over the slide, the picture here is of one of our operations up in the Bakken. Of course, I'm going to talk about tight oil quite a lot through this presentation. Let me start with this very simple chart which compares the upstream across the major IOCs. Very simple. Last three years, average return on capital employed versus the last three years' average earnings.
I don't think it's a surprise to anybody in the room where ExxonMobil is positioned versus competition. That's encouraging, of course. It always has been. You always want to outperform your competitors. Where we are in terms of a finance position, as Darren has said, we have an exciting plan in place to improve it. When Darren looked at the improvement across the whole of the portfolio in the corporation, this is how it looks for the upstream. We plan to return this upstream business to a double-digit return on capital employed with significant earnings growth, all at a constant crude price. This is all done at $60 Brent. You can see on the chart, it's really a dramatic improvement over a short space of time for a business of our size. We're the largest.
It's a capital-intensive business, to move the needle over that time frame requires an aggressive plan. I will tell you, our confidence is high on being able to execute this plan, because our plan is built on five, what we believe are world-class earnings development opportunity. Five, and they're in our core businesses: deepwater, tight oil, liquefied natural gas. I am going to spend a considerable amount of time talking about those five development opportunities. Before I do, I do want to reflect on our exploration and acquisition of discovered undeveloped resources that Darren mentioned. The data you have on the chart here is third-party benchmark data. It's WoodMac data. You're all very familiar with WoodMac data. It allows us to benchmark what we're doing versus others on a third-party basis. The left-hand side is exploration success.
This is the last five years of commercially viable discoveries in WoodMac's view. It's pretty clear from the chart we've had a successful period, more than three times the discoveries of the next largest competitor over that five-year period. Of course, they include those play-opening discoveries in Guyana and in Romania. Of course, we're encouraged by these results, but I would tell you internally within ExxonMobil, we're even more encouraged by the progress we've made on our own proprietary technologies. We're absolutely convinced that we have the industry-leading full-wave inversion capability based on our ultra-high performance computing platform. What does all that mean? It means you'll get better quality images of the subsurface. It means you get a better understanding of the subsurface.
We don't have all the solutions in exploration, but we're really encouraged by the progress we're making with these technology solutions that we've been investing in for many, many years. I have no doubt they're contributory to this exploration success. On the right side is a chart of our resource additions in total. Two left-hand bars compare ExxonMobil to the competitors over that five-year period. As Darren Woods pointed out, 2017 was a banner year for ExxonMobil's Upstream business by adding 10 billion oil equivalent barrels to our resource base, both by the bit and through acquisitions. Of course, as you know, and as I will talk about, a big component of them was the acquisition of the Bass acreage in the Permian, Carcara in Brazil, Area 4 in Mozambique, and the acquisition purchase of InterOil in Papua New Guinea, and I will talk about all of those.
Importantly, we believe we bought these at the right time. We bought these at the right time of the cycle. We believe we've got tremendous value for what we've bought. It is in our hands to execute these acquisitions, execute these developments, to bring that earnings, that financial capability to the bottom line. In addition to these resource adds, 2017 was also an extraordinary year for us in terms of capturing the largest high-quality acreage we've had since the merger. It provides, in our assessment, exposure to over 8 billion oil equivalent barrels of net risk resource. That's double anything we've had in the last 10 years. You can see on the chart behind me, it spans six continents. Guyana, Brazil, Papua New Guinea, Mozambique, of course, are in there. I'll talk about them.
Other key acreage, the Perdido in Mexico, Block 11 in Cyprus, three offshore blocks in Mauritania. Not only have we secured this acreage, it's very important to me that we get after them quickly. I illustrate on the chart here how our drilling plans in nine of these areas in the next two years. Everything I talk about from this point on will not include any upside from these exploration activities. That's all upside from what I'm going to be talking about. Let me focus on these five development opportunities. I want to be clear, these are key to our Upstream midterm results. All five of these will be on production in 2025. All of them are attractive in the liquids plays at $40 a barrel. All of them in the gas plays are attractive at $5 per million BTU of LNG.
Which means when I say attractive, it means they're generating a double-digit return or above at these low prices. We've also been very careful when we've made these acquisitions and when we've selected these development opportunities to ensure we don't cap the upside. These are not only very robust at the low side of the commodity cycle, we believe they're very attractive at high prices as well. They will generate 50% of our Upstream earnings in 2025. You can see these five plays listed on the left-hand side. Two in the deepwater, Guyana and Brazil. Unconventional, that's tight oil in North America. Of course, the Permian Basin is a big part of that. Two big liquefied natural gas opportunities, the expansion in Papua New Guinea and our entry into Mozambique. As I said, there's more potential that I'm going to talk about.
One of the elements that's key to these 5 is we are the operator in the vast majority of them. That's really important to us, because if we're the operator, it gives us that opportunity to leverage our proprietary project development capability that we've demonstrated in ExxonMobil for many, many years, and to leverage the scale of this big corporation. You're gonna hear me refer to that many, many times. Darren described our portfolio of opportunities as being the strongest we've had in the corporation in the Upstream segment without question. This is the strongest portfolio of development opportunities ExxonMobil has had since the merger of Exxon and Mobil in 1999. Let's start with the first one, Guyana. By any stretch of the imagination, Guyana is a major discovery, and those discoveries are continuing. That's really good news for everybody involved.
Primarily it's really good news for the country of Guyana. We are the leading player and the leading operator. In 3 play tests, we've now discovered over 3.2 billion oil equivalent recoverable barrels, and that's in 5 discoveries. We have communicated, we've had 2 further discoveries in Ranger and Pacora. We have not quantified those discoveries yet. Of course, we're still assessing now. We have told you all that we found hydrocarbons. We also have considerable additional potential in this region. We've identified 20 additional prospects. When I talked earlier on about the upside in this play, you should be thinking that when you look at those 20 additional projects. We plan 4 exploration wells in 2018 in total. That includes additional drilling on Ranger and on Turbot.
We don't discuss the exact financials on any individual play out of respect to the country and to our partners. I'll reinforce, this is very attractive at $40 a barrel. We're moving quickly. It's one thing to discover, it's another thing to get the oil out of the ground and into the market quickly. We will have the first oil out of Guyana less than 5 years after the first discovery, and that's some 4 years. The chart behind me lays out the first 3 phases of this development. That's to develop 2 out of those 3.2 billion oil equivalent barrels. Phase 1's Liza. We reached a final investment decision last year on Liza 1. That's 120 KBD boat. Oil will be coming out in 2020, 2 years' time. Of course, that's a floating production storage offloading vessel. Contracts have been awarded for that.
Development drilling will take place in 2018. We're bringing our second drilling rig down into the region right now. It'll be on point in May. Phase 2, again, is in Liza. We're in the middle of the regulatory program. That'll be a 220 KBD boat. You can see it comes very shortly afterwards, 2022. Phase 3 will come very quickly after that, and that'll be developing the Payara and Pacora discovery. That'll raise production, as you can see on the chart, into excess of 500 KBD by 2025. You can see on the chart there's some upside. We've done this stuff before. ExxonMobil's done it. We did this in Angola back in the 1990s. Offshore deepwater, FPSOs out on point, get it into the market quickly. This is not new for us.
What's really important here is, again, as we're the operator, we're leveraging this proprietary technology that we have been investing in for many, many years. We have the seamless integrated simulation of the reservoir. That's all the simulation in one model. Again, what does it give you? It gives you better resolution of the subsurface. It allows you to optimize the well paths. It allows you to lower development costs and get earlier, more efficient production online. You can probably tell we're pretty enthused by the opportunity. That's the first one out of the five. The second one is in Brazil. 2017 was a big year for us in Brazil as well by the addition of discovered undeveloped resources, but also the acquisition of high-quality exploration acreage.
You can see on the chart We've allowed us to leapfrog to a material position in Brazil in a very short time, and you're very familiar with the other players in the region. With our partners, we captured the North Carcara block last year. We farmed into the rest of Carcara. That's given us exposure to over 2 billion oil equivalent barrels. Again, importantly, double-digit return, $40 a barrel. Our 2018 plan means getting after it quickly. We're planning one to three wells in the Carcara. We significantly increased our exploration position last year. I think you're familiar, we won 10 of the 13 blocks in round 14, and we're very pleased to win all of those. Eight were in the Campos, two in the Sergipe-Alagoas. Again, we're getting after it.
It's very important to me that when we make these exploration areas, we get this acreage, we get after it quickly. We plan to shoot or acquire 3D seismic on more than 4,000 square kilometers in 2018 of what we won in those bid rounds. That's half the total acreage in 12 months. Another important move in Brazil, we signed a strategic alliance with the NOC with Petrobras last year. Of course, Petrobras has the knowledge, the best knowledge of this whole basin. If we combine their knowledge with Exxon Mobil's deepwater experience, and we enter into this cooperation, not just in exploration and production, but this cooperation could expand into gas and petrochemicals as well. We think this is really important for us in the midterm. We're very pleased to have signed that alliance. I believe Petrobras have the same view.
When I put the deepwater together, these two great deepwater plays, you can see a summary of our growth in the chart on the left-hand side. Depletion business, you can see what happens to our existing business over the next 10 years, but you can see the impact of these new developments. We will more than offset the decline with considerable upside potential in this short time period. On the right chart side, we just break out those new developments, you can see the importance of Guyana and see the importance of Brazil. The other production comes from places like Neptune in Romania and like West Africa, Nigeria and Owowo. Again, of these new developments, the strength is at these low prices. We believe we've significantly enhanced our deepwater position. Third area. Third area, tight oil, unconventionals, liquids in North America.
Again, it was a banner year for us in 2017. We've increased our Permian resource base from less than three to 9.5 billion oil equivalent barrels over that period. Of course, foundational to that was the major acquisition of the Bass acreage in the Delaware. 250,000 acres. After we got hold of that acreage, and after we've given our own assessment of that acreage, we are convinced there is more stack pay potential, there are more horizontal zones that are commercially available. When we bought it, we bought it for $3.4 billion oil equivalent barrels. After our assessment, we've already upped that to $5.4 billion oil equivalent barrels. Of course, an increase of that size significantly improves the economics. We really like that position. At the top of that bar is a checkerboard in the Permian.
Lots of different players own lots of different pieces of land. What's very important is to get contiguous land, because that allows you to lower the development costs. We've been pretty successful last year with what I call bolt-on to our existing acreage to increase the contiguous nature of it. It gives us 9.5 billion barrels in the Permian. We add the Bakken on there, we're up to $10.6 billion oil equivalent barrels. The Permian is clearly a terrific resource. Everybody is talking about the Permian. You can't pick up any piece of literature or media in the oil business today without somebody talking about the Permian. There are lots of players in the Permian. There's also a wide range of differences in the acreage that people have.
Of course, the successful ones, the successful companies are going to be the ones who can most effectively and most efficiently not just produce the molecules, but get the highest value for those molecules. We like our position. We think we have a truly unique position in getting value out of the Permian versus anybody else in the industry. It starts with this capability of our division, XTO. XTO have been in this unconventional space as long as anybody. Over 12 years of unconventional experience, drilling, completing, and operating wells. Our division of XTO has a material play in the largest five unconventional plays. Of course, the Permian, the Bakken, the Eagle Ford, Marcellus and Utica, and the Haynesville. They've drilled 5,500 wells. We operate 6,500 wells, way in excess of any of the other IOCs. The more you operate, the more information you have.
The more know-how you have, the more you can build that into your technology set to be more efficient in the future. In terms of producing liquids, well, you can see Chevron and ourselves are much higher than anyone else in producing liquids, and last year, we produced 12% more than our nearest IOC competitor. You can only leverage this capability if you're the operator. You must be the operator. That's how you leverage. If you're the operator, you control the development plans. You can leverage your unique know-how. We're about 72% operator in all the acreage we operate today. By 2020, it'll be 90%, nine, zero. We believe strongly in this business, you need to have a manufacturing mentality. You've got to drill frack complete. You've got to get that product efficiently to the market. It's not just about the number of drill rigs.
You've got to have completion crews. You've got to have frack crews. You've got to have optimization and planning. You've got to have the right amount of sand, the right amount of water. You've got to put all these pieces in place to be most effective and most efficient at getting this resource to the market. You've got to ensure that there's no roadblocks. You can put a lot of resources into this area. If you have a roadblock and you stop that production, it's not going to get you there. Very important to this is the type of acreage that you have. That's why I mentioned earlier on about this importance of contiguous acreage. That is key for capital efficiency. That is key to get this product to the market quickly. It allows you to drill longer laterals. It allows you to have a smaller surface footprint.
Of course, it allows you to be more efficient. I mean, imagine the challenge if you've got this checkerboard of acreage. I'm operating here, someone else is operating there, and I'm operating here. You've got to work around and through these people. You've got to get agreements for pipelines. You've got to move rigs in. It is tough. Don't underestimate. It is hard work to do that. If you have contiguous acreage, it is much easier. When you look at the chart there, of course, the red is ExxonMobil's acreage. These are big areas, and big blocks of Dark Rave gives us that contiguous acreage. We think it's unmatched, and we're working very hard to bolt on and in between all of these big red areas. I mentioned longer laterals. Longer horizontal laterals mean fewer wells, means lower costs, means increased recovery.
The chart on the left-hand side is our data. It compares the PV of developing a fixed resource across different lateral lengths. I'm well aware there's been questions from this group and out in the industry about the value of longer laterals. Let me tell you, we are drilling longer laterals, two and a half, three-mile laterals because it is providing us with value. I can't tell you what others have experienced. What I can tell you is we're absolutely confident it's giving us a better return, but it is tough. Not everyone can do it. You need the technology to be able to drill a three-mile lateral. You need contiguous acreage. If your acreage is only a mile, you can't drill a three mile. We have diagnostics. It's still early in the game, but we're really encouraged by our success.
I think, as I said, there are many, many operators in the Permian. There are not many who have the capability to drill that length of lateral. Plenty of experience, as you can see on the chart, on the one- to two-mile laterals, much less in the two and a half to three mile. We are very encouraged by what we're seeing. In the Bakken this year, we plan to drill 15-20 three-mile laterals. 15-20 in the back and in 2018. We are seeing a 15%-25% increase in recovery. Producing from a two-and-a-half-mile lateral. We've already drilled our first three-mile lateral in the Permian. We've had strong days. The more you drill, the more you learn, the more you integrate it into your technology set, the more you can apply that to the next play. Can't do it without contiguous acreage.
Overall, in this tight oil, the tight liquids play, our development costs are down 70% since 2014, and we're heading towards $5 for oil equivalent barrel development cost. It's not just about leveraging the XTO division. What's really important to us is we leverage the full capability of ExxonMobil on the Permian play. We believe we have this unique value. We are not just applying the XTO experience to this. We're applying the full subsurface technology of ExxonMobil into this unconventional space. We are leveraging our development skills. We have this big development company organization. It's very important you apply that same mentality to these. It's not drill one, drill one, drill one. It's look at the whole picture. How do you drill over the next five years? How do you complete over the next five years? How do you get those hydrocarbons out over that period?
