PESA’s summer West Texas Regional District Meeting brought together Simmons Energy, A Division of Piper Jaffray and Chevron to look at critical issues in the Permian Basin on July 16 at the Petroleum Club in Midland, TX.
Featuring keynote speaker Steve Hassmann, General Manager, Drilling & Completions, Mid-Continent Business Unit, Chevron, the meeting provided an opportunity for PESA members to network and discuss the challenges facing services and equipment companies in the Permian.
West Texas Steering Committee Member David Christmas, Vice President, Permian Basin, Schlumberger, introduced a market outlook from Fred Charlton, Managing Director, Chairman and Head of Energy Investment Banking, Simmons Energy.
Charlton presented a current overview of the financial picture facing the oil and gas industry. Charlton commented that oil demand is slowing, and the industry is looking at a flat rig count for the rest of the year, but he believes the industry will see rigs going back to work in early 2020. He also discussed indications that rig utilization is increasing in the global offshore space; however, pricing is affecting profitability for many companies.
Hassmann gave a short history of Chevron’s presence in the Permian, stating that although the company has been in West Texas since the 1920s, the business unit was historically used as a training ground for new employees. That has changed dramatically, as Chevron is currently producing half a million barrels of oil a day in the Permian. That is an increase of 130,000 barrels a day over 2018 production numbers. Chevron has 24,000 wells in the Permian with plans to drill 250 in 2019. The company’s 2019 budget in the basin is $4 billion.
According to Hassmann, the biggest challenge facing Chevron and other operators in West Texas is water. Hassmann expressed growing concerns for companies on how to get adequate supplies, and more importantly, how can the resource be economically recycled? Chevron has significant concerns about transportation infrastructure in the Permian, so Hassmann’s team is working with TxDOT to make drilling plans that coincide with the state’s road projects in West Texas.
The company has shut-in some gas wells that were not economical, and they are now looking at ways to use their own natural gas to fuel operations in the area. He also shared that Chevon is moving to electric fracs and advised attendees to invest in electric frac spreads.
Hassmann concluded by recommending that service companies in business partnerships with Chevron focus on meeting the terms of the agreement, process improvement and the total value of the project.
West Texas Regional District Meetings create productive group settings to address critical issues and share best practices. For information about future PESA events in the Permian and beyond, please refer to the PESA Events Calendar or contact Kristin Hincke, Senior Director Government Affairs. The next District meeting will occur in the fall.
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