Crude Summit: Chevron ‘really positive’ on Permian

Drilling has made a comeback in the Permian basin, the top US shale formation, but in a "much more measured" manner than in past cycles, Chevron said.

"You are seeing much more discipline in capital budgets than you have seen before," Colin Parfitt, vice-president of midstream at Chevron, told the Argus Americas Crude Summit in Houston, Texas, today.

While Parfitt said he's "really positive" on the basin given its underlying resource potential, the industry is paying close attention to shareholder demands for spending restraint even as oil prices rebound.

Chevron said last month it plans to invest about $3bn in the Permian this year, highlighting the growing importance of the shale deposits of west Texas and New Mexico within its portfolio. Crude production from the basin is forecast to reach a record 5.1mn b/d in February, according to the Energy Information Administration (EIA).

Turning to the energy transition, Parfitt said there is nothing "credible out there" to suggest that oil and gas can go to zero, partly given the current size of the energy system.

"It has taken us multiple decades to create the energy system that we have, and you can't just flick a switch and change it over overnight," he said. "The scale of the problem often gets underestimated."

Chevron, in fact, plans to grow its oil and gas business, but in a way that minimizes emissions. "We believe that there's still a future for oil and gas, but it's got to be a lower-carbon oil and gas," Parfitt said.

The producer is also investing in new energy technologies — such as hydrogen, carbon capture, renewable fuels and offsets — where it has a "strategic advantage".

Last year the company set out plans to triple its spending on green initiatives to $10bn through 2028. Chevron also started up a new unit focused on the energy transition that will initially focus on hydrogen and carbon capture.

"What we recognized is that if we are going to make more progress in new energies, we really needed to create a separate group just to focus on that, and to make sure it wasn't dispersed across the organization," Parfitt said.

By Stephen Cunningham