We're leveraging our scale. We're leveraging our purchasing power. There is going to be more activity in the Permian. It's going to be very important to leverage our scale to make sure that we can be most efficient and most competitive during that period. It's not just about getting the hydrocarbons out of the ground. We believe, and we know we're uniquely positioned to extract more value out of this Permian because of our assets on the Gulf Coast. The chart on the top right shows our refining capacity for light crude. Light crude is what comes out of the Permian. It's light crude and condensate. Light crude and condensate, when you put it in our refinery, gives us a higher margin product, higher margin across the refinery.
As you can see, already we have the largest capacity to take those molecules, extract that higher margin, versus refining other crudes, than anyone else. Jack, later on, will talk about the lighter shaded area, which is the expansions we're making on the Gulf Coast so that we can leverage more of that value. In the chemical segment, when you're producing this crude and condensate, you're not just producing crude and condensate, you're producing gas, of course, but you're producing natural gas liquids, ethane, propane, and butane. As you're familiar, ethane, propane, and butane are great feedstocks for a chemical business. We're the only IOC with one of the world's leading chemical companies. When you can benchmark ExxonMobil's chemical company versus all the other petrochemicals in the world, there's only one IOC who has a chemical company in the top four.
In that company, which is us, we have the leading ethylene polyethylene business. Ethylene can come from ethane. Ethane is feedstock out of this play. We have the largest capacity to take that ethane on the Gulf Coast, convert it to ethylene, to polyethylene, getting it into the growing markets. You can see Gulf Coast. 2018, this year, we'll start up a 1.5 million ton cracker in Baytown in the middle of the year. 2022, we'll start up the world's largest steam cracker with our partner in SABIC. Importantly, in Corpus Christi. You know your geography of Texas, Corpus Christi, of course, is close to the Permian.
I ran the chemical company for the last three or four years, Many people in the industry were talking about the fact that the ethane supply will tap out in the Gulf Coast area, in Texas and Louisiana and Oklahoma, the incremental barrel of ethane will come down from the Marcellus. All of those Gulf Coast producers are going to have to pay the transportation costs to come down from the Marcellus down to the Gulf Coast. You're probably familiar, people are building steam crackers up in the Marcellus. It's one of the values in being in an integrated oil company. We understood what's happening in the Permian, when others were running to the northeast, we have elected to build our steam cracker on the Gulf Coast, close to the Permian. We think it's going to play tremendous value to us.
Our startup timing, if we get to final investment decision, which we anticipate this year, will be in 2022. In the midstream, the final component of this story. In the midstream, we're planning to invest $2 billion in the infrastructure between the Permian and these Gulf Coast petrochemical and refining assets. We already have purchased what is referred to as the Wink terminal. That allows us to lower costs. That allows us to blend, to optimize margins. That allows us to optimize quality differentials. All in, when you look at the total integrated ExxonMobil position to be able to leverage value from the Permian, we like our position. This is how it plays out in terms of volumes and earnings. This is the only chart that I will talk about specific earnings for a specific development opportunity. On the left-hand side is our production.
We have shown a chart similar to this before. The reason I put it in here is twofold. One is we're on track. The red line is we're on track. You see some high side flexibility. Our organization is absolutely [renewed]. We've got to deliver on what we say, but I am determined to show you there is upside on this as well. We're going to run 30 rigs in the Permian this year, six in the Bakken. We have this strong growth plan. This is very attractive, of course, at $35 a barrel crude. On the right is earnings growth. It's important to understand this chart. This is the incremental earnings growth. We're already making earnings in refining and chemicals out of the Permian. This is how it improves going forward. The dark blue area is the upstream, the light blue area is chemicals and the downstream.
This is all at constant $60 a barrel Brent equivalent WTI. You can see the rapid increase in earnings. We expect to be at $6 billion additional earnings out of this play without a price change by 2025, of which two additional. We like our position in the Permian. It's a positive story, but I do want to just quickly comment on our total upstream results for the U.S. We published that. You can see in the chart, you'll see it on the page in front of you look at our earnings in the upstream 2015, 2016, and 2017, you can see they are negative. The plans I've been describing is part of that comprehensive turnaround plan for our upstream in the U.S. As discussed, we're growing our liquids. We were 20% liquids in our XTO division in 2012. We're now 40%, we're going higher.
Those are the bars on the chart. Gas, you can see, is essentially flat in the U.S. over this period. Importantly is the line beneath it, which is the difference between those two lines is what we call associated gas. This is gas that comes from drilling with oil. It basically comes for free. It's associated gas. As you can see, as going out into the future by 2022, you can see that we're essentially producing the same amount of total gas, but a lot higher percent comes from associated gas from the Permian. In dry gas, we are laser-focused. You can make money on dry gas in the U.S. You can. You just need to pick the right play at the right price point, the right development cost point. We're laser-focused on that. We have to be selective. We are.
Cost control is critical in the U.S. This is a commodity business. Darren talked about it. I've already discussed how we're lowering the development costs, but we're also aggressively working our above site costs. I think you may have seen our XTO division, we're moving down to Houston onto our large campus. Of course, that's part of leveraging the technology of the larger ExxonMobil. It's a big cost play in there as well. The fourth element to our improvement plan in the U.S. is asset management. We sit on a lot of resource. Where these resources have more value to someone else than they do to us, we will divest. We're more aggressively looking at our portfolio right now. That is a flag to all of you to say you should anticipate more divestments from ExxonMobil.
Before you ask, I'm not going to give you a number. Because I know you're going to ask. That is as a message that we're going to do. It's about moving to liquids, laser-focus on gas, controlling costs, working the asset management. You can see where we think for our upstream U.S. business in 2022 at $60, well before the peak in the Permian, we expect to be making $5 billion of earnings at a constant price in the upstream. That's three. I talked about the two deep waters, I talked about the Permian and tight oil. I want to talk quickly now about our two LNG liquefied natural gas opportunities. Obviously, we're a big player in liquefied natural gas. We have a big position today in Qatar and also in Papua New Guinea and, of course, also at Gorgon.
We're very proud of these ventures. We're honored to have played such an important part in the development in Papua New Guinea and in Qatar. We're in 12 of the 14 trains in Qatar, as you know. We have a demonstrated success in this business. We know how to make money in this business. We know how to build big projects in this business. We sit on some really excellent opportunities going forward. That left-hand chart is very similar to the one Darren showed, which is the growth, 4% growth annually for LNG demand and the supply and the gap in supply. This is WoodMac's data, and this is WoodMac's assessment of how much of that supply is available at this price. In other words, that can deliver a 10% return at $5 per million Btu. There's a lot of projects out there.
There's not a lot that can be a double-digit return, make a double-digit return at this $5 price range. Of course, you know I'm going to tell you that our two projects are in that band, which they are. On the right-hand side come online. They do it based on cost and based on likelihood. You can see, the Wood Mackenzie data is a solid part of that red bar. We've added what we know more than Wood Mackenzie in terms of ExxonMobil's plans. You can see, we're going to be a big player in adding new capacity by 2025. The vast majority of that bar on the left-hand side is the PNG expansion and. Let me start with Papua New Guinea.
I guess before I start on Papua New Guinea, it is an opportunity for us to express our great sympathy to the people of Papua New Guinea. I think you've all read about it, a horrendous earthquake up in the Highlands. We are part of the recovery program. We think the government's doing a great job, but it's tough work there. Our great sympathy goes out to all the people in country and to the government. Our facility in Papua New Guinea that we've been operating for some time is now running at 8.3 million tons per annum. That's 20% above its design or original capacity. We've had some significant new discoveries in Papua New Guinea. That include the Muruk-1 well near the Hides field. We'll drill a second well there in 2018.
The P'nyang South-2 well that confirmed the southeast extension of the field that we announced in January of this, we're assessing to quantify. In addition, we've captured 11 further exploration blocks. We now have about 10 million prospective net exploration acres in Papua New Guinea. Of course, right in the middle of that chart there, you can see the impact in terms of the acquisition of InterOil, which took place last year. Of course, that gave us access to multiple discovered fields, including Elk and Antelope. We've got the discoveries, we've got the acreage, we've got the discovered undeveloped resource. We're now working with Total, of course, who's in the Elk and Antelope fields, to leverage this existing infrastructure that we have in place. Clearly, a big part of that is to reduce further development costs.
Our development concept is to double the liquefaction capacity at Port Moresby. Double it. Two new large trains for Elk and Antelope, one for these new ExxonMobil discoveries. All of these will be at a 10% return, less than $5 per million BTU of gas. Papua New Guinea is a tough country. This big earthquake, I think it was 7.6 on the Richter scale. Our facilities are up in the highlands where we're drilling. There's a pipeline of some 500, 400 miles, 423 miles or something like that from the highlands all the way down to Port Moresby, and then we've got the liquefaction facilities. These facilities are designed to sustain earthquakes. As far as we know, our integrity of all of our equipment is pretty damn good. They essentially come out unscathed.
Unfortunately, in Papua New Guinea, the infrastructure, the roads, the accommodation, the airstrips are severely damaged. The integrity of our facilities has been very, very good. The left-hand chart summarizes our resource growth in Papua New Guinea. That's the fourth of our five major developments. The fifth, last year we acquired 25% of Area 4. That's 85 Tcf in place. That's some of the world's largest, but also importantly, lowest cost natural gas resources in the world. We really think this plays to our strength. This is a frontier project development. It's what we did in Papua New Guinea. It's a frontier project development. There's no major hydrocarbon development in Mozambique today. We can play a key role in terms of developing this resource. Of course, last year we funded the floating LNG with our partner Coral, 3.4 million tons.
That development you can see on the chart there is Mamba. Mamba will be in excess of 13 million tons, potentially very large onshore trains. We expect to have that online by 2024. That's a very similar timeline to our development in Papua New Guinea. We know how to do this. We can benchmark our previous experience. That's why we're confident we can get this thing online at that time. The future potential here, of course, I have a bar with a shade which goes right up to the top of the chart, can be very, very large. We have a vision, certainly of 40 MTA of liquefied natural gas, multi large train development, shared onshore facilities. That's where we're headed with this development. We've done this before.
When we were in Qatar, we assisted in the program. We were instrumental in the program to bring five trains online in less than five years. Also in Mozambique last year in exploration, we were awarded the exploration and production contracts for three other offshore blocks with our partner, Rosneft. We expect to sign that PSC in 2018. We expect to have our drilling in place by 2019. That's the most attractive development portfolio this company has had in the upstream since the merger of Exxon and Mobil. We're very excited by them. We're still focused on the fundamentals of the upstream business. It's not that complicated. Continuously upgrading your portfolio, continuously reducing costs, maintaining the reliability and safety performance that this industry requires and that we expect from our organization.
We are committed to buy the [better] exploration. We think it's paid benefit as dividends to us as I have just described. I mentioned our very active portfolio or asset management in tight oil. Are in the U.S. That applies to the whole of ExxonMobil's portfolio. On the left-hand side at the top, you can see our total resource base, which is very, very large. We split it up into the SEC definition of proved, of course, producing recoverable and producing and/or with significant funding. The design and develop is the next step. We have a whole bunch on there that is evaluating. We are looking very, very hard at this portfolio. We're looking very, very hard at asset management. If the time horizons that we're thinking to others than it is to us, you should expect to see us increase our divestments.
You've got to take costs out of this business. We've taken 22% out of the upstream in the last 3 years. We've taken 22% of the headcount without any loss of capability in the upstream over the last 3 years. It's easy to reduce costs by just benefiting from the cycle and lowering procurement costs. Much more difficult to engineer costs out of your business. We believe we've been doing that. It's not a question of cutting. It's a question of being more efficient. That will continue in this business. We have been the lowest upstream in terms of total unit cost 4 out of the last 5 years. Total unit cost. In other words, including depreciation, including what you invest. In last 5 years, we've been the lowest 4 out of the first 5 years and well below our 2 major competitors. 2 more charts, then I'll close.
1, I just wanted to give you an update on Kearl. A lot of questions on Kearl. Important we talk about it. We have a very aggressive improvement plan. We talked about it, I believe, last year. We're making good progress. We were cash positive in 2017 despite not running even close to capacity. We're now break even. We're now break even at less than $50 WTI with a production rate of 180 KBD. We expect to be at 200 KBD in 2018. We're working every element of this resource to get the profitability where we expect and believe we can get it. That's improving operations, which leads to improved profitability. You must work reliability, you must work cost, you must work yield. Costs are Kearl. We have a clear path to $20 a barrel cash costs.
I think importantly, the same as we're doing in the unconventional space, we are applying the total ExxonMobil technology resource to this asset. That's why we have confidence we can get this thing to the kind of profit state that we expect from it. That's applying our downstream technology, our midstream technology. We're applying our skills in molecule management, in bitumen recovery, in heat utilization, in diluent usage. There is a lot of opportunities to apply ExxonMobil's downstream and technology skills to this asset. It is a massive resource with a large upside. We believe we have a clear plan in place, and our confidence increases every day that we can be successful. You can see on the chart we expect to be at 240 KBD by 2020 with per year of cash at $60 per barrel in that same timeframe. Final chart, which is upstream volumes.
Darren said it earlier on, so I'll just-- Our focus, I'll repeat it's value creation. I understand all your interest in volumes. Volumes are clearly important to us as well. It's important to recognize that not all volumes are equal, and we will simply not chase volumes if the value is not there. This organization is focused on the quality of the portfolio. We're focused on the fiscals, the realization, the costs, in addition to volumes. Nevertheless, I've laid out the volume chart. 28, we're only in March. I think you should be looking at a number similar to 2017. That's what you should be looking like in 2018. Something in that range. Of course, I talked about Papua New Guinea. We're not exactly sure when Papua New Guinea will be online, certainly in the coming weeks, faster than the coming months.
That could have an impact. Groningen can have an impact as well. Everything I have on these charts excludes any potential divestments. I think 2018, similar to 2017, 2019 will go up. Expectation is will be 4.1 million oil equivalent barrels in 2019. The future is one of growth. As I've been explaining, our confidence is high, a lot of it based on not just the quality of the resource, the quality of the fiscal control of ExxonMobil's organization. We have a track success when we're the operator. Of course, I've laid out the strong growth in tight oil there. You can see if we were just to play the Permian and tight oil on its own, we'd be pretty much flat through the period. The major growths are the other ones that I have been talking about.
Again, as I said, 50% of our earnings in 2025 will come from these 5 major development opportunities, all effective at $40 a barrel or $5 a million BTU gas. Everything on this chart is assuming a $60 a barrel, no price change. Best portfolio since the merger, robust across a price range. Our confidence is high. With that, we'd be happy to take any questions on the material that I presented or on the material that Darren has presented. Jeff, I think you'll keep us under control.
I will. As Neil indicated, we'd like to just take a pause here and address any questions that you may have up to this point. I'll remind you that we're going to have another discussion period after we present the full material. Keep that in view. When I call upon you, if you wouldn't mind stating your name and your affiliation, and if you could leave your questions to just one follow-up. Ryan in the middle.
Ryan Todd at Deutsche Bank. Can you talk a little bit more about growth and value creation, but how you arrived at the current strategy, I would say it's probably a little of a departure from a lot of your peers are focused on capital constraint and cash return to shareholders. You've laid out a relatively aggressive growth strategy. Can you talk a little bit about how you arrived at that strategy? Thanks.
