Chevron CEO Expects Permian to Thrive for a Long Timeby Will Brackett
Chevron opened its bright new copper-colored Midland campus to its stockholders on Wednesday for its annual meeting in the heart of what is one of its most significant areas of operation.
As other producing basins have retreated amid continued low oil prices, the Permian has managed to continue growing production, and Chevron, for one, intends to pour billions into the region, where it has had a presence for about 90 years.
Recent gains in productivity and efficiency have changed the game for Chevron, John Watson, the company’s chairman and chief executive officer, told reporters following the meeting.
“It’s changed the game very significantly. If you go back to the beginning of this decade when I came into my job, it wasn’t clear how much oil could be extracted through hydraulic fracturing. Then it wasn’t clear at what cost it could be extracted,” he said. “What we’re seeing is, through innovation in the industry, it’s become more efficient and cheaper and cheaper and cheaper to produce.
“Right now we’re sitting in a $50 world and activity is rising in the Permian Basin,” Watson said.
The Permian “is in a very unique position in the world. If you look at the industry around the world, it’s still very depressed at $50,” he said. “Every class of asset — whether it’s deepwater or conventional production — in many locations every type of oil development is looking to reduce their costs so they can become competitive. It’s clear at this point that shales are outcompeting most other asset classes, particularly here in the Permian Basin.