Chevron to double production in Permian Basin in next five years; Exxon to boost Permian output to one million barrels a day by as early as 2024
Chevron Corp. and Exxon Mobil Corp. plan to significantly ramp up production in the oil field at the heart of the American fracking boom, the latest sign that the next era of shale drilling is likely to be led by the major oil companies.
In the next five years, Chevron expects to more than double its production in the Permian Basin in Texas and New Mexico to 900,000 barrels of oil and gas a day, the company announced at an investor event Tuesday. That’s a nearly 40% increase from its previous forecast.
“The shale game has become a scale game,” Chevron Chief Executive Mike Wirth said in an interview. “The race doesn’t go to the one who gets out of the starting blocks the fastest. The race goes to the one who steadily builds the strongest machine.”
Not to be outdone, Exxon on Tuesday announced plans to increase its Permian output to 1 million barrels of oil and gas a day by as early as 2024, a day before it was expected to disclose growth at its own investor meeting Wednesday. BP PLC, Royal Dutch Shell PLC andOccidental Petroleum Corp. are also focusing on the region.
“We’re increasingly confident about our Permian growth strategy due to our unique development plans,” Neil Chapman, Exxon’s senior vice president, said in a statement.
Big oil’s growing ambitions for the Permian follow a long-established pattern in the oil patch: Wildcatters and small exploration companies find ways to tap new reservoirs, then the big companies move in.
Five years ago, Exxon, Chevron, BP, Shell and Occidental collectively made up about 9% of crude production from modern fracking techniques in the Permian. In October, the latest period for which relevant figures are available, they made up about 16%, according to data on ShaleProfile, an industry analytics platform.
Those numbers are likely to grow significantly in the coming years, and it wouldn’t be a surprise for the big five to produce far more of the booming area’s crude within a decade, said Ed Hirs, who teaches energy economics at the University of Houston.