Let me cover that, I'll ask the rest of the members of the MC to jump in. The way we have looked at this is, as I said at the beginning, what are the advantages that the corporation has built up over the years? What are the strengths that we have? Where can we differentiate ourselves versus competition? What is the opportunity to leverage those advantages in the portfolio of investments that we've got available to us? As Neil said, if you look back in time, as the prices came off, we were actively out there working to acquire exploration opportunities, discover undeveloped opportunities, trying to fill that pipeline of high profitability opportunities. We were very successful at that, as the chart showed. Our view is how can we make shareholder value, how can we contribute uniquely to that?
If we have an opportunity to do that, we will. We'll prosecute it. What you're hearing today isn't so much a change in strategy, it's a change in the opportunity set available to us. In the past, when we didn't have those opportunities as readily available, we made money. That excess cash was returned to the shareholders because the portfolio within didn't justify all the money that we had. Today, we see the opportunities well in excess of what we've had in the past. As we said, the best portfolio of opportunities since the merger between Exxon and Mobil. That's why the capital is ramping up. Our view is that we can take that money and invest it and get high returns, which is what we're here to do for the shareholders. Our perspective is how do you grow shareholder value?
I think artificial limits on CapEx is a function of what's available to you to invest in. Returning cash to the shareholders if you don't have a better set of opportunities in-house is a good idea, if you've got a good set of opportunities in-house, why wouldn't we invest in that? That's the strategy we've put in place. Are you going to comment?
I think it's also fair to say is, you're only spending this kind of CapEx if you've got the opportunities. If you don't have the opportunities, you can't prosecute them, we have a very attractive portfolio of opportunities right now.
I'd just like to add that the 10 billion barrels of resource that Neil talked about in 2017, we were working those opportunities in 2015 and 2016. This has been building up over several years.
Good. Thanks. I guess the natural follow-up to that is, you mentioned this somewhat, cash return to shareholders and dividend growth, I guess, in particular, how does that, in terms of relative priorities on your use of cash, where does that fall? Thanks.
We'll cover that in the wrap-up section, but I'll just preview it now. The way we look at it, we've got shareholder the dividends and investing in the business are our top priorities. That's an and equation. We think, and as we'll show when we get to the back end of the presentation, if you look at our free cash flow, with this portfolio tested against low price environments, we have the capacity to continue to reliably grow our dividend and invest in these opportunities. We don't have to make a choice between those two today. The third priority will be making sure that we maintain a solid balance sheet, strong financial flexibility. The purpose of that is we cannot call the point of talking to you about the Brent chart, talking to you about the cycles. We can't call the market.
We want to be in a position to respond to the opportunities in the market when they develop. Having a strong financial balance sheet is key to doing that. After we've taken care of the shareholders, and we've invested in the opportunity set that we've got, making sure we've got a strong balance sheet, and then as our investments come online, we generate cash, excess cash to what we need to do that, gets returned to the shareholders. That's the strategy. That's the capital allocation strategy.
Yeah. Right up in front. Jason.
Thanks very much. This is Jason Gammel, Jefferies. First of all, I'd like to thank you for the incremental detail that you presented today. It's a much clearer picture now of how the strategy will evolve. My question is the evolution of return on capital employed in the upstream business. You've got a great blend of shorter cycle and longer cycle projects, but it would seem to imply that you're going to have a buildup in pre-productive capital over the next few years. The chart implied a somewhat linear growth in return on capital employed, but would we expect to see the growth in capital employed a little more back-end weighted towards the 2025 timeframe?
Yeah, I think, well, let me talk to the upstream. I think if you go back and look at the chart, you can see this will take us up in return on capital employed because of the quality of the investments. Right now, if I remember in the chart, 2025, we expect to be at a double-digit 11% return on capital employed. The portfolio of opportunities we have are accretive to return on capital employed, as well as giving us the earnings growth. You all know what happens when you start to depreciate your asset. The capital employed goes up. You really have to have a high-quality portfolio. I think it's indicative or illustrative of the quality of the investments that we have. You don't always have them like that.
Jason, Sorry.
No, go ahead.
I'd also like to say that I'll talk to you in the downstream and chemical presentation. A good bit of that investment portfolio is coming on in 2018 and 2019, and those are pretty high ROCE in the base case. That's going to help as well in the near term.
Just maybe as the follow-up, the reduction in the required price for the LNG projects to $5 MM BTU seems to be a pretty impressive reduction in the cost structure from where the industry was at even three or four years ago. Can you just talk a little bit about the evolution of the cost side of the LNG business that you've seen over the last couple of years?
Yeah. I think it starts with the resource base. I mean, not all resource bases are the same, and so therefore, not all costs are the same. We estimate we've taken 30% out of the development costs of major projects in the last three years. That's the number we believe. It's through efficiency steps. Of course, it's through leveraging the market. Of course, allows us to apply our capability to build big trains in a frontier location. People can build big trains, but to build them in a frontier location is tough. Papua New Guinea, we did that. We modularized a lot of equipment. We built it up in Korea and places, and we modularized it and brought it down. There's going to be a lot of that going on in Mozambique as well.
-resource that you have and the capability of your organization. I think you have to start on LNG by saying, typically larger is better. The trains are bigger, it's a lower cost. If the resource base is larger, it's a lower cost.
Jason, the large train technology that Neil highlighted is an evolution and improvement in technology relative to what we did in Qatar and what we did in Papua New Guinea.
I just had one other thought on that is the organization understands very clearly, the point of showing charts early on is there's lots of opportunity to fill the space between available supply and over time as that declines in the demand curve. There's lots of opportunities out there for the industry as a whole. We're only going to bring forward and fund projects that are competitive and on the low, on the far left-hand side of the supply curve. The organization clearly understands that. We are not developing me-too projects. That's not what we're here to do. So we're not going to advance these projects if we don't find a way to leverage the technology, to leverage the capability of the organization to bring those costs down and bring in the lowest cost supply in the industry. That's the mandate. The organization clearly understands that.
You'll see that when Jack talks about the downstream. We have been working investments in refineries for five, six, seven years, refusing to invest in upgrading capacity until we found a way to do that at an in-Qatar projects. That's not part of our strategy. That's not where we bring shareholder value. What you're seeing in here is an intense effort over the last several years to bring that technology and that capability to bear.
I would say on those LNG, we've got a very clear view of what the industry's LNG costs around the world on a fully costed basis, including the capital cost. If we can't bring capital fully costed, if we can't bring projects forward on the left-hand side of that supply curve, not just at cash cost, but full cost, we ain't going to proceed until we've got you there. Again, we haven't reached Final Investment Decision on some of these, but we have a clear line of sight to get these to the left-hand side.
Hi, good morning. This is Sam Margolin from Cowen. You made a compelling case for your digital platform and the value that you think it adds to the upstream side. You're leveraging it for the development business, I think a lot of people are curious why you never thought it could be deployed for acquisitions of current production. If you could squeeze out costs for producing assets that you might look to acquire and use that to fund some of your development. What was the hurdle over the bottom of the cycle for you to purchase more currently producing assets on the M&A front as opposed to this development focus?
Yeah. I'm sorry.
Go ahead.
I was going to say, I think there's probably many questions within your question there. Let me just start on the technology piece. Be under no illusion. We're not just applying that technology into Guyana and the development opportunities I talked about. We're applying that to our whole portfolio. No, that's not correct. We're applying that technology across the whole of the portfolio. That's why I said a minute ago that a lot of the opportunities that you saw come in 2017, the work was done, the negotiations were done, the analysis was done. I'll throw 2014 in there as well. We were looking. We were evaluating. We were looking hard, and it just takes a little bit of time for those to come to fruition. It wasn't because we weren't looking at the bottom of the cycle.
I think, Sam, kind of implicit in your question is if we had taken this technology and applied it to an opportunity set for acquisitions, we might have come to a different answer. What I would tell you explicitly to that implicit question is that wasn't why we didn't have acquisitions in the down cycle. It wasn't the ability to recognize where the opportunity set is. It was the difference in expectation in the industry and what we saw the market doing. If you recall, when we went into the down cycle, people expected a V recovery. If you remember that, it wasn't that long ago. People kept thinking this is going to be down and back up again, and you saw a lot of people leveraging up to try to make it through the V. It turned out it wasn't a V.
Our view going forward is it's not going to be a V. You're going to see, given the changes in unconventional, there's a new paradigm in the upstream business. I think part of the challenge in acquiring somebody is you've got to find an opportunity to bring value to that business above and beyond any debt that they carry in with them and above and beyond the expectations they have in the market in terms of where that opportunity is going to go. That eventually worked itself out of some of the valuations. By that time, there's a lot of debt hanging on a lot of companies. I think there are a lot of dynamics in there. Thinking through how we can add value to an acquisition target was not one of the impediments.
Okay. Then just a quick follow-up. In the LNG portion, you didn't mention Golden Pass. You've got FERC approval, and it does seem to fit with your overall theme of optimizing the molecule. You've got a lot of dry gas that you might want to commercialize. Just wondering where that fits in your LNG portfolio.
Well, we're progressing the project. We have not reached a Final Investment Decision. Of course, we're working with our partners. We're still progressing the project right now. I mean, we have nothing new to add on that one. It's certainly an opportunity that we're assessing, and we've been progressing for several years, as I'm sure you're aware. Anything to add, Andy?
No.
Okay. On the far right, Neil, please.
All right. Great, guys. Thanks very much. Neil Mehta here from Goldman Sachs. First question is more of a tactical question about some of the disrupted production here in 2018. You referred to Groningen, also some of the issues at Papua New Guinea.
Any updates on both of those assets as we think about production for 2018?
Yeah. Just in Papua New Guinea, it's only 10 days since we had the earthquake. As I mentioned, as far as we can tell, everything we've checked so far, the integrity of our facilities is good. This is a lot of pipe. As we said, 400-plus miles through the mountains, through the sea. You have to do the integrity checks. We have to do the integrity checks on the wells. We're confident in the integrity of the liquefaction facilities on the coast. It's tough to get people in and out up in the Highlands right now. Accommodation is a challenge. Infrastructure is a challenge. I think our people locally went out and said, they gave a date of, I think it was two months or eight weeks or something like this. That's still preliminary. It could be shorter than that. We don't know yet.
You have to do this thing step by step. It's most important that we get and check the integrity of these facilities, of course, before we begin operations. Right now, it's even more important to get people into the area, make sure everyone's safe, get the accommodation in place, and all of that. In Groningen, we're at the same production rate that we were at the back end of last year. You're all aware that this is a joint venture, 50/50 ExxonMobil and Shell in NAM, who have 60% of the Groningen play. The other 40% is with the state or with the government. The government's controlling that production right now. It's 21.6, I think, BCM right now, 22, 21.6. It's at the same.
We're working very closely with our partners and with the government to make sure that that production rate is consistent with what both the country needs and the other equity shareholders want. It's an ongoing discussion with the government, right now our production is at that rate.
That's great. The follow-up question is just around U.S. earnings. Thanks for providing that 2020 look of $5 billion. It's a huge focus of investors about how to get net income from the U.S. and the E&P side higher. Can you talk a little bit about what bridging the gap from where you've been, which has been breakeven, to the $5 billion? A little more granularity there would be helpful.
Yes. It really is. It's a combination of all of the above. As I said, in that time period, to turn the earnings around during that period, you have to work all parts of the income statement. Clearly, increasing our liquids production, primarily out of tight oil, Bakken and Permian, is a big component of that. Being laser focused. The other dimension, as I talked about, is cost. I don't think there's anything magical in this. Get the value out of the Permian in the optimum time. I'm not even always to say it's the fastest. The optimum time to get the greatest capital efficiency, the greatest long-term shareholder value that we can. To get to 2022, key to that is to grow liquids in the Permian and in the Bakken and even a little bit in the Eagle Ford as well. That's the main driver.
The only other thing I'd add there is the quality of the wells that are in this plan looking out versus where we were even just two years ago. It's a big change. When I first started getting associated with the Bakken and seeing the Bakken wells, a good well was 600, 700 barrels a day. Now we're routinely over 2,000 barrels in the Permian. Same thing we're seeing in the Permian, actually in a more compressed timeframe in terms of the improvement. The plans, the well quality that's underpinning those growth plans is very high quality. It's the heart of the Permian, heart of the Bakken, and it results in some very good financial metrics.
Yeah. Just on that point, I said it's all about the income statement. Those development costs are critical. Most of my discussion was around driving down those development costs, which is, again, not just about drilling. It's about fracking and completing. It's about getting those products to the market. It's that whole end-to-end value chain that we're focused on. That's the really important part.
Okay. In the center, Paul.
Thank you. Thanks, Jeff. Paul Sankey. I want to thank you personally as well for trying to turn the supertanker in terms of Exxon disclosure. I think that I speak for everyone in the room that the more that you guys say about your businesses in terms of disclosing, particularly segment cash flow, and more information about certain businesses that you have, such as chemicals, where you're clearly a world leader, would be greatly appreciated. If you could continue the drive, Jeff, that I know that you're on to improve disclosure of this great business, we would be very appreciative. Thank you. Having said that, Darren, we've seen long-term growth targets previously from Exxon. Can you explain to us a little bit about the mistakes of the past which have led you not to meet those targets? Explain to us what's different this time.
I understand everything that you said, but the history says that you just haven't met targets in terms of upstream volumes. What's different this time, Darren? What are you planning personally in terms of how you're going to stamp your identity on ExxonMobil's future? Thank you.
My what, Paul?
Sorry?
What'd you say? How I stamp my what?
Your own personality and your own identity. We've got some big figures historically. Lee Raymond, Rex Tillerson. Now we have you.
Well, I'll.
He's big, let me tell you.
I have to tell you, I'm not competing with Lee Raymond or Rex Tillerson, I think, and I would tell you, they probably weren't competing with each other either. My objective is to get this organization focused on driving value, translating that value into results, bottom line results that you all will see. My perspective on this, my philosophy in running a business is we should do a hell of a lot less talking and a lot more delivering of the results. I take your point, though, that understanding our business is absolutely critical, and that was the reason why I started at the beginning of this conversation that around what we're planning on doing, where we're trying to take this business, and what the opportunities are to improve it and the progress we're making. Today's discussion, I think as you commented, is different.
Trying to give you why we have such faith and the targets that we set for ourselves here and the work that we're doing. This was not started. We've always done it, which is start at the beginning, figure out where you have an advantage, what the opportunity set looks like, then how you change potential issues. That's how this process got put together. That's the plan that you're seeing today, we're sharing that in more detail today to give you some sense for how that all hangs together. I think Neil trying to touch on what's different about this plan in terms of the things that we have within our control, I'll hand it back to Neil to let him go back through that again. We feel this is a different set opportunity set than we've had in the past.
Yeah. Neil, can you really put it in the context of what's gone wrong in the past? We all know XTO.
Well, I'm going to tell you, I talked about it in my comments. There's many elements. Of course, a lot of it depends on the quality of the resource, the quality of the fiscals that you've got. Most importantly for us is can we control our own destiny? That's what it is versus some of our recent developments where we have control. We are the operator. We can apply. As I said to our organization, go and execute now. It's different. There's always the upstream business. There's always other players. If you have responsibility like we have in Guyana, where we are the operator, gives us that opportunity to get that oil out quickly, to control our destiny. It's the same in the Permian. It's the same in the acreage that I've been talking about in the other place. I think, Paul, that's really important.
