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Chevron Eyes Controlling Permian Ops Remotely as Machine Learning Expands

Drilling some Permian Basin wells from the confines of air-conditioned control rooms in Houston nearly 500 miles away is becoming a reality for Chevron Corp. as it integrates cloud computing into its operations.

Speaking on the second day of the CERAWeek by IHS Markit conference in Houston, CEO Michael Wirth discussed Chevron’s growth plans for the biggest play in the U.S. onshore portfolio, where the producer is operating in manufacturing mode, i.e. moving from “shale to scale.”