Chevron's big Permian Basin output engine steamed ahead in second-quarter 2023, soaring 5% sequentially to a record 772,000 b/d of oil equivalent as its top executive said July 28 that company output from the play would be "roughly flat" in July through September but would resume its climb in the year's closing months.
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Register NowThe same day, ExxonMobil, another Permian heavy hitter, said it had just a 1% boost in Permian production during Q2, but its CEO said separately his company has grown a little more slowly but is maximizing overall recovery instead of focusing on short-term initial production rates.
Despite their differing output growth paces, both companies plan to arrive at 1 million boe/d from the basin respectively in the next four years, ExxonMobil by end-2027 but Chevron a little sooner, according to their presentations.
In New Mexico, Chevron put 10 company-operated wells on production in Q2 and before year-end expects to put online an additional 30 wells with higher expected production rates, company CEO Mike Wirth said during a quarterly earnings conference call.
"Over the next five years, we expect to develop over 2,200 net new wells, growing production while delivering return on capital employed near 30%," Wirth said. "Longer term, we've identified well over 6,000 economic net well locations that support a plateau greater than 1 million barrels per day through the end of next decade."
Chevron wells yield 50% oil
About half of Chevron's Permian production is company-operated, with the rest non-operated and royalty production, he said, adding the company is still drilling primary benches in the basin to optimize the oil cut. Across the basin, its production is about 50% oil, 25% NGLs and 25% gas.
Like Chevron, ExxonMobil also is also optimizing its large position in the Permian, the US' largest oil reservoir with current oil production around 5.6 million b/d, and natural gas output of 16.5 Bcf/d, according to S&P Global Commodity Insights data.
ExxonMobil produced 620,000 boe/d in Q2 from the basin, versus 615,000 boe/d three months earlier. The company is drilling horizontal wells with record 17,500 foot laterals -- more than 3 miles long, ExxonMobil CEO Darren Woods said during his company's separate earnings conference call July 28.
A very long lateral "lowers the cost associated with ... the resource," Woods said. "As you drill longer wells, it's important that productivity remains constant, so we've done a lot of work to make sure that the productivity of each foot is consistent as we drill longer and longer. That's driving capital costs down pretty significantly."
ExxonMobil has an assortment of technologies that it's putting to trial and are already deployed in the field, and these should boost well recoveries, Woods said, but he added he is not ready to disclose them.
'Encouraging' technology results
"Early results are encouraging, but not at the scale today" that would show up in the company's well results, he said. "All those things together give us confidence that we've not only moved to the front of the pack but we've got a lot of upside going forward."
In addition, Woods said ExxonMobil's pending $4.9 billion of Denbury, announced earlier in July, was motivated by the "broader opportunity" of carbon storage and sequestration and "keeping the carbon under the ground," rather than the small company's legacy enhanced oil recovery business.
Woods said EOR "frankly for us was not a ... strategic driver of the opportunity."
"I see EOR as providing a lot of optionality in the short term as we're bringing on carbon capture facilities," he added. "If we don't have everything lined up on the sequestration side, the EOR gives us an opportunity to progress these things and not lose schedule. It's certainly not a strategic thrust for us as a company."
The Denbury acquisition, slated to close in Q4 2023, comes with 1,300 miles of CO2 pipelines, the US' largest such network.
ExxonMobil said it envisions the combination of its own and Denbury's assets and capabilities with the potential to profitably reduce emissions by more than 100 mt/year in one of the nation's highest-emitting regions.
Progressing TCO growth project
Also, Chevron is progressing with commissioning and pre-startup activities at the 50% Chevron-owned Tengiz Chevron Oil, or TCO, project in Kazakhstan, where it is currently introducing fuel gas to new facilities.
"In the third quarter, we expect mechanical completion for the future growth project and to complete a major turnaround," Wirth said. "Cost and scheduled guidance is unchanged. Conversion of the field from high to low pressure is expected to begin late this year, and the [project] is on track to start up by mid-next year" or 2024.
After completing these projects, TCO is expected to deliver production greater than 1 million boe/d in 2025, he said.
Chevron's production in Q2 2023 averaged 2.96 million boe/d, about flat sequentially and up 2% from the same year-ago period. US output in Q2 2023 was 1.219 million boe/d, including 916,000 b/d of liquids and 1.8 Bcf/d of natural gas.
ExxonMobil's production in Q2 2023 averaged 3.6 million boe/d, down 6% sequentially from Q1 and down 3% from Q2 2022.