We have demonstrated success when we control our own destiny. That's important.
Paul, as you look back at the porcupine charts that you've become famous for, it's really pretty simple. There's three buckets. There's price entitlement effects, you all saw the impact from 2016 back on our volumes, 50, 60 KBD. You saw that. You go up, as Darren said, to $120. That does have an impact on your volume. One case is clearly entitlements, and we will happily take higher prices any day. The second big bucket over that time is divestments. Some of you hear that, some of you don't. Obviously, we're not making divestments unless we think there's going to be a whole lot more value to that than keeping those volumes on the balance sheet. The third big driver, which clearly was an issue, was a large proportion of projects.
Many of you can recite the names that were OBO operated by our competitors of which we had an interest, in which we were trying to influence and help. At the end of the day, slipped one, two, and three years.
The price went up.
Yeah. The difference as I look at this outlook, it won't surprise you, we were wrestling with this same very question. What is our complement, the operated piece? When you look at the nature of the growth, I think over half of those volumes are in these unconventional resources that are individual wells, not three-year projects that takes three or four years to execute. If it slips a year, you move hundreds and thousands of individual wells that are coming up. Quite frankly, there's some optimism we can do better. When you look at the projects that are in that wedge that Neil showed, at the end of this year, 90% of that will be under an advanced commitment. We're moving. We're moving forward toward an FID decision. The confidence is high.
We've tested that against what are all the things that can go down, what are all the things that can go up, and we think we've got something that the team in Houston and we have a lot of confidence in.
I want to just add something to that because the premise of your question, Paul, Neil made the point when he showed the chart. This is not a volume-driven plan. Volume is a part working to make sure that what we deliver here brings earnings and return on capital employed. As we go through this process, if we have to sacrifice volume to achieve that, I have no problem doing it.
I have no problem coming and talking to you about it. I understand the focus on volume, particularly when the box is a lot bigger and blacker, because that's the output you can get your hands around to try to infer what's happening. My commitment to you is to explain to you what's happening, I'm telling you that it's not a volume-driven game, it's a value-driven game. We've given you the volumes because that's what we think we're going to deliver out of this process. As we work through this, if that changes, we'll let you know.
Thank you. Darren, if I could say, we would greatly appreciate if you would, by your Exxon's traditional lack of access to the market, you really are now becoming one of the few major companies that doesn't meet the market as regularly as some of our shareholders, your shareholders would like. If you guys, again, I appreciate Jeff's efforts to turn the supertanker, we really want to see more disclosure. You've got the best chemicals business in the world. You've probably got one of the great downstream businesses, you're talking the upstream business. Please disclose more and meet us more. We would be greatly appreciative. Thank you.
Two points tonight, Paul. You must have missed my opening statement because what we've said is over the last year, since I've been in job, I've been engaging pretty broadly with this community, with our shareholders, with the broader stakeholder community. One of the clear messages that came out is we don't understand your business, and we're not clear on where you're trying to take it. I'm committed to making sure that's not the case. All right. I'm committed to make sure that's not the case. That's the work we're going to do. I would tell you've heard the upstream story, but you only heard part of the story. You haven't heard the downstream and chemical story. I think you're going to get the same level of clarity that you got on the upstream as you're on these next two segments. Okay?
Doug. Sir, in the front.
Oh, sorry. Just Doug. Doug Terreson, Evercore ISI. I'll tell you, I want to commend you guys for your public return on capital targets, not just for the major businesses, but also for the corporation as a whole, because this leads to accountability, effectiveness, and transparency for investors, and obviously, those are all good things. On this point, considering the execution risks that the big oils have faced during the past decade, I have a couple questions on your process, too. First of all, are there changes to the capital budgeting or process selection approach that are worth mention, Darren? Is it really just such an improvement in portfolio quality that gives you confidence that you're going to be able to deliver?
The second question is, are changes to the incentive compensation needed to drive these gains, or do you think that you guys are already aligned with shareholders enough to accomplish the objective, which would be to deliver on these objectives? Two questions on process and delivery.
Okay. I'll hand over to Mark and Neil and anybody else who wants to talk about maybe some of the upstream processes. What I would tell you from a process standpoint, we talked a little bit about it before, from a capital allocation standpoint, I think a lot of the questions that come in is how do you choose between this and that? The reality is, we're not trying to do that. The reality is the message to the organization is bring me a project that is robust to a broad range of market environments and is competitively advantaged. We spend a lot of time squeezing that because I can tell you we're not going to invest in something that I can't convince myself, that this team up here can't convince themselves is competitively advantaged against others. We don't do me too. Okay?
That's the process that we're going through. What we have found is it helps drive the organization to pull the technology lever. If you're going to do that, you better find how you can realize more value in your business, or you better find some technology angle to bring it to bear. If you can't do either one of that, you're not leveraging the value of the corporation and the advantages that we have, you're going to end up with a me too project. It forces the organization back in to think that and think it hard. What we've seen over the last several years is the product of that. It's nothing new. It's the same thing we've been doing. I can tell you the weight and the pressure is a lot higher because we've got to go deliver that advantage.
That's what I would tell you, number 1. The second thing around compensation, we've got our disclosure that will come out as part of the annual meeting process and the proxy. Our compensation system is very well aligned with our pay goes down. That is a 1 for 1 correlation. I would tell you that the incentives are there. It hasn't been, and I think the underlying question there is around, is that the root of the issue here? I don't think that's the root of the issue. The issue has been working the opportunity set. We're not going to invest in something that doesn't bring the value, and so that takes time. As Jack said, the opportunities that we're presenting today have been a work in progress for years. They culminated last year in our 2017 plans, but they didn't start then, that's for sure.
Yeah, that's a point taken on alignment at the exec to definitely improve the returns and value creation. Is it necessary to tweak the incentives below your level for the rest of the organization? Are you comfortable with it? Do you think that there's sufficient alignment to accomplish the objectives the way it is?
We have a ranking system in our company. Well, we rank people's performance. That's how we make sure that folks are aligned on and delivering on the commitments that we make. It works.
Just one comment to add. When Darren talked about these projects have got to add value. They've got to be competitively advantaged. The organization's got to demonstrate we can execute them as well. That's a really important. These are big capital investments. When the organization brings forward an opportunity, on time, that's a key part of our investment decision as well.
Okay. Russell up here in the second middle.
Hello. It's Rob West from Redburn. I've got two questions, please. First one's on the disclosure. Echoing the comment that everybody who's looking at it and really appreciating the extra detail we're getting. How much of this is a one-off at the moment because you feel like the understanding is low, versus a change that's going to continue in the future with giving these same charts hopefully every year and maybe also revisiting some of the quarterly disclosure you give us? That's the first strand in your thinking there. The second one is on the Permian growth that you've outlined. I'm aware on the chart that you show of the Permian ramp up since starts growing faster. I'm guessing that a lot of that is because of the infrastructure build-out, particularly in that very vast and sparse position in New Mexico.
Can you comment on the progress there and what we should be seeing getting built out in the ground over the next couple of years to just really enable that inflection in the production growth? Thank you.
Yeah. Darren, maybe I answer the Permian one first. I think you got to get all the elements in place. You can rush to get crude oil out the ground in place, so that's why you see this curve, which looks like this. When you get all the elements in place, you can blow and go. You got to get all the elements in place. That's not just getting the right sand, the right frac crews, the right drill rigs. It's about, as you were suggesting, the right infrastructure in place. You got to evacuate the molecules. So you have to get all of the elements in place, and that's why it's so important to have a rigorous development plan across the whole development opportunity. That's the way to be most capital efficient. It's not that difficult to ramp up quickly.
You want to ramp up that gets the most value out of the midterm, and that's why I think this development planning is so important. I think I referred to it in my comments. I'm not exactly sure what I said, but as a manufacturing mentality. A lot of my background is in the downstream and chemicals. That's the methodology. Get everything lined up. When you're ready to go, we go. That's why that curve is shaped like that.
If I could just add to that. The team, in terms of the new acquisition, the new acreage in the Delaware Basin, kind of striking a balance between getting after it relatively quickly and also, as Neil said, coming up with a development plan that we think is going to be the most capital efficient and the most value over the long term. So I think people are going to be seeing out of that is it's going to be a different looking development. We've already designed through how we're going to have different elements come together with a major central facility. So if we've been putting all the elements in place, but have it set up to where we can go execute pieces of it. It's part of a plan the team spent a pretty good amount of time looking at and developing.
The other thing I'd say is in terms of that different trajectory on it, some of those wells that are going to cause that trajectory have already been drilled.
Yeah, I like to think we've supplemented this great capability within the XTO division with this Development Company resource. Putting those two pieces together, I think, will give us this advantage that we've been discussing.
I'll answer your first part of your question around the one-off. What I'd tell you is the character of the company hasn't changed. We don't really do one-off things. It's as the evolution of this process was derived from the work we did last year, thinking of how engaging and understanding what the opportunity set looked like. The plan for this presentation was cooked last year. You think about what's in here and what we're doing, this is all driven by the plans we put together last year when we were working this presentation last year. I mentioned at the beginning, this is the beginning of a broader and deeper engagement with our stakeholders and shareholders. That's the process that we're on.
How that manifests itself, you'll get a chance, some of you will get a chance to comment on because we'll be out reaching out, talking to you to understand how we can better help you understand our business.
All right. Try to squeeze in two more, Doug. Russell.
Excuse me. Thank you, Jeff. Doug Leggate from Bank of America. Darren, first of all, I want to echo a lot of the comments been made here. A one-line P&L and a one-line cash flow statement isn't going to meet market requirements on a quarterly basis. I'd really urge you to have a look at the kind of disclosure that your peers are giving compared to Exxon. That also goes to the management outreach that takes place from your peers on those quarterly conference calls as well. As you get to consider your thoughts on how you deal with that going forward. My question is really just one question, and it's the capital efficiency and the decision about capital allocation.
When you look at the step change in capital efficiency that comes from the Permian Basin, you're obviously getting after that You've also come through a period of extensive or significant investment over the last several years. 1 million barrels a day was the number given to us over the last couple of years in terms of new production. You were entering into a period where you could harvest some of that cash flow. Now you're asking investors to take a step back and look for another aggressive period of non-productive capital, long-dated promises, and your return on capital might be one of the best, but your share performance is absolutely one of the worst. Why are you doing this now and not considering more about rebalancing return of capital with the growth?
Why do you have to do everything all at once, as opposed to balance a little bit more returning cash to your investors to address that share price weakness?
Let me just make sure I know your question, Doug. The suggestion is rather than invest in high-return, profitable projects, to take the cash and return it to shareholders. You're asking why we don't do that?
Well, these projects that management sees. As you said, the characteristics of Exxon haven't changed, but the market is sending you a message, which is they're not recognizing the value that you see, so why not a more balanced approach?
Thanks for the clarification. I think there's a couple themes happening here. One of the themes, and you started off with this, is that the market and this group and this community needs a better understanding of what we're trying to do and where we're trying to take the business. I think that's different. I think the intent is to help people understand what that opportunity set looks like versus what we've had in the past. I think one of the comments you've heard from all of us is, this is the richest set of opportunities, the investment opportunities we've seen since the time of the merger. Exxon and Mobil together, and the opportunity set that we created there, this is the best we've seen since that timeframe. Our view is the opportunities fit very well within our capabilities. They take advantage of what we've proven.
We have a track record in these areas. We can deliver those things, and we can generate returns that will make it to the bottom line. If I grow earnings and I grow return on capital employed, in my mind, that's the definition of shareholder value for a capital-intensive business. That's what our plans project, and that's the discussion that we're having today. That's why we're doing it.
Okay. Biraj.
Hi, it's Biraj Borkhataria, RBC. Two questions, please. The first one, just going back to the investment plan, how should we think about the scenario where commodity prices are weaker than you expect, and as it relates to the credit rating? Given the opportunity set is so attractive, as you said, would you be willing to sacrifice a couple of notches on the credit rating in order to maintain the investment plan given in a lower oil price environment? Based on your conversations with stakeholders in the last few months, what has been the biggest misconception or misunderstanding from your view of Exxon versus the stakeholder's view?
We'll have a chart when we get to the wrap-up and talk about the financial case. We do have some slides to try to cover that. Part of the reason why we have the cash flow broken down by different price scenarios is because the thing that we test as we're looking at our investment plans, as we're looking at our plans to reliably grow the dividend is how robust is that to the different price environments, and what would be the implications if we were to pursue those things, we find ourselves in a price environment on our balance sheet and some of our financial metrics. We take a really hard look at that to make sure that we're robust.
We feel comfortable with the plan that we've got put together here and talking about over the price ranges we're talking about is pretty robust to that. We don't find ourselves in a situation where we have to compromise on any one of those variables, and we think we have the opportunity to progress all those and maintain those priorities.
It was just based on your conversations with various stakeholders.
We're a big business. We've got a lot of different parts, too. We've talked, I think, historically about the advantages in some pretty high levels. What we're trying to do today is take it down a little bit of level to help people get a better feel for what those advantages are. I think that's been the biggest opportunity that I've heard back, is help us better understand how you all are thinking about the business, the direction that you want to take it, and how you plan on taking it there. That's part of why we're where we're at today at this discussion.
We're going to go ahead and take a break right now. I know that we didn't get to everybody's questions. Please hold those questions. We're going to have another discussion period. We're going to take a stretch break for about 15 minutes. Ask everybody to try to get back in your seat by 10:15 A.M. Thank you.
Welcome back. I'm going to walk us through our Downstream and Chemicals segment of the presentation. As shown on the screen, there is a picture of our largest integrated refining and chemical complex in the world at Singapore. Singapore is where we made an acquisition in 2017, the Jurong Aromatics acquisition, and it's also the home of the world's only crude cracker. I'm going to cover Downstream and Chemicals, and before I get into the deck, I want to make just a couple of key points while I'm still on this slide. We've been in this chemicals and downstream business for a long time, and through that time, we feel like we've built up a very unique, competitive position, and it's really due to four factors. Number one, and you've heard this loud and clear already, our commitment to proprietary technology. Second, our global footprint and scale.
Third, the integration between downstream and chemicals, also increasingly with the upstream as well. Last, and very important, a market position and customer base that's been built up over decades. It's a very unique competitive position. All the investments I'm going to talk to you about today leverage one or more of these competitive advantages. A similar chart to what Darren showed earlier, Neil showed earlier. I did expand the timeframe to 5 years, given the length of cycle in this business. It's a 5-year ROCE versus 5-year earnings for the combined downstream and chemical businesses of us and our IOC competitors. I'm going to talk about the downstream and chemicals separately. In fact, those are separate businesses, and we have separate strategies there that I want to walk you through.
For this is the only time when we're able to compare ourselves directly, apples to apples, with our other IOC competitors, because many don't break out chemicals and downstream separately. When I switch and show you separate downstream and chemicals charts like this, there won't be many IOC competitors on there. One observation that you can get from this chart is that we're larger than our competitors. Our combined, our chemicals business and downstream business is larger than our competitors. Leveraging this scale advantage provides us investment advantage. I'm going to talk about 19 different investments. I'm not going to go into details about 19, but I'm going to mention 19 major investments in downstream and chemicals. 17 of them leverage existing ExxonMobil infrastructure. It is an advantage. Let me now look at what our plans result in 2020 and 2025.
