Permian investment remains a top priority for Chevron
Chevron Corp.’s sprawling portfolio includes massive deep-water platforms, multibillion-dollar gas facilities and footholds in dozens of countries.It appears to be where much of the smart money is going these days. It is an area so fertile that both large and small producers are making an investment there. It is also helping to fill the coffers of the Permanent University Fund in Texas.
But in a conference call on Friday, executives made it clear Chevron’s future has become closely tied to a single region: the prolific Permian Basin, where the company spends $1.5 billion annually and expects to increase investments in coming years.
“We’re not looking to take all activity down to the Permian,” said Chief Financial Officer Patricia Yarrington, adding the relatively low cost of pulling large amounts of oil out of the region raises the bar for other projects competing for capital. “Permian will get the first call.”
Another executive said the company has essentially built a “well factory” across 2 million acres in West Texas and New Mexico, which means it has begun drilling oil wells over and over with the same design features.
Its approach could lift oil production in the Permian as much as 200,000 barrels a day by the end of the decade, said Bruce Niemeyer, vice president of Chevron’s mid-continent business unit.
Chevron’s focus on the Permian Basin, which Yarrington described as “an abundance of riches,” marks a strategy shift for a company that for years has developed much bigger projects, putting billions of dollars into large-scale liquefied natural gas projects in Australia and giant deep-water facilities in the Gulf of Mexico.
“When you have such an extraordinary asset base in the Permian, when it has such depth and breadth to it, such huge economic strength, everything in the portfolio needs to be judged against those options,” Yarrington said.