Chevron plans to double US tight-oil output by 2017
The aim is part of a five year plan to increase global output to 3.3 million b/d
Chevron hopes to double its US tight-oil production to more than 250,000 barrels a day (b/d) by 2017, as part of a five-year plan to increase global output 25% to 3.3 million b/d, Chevron executives told its annual investor day in New York.
The company will drill more than 500 wells the Permian, Marcellus and Utica basins, where it is producing 125,000 b/d. The Midland basin in Texas will see the greatest activity, with 340 new wells, followed by the Delaware/Wolfcamp in New Mexico with 100.
Big gains are also expected from the deep-water Gulf of Mexico. Three deep-water projects - Jack/St Malo, Big Foot and Tubular Bells - will add 300,000 b/d by 2014. But the company is pinning its hopes no North American tight oil to push it over the 3.3m b/d target.
Chevron is the second-largest Permian producer with more than 2m acres under lease. The addition of 240,000 acres from Chesapeake Energy brings its Delaware holdings to more than 1m acres.
Initial production from four recent Delaware wells exceeded 1,000 b/d each, said George Kirkland, the company’s vice-chairman in charge of upstream. “The reason we're seeing so much focus on the Permian is the success we're seeing there,” he said. “The Delaware basin is less mature but has great potential with stack plays in the Bone Spring, Avalon and Wolfcamp. Our initial field evaluations are expanding the productive area of these major reservoirs,” he added.
On the natural gas side, Chevron has eight rigs drilling ahead in the Marcellus, where it has $850m of outstanding spending obligations. It drilled four test wells in the Utica in 2012 and plans to spud eight more this year.
Cumulative production from the first 65 Marcellus wells averaged 1.8bn cubic feet (cf) after 30 months, near the upper end of its expected range of 1bn to 2bn cf. The company expects to recover 5bn cf per well. Total Marcellus production will increase from 30,000 barrels of oil equivalent a day (boe/d) to 100,000 boe/d by 2017.
Chevron’s cost of production rose 15% in 2012, to $31.16 per barrel. The company plans to spend $33bn on upstream work this year.
Longer term, Kirkland said Chevron hopes to refine its drilling technique to maximise efficiency and reduce expense -- vital for unconventional shale wells, which can cost $10m each. “With our technology, we think we can compete with anyone in drilling shale wells. Shale activity at this point, much of it has been very brute force. We see a lot opportunity apply technology to in effect reduce cost,” he said.