Exxon Mobil plans to move its headquarters to its Houston-area campus from a Dallas suburb next year, becoming the largest Fortune 500 company in the metro area.
The arrival of Exxon's top brass and some 250 workers from Irving will bolster Houston’s standing as the nation’s “energy capital,” attracting more energy investment and corporate relocations to the region, area leaders said. Exxon is the world’s largest public oil company with some 72,000 employees.
“Exxon Mobil’s move further solidifies Houston’s position as the Energy Capital of the World,” said Bob Harvey, CEO of the Greater Houston Partnership, the city's economic development group. “Exxon Mobil is a key participant in our Houston Energy Transition Initiative, and we look forward to working with the company as we continue to position Houston to lead the energy transition to a low-carbon future.”
Exxon's corporate relocation to Spring, north of Houston, is part of a strategic reorganization to prepare for a low-carbon future as well as an ongoing streamlining of operations that accelerated after the pandemic-driven oil crash in 2020. Exxon on Monday said it plans to combine its chemical and refining businesses and centralize its technology and engineering operations, which will help the company cut more than $6 billion by next year, compared with 2019 costs.
The reorganization would result in three business lines: Exxon Mobil Upstream, focusing on oil and gas drilling and production; Exxon Mobil Product Solutions, specializing in refining and chemicals; and Exxon Mobil Low Carbon Solutions, pioneering carbon capture, hydrogen and biofuels. The headquarters relocation, expected in mid-2023, will enhance collaboration across the corporation as it seeks to lower its carbon footprint.
“We greatly value our long history in Irving and appreciate the strong ties we have developed in the North Texas community,” CEO Darren Woods said in a statement Monday. “Closer collaboration and the new streamlined business model will enable the company to grow shareholder value and position Exxon Mobil for success through the energy transition.”
Exxon becomes the 25th Fortune 500 company to call Houston home., and its relocation marks the third Fortune 500 headquarters move to the Houston area in as many years after HP relocated to Houston from San Jose in 2020 and NRG Energy relocated from Princeton, N.J., in 2021.
Houston has the third highest number of Fortune 500 companies nationally, eclipsed only by New York City and Chicago. Exxon ranked No. 10 on Fortune Magazine's list of the 500 largest publicly-traded companies by revenue last year.
Although Exxon has long had a major presence in Houston -- Humble Oil, founded in 1911, became part of Exxon in 1973 -- the company has been headquartered in North Texas for the past three decades. Exxon, formerly Standard Oil of New Jersey, moved to Irving from New York City in 1989.
At the time, many corporations kept their headquarters separate from their operations, even if their satellite locations were much larger than the head office. However, as oil companies face increasingly volatile markets and the existential threat of climate change, some are consolidating their operations into one central headquarters. Shell, formerly based in The Hague, earlier this year moved its headquarters to London as it shifts its investments away from oil and gas to renewable energy.
Exxon, which has pledged to spend $15 billion on lower-emissions projects through 2027, has proposed a $100 billion carbon capture hub in Houston that would capture and store up to 50 million metric tons of carbon dioxide per year from Houston-area industrial plants by 2030, and up to 100 million metric tons by 2040.
“Exxon’s decision further supports Houston as the center of the energy transition,” Houston Mayor Sylvester Turner said. “We look forward to opportunities to collaborate in the future to benefit the Houston area.”
The move also will have wide-reaching implications for the city’s economic development and real estate market as the Dallas-area employees, contractors and suppliers move south.
Exxon, which has long been active in Houston's civic and philanthropic circles, will likely be even more engaged in the community after moving its headquarters here. The blue-chip company also brings “prestige” to Houston, and will likely aid in the city's corporate recruitment efforts, Harvey with the Greater Houston Partnership said.
The relocation will likely extend the so-called “Exxon Effect,” which has reshaped the real estate landscape in North Houston. When Exxon announced plans in 2011 to build its 385-acre campus in Spring, the project brought thousands of new residents to northern Harris County and southern Montgomery County, fueling the development of new master-planned communities, offices, hotels, apartments and stores in the region. It even helped propel construction of the Grand Parkway's northern section.
Exxon has been consolidating its business in Spring for some time. The company in 2014 moved its shale subsidiary XTO to Houston from Fort Worth, and in 2015, moved thousands of employees to its new Spring campus from Greenspoint and its Fairfax, Va. offices.
The global pandemic, however, dealt a particularly damaging blow to Exxon, which lost $22 billion in 2020, its worst year in four decades. Exxon slashed its operations and capital budgets, and laid off 1,900 U.S. employees, mostly in Houston, as crude demand and prices crashed.
About 8,500 Exxon employees work at its Spring campus, down from more than 10,000 before the pandemic. Exxon is among the top 20 largest employers in the region, according to the Greater Houston Partnership.
Even as oil markets have recovered with the rollout of coronavirus vaccines, Exxon continued to streamline its business to return more cash to shareholders and focus its efforts on its most profitable wells in the Permian Basin and offshore Guyana.
Exxon in October announced plans to move about 1,500 employees in The Woodlands to its Spring campus, further consolidating its Houston presence. Exxon recently put 290,814 square feet of office space at 1735 Hughes Landing in The Woodlands on the sublease market, according to commercial real estate firm Cushman & Wakefield.
Gil Staley, CEO of The Woodlands Area Economic Development Partnership, lamented the loss of Exxon in The Woodlands, but said the corporate relocation to the north Houston region will benefit The Woodlands' housing and retail markets.
“There are people out there that truly think that Exxon Mobil’s campus is in The Woodlands, because it is so closely located near our community,” Staley said. “They certainly are impactful to our community and will continue to be so.”
CDC Houston; the developer of City Place community that is home to Exxon’s Spring campus, in June announced a partnership with DMB Development to build thousands of residential units within the community near Interstate 45, the Grand Parkway and the Hardy Toll Road. City Place is home to 1,100 apartments and 160 single-family homes. Once the development is built out, City Place is expected to have 2,500 to 3,000 single family homes.
“We’re going as fast as we can (to build housing) but I think this (Exxon announcement) will probably help get deals done and it will probably increase builder interest,” said Warren Wilson, executive vice president at CDC Houston. “We’re basically going full speed ahead,” Wilson said.
Exxon’s Spring campus boasts about 20 buildings, and features a 100,000-square-foot gym, an on-site daycare center for 300 children, a town hall and auditorium, executive office and meeting rooms and an outdoor plaza that can host up to 3,500 people.
Marissa Luck contributed.