ExxonMobil and Chevron continue to increase production in the Permian Basin

Oil Price:

While European oil supermajors are yielding to investor pressure to set emission reduction targets and announcing investments in renewables and EV charging networks, U.S. majors ExxonMobil and Chevron are doubling down on oil production on their home turf, turning the ‘shale game’ into a ‘scale game’, as Chevron’s CEO Michael Wirth has recently said.

The two biggest U.S. oil firms aim to boost significantly their respective production from the most prolific U.S. basin, the Permian, which now pumps more than 4 million bpd of crude oil.

Both Exxon and Chevron hold vast acreage positions in the basin, and both have the financial resources to invest in ramping up shale production even through various oil price cycles, even at oil prices at which smaller independent drillers struggle to break even and scale back drilling and capital spending.

The shorter-cycle shale production yields returns in two-three years, compared to many years of lag time from discovery to development to start-up of complex offshore oil projects, for example.

While Exxon and Chevron are not giving up on their most promising conventional oil projects outside the U.S., their common key priority by the middle of the next decade will be the Permian. And in order to achieve their ambitious growth targets, the U.S. supermajors rely on innovation—not only innovation in drilling, but also digital innovation and transformation with increased use of various AI technology, cloud computing, automation, and data analytics.Chevron and ExxonMobil, for example, work with Microsoft to boost efficiencies and profits.

Chevron signed in 2017 a seven-year partnership with Microsoft, under which the tech giant is Chevron’s primary cloud provider and the companies are working on speeding up the application of analytics and the Internet of Things (IoT).

Earlier this year, Exxon struck a digital partnership with Microsoft to use cloud technology to increase oil production and profitability in the Permian. According to Exxon, the partnership will make its Permian operations the largest-ever oil and gas acreage to use cloud technology. Cloud technology application is expected to generate billions of U.S. dollars in net cash flow for Exxon over the next decade, as data analysis and operational efficiencies improve. The partnership also has the potential to increase Exxon’s production in the Permian by 50,000 oil-equivalent barrels a day by 2025, the U.S. supermajor says.
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With the increased infrastructure in Texas, more of this oil is reaching the market for domestic consumption and exports.  The majors were slow to get into the shale production market in the Permian but they are committed to it now in a big way.  That commitment should give US consumers more choices if they live outside of California which is still trying to restrict supplies and push inefficient alternative energy and EV's.