Oil giant Chevron will invest around $4 billion next year to ramp up its crude production in the Permian Basin area of the United States. Conway Gittens reports.
Chevron will invest $4 billion next year to ramp up its oil production in Texas and New Mexico. The company wants to boost its output from the Permian Basin to over 400,000 barrels per day over the next few years. Bob Yawger runs futures division at Mizuho Americas. (SOUNDBITE) ROBERT YAWGER, DIRECTOR, FUTURES DIVISION, MIZUHO AMERICAS (ENGLISH) SAYING: "They have to replenish their reserves. Their options are to go to deep water, which they've been very good at in the past, but it's expensive. A barrel of crude oil has to be $70 bid at $90 for it to be cost-effective. They can go to the oil sands. And that's also constrain by transportation, and it takes a lot to process into a barrel of crude oil. Or they can go stay and hang out in the United States and operate in the Permian Basin, which has a lot of pipeline, it's really a fantastic spot. Now they're gonna have to invest X amount of money, but an investment in that space is far less than if they had moved to something like the deep water or the Gulf of Mexico." U.S. crude has been trading at a steep discount to Brent crude over in Europe, encouraging buyers to turn to the United States as their main energy supplier.