Pretty significant earnings growth that you can see here. Let me give you the basis for the estimates. These are all based on a flat 2017 margin environment, and that's going to be true for all downstream and chemical projections that I make over the next half hour. I want to be clear, that's not the basis of the decisions, investment decisions we make. When we bring investments forward, we look at a robust set. We typically look at, okay, what's happened over the last 20 years? What's the most optimistic and pessimistic environments we've had to operate in? Let's test those investments over those time periods. We want our projects to be resilient over that full investment cycle that Darren showed earlier. You might recall at last year's Analyst Meeting, we talked about our downstream and chemicals projects delivering a 30% cash flow increase by 2020.
This 2020 outlook is consistent with that. It manifests that cash flow into ROCE and earnings, but it's consistent with that same outlook. Nothing's really changed versus what that outlook was last year. We did add on 2025, obviously here, and that gives us about double the earnings, as was mentioned earlier, than 2017. This projection does include some projects that are fairly early in our project management system, but we have good line of sight to achieving it. Now I'm going to switch gears and go just into the downstream, and I'll start showing the same look for just the downstream only. You can see there's only one of our IOC competitors on this chart. We don't really have transparency to get to the other businesses in just the downstream segment. I added several downstream pure plays to the chart, Phillips 66, Valero, and Marathon.
Just give you a little context for how our downstream performance compares to other investment opportunities. We have some really good advantage investments, and they're going to yield some really nice financial results for us. As I look at 2020 and 2025, you can see, consistent with the last chart, some substantial earnings growth. In 2020, our projected earnings are up about 40%, and then in 2025, about double. Let me get into the downstream. I want to start with what we've been doing. We've been talking a little bit about portfolio management. Let me talk about what we've done on the downstream in that regard. We've had a consistent long-term commitment to high-grading the downstream asset portfolio. The graph on the left shows you a percentage basis of where we are today versus where we were in 2008.
On the right-hand side, we've talked about some of the numbers there. 13 refineries that we've divested over that time period and quite a bit of other parts or assets in our business. Those assets removed $8 billion of lower productivity capital employed from the books, and we've had some other investments over the period, the whole business is not down $8 billion from capital employed, but it is lower capital employed today than it was back in 2008, even though we've been continuing to invest in the business. More importantly, it's more productive capital. It's more productively generating earnings for the business. This obviously improves our financial performance. It also allows our operations and technical teams to focus more on these profitable remaining assets.
Some of that focus is what it's also allowed us to maintain a pretty lean staffing level over this time period. As Neil talked about for the upstream, downstream is continuing to focus on costs. We have a long-term commitment to disciplined cost management, demonstrated on the graph on the left over this 10-year period at a 25% reduction in operating costs. That's on top of offsetting inflation as well. The plot on the right is one we've shown before. It shows industry benchmarking that consistently shows we have a material refining cost advantage versus the rest of industry. This focus on cost, we feel is more important now more so than ever, because with the surplus capacity, higher cost manufacturing facilities, especially in mature, low-demand growth markets, are likely to continue to be rationalized.
Continued focus on cost in our business and maintaining the most competitive set of refineries and manufacturing facilities out there. The projects that are in our plan are going to further strengthen the refineries that we think right now are already some of the lowest cost facilities in the industry. Darren showed you a similar chart to this earlier in terms of our energy outlook and the demand shift between the products that are coming out of our refineries, that we're making in the downstream. This graph on the left shows the percentage change between now and 2025 on the products that we're going to be manufacturing and putting in the market from our refineries. We show the 2017 prices for each of these products in a $53 Brent environment across the bottom of the X-axis.
Over the next five to seven years, we plan to upgrade 200,000 barrels a day of fuel oil into higher value products. Most notably in the lube base stocks, into low sulfur diesel and jet production, all of which you can see by the prices are much higher value products than the fuel oil that we're destroying. That shift's been enabled by our integrated downstream and chemical complexes. Singapore was the one I showed you earlier. Many more around the globe. Over 80% of our global refining capacity is either integrated with lubricants and/or chemicals. A big advantage and really enables these advantage products that are going to be able to make this big shift into higher value products. Let me talk more about these projects specifically.
The big red bar there represents, with Exxon Mobil underneath, it represents six refining projects, about $9 billion of total investment, and about of which $3 billion's already been spent. The average return of those projects is about 20%, and that compares to an estimated industry average of somewhere around 8%-12%. It gets back to that point that Darren made earlier, is that we weren't going to go make these investments to upgrade fuel oil until we had investments that we felt were advantaged and were very competitive and resilient across a lot of different markets. We've come to that point. Largely we've come to that point through leveraging advantages that we have, most notably proprietary technology and integration and optimization within our system, our unique global scale and our footprint. Again, just to emphasize, all of these projects are unique to us.
They involve our proprietary technology, our footprint. No competitors can replicate this set of projects and can replicate this kind of return in the downstream business. Give you a technology example. Singapore resid upgrade project that we're looking at now. Have not FID'd that, but it's moving along through our early gates in our project management system. It's going to use a slate of proprietary technologies that's going to allow us to upgrade our refinery and our steam cracker resid into low sulfur diesel and lube base stocks. This is going to move Singapore into the top quartile of refining complexes worldwide in terms of competitiveness. Proprietary technology, a whole suite of proprietary technologies. It's not just one. It's catalyst and it's process technology. It's all combined, and we've been working on it for a number of years. A couple of integration and optimization examples. One is at Antwerp.
We're going to invest into delayed coker. Already investing in delayed coker. It's going to come online this year. It's going to utilize resid not only for Antwerp, but also from Rotterdam and Fawley. Enable us to get to scale and put in a 50,000 barrel a day delayed coker, versus just meeting the needs of one refinery. Then perhaps my favorite example on integration, and it's one that's referenced earlier, it's a Beaumont light oil expansion project that is, again, not FID'd, but should FID this year. That's going to be for a new atmospheric pipe still. It's going to leverage a lot of on-site infrastructure that's available to us at Beaumont. For instance, we have some gas plant capacity that we'll utilize. We have some downstream processing capacity that we'll utilize.
We'll also put in a little bit of hydrotreating, but we'll take a lot of the intermediate products, and we'll take them to Baton Rouge, and we'll take them to Baytown, and those are products that right now they're buying from third parties. Although the project's located at Beaumont, it's really a full Gulf Coast upgrade. Full Gulf Coast refining upgrade. Again, very unique to our footprint in terms of being able to do that. Very unique to us in terms of being able to say we have the confidence. We're doing this because what we see in the Permian and we see in the Bakken. We know this is going to be a long-term resource. We started obviously working on this several years ago.
Based on the confidence we had from our upstream developments in terms of that resource being there and those molecules coming down the pipe for a long time. We also undertook some creep capacity projects in Baton Rouge and Baytown to add some more, make our pipe stills be able to take a little more light oil crude. In total, we're adding 400,000 barrels a day of light oil refining capacity at a third the cost of grassroots. It's integration amongst the refining segment, it's integration with the upstream. It's integration. It leverages our footprint. Very good example of what we and we alone can do in this space. Another example is Rotterdam. At Rotterdam, we're investing over $1 billion to add an advanced hydrocracker to manufacture low sulfur diesel, and very importantly, Group II lube base stocks.
It becomes the only world-scale Group II base stock producer in Europe. We're again bringing proprietary technology, you're going to hear me say that a lot, and leveraging the scale and footprint advantages we have to enable a project return that's above 20%. It grows our Group II lubes capacity globally by 35%. Because of this global circuit, we're going to be manufacturing the same specifications in Group II lubes. We've been working with customers as they work with that lube base stock in their formulations already. When this plant comes up, they'll be ready to use these base stocks. It's transformative to the site profitability at Rotterdam. It's going to double earnings from the site, and it makes Rotterdam one of the most competitive refineries in Europe. Rotterdam is the most recent example of investments to grow our supply of lube base stocks.
We're the global leader in base stocks, and we're committed to continue to supply our customers over the full range of quality of base stocks, including Group I. We also have a strong global position in finished lubricants, and we're number 1 in the high-value synthetics category, and that's led by our famous Mobil 1 brand. You can see how the leadership in the synthetic lubes is manifested in that chart in the lower left, showing synthetic lubricants sales growth, and the fact that the Mobil brand is growing at three times the industry average over the past decade. Of course, our plan is to continue that trajectory. To accomplish that, we've got to continue to innovate. You may have seen we put out a new Mobil 1 product recently, Mobil 1 Annual Protection.
Just allows us to continue to expand the synthetic leadership in the U.S., which is the world's largest synthetic market. Lubricants and lubricants leadership is a real important part of our plan going forward. I'm going to back up a little bit now and just talk about the full downstream. This schematic shows what Darren mentioned earlier. We stood up a new fuels and lubricants company January 1st of this year, and we did it with this model in mind, in terms of really focusing on the lubricants and the fuels value chains. This goes all the way from crude transportation, all the way into our manufacturing plants, and distribution into the fuels and lubricants value chains, and into the markets.
This new company, in addition to providing a lot more focus on these value chains, also did allow us a streamlining opportunity, and we reduced above-field headcount by about 20%, or in the process of doing that. I've talked about the premium integration advantage refining investments. I just talked about the lubes value chain. Let me talk a little bit about the fuels value chain that's shown here. You see the Synergy logo. Synergy really is a global investment in our brands. It started with a new fuel formulation. We went back to the lab and said, "Can we do better in terms of our fuels?" We think we have. We've got an improved fuel, so a really good product we're putting out there. That's out there at 80% of our retail fuels outlets right now.
Another part of that is a fresh new retail site image that you've probably seen, and that image is out there at about a third of our retail stations. We've still got a little ways to go to roll that out through our whole retail. Also on the Diesel Efficient that you see there, this is an industry first in the U.S. We're putting out an advanced additized diesel fuel that delivers a 2% fuel economy benefit. We're just now rolling it out. We're starting in Michigan. Very good reception. We'll be rolling it out to, I think, North Texas next. A good start in terms of that initiative. I mentioned, you see Mexico and Indonesia up there. Those are two markets that we've recently entered.
One part of our strategy in terms of the fuels value chain is we need to be growing where the markets are growing. We need to be having a big presence where the markets are growing. In Mexico, we entered with our branded wholesale model supplied by the U.S. Gulf Coast, a very advantaged supply cost. In Indonesia, we've entered with a joint venture, and that's supplied by Singapore. Again, very advantaged supply cost. All that adds up to a pretty good earnings outlook in the downstream. The graph on the left shows how we expect earnings to grow between now and 2025. The projects, most of which I referenced, are shown down below, the timing of those startups. I mentioned our refinery cost advantage that we're very proud of and very committed to maintaining.
The sales growth in emerging markets, we're expecting a 20% sales growth. Mentioned Mexico and Indonesia. Those are key countries in that. I spoke about these refining investments. There are advantage investments that are going to allow us to grow earnings at a very high return. Finally, integration. This chemicals, lubricants integration in our manufacturing sites. I mentioned the insights the upstream give us, but also in the project management category. We're utilizing some of that project management and some of that greenfield and modularized experience that we have in the upstream. Overall, a doubling of earnings by 2025, 40% increase of growth by 2020. I'm going to move now to chemicals. In the picture you see there are the furnaces at the new ethane cracker being built at the Baytown Olefins plant.
Plant should start up about mid-year and plays a very prominent role in the chemicals growth plans. Here's the same cross plot on ROIC versus earnings. For the chemicals business, there's again, only one I see that breaks out chemicals separately, so I added in a couple of pure chemical industry competitors: DowDuPont, Sinopec, SABIC. You can see how our chemicals business compares to them. We have some unique competitive positions in chemicals. The integration that I've mentioned time and time again, the proprietary technology, that's really applied to the products. The process some as well, but especially on the product side. Very important in chemicals. The project execution capabilities, this is where we're really leveraging some of that upstream project management expertise because we have several greenfield projects where that's very applicable. Then long-term customer relationships.
Importantly, long-term customer relationships where the market really is, which is in Asia. Here's our outlook for 2020 and 2025. We project, like the downstream, like you heard earlier, about a doubling of the chemicals earnings by 2025. More near term, again, similar story. Earnings to be up about 40% in 2020. Seven of the eight major investments that are going to be driving that earnings growth in 2020 are going to be online by the end of this year. Our growth plans are rooted in technologies markets that we know very well. Let me talk more about our plans, but let me start with a little historical context of the chemical company and where we stand today. Graph on the left, each bar on that graph represents a decade of chemicals performance.
Over the last three decades, our earnings have approximately doubled each decade. We plan to extend that streak to four. You can see, we're used to growth over a long period of time in the chemicals business. That long-term commitment, that consistent commitment to the chemicals business has enabled us to have a very unique competitive position. That's shown in that chart on the right. That's all the products where we have a market position of number one or number two, and those products comprise 75% of the total chemicals business. This is most of the chemicals business represented right here, either number one or number two in the market. The top two there are polyethylene and differentiated polyethylene. They represent about 30% of the current chemical sales, and they represent about half of our projected sales growth.
Let me talk more about those. Due to this large U.S. unconventional natural gas resource base that I know all too well and I'm sure you all are very well aware of, low cost ethane is readily available. It really offers a good feed advantage for the U.S. in terms of attracting a large number of crackers. We have a large number. We have some that have already come online, we have others that are under construction like ours, and there's others that have been announced and are on the plans. That's a big advantage, but our advantage doesn't end with feed cost. The graph on the right shows that we bring what we estimate to be about $300 a ton of additional advantage over a new entrant into the U.S. Gulf Coast in terms of ethane cracking and ethylene production.
It starts with scale. The Baytown cracker is going to be 1.5 million tons. Going to start up by mid-year, integrated in with Baytown Olefins plant. Make use of all those utilities and an operating organization that's already in place. A Corpus area cracker that was mentioned earlier, that's not FID'd yet, but should be FID'd this year, is even larger. It's 1.8 million tons. It's going to be the world's largest ethane cracker. The integration we're getting there is really heavily leveraging some of the greenfield project expertise that rests in ExxonMobil Development Company. That's not available really to any of our other chemical competitors. It really is making a big difference in terms of these greenfield projects.
Secondly, we have an established global supply chain in place. I'll talk a little more about that in a subsequent slide. Our plans are to export our products to high-demand markets in Asia. We already have a very large customer-facing organization that's already working with customers on where this new supply from the Gulf Coast is going to go. The big red part of the bottom of the bar, that proprietary technology, a big advantage, and that's resting with our performance products. Performance polyethylene that Darren mentioned earlier and Neil referred to too. I'm going to talk more about. The graph on the left shows our performance polyethylene line, Exceed™ and Enable™. This is metallocene polyethylene. I'm not going to go into a lot of detail.
