{"id":2379,"date":"2019-02-04T20:26:11","date_gmt":"2019-02-04T20:26:11","guid":{"rendered":"http:\/\/euromenaenergy.com\/?p=2379"},"modified":"2019-02-04T20:26:11","modified_gmt":"2019-02-04T20:26:11","slug":"exxon-chevron-muscle-up-in-permian-on-rig-to-refinery-play","status":"publish","type":"post","link":"https:\/\/emimer.com\/?p=2379","title":{"rendered":"Exxon, Chevron muscle up in Permian on rig-to-refinery play"},"content":{"rendered":"
\n

Bloomberg\/Houston<\/p>\n<\/div>\n

Exxon Mobil Corp and Chevron Corp bided their time, watching smaller independent drillers make the first moves in shale before placing their bets. Now they\u2019re all in.
\nThe two US supermajors are investing heavily in Texas pipelines and processing facilities as they build out their rig-to-refinery approach to the Permian Basin, demonstrating how shale is becoming a core driver of the world\u2019s biggest oil companies\u2019 future growth.
\nBoth Exxon and Chevron nearly doubled production from the Permian over the last 12 months and expect strong expansion to continue. For Chevron, the region will produce a fifth of all its oil by the mid-2020s. But rapid growth brings transportation and refining challenges. This is where the supermajors think they can steal a march on rivals, who have until now stolen the show in the world\u2019s premier shale field.
\nExxon will \u201cbring fundamental science and technology, bring large-scale efficient development and bring an integrated well-to-market approach\u201d to the Permian, chief executive officer Darren Woods said during a call with analysts Friday. \u201cWe believe our approach will deliver the lowest-cost supply and give us a significant advantage over the rest of the industry.\u201d
\nThe supermajors only produce about 9% of Permian oil so \u201chave a long way to run,\u201d according to Raoul LeBlanc, a Houston-based analyst at IHS Markit. But they\u2019re coming on fast. At the start of 2017, they spent less than 5% of drilling and well completion capital in the Permian and by the end of 2018 they had jumped to 15%, he said.
\nWhile the Gulf Coast refining hub is the natural destination for Permian oil, processing all that crude is not so simple. For years, refiners upgraded facilities to handle heavy, high-sulphur oil from Venezuela, Canada and Mexico as US production waned. But the shale boom brought an abundance of light, low-sulphur crude that isn\u2019t optimal feedstock for heavy
\nrefineries.
\nSo more capacity is needed. To handle surging Permian oil flows, Exxon is expanding capacity at its Beaumont refinery in Texas by 65%, a move that will make it North America\u2019s biggest. The cost will be about $1.1bn, according to analysts at Cowen & Co Exxon also signed off on a giant crude pipeline, developed with Plains All American Pipeline LP and Lotus Midstream LLC, that will ultimately carry 1mn barrels a day.
\nKeeping pace, Chevron agreed to buy a Houston-area refinery from Brazil\u2019s Petrobras for $350mn, the company\u2019s first refinery acquisition in decades. The ageing operation that mainly processes the light crude harvested from US shale will boost Chevron\u2019s Gulf Coast refining capacity by almost a third.
\n\u201cIt is in a great location and that allows us to integrate increasing light crude production out of West Texas,\u201d chief executive officer Mike Wirth said on a call with analysts.
\nFor the sceptics, it\u2019s about time. While smaller rivals were experimenting with fracking technology and buying up drilling rights in the now-prolific basin early in the decade, Exxon and Chevron didn\u2019t really get going until years later.
\nAlthough Exxon\u2019s inaugural foray into shale happened in 2010 with the $35bn purchase of XTO Energy Inc, that was a gas deal. The real money was in oil, spurring Exxon to spend a further $6.6bn in 2017 to amass Permian drilling rights from the Bass family.
\nAs for Chevron, the California-based driller inherited a commanding 2.2mn acres of drilling rights, the second-largest behind Occidental Petroleum Corp\u2019s, from its 2001 takeover of Texaco Inc.
\nBoth companies have gone through steep learning curves, picking up techniques from smaller rivals. Still, there are worries they haven\u2019t yet caught up.
\n\u201cThere are concerns that you are perhaps not as leading-edge as we might want you to be in terms of your Permian performance on a returns basis,\u201d Paul Sankey, a New York-based analyst at Mizuho Securities USA LLC, said to Chevron\u2019s Wirth on the call.
\nWirth responded by saying returns are \u201cvery, very strong.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Bloomberg\/Houston Exxon Mobil Corp and Chevron Corp bided their time, watching smaller independent drillers make the first moves in shale before placing their bets. Now they\u2019re all in. The two US supermajors…<\/p>\n","protected":false},"author":1,"featured_media":2383,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[46,48,57,90,96,107,113,137,139,160,174,183,184,201,202,209,230,232,233,244,246,249,256,267,277,279,288],"class_list":["post-2379","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-aramco","tag-athens","tag-baroudi","tag-democracy","tag-doha","tag-embargo","tag-energy-peace","tag-gas","tag-gazprom","tag-international-maritime-disputes","tag-lebanon","tag-maritime-boundaries-east-mediterranean","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-poverty-alleviation","tag-putin","tag-qatar","tag-rosneft","tag-roudi","tag-russia","tag-saudi","tag-straddling-hydrocarbons-reserves","tag-total","tag-trump","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/2379","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2379"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/2379\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/2383"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}