Chevron Corp. plans to increase Permian Basin production by about 10% this year from 2021 levels, among the biggest growth forecasts yet from any of America’s top shale producers.
The company produced 608,000 barrels of oil equivalent a day from the Texas and New Mexico basin in 2021 and will grow that significantly this year after ramping up capital spending by 50%, executives said on a conference call Friday. Large independent oil producers such as Pioneer Natural Resources Co. and EOG Resources Inc. have flagged growth forecasts of 5% of lower. Chevron’s expected 2022 rate would mean keeping output at similar levels as recorded in the second half of last year.
U.S. oil production has resumed growth following cutbacks and curtailments as the industry grappled with the pandemic over the past two years. Still, investors and OPEC+ are watching closely to make sure shale doesn’t return to its old habits of overwhelming global demand and sinking oil prices. Independents have pledged to rein in drilling despite sky-high crude prices, but oil majors like Chevron have more flexibility to expand because growth in the Permian largely offsets declines elsewhere.
Globally, Chevron’s 2022 production will be flat to down 3%, the company said. The Permian offers some of the best returns anywhere in the world, Chief Executive Officer Mike Wirth said on a call with analysts.
“The Permian is healthy and getting better,” Wirth said. This year will see “a meaningful step up in activity and we want to execute that well. I don’t think we’re going to be tempted by the price of the day and put that at risk by doing more” than is necessary.