Chevron Eyes $40B for Drilling
MOUNDSVILLE – Global oil giant Chevron has big plans for the Marcellus Shale underlying West Virginia’s Northern Panhandle and even bigger plans for the rest of the world, as the California-based company will spend nearly $40 billion to drill and frack this year.
“Overall, we have an attractive portfolio of investment opportunities which we will continue to fund in a disciplined fashion to grow value and shareholder distributions,” said Chairman and CEO John Watson.
Approximately 90 percent of the 2014 spending program is budgeted for upstream crude oil and natural gas exploration and production projects. Another 8 percent will be used with Chevron’s businesses that sell gasoline, diesel fuel and other refined products, fuel and lubricant additives.
Chevron is one of the largest publicly owned oil companies in the world, alongside fellow “supermajors” Exxon Mobil, BP, Royal Dutch Shell, Total and ConocoPhillips. Chevron earned $5 billion worth of income from June through September, although this amount is actually $300 million less than Chevron took home over the same period in 2012.
To this point, only Chesapeake Energy has actually drilled Marcellus Shale wells in Ohio, Brooke or Hancock counties in West Virginia. Chevron, Trans Energy, Consol Energy, Magnum Hunter, Stone Energy, Gastar Exploration, Noble Energy and several others join Chesapeake in working in Marshall, Wetzel and Tyler counties.
Watson said Chevron is increasing Marcellus Shale production in West Virginia and Pennsylvania. He emphasized much of this production is in the “liquids-rich” zone. This means the gas stream contains both dry methane, as well as wet products such as ethane, propane and butane.
“We are also moving forward on the development of our liquids-rich unconventional properties in the U.S.,” Watson said.
After acquiring lease rights from AB Resources, NPAR, TriEnergy Holdings and Chief Oil and Gas, Chevron signed additional acreage for drilling throughout the Northern Panhandle. However, Chevron also wanted to make sure the West Virginia operations would live up to the company’s safety standards. In June 2010, a well in the name of AB Resources exploded near Moundsville when workers struck a pocket of methane gas a little more than 1,000 feet below the ground. In addition to injuring several workers, this ignited a large fireball that burned for days.
To prevent any such problems from occurring under Chevron’s watch, the company ceased several active operations to upgrade them to ensure they met the company’s safety standards.
Another driller, Noble Energy, also announced plans to spend $4.8 billion for drilling this year, including $3.2 billion in the U.S. Noble Chairman and CEO Charles D. Davidson said the company will focus much of its investments in the “wet gas area of the Marcellus Shale.”
“The company’s strong balance sheet and growing cash flow allow us to execute our recently sanctioned developments and continue our robust exploration and appraisal programs to further enhance the major project pipeline,” he said.