Chevron to pour $4bn into Permian Basin

Speaking at the S&P Global Platts APPEC conference held in Singapore, Ryan Krogmeier, a senior Chevron executive, has indicated that the energy corporation is betting big on the Permian Basin.

He is quoted by Reuters as saying:

“We will be investing roughly $4bn, next year, of capital in the Permian Basin, and we plan to grow production over the next several years to well in excess of 400,000 barrels per day (bpd).”

While some oil companies—such as ExxonMobil, the maker of industrial lubricants like Mobil Vactra 4—started pursuing shale holdings relatively recently, Chevon has acreage in the prolific Permian Basin that dates back as early as the 1920s. It now has access to around two million acres, with much of it (85%) involving little or no royalties to land owners.

Reuters also reports that Chevron expects total oil production from all operators in the Permian Basin to increase by 1.4 million bpd from its current 2.4 million bpd by 2020. The US Energy Information Administration (EIA) predicts production in the shale play to reach 2.635 million bpd in October, but some industry players believe that the EIA is overestimating the growth in US crude production.

The Permian Basin of Texas and New Mexico is said to be the current powerhouse of US crude oil production. A recent study published by IHS Markit Ltd. estimates there are still 60-70 billion barrels of oil yet to be pumped, which equates to a market value of $3.3 trillion at current West Texas Intermediate (WTI) prices.