I just want to show you, it's really providing our customers a range of properties that's just not available in commodity polyethylene. For instance, on Exceed™, a customer may be able to down gauge and use 20% less plastic because Exceed™'s a lot stronger material, and that attracts a premium. We first introduced metallocene polyethylene back in the 1990s. We have well over 20, pushing 30 years of innovation experience with it. It's a smaller market, but we have a large market share, about a 50% market share. Broader performance products. We have others. We have the Vistamaxx, Santoprene, Vistalon. We have several other performance products in that same kind of vein. Those performance products have grown at twice the rate of commodity products over the past decade. Our plans are based on continuing that same general trend going forward.
That's going to be dependent on continuing to innovate and continue performance. The other part of this whole value equation on the chemicals is the global supply chain. It's a big advantage we have that other competitors don't. Important in that, you see on the bottom there, four innovation technology centers. Those are in Texas, Belgium, India, and China. These technology centers allow us to innovate with our customers on new product applications. An example is last year in 2017, had 1,500 product trials with our customers, and typically, 70% of those are going to turn into new demand. We're working with our customers now in Asia on the product applications that's going to drive the demand for the product that we're building the crackers to go fill.
We have 20 manufacturing sites, and they're geographically spread throughout the world, North America, Europe, Middle East, Asia. We sell products in 140 countries. This enables us to have access to the most advantaged feedstock and then sell our products in the markets where the demand is highest. Obviously, the most advantaged feedstock is going to be tomorrow, 10 years from now, don't know. With this global reach, we'll be able to leverage that. We can also be responsive to market disruptions. If we have a more reliable supplier to our customers. We're very unique in terms of this overall global supply chain. It's been building up over many decades, underpins our growth plans going forward. The graph on the left here shows our growth plans. It's a 30% sales growth by 2025. 7.5 MTA of growth.
Involves $20 billion of new investments, which average about a 15% DCFR return. A chunk of that is the U.S. Gulf Coast that I talked about, where we have this advantage over new entrants. That's about half. 40% is in Asia. A lot of that's in Singapore. I mentioned Jurong Aromatics acquisition before. We'll be leveraging synergies to grow earnings from that facility. We're starting up a butyl and adhesives plants now. I believe the adhesives already started up, and butyl's in the process. We have an Asia cracker in the plan too, that would come on late in this cycle, more towards the 2024, 2025 time period. Essentially, all the volumes and earnings growth that we're showing here is yet to come, but 40% of this CapEx has already been spent. Again, the Baytown cracker's coming on mid-year.
Most of that capital's been spent, and all that earnings and cash flow is out ahead of us. Then, seven of the 13 new facilities that are referenced here will be online by year-end 2018. Let me wrap up now with a projection of earnings, much like I did on the downstream. You see the bars building up. Again, the project startup timings are shown down below the bars. This is advantage growth leveraging the strengths we talked about. I talked about product leadership with the performance products. Talked about how important proprietary technology, absolutely critical, the proprietary technology has in the chemicals business. I showed you the global footprint is very unique. Of course, we keep coming back to integration because it's very important and provides us a lot of unique advantage.
Example here again, I'll go back to Singapore and this Resid upgrade project in Singapore. Big benefit on the refining side, but also a big benefit for the world's only true crude cracker. We're going to take our Resid from that crude cracker, again, a suite of proprietary technologies, upgrade that. Some of that with synergies with the downstream, some of that's different technology. This is profitability. Take us from a leadership position in terms of liquids crackers in Asia to growing that gap and becoming even more of a leader in that regard. In general, in total, adds up to doubling of earnings by 2025, and again, that's based on a flat 2017 margin environment. That wraps it up for downstream and chemicals. I'm going to now hand it back to Darren. He's going to review the corporation investment and financial plan. Thank you.
Thanks, buddy. All right, thank you, Jack. Hopefully my voice will hold up for the last section of the presentation. Let's return now back to our consolidation plans. We started off high level, talking about the overview of where we're taking the corporation, broke it down into some of the segments. Now I come back, wrap up the financial results, go back over the investment profile. To the fundamentals of growing value, which for us is in earnings. As you've seen today, we have a very robust plan across a variety of price outlooks. Earnings will grow in all instances at a fairly ratable increase over time. In line with that, our return on capital employed grows over this. Earnings grow by 35% in 2025. At $60 oil, we expect our earnings to be up 135%. ROIC will double over this timeframe, 2025, and be up considerably in 2020.
This reflects the diversity of the portfolio of advantaged investments that we've talked about. It also reflects the work that each of Jack and Neil talked about around driving improvements in our base business. The cash flow profile mirrors that earnings profile. You see here we've got steady growth over time, and we're up about 50% in 2020 and roughly doubled in 2025. As you can see from the chart, we've got solid cash flow growth across all the price sets. At a flat real 2017 price, we expect our cash to be up over a third in 2020 and by 90% in 2025. Again, this reflects the quality of the plans and the benefits of the disciplined investing, not only for what we're doing going forward, but what we've done from the past. I want to just pause here for a minute.
When we talk about going forward, I don't want to lose sight of the role that the investments have made from the past in cash flow. In fact, as we've talked about it internally, CapEx is the price you pay for cash flow. This next chart gives you a little bit of a [flow] over cumulative CapEx for a 10-year period. It's a rough proxy for what I call cash productivity. As you can see by the bars, for every dollar of CapEx that we've invested over the last two cash flow. You can also see that we're the only one above one on that chart. That's a simple measure, and I think sometimes the simplest things are the most powerful. It reiterates what we think is a very important point. That disciplined investment and advantaged projects are absolutely critical. Takes me to our next slide.
We see a growing CapEx investment profile to capture the rich portfolio of opportunities that we've talked about, $24 billion this year, $28 billion next year, and a little over $30 billion on average as we go out across 2025. The profile doesn't include any acquisitions with the exception of the Brazil farm-in that Neil mentioned earlier today that are contributing to that profile. I guess the key point that I'd like to emphasize on this chart are these are projects that are pretty much in hand, most of which we'll operate, and all of them have a robust economics to all the price sets that we've talked portfolio. Also say we're very focused on our existing portfolio of assets. As we've talked about, we believe the investments profile give us the potential for value growth. That potential is realized by executing what we built well.
It's what we refer to as operational excellence. The operating mindset that the organization has is to focus on the things you can control. To make sure you're continuously improving on those with balance. Continuous improvement with balance. We've got to lower our costs, drive more efficiencies through the business. We've got to run reliably, and we've got to improve performance. That's something this organization has been focused on for many, many years. It's a real strength. In fact, I think it's a hallmark of ExxonMobil in our operations. What we've shown here on the chart is our safety results over the years compared as a proxy for operational excellence.
The reason for that is if you're going to drive good safety performance, you got to get in the head of every person who comes into that plant and drive the discipline of focused activity day in and day out, every minute of every hour. Safety is a good proxy for operational excellence. If you can do safety well, we tend to find you can see our efficiency focus. We're down $11 billion since 2013. Over half of that is through own efforts, so not help from the market. The work that our organization has done to drive cost out. Put into the business from our growth and going forward, down in the light blue there with the new business. My expectation, as Neil talked about, is we'll do better than this. We'll drive more cost out to make improvements and grow more efficient.
For us, in a commodity business, this is critical. You got to run well, you got to run a low cost. You got to contribute value across every part of the price cycle. You combine the advantage investments, the operational excellence, you get strong results. You run that strong before, reflects the strong balance sheet and the substantial financial capacity that we have. We think it's a critical competitive advantage, particularly given the cycles of the industry that we operate in. You see on the ratings under each of our names there. I'll just tell you that the ratings reflect our having that financial capacity to manage through the cycles is a critical competitiveness as that price moves back.
It allows us to take advantage of counter-cyclical opportunities, it allows us to prosecute divestments when it's right for the value optimization rather than from a need for cash. Lots of examples to this. In fact, what I would tell you is the investment portfolio that we have today is a function of that counter-cyclical approach. In 2014, as the prices came off and people stepped back from the market, our organization leaned in for opportunities to refill the pipeline with value creative opportunities. That's what you've seen come to the forefront today in our upstream business. You might remember the Rotterdam and Antwerp investments we made some time ago down at the bottom cycle of the downstream business. A lot of questions around investing in Europe at the down part of the market.
We brought those projects in at much lower than industry average cost with much higher industry returns because we were investing the down part of the cycle. That financial flexibility is given to us through the strength of our balance sheet here. For the long term, our intent is to basically maintain that. If you ask what level that represents, we think about we've historically been at the triple A level. I think the financial metrics associated with that are good metrics and good thresholds for us to target on for the long term on the financial metrics because we find ourselves in the next down cycle to take the opportunities presented at that point in time. Final point I would make here is this balance sheet gives confidence to the investment community in terms of our ability to weather these cycles.
It also gives constant confidence to our partners who invest with us for the long term. It's very valuable. Of course, that strong financial position is also valuable in sharing the corporation's success with our shareholders. We've provided dividends for more than 100 years, we've consecutively increased those dividends for 35 years. Our intention is to continue to do that. The left chart gives you the recent dividend growth history. You can see 2017 and in the prior years. Our expectation going forward, certainly in the near term, would be somewhere between the ranges shown here. On the right profile, you can see our free cash flow. I'm pretty comfortable with this. It grows across, again, every price environment and allows us to manage our capital allocation priorities. Let me just wrap the presentation up.
Hopefully, you got a view today and a perspective on the opportunities we've got in front of us, what we're trying to do to capture those and the results that we expect to get. I also hope you get a sense of the breadth and the depth of our opportunities across each one of our businesses. I don't believe there's a competitor out there that can match the opportunity set that we have available to us today. Finally, I hope we've conveyed our commitment to grow shareholder value by managing the long-term fundamentals. Innovative technology, deploying innovative technology, leveraging our integrated businesses, disciplined investment in projects that are advantaged versus industry, operating those assets with excellence, then maintaining a strong financial position to take advantage as we move through these cycles. Finally, underpinning all that with a motivated and very capable world-class workforce.
We think it's important to continue to share our success with our shareholders by growing a dividend and to position the business for future success with advantaged investments. As I said, to do that, we need to maintain a strong balance sheet. The cash that we generate as we move through the price cycles, as prices come up, that excess cash in excess of the needs here, we're going to return back via buybacks. It's been a successful formula the company has used for many years. In fact, it's been the one that's been in place since I've worked for this company. I think what you've seen today is we've got some solid plans to deliver growth, to deliver competitive advantage, to deliver improved returns on capital employed, and deliver our earnings. We're also effectively leveraging and investing in each one of our world-class businesses.
You can see the results on this with our return on capital employed and our corporate earnings. This is our definition of growing shareholder value.
We're very committed to delivering on this plan, and we look forward to engaging with all of you as we progress this to share how we're doing. With that, I'm going to turn it back to Jeff to open it up back to questions again. Thank you.
Thank you, Darren. We'll go ahead and open it up to the questions covering the full context of the plan. Maybe we'll go ahead and Jon, UBS.
Thank you. It's Jon Rigby from UBS. Two questions. The first is on the downstream. I take the point that over the last four or five years, five years I think you gave it, you have been the most profitable of the super majors, but it's evident in the last one or two years that that gap has been closing. In the last few quarters, and you can't measure it always on a quarter is actually you haven't been the most profitable. What I wanted to explore was, does that reflect just a hiatus in your business and that will obviously start to take some leverage from the investment you're putting in? Or does it reflect some gaps in where you conduct business, where others are making profits that you can address or are addressing? I wonder whether you could sort of articulate that.
The second question is going back to the upstream presentation. I think most people would agree that the sort of PNG brownfield expansion is probably one of the best brownfield expansions globally, and Mozambique is probably the leading greenfield project. Everybody is looking at that gap that's emerging in the 2025 region on LNG demand versus supply. I think there's quite a lot of projects queuing up to try and get into it. It may well be that the strategies for securing FIDs are changing a little bit, so that you may well sanction before you've contracted everything, or you may want to take LNG risk onto your own books and so on and so forth. I just wonder whether the strategy for pre-sanction and inter-sanction for LNG is going to be different for ExxonMobil this time around than perhaps it has been in the past.
Thanks.
You want to start with the downstream?
Let me talk on the downstream. Address the last part of your question first in terms of quarters. As you said, one quarter, you got to put that in context. If you look at the fourth quarter of 2017, it was our worst reliability. It was the second-worst reliability quarter in the last nine years. It was not a good quarter. We recognize that, and we're addressing it. We had five refineries that were down for part or all of the quarter. That fourth quarter impacted 2017. Not a reflection of our underlying business. We pride ourselves on reliability. We work on it very hard. Occasionally, we have some hiccups, and we had one the fourth quarter for sure.
In terms of the downstream and how we're going to compete, I would say the new company organization, the fuels and lubricants company, is set up to focus on the business and make sure we're looking at that holistically in the fuels value chain and lubricants value chain across all aspects, including leveraging our assets, making sure we're making full use of our assets. Where we can help maybe market dislocations and discontinuity, we're going to do it. Mike, any comments on that?
No, I think as you said in your question, there's also some geographic differences from time to time, depending on where margins move, who has turnarounds in a given quarter. We've always found the best way to look at our downstream business over the long period of time. All the benchmarking we do says we have the premier downstream business in the industry with the best brands. We have the highest growth rates, the best operations. We expect over the long term to maintain and grow that advantage. You've seen a lot of those plans today. I would suggest to you a lot of our competitors aren't making those investments that we talked to you about today. If they are making them, they're not making them with our add-ons for technology and integration and market position that we talked about.
We expect to be leaders in that dimension for a long time to come.
Upstream.
On the LNG marketing question, really what is required to sanction a project, clearly, as you've observed and many have, the market is changing. That happens. We're not afraid of it. It is changing in front of us. It is changing maybe not as fast as some people anticipate, but it is in change. We are in a continual dialogue with traditional customers, and we are continually involved in a lot of market development with new customers. In this, there's a very rich dialogue about the types of contracting that is desired. There is still a lot of interest in traditional contracts. They will no doubt be part of underpinning some, perhaps a large part of these investments. There's also a lot of interest in newer, more hybrid models that are being explored and indeed are.
I think you will see something different emerge in terms of what we do to get to a sanction on those projects. I can't sit here this moment and give you a split or any sort of arrangement that is in my mind that is going to suffice for either one of those projects and/or other projects we might bring forward. Markets change. We change with them. The change may not be quite as big as people think, but there will be some differences. We shall see.
Yeah, I think it's the size of the changes and the timing. Obviously, there's a larger and larger spot market out there for LNG. This is a market in transition. That period of transition could take multiple decades.
At the end of the day, what you said at the start of your question, competitively advantaged projects is where it starts with us. That's what we look for. As I said, I think we believe we have them in our two big plays.
Phil?
Thanks. Phil Gresh from J.P. Morgan. First question is a little bit of a clarification. When I look at the cash from operations guidance and when I look at the free cash flow guidance, 2017 was a year that had pretty low asset sale proceeds. I was just confirming if there are assumed asset sale proceeds in both of those guidance items. I think that's how you define it. Historically, is there a certain level of assumed proceeds in the numbers?
There's a ratable level based on historical performance that we have in there relatively, but not consistent with some of the discussion that Neil led in terms of the emphasis we're putting on divestments and upgrading that portfolio as we've brought in this rich opportunity set in the upstream.
Is the historical level, is it about $4 billion? Is that?
That's the range, yeah.
Okay. The production does not include the divestitures, is that correct?
That's right.
