ExxonMobil and Chevron saw mounting oil and gas production from the US Permian Basin in Q2 2022, and outlooks continue to project double-digit growth for each in the giant West Texas and southeast New Mexico play, company executives said July 29.
Chevon’s Permian oil and gas production was 696,000 boe/d in Q2, up more than 20% from a year ago, while ExxonMobil produced more than 550,000 boe/d, 130,000 boe/d more year on year, the companies said in respective statements.
Chevron is targeting 15% Permian oil and gas production growth this year, while ExxonMobil continues to tout 25% or more.
Jay Johnson, Chevron’s executive vice president for upstream, said during a Q2 earnings call the company is “increasing our activity levels since the [coronavirus pandemic], so we have seen our investment go up.”
The company has targeted $1 billion more spending in 2022 than 2021, Johnson said.
In July, Chevron increased its Permian rig count by two for a total of 10, and it expects to maintain that level through H2 2022, Johnson said. But rig numbers may be deceptive because one current high-specification rig can drill the equivalent of what two rigs could drill as recently as 2018.
“We’re so much more efficient with our rigs, and each frac [hydraulic fracturing] crew today is also completing roughly double the work they were doing back in 2018,” Johnson said.
Johnson also noted Permian “development costs are down about 25% since 2019, and we expect to keep them flat this year by offsetting inflation with productivity improvements.”
The potential for efficiency gains is also large, he said. For example, the company makes deals with other operators “all the time” to fill in what Johnson calls “the checkerboards” of adjacent land ownership to enable more-efficient drilling.
Since 2017, Chevron has executed over 260 transactions that have allowed it to extend its drilling to adjacent acreage. This added 3,500 long laterals, which couldn’t be drilled to 10,000 foot lengths or greater on Chevron-owned acreage alone if it had to keep within its own boundaries.
Such moves has led to “efficiency and higher returns,” Johnson said.
In the US Gulf of Mexico, Chevron is developing two important large discoveries it made years ago: Anchor, in the prolific Green Canyon area of the Central Gulf, and Ballymore, in the Mississippi Canyon area a little further east.
In addition, the company has a stake in the Shell-operated Whale field in the remote southwestern Alaminos Canyon area that is also under development.
Chevron will soon start up a waterflood at the existing St Malo field, which is part of a larger complex that also includes the Jack field. Both fields are sited in the remote, far-southern Walker Ridge area of the Gulf.
The waterflood will be an “important milestone technologically” in the company’s ability to tie back new prospects to an existing production facility from farther distances, Johnson said.
ExxonMobil keeps to Permian plan
ExxonMobil’s 25% Permian growth in 2022 would be the second consecutive year it has grown its volumes there by that magnitude, CEO Darren Woods said.
And although the world needs more barrels of oil, ExxonMobil probably won’t deviate from its stated growth plan, Woods said.
“We’ve got a very aggressive technology program that we’ve been working on for some time now,” he said, “And that’s one of the reasons why we’re seeing some of the advances and cost and efficiency is driven by a lot of that work we’ve been doing in the technology space … we don’t want to get too far ahead of that.”