The second question was just looking bigger picture, one of the hallmarks of ExxonMobil over a long period of time has been its ability to invest, grow earnings, grow cash flows, but also be market leading in terms of total return on capital yield. If I look at 2000 through 2012, your return on capital yield was almost 7%, so better than the market, significantly so and for a long period of time. If I look at the dividend yield today, it's about 4%. The market dividend plus buyback yield is north of that, is 4%-5%. In order to compete with the S&P 500, that total return on capital yield is something I think investors have to consider. I look at your cash flow here, it looks like it's in excess of the dividend. You talked about continuing to grow the dividend.
I'm just wondering how you think about having ExxonMobil stock be able to compete with the overall market from a return on capital standpoint. Thanks.
Well, I would tell you the plans that we laid out today is the intention of how we expect ExxonMobil stock to compete in the marketplace, which is trying to grow value through advantage investments that create unique bottom-line profits for the company. I think if you look across the portfolio that we've got today, it's advantage versus anybody in competition. If you look at where the market's going, the demand, and the need to meet that demand, bringing in advantage projects in that timeframe is going to bring value to the bottom line. Our objective is to grow the earnings and do that in a capital efficient way so that we grow return on capital employed at the same time. That's the basis of the plan. That's where we've laid out. That's the investment in advantage in projects, and then driving operational excellence.
Okay. Paul?
Thank you. Paul Cheng, Barclays. Two questions. Making a backlog of investment. A lot of them, you will be the operator, so you control your destiny. At the same time, the flip side is that that also means your organization, that a lot of your peers are some very highly capable companies that have fallen into that trap in the past. How should we look at it? Are you going to have to beef up your organizational capability limit from the current level, or you think you have enough of the capacity here already? What initiative you take to ensure you don't fall into that trap? I have a second question after that.
Okay. Well, I'll start with the answer then maybe hand it over to some of the folks to expand on it. I think if you look back historically, we have ramped up capacity in order to take advantage of opportunities in the portfolio. We've done that through typically going out and using contractors to do that and bring them into the business and use them for a while. Then what you saw when we got into the downturn, we didn't have layoffs. We basically shed some of that contract to that more flexible work base. We have a business model that we've established that allows us to flex up and down from a demand standpoint. That's the foundation of how we think about managing the project.
It's a really good area of focus, and one of the things we've been talking a lot about is making sure that we have the organizational capability to execute the projects across the three sectors. Of course, we've got the development company in the upstream that's going to advance the deep water and the LNG projects. We've got XTO that's advancing the tight oil. Then we have a chemical and downstream project organization that's advancing that portfolio. We've got these organizations that are advancing each of those capital streams and working very closely together to make sure that we're taking advantage of everything those organizations know to execute those projects. Maybe Mark or-
Yeah, just we have with ad hoc contractors and ad hoc contractors companies to flex. One critical part of this plan is for each of the businesses is to make absolutely rock solid sure that as we look at all the specific capabilities that are going to be needed to execute each of those projects, whether it's electrical construction, you name it, that we have the strength there that we need to execute. The businesses wouldn't put together a plan or put forward a plan that they weren't committed to delivering on. We have made adjustments where we've seen gaps over the last three or four years to address that. A lot of confidence in the capability that we need, and we know what's needed because as Darren's mentioned, we've been at a much higher execution level in the past.
I would just say that. The organization has been working on these plans for a couple of years, as these projects have been coming forward. Just to reemphasize, the businesses brought these plans forward in saying, "We can go execute these. We can deliver on these." They're building up that capability. From a downstream and chemical standpoint, I take your point in terms of the level of activity versus historical, they've been thinking about this for a while now and have plans in place to make sure we address it. Some of it is leveraging some of this upstream project experience that I've talked about.
My second question is on the
Just one thing, just to add, just to make a point. I think you all know this, in a commodity business at the low point in the cycle, it's easy to cut costs. It's much more difficult to cut through efficiencies and retain capability. We've been very careful throughout this period of the down cycle to take efficiencies to our business, to the bottom line, and retain that capability.
Thank you, Jack. Darren, on the buyback, historically, not just Exxon, all your peers are looking at that as a fifth wheel. When you have excess cash, you go into just distribute it. If not, you don't do that. Fundamentally, should we look at it differently? This is a highly cyclical industry, oil price go up and down. With the emergence of the shale oil, one may argue that we even shorten the cycle time and have more volatility. From that standpoint, as we continue to grow dividends, should we have a component of the buyback is to shrink the share count so that your overall dividend payout will remain relatively flat throughout the years on that at the bottom of the cycle, you can't really support it.
The other component is that why look at the buyback just as a driver and not as another asset, which you know the best, and all the other asset need to come or all the other investment need to compete against that. Thank you.
What I would tell you as we think about the buybacks are, the primary focus is looking at where are there an opportunity for us to grow the business and invest in these advantage projects. The buyback and the excess cash that we've generated goes back into bringing in the shares back into the company. The value, it's a distribution rather than a value creation step, is the way we have historically thought about it. If you look at the history, even in periods when we bought back a lot of shares, it was in markets where prices were up, and you had extra cash beyond the capability, and because of the discipline that we have in our investment, rather than spend that in lower return, less advantaged project, we return it to the shareholder. That's the fundamental philosophy that we've got around our share buybacks.
I think the other point, too, is when we look at projects, as Neil and Jack have mentioned, we're looking at projects that are accretive, that are better than what we've got in the business. Those investments, by definition, are a better investment than just buying back for what we've already got. Sir, on the center right behind you. There you go. Thank you.
Thanks. It's Blake Fernandez with Scotia Howard Weil. I had two questions. One on capital spending is obviously ramping up. I think you said $28 billion next year, then $30 billion beyond. I'm trying to understand what kind of flexibility you have in the event that the commodity doesn't cooperate. The second question is on asset sales. I didn't know if those were targeted specifically to upstream, downstream chemicals. Thanks.
I'll start with the latter question. On the divestment program, we've always had a very active program across the different portfolios. I think as we've high-graded the upstream, it gives us a rich set of opportunity, gives us a chance to further upgrade that portfolio. Neil talked about additional emphasis in that space just because of the mix, the inflow of projects and opportunities that have come in gives us the opportunity to look at high-grading that portfolio a little more aggressively than we had in the past. That's on the upstream side. On the downstream side, I would say we've been fairly aggressive historically around looking at where the opportunity sets are. Again, we don't do that based on a drive for cash.
We do it based on an opportunity to find value, and we've got time to take advantage of that and the patience to do it. That tends to drive kind of the cycle time within the rest other parts of the business. I would tell you the focus across the whole of the portfolio is pretty constant around continuing to look for opportunities where somebody else values one of our assets higher than what we can realize and take advantage of that. From a cash standpoint, one of the points that we try to make with the different price scenarios is to test the soundness of that plan in a lower for longer period. The $40 case is an annual average over the life of the time frame that we're talking about.
I think that's a pretty severe case to be in that position for that long a period of time. I think we'll find years and periods where you may dip below that, I don't know that the industry as a whole can withstand that. I think we're pretty robust to the down cycles. There may be a year or two where you have additional capital requirements that you need to fund, over the long period of that, I think we're pretty robust to it.
Okay. Theepan.
Thank you. Theepan Jothilingam from Exane BNP. Two questions. Just firstly on CapEx, if you could just clarify, do you see a greater component of non-cash in the guidance you've given for the $30 billion? Do you see more project financing, so the cash component actually is a bit lower? What have you assumed in terms of cost inflation going forward. The second question actually is really around today's portfolio to Darren really, because we've talked a lot about the growth. I was just wondering, when you review the 2017 performance, how much cash was left on the table in terms of the underlying business at Exxon?
You want to talk about the financing structure?
From a financing perspective, the capital profile we look forward does not have us doing any financing. To the extent we ever finance, we co-lend with other people. It's our own lending in there. No financing plan in the CapEx.
In terms of the 2017 performance, I think the fourth quarter, Jack mentioned a number of operational upsets, which is fairly unique for us. You typically see reliability incidents that happen across the portfolio, given the age of the refinery and the assets that we've got. Unusual to see that many occur in one quarter, so it's not a systemic issue. We've got a pretty good understanding of what that impact was, and how that impacted the fourth quarter and to driving forward is to drive improvement in reliability so we don't see that repeat kind of in the future. We're pretty comfortable you're not gonna see the same kind of concentrated reliability instances as we come out of those issues from the fourth quarter.
Okay, specific to the fourth quarter.
Yeah.
Then the cost inflation assumption.
Yeah. If I could just comment, two things. As Neil mentioned, when we look at cost of projects every year, in the project business and in the drilling business, there were dramatic cost reductions, 30% in the Those dwarf any sort of inflation assumption one might make. That's our expectation on the businesses is you gotta do a lot better than just offset inflation. You need to fundamentally make this work, as Darren said, in a lower for longer environment with good elasticity so that when we do get price response, we can respond. The businesses are built around delivering something that works, are driven to come up with concepts that work in a lower for longer environment and then just enjoy the upside. If when we find inflation, typically, it's with much higher crude prices.
We'll take that as well.
At our project management organization, we do a rigorous look every year on what we expect inflation to be in the next couple of years, out maybe out five, seven years in our construction period, in all the markets where we work around the world. When we come forward, the organization comes forward and brings an FID that is matched up. They're using that inflation forecast in that estimate going forward. It's all built in when we FID a project, reasonable inflation expectations.
[Inaudible], maybe I can ask you to hand the mic back one row for me. Thank you.
Thank you. It's Brendan Warn from BMO Capital Markets. I guess my first question is for Neil, just in terms of the CapEx, we appreciate the additional guidance you've given. Can you also talk about in terms of what you call your base and works programs or your base business, in this step-up in CapEx, are you talking about also a greater allocation to your base business? I'll have a follow-up. For upstream volume, slide 38. Just your split of CapEx to base business upstream.
I think, in terms of the work programs, there's no change in our work program CapEx over that period. I'm struggling to see the chart you're looking at.
Production, in terms of production growth from your new growth, you say 50% of earnings from big 5. Are we also expecting an increase of CapEx to your base business? Perhaps you can just talk about base declines and managing base declines.
Yeah. Well, we typically talk about a base decline, volume decline in our business about 3% per year. That's after our work program. That's what we look at. I don't see any change in that going forward.
I guess my second question relates again to the upstream in terms of this high grading, and you've sort of shared with us high grading in the downstream. How aggressive do you think you'll be, Darren, that you call it base or your existing portfolio of upstream, compared to your peers is lower margin, call it, has lower cash contribution. How aggressive will you be going forward?
I think that's really a function of what the market's interest is. I mean, at the end of the day, what we're looking to do is find somebody who values that asset, puts a higher price on it than what we can achieve internally and where that sits within our portfolio and our priorities. That's what's opened up the opportunity to be more aggressive in divestment is as we've brought in this additional resource, the pro forma or the seriatim of projects and the attractiveness of them have changed. The question is, for ones which are further down the seriatim for us, is there an opportunity to high grade those by finding somebody out there who puts a higher value on them than we can think we can achieve in the timeframe that we're looking at? I think it really is a market opportunity question.
I think, Darren, as Darren said earlier on, we've added a lot of what we think are good resources to our asset base. It gives us more flexibility going forward. There has to be a buyer out there. There has to be a buyer for the asset. They have to have value that you want to sell at. There's somewhat an opportunity window that you can take or not take, depending on whether it's there. The message I wanted to give was we have flexibility. We're looking more aggressively. That's really the message.
That's why we don't put a target out there because, you know, it depends on how many buyers are out there and whether they value our assets more than we value them. If we find that equation, we're gonna make a sale. If we don't, we're not. We don't want to put a target out there because we don't know how that's gonna work out at the end.
That's why we've not built any divestments into that volume plan. That volume plan is excluding any potential divestments.
Alistair?
Thanks, Jeff. Alastair Syme at Citi. A large part of your future resource base is still in Canadian heavy oil, that's sitting in the undeveloped piece. As the U.S. tight oil volumes grow, how do you see the Canadian supply picture fitting into the broader North American supply?
Well, why don't I start and maybe some of the other guys can add. You know our assets in North America. Our first priority is to get Kearl up to the level of performance that we expect out of it, and that's the aggressive plan that I laid out. Our target is to get that facility up to 250 KBD. That's where we're headed, and that's our target, and to get costs down at the same time.
As you look at the other two categories of resource, the Cold Lake cyclical steam operation is highly profitable in a lower for longer environment. The other big chunk of undeveloped resource would be the SAGD. As you're aware, or may be aware, we're going through the regulatory process on an initial project. We've still got to take a decision on that. Again, the organization is tasked with making that work in a lower for longer environment with good elasticity. We'll see where they get to when they come forward in the next handful of months. Of those three buckets of resources, I think that really describes the breadth of the Canadian heavy oil resource.
Peter, in front.
On the chart here where you have the dividend growth and the free cash flow, you don't really have the numbers there, but would it be fair to say, as an example, on a $40 oil price over this period of time, your free cash flow would cover, let's say, a 2% dividend increase?
Well, the way we've looked at that free cash flow, what we've tested on the $40 case is to make sure that if we looked at historical growth in dividends-
Right
We used it as a proxy, the ability to continue at a rate between the numbers that we've shown there, could at a $40 a barrel, we fund the investment profile that we've got there, and we're comfortable that we can do that.
Yeah. What you're saying, if you fund the investment profile you're looking at, you may not be able to maintain a 2% increase in the dividend. Is that?
What I would say is we're confident we can continue to reliably grow the dividends and fund the investment profile that we've laid out today at a $40 a barrel case.
Okay.
Okay. Doug?
Thanks. Doug Leggate, Bank of America. Guys, when you look out seven years, a lot can change in seven years, not so much the commodity, but the opportunity set. I guess it's a question on Guyana. The exploration success rate has gone pretty quick, and there's 20 prospects, four wells this year, I guess, and a lot more to do. What happens to the capital plan, the guidance, if you have, let's say, disproportionate success in exploration in Guyana?
Well, I would tell you, the constraint we'll manage to is the capability of the organization. As we look at new opportunities, if we were to find opportunities looking more attractive than what we're currently prosecuting, that would have to go into the evaluation around how can we prosecute that, how does that look, and are we capable of executing those resources? Depending on where we're at, what stage we're at in developing those things, you can reprioritize based on how good a new opportunity appears. That's what we've done today in terms of the stuff that's come in and then the divestments we've been talking about.
Well, I guess as a quick follow-up then, because clearly as you pointed out, you haven't included Pacora, Neil, I think you said, and Ranger in your numbers. Can you give us some concept as to why you haven't included those? What are you waiting on? Do you see Ranger, in particular, being commercial, supporting a standalone development? Clearly, that's not in your numbers. Give us an idea of what you guys are thinking.
Well-
the potential looks like.
Yeah, as I told you on Ranger, we communicated, we found hydrocarbons, we're still assessing it. I mean, that's the message. There's no change in our message there. We're still assessing the commercial viability of it. What I've told you is what we know so far. We have three FPSOs in the plan. We have 20 additional projects. We have two discoveries that we're still quantifying. We have flexibility. I think we will look at these as they come forward, and if we believe that they are additive to the portfolio, if we believe that they're better than another opportunity we have, and we believe we can execute them to our level of performance, obviously, we'll consider it. There's no new news on Ranger right now. As soon as we have it, guarantee you'll be let know.
To Neil's point, it's a very large structure. We've got a single well on one side. In order to answer questions around size viability, we'd like to get a well 25 kilometers on the other side and just make sure it looks the way we think it does. It's really just, we're going to drill an appraisal well there later in the year.
Thanks, Jeff.
Yeah, then in six months, nine months times, we'll be able to give a view on it.
Yeah, just set the expectation at the right level. I think that well is going to be in the second half of the year.
Neil?
Thanks. Thanks, Jeff. Just to clarify, Darren, one of the comments that you made, I think you showed on the chart, five-year dividend growth history has been about 7% a year. Last year was 3%. I think your comment was you expect it to be somewhere in between going forward. Is that?
In the near term.
how we should kind of anchor towards that 5%?
In the near term, yeah.
Okay, great.
That's how we're thinking about it.
All right. The follow-up question. You guys have unique perspective on the oil markets because you operate in OPEC and OPEC ex-U.S., you operate refining assets. I wanted your perspective in terms of where we are in the near-term rebalancing at this point as we think about the offsetting factors of OPEC curtailment relative to U.S. production growth. Perhaps we can get perspective across the Management Committee on this.
I think we have a pre-aligned view on the markets and the commitments made by OPEC some time ago and what's been widely reported in the press, we currently see that as very good adherence to the commitments that they made in terms of where they want to take the supply that's within the control of that body and the extended body that's working with OPEC. For us, a big help to the markets has been the growth and demand. As prices have come off and as economies around the world continue to gain steam and are very healthy, that's really driving demand at levels much higher than the most recent history. That extra demand has contributed to the drawing down of the inventories, and, very importantly, has offset the growth that we're seeing out of the Permian.
The way I tend to look at it is the real driver and the benefit that the markets are seeing today is driven by this very high demand growth. I think one of the key questions going forward is how long will that growth sustain itself? I think you could talk to five different economists and get different answers there. That's, I think, a really key question. When that demand starts to tail off, if Permian production continues to rise, I think you're going to see a different rebalancing of the market, and OPEC will have to make some calls around how they want to manage that. That's why we are so concentrated and focused on. If you think about OPEC intervention in the marketplace, it's not a fundamental.
We're very keen as we think about our business and the resilience of our business to make sure that we're not building a business based on something that's not a fundamental. Hence this testing at $40 oil is that you can find yourself back in there depending on how all this plays out. Lots of variables, as I said at the beginning, don't know how it's all going to play out, but you want to be robust to that to give the market time to readjust and find a new equilibrium. Okay. Ryan?
Thanks. Maybe a couple. On a number of the projects that you've touched on that have come up in passing, whether it was Canadian SAGD or Golden Pass LNG or some of the things that aren't specifically in the presentation, or any other projects that are possibilities of FID in the coming years, is there some cushion in the CapEx that would cover potential sizable investments that aren't in the plan right now? Or is there a risk that CapEx could go higher if some of those projects were to go forward?
Certainly in terms of the upstream volumes growth, the CapEx plan reflects not just talked about a couple. I talked about Romania, Neptune, I talked about some potential in Nigeria. There is flexibility within the CapEx plan for other projects, and they're built in there.
Well, I think it comes back to the point that Doug was asking about. If we found in the course of time through some other additional work, another project or opportunity came up that represented a higher value opportunity, we'd step back and look at if we want to reprioritize on that or whether it's added into what we're currently working on. It comes back to then looking at the capability of the organization, the capacity in a particular area that we're working on, and the ability to advance that. I think what you'll find over time, given the timeframe that we're talking about, which is pretty far out there, you're going to have things moving around. We'll just look to, as that stuff moves, to figure out what's the right way to position the business.
I think you'd not be surprised that we're working on a whole bunch of other stuff.
Right.
They're just earlier in that development phase.
Thanks. Maybe a follow-up on the downstream. You talked about 400,000 barrels a day of incremental light crude processing capacity in the Gulf Coast. What's the net increase in distillation capacity? Is that 400,000 barrels a day of distillation capacity or is that the swapping out of some heavier for light? Maybe you have a history in Europe of making targeted investments, even in a market which didn't have demand growth, that continued to move your assets lower on the cost curve and competitive even in a flat to shrinking market. Can you talk about how you're thinking about Gulf Coast investments within the framework of U.S. demand dynamics over the next 5-10 years?
Yeah. The 400,000 barrels a day is pretty much all on top of existing. Neil showed a chart that showed us going from basically 400 to 800. We're basically doubling up in terms of the light oil capacity. There may be a little bit of back out on some other crudes, but it's mostly just net add. Again, that's the Beaumont investment we talked about, but it's also a couple of projects in Baton Rouge and a project in Baytown to de-bottleneck all added to the bottom line. That gets to your other part of your question, as I understand it, is we are going to continue to as we have de-bottlenecking opportunities to take-
-terms, we're going to pursue those. That's how a lot of these things came about.
The way we look at our refining business, it's a global business. You've got to compete globally. You mentioned U.S. Gulf Coast and U.S. demand. What I would tell you is, you have Gulf Coast capacity is looked at in light of the world markets. The investments in the Gulf Coast are being supplied, and the products are moving into Africa and South America, where you can supply that demand very cost efficiently, taking advantage of the energy prices that we've got, as well as the scale on the Gulf Coast. I think the other thing that we look at very hard in the refining business, given the general global overcapacity, is you've got to have a structural advantage, and one of the big advantages of the light crude coming out of the Permian is a logistics advantage.
You can actually, if you've got the right technology and ability to lower your capital cost, you can make high project returns just on the differential on logistics.
Management structure. Could you just take the time, and I apologize for my ignorance, to talk us through your management committee, and how you're organizing the business? I think the history here has been somewhat that, for example, Shell was more regionally organized. Say more about how you're changing the structure, if you are. We're also noted that you don't have a CFO. If you have anything to add on that or the way you manage your finances. Just if you could talk to us about anything that you're doing to restructure the management organization in that regard. Thank you.
Sure. Well, I would tell you that the announcement that we put out about the downstream and the reorganization we're making there is pretty independent of the management committee and what we're doing in Dallas. That change that Jack referenced was really at the time of the merger, when we brought the Exxon and Mobil together, we organized on a functional basis, and the idea there was as you brought refineries together between different companies, different elements of these businesses from two different companies, there's a lot of value in harmonizing the processes and streamlining, driving efficiencies, figuring out the best of both worlds, and making sure that we propagated that all across the organization. In the early days after the merger, the functional organization was designed to really drive the improvement opportunities we found by bringing these two great companies together.
I think we've been very successful at that over the years. Have high-graded each of the functional companies in our operational excellence and our ability to execute functionally very well. As time has gone on in the downstream now, full advantage of being part of an integrated business from crude all the way through to finished products, even into the chemical business. The downstream organization, as Jack showed, was around organizing around the fuels value chain and around the lubes value chain, and make sure that we're optimizing and catching the value all along that value chain, while preserving and maintaining and continuing to improve the functional excellence. It has organizational constructs within that to make sure that we continue to drive functional excellence. Anything you guys want to add to that?
Yeah. The only thing I would say is that the concept that we have in the downstream now was one that we basically proved out in the chemical company. As Darren said at the merger, we were very functional. Chemical company was the first one to go to this new value chain approach, managing the whole value chain, managing the market, fully integrated, looking for discontinuities and opportunities. Then we took that to the downstream, and we implemented it there. It's another example of the integration benefit of having these three great businesses that we can take leading-edge concepts like this and move it into other parts of the business.
Okay, thanks. Darren, I'm going to throw one straight at your head here. You've set out some long-term targets. If you don't meet them, will you resign?
I think my employment is between the board and myself. I have every intention of meeting those targets. I think you used the word proof to test the resiliency of what we're doing, the organization's capability to achieve that, and its commitment to deliver has been built into what we're talking about here today. As I said before, if you look at that time horizons and the things we've talked about with the earnings and the cash flow, obviously, those projections and those price environments are flat real. We all know that the market doesn't move in straight lines.
There's going to be movement as you move through here. The whole point of that process and thinking about it that way was to show the resiliency of the investment opportunities across a very wide range of price environments. I think the real question is whether or not those projects have the advantages that we are convinced they do, and I think that's not really something that we'll test that. We'll demonstrate that through the implementation of those projects, but we're absolutely convinced of that. I don't think that's a question about. That's been part of our business for a long time. The real commitment here is to develop a portfolio of very advantaged projects that deliver earnings growth. That's the idea. That's the concept behind the presentation.
Yeah. Raj?
Hi. I have a question on the downstream. You talked a lot about the strategy being around the lowest cost feedstock and then integration, but you didn't talk much about the other end of the value chain, i.e., the non-fuels marketing side or the cross-sell opportunity. Your peers seem to be split on that opportunity. Some of them say it's a cost of capital business. Others see it as a significant growth opportunity. I was wondering where you guys sit on that.
I'm not quite sure I understand the question.
On the non-fuels marketing and C stores.
Convenience retailing.
Oh, yeah.
Yeah.
Mike, you want to take that?
We've spent a long time working the convenience retailing model, and I think at the time of the merger, with ARCO ampm at the time, we probably had about the best offering that was out there in terms of trying to make money from convenience retailing. It's gotten to be over this period of time, which is 20 years, it's gotten to be a very crowded marketplace. Even some of the big hypermarkets have moved back into the sector, as you know, here and around the world. All of our competitors have moved in that direction. There's people like 7-Eleven that specialize in that. As we see the competition for those cups of coffee and sweet rolls in the morning and those type of convenience, but as we see that competition increase, you see the margins subtracting.
We took a decision, I don't know, about six or seven years ago, we tried to do some alignment with some people who were good at it, did some joint ventures and things. What we decided was that we could transform our model from us owning the street corner, letting some of these people who were really interested in the convenience retailing own that asset, but license to them, if you will, our brands, and they would then sell our brands into the marketplace. I would tell you that every time we look at it, and we look at it every year as part of our plan period, we're back to what you said, that for most people, that is a cost of capital business. Now, if you have the strength of a 7-Eleven or a Walmart or someone behind it, maybe it's not.
For us and people that do what we do, just the convenience piece, we just don't see where it competes for capital in our company. We've transformed every station, every street corner we have in the U.S. and Canada as well as pretty much all of Europe. We got a little bit left to get a little tail on that'll finish up. We're very pleased with the results. We found very high-quality people who we have very high standards for them to run under with our brand out in front. They're very focused on growing their business, expanding their business. We've seen among these BWs growth in the sales of either Mobil products or Esso products overseas, Exxon products here. We're actually very pleased.
We're just on the beginning of the cusp, though, of seeing how much growth they can have in their business and how that translates into growth for us in terms of the molecules that we put in there. That's our view. Asia's very different. Asia is largely a lease market. We have a very nice position from Australia, New Zealand through the Pac Islands, Singapore, Hong Kong, and we have a joint venture in China. That's a market that as that market develops, we continue to develop with it. As we sit here today, we get pretty good returns on the kind of concepts that we have there, which are largely on lease sites that we own and operate. I know some of our competitors have taken a different course, and we'll see. We'll see in the fullness of time how that works out for them.
Just one more comment on the branded wholesaler model that Mike described very well. The value proposition we have with those partners is we invest in the brand. We invest in the Exxon and Mobil brands. We own that canopy, and then they run the back court. That's what the Synergy effort's all about is reinvesting in the brand, reinvesting in the fuels, reinvesting in our site image.
All right. We got time for one more question, and we'll ask Darren to go ahead and make some closing remarks. Jason, go ahead.
Thanks, Jeff. It's Jason Gammel with Jefferies again. A question on the Permian. I want to come back to the integration that you've laid out quite nicely on the upstream and downstream. Is there anything that you feel the need to do from an investment standpoint in the midstream to ensure the execution of the strategy? I'm thinking not only the need to potentially ensure that you have gas processing capacity and takeaway capacity, but maybe there might be some arbitrage possibilities as well. I know you mentioned Wink.
Well, I talked about earlier on that we have a plan to invest $2 billion. We've already invested in a significant terminal in there. Of course, we're looking at opportunities because we have this opportunity set. We have the upstream and we have the downstream and chemicals. Where we can get more value out of that linkage versus someone else doing it, we're constantly looking. Right now, our plan is $2 billion over the next multiple years in infrastructure, including that Wink terminal, but we'll continue to look for new opportunities.
Specifically in gas processing.
It could be
Yes. We're looking at gas processing. We're also looking at transportation, not only of crude, but also of natural gas and NGLs. We're looking at that whole site. We're not going to let value leak in that piece of it.
Okay. Darren?
All right. Well, maybe just a few wrap-up comments. I think you've heard the story that we've laid out today. I want to emphasize to you that if you look at each of the sectors and take the upstream, we brought a portfolio of opportunities that have not been as attractive. What was the origin of that? If you go back to the time when prices collapsed and people pulled back from the market, I would tell you we leaned in. The model that we have of having a strong financial position is you lean in when people are leaning back to find opportunities to bring into your portfolio to grow value. I think what you saw today is the evidence of that in the upstream.
If you look at the downstream portfolio and the investments we're making there, I would tell you that is driven by deployment of advanced technology and our catalysts. The timing of that's driven by that profile and that shift in demands that you saw in the chart. As fuel, the IMO specs come in, as the demand for fuel collapses, and the demand as economies around the world grow and diesel rises, we can convert those molecules cheaper and more efficiently than others. That's a value proposition that's unique to us. We bring that to the market. The timing's driven by that shift in demand. The timing's driven by our ability to develop that technology and put it into good projects. That's what's driving our downstream portfolio and the investments and the growth that we're talking about here.
If you look at our chemical business, you got a high growth market. We've got a unique opportunity. If you saw the past, the chart that Jack showed, that our high-performance products and the growth that we have there, you've got to continually invest in a market like that to continue to keep up with the pace of that demand growth. We're timing our investments to continue to penetrate high-performance markets, high performance with high-performance products and good margins. That's where we have the ability to differentiate ourselves, our technology, and the capabilities of our organization. We can reach around the world from any location to land those products competitively. The advantage we can bring to that is we've invested in scale.
We have a commodity business, we can fill that scale up to lower our costs, over time, continue that growth in high grade and profit. That's what's driving our chemical portfolio. Great opportunities in the marketplace for advantaged investments and things that will grow value, that will grow our earnings and grow our return on capital employed. I want to thank you for coming today. I appreciate the conversation, the dialogue. As I started this, I want to end it. We're going to continue to have this conversation. We'll continue to engage with you, talk about how we're looking at that business, and as things develop, make sure that you stay abreast of all that. Okay, thank you.
Before we break, just a few comments. In a moment, I'll be inviting you to join the ExxonMobil management team, not only the management committee, but also our corporate vice presidents for lunch by exiting the back of the room, where staff will lead you up to the seventh floor for lunch. I'll remind you, for those that are staying for that. For those that are departing, as Darren just said, we really do thank you for your time, we thank you for your interest, and we look forward to a future discussion. We ask, given the weather especially, travel safely. The rest of you, we'll see you back in this room here shortly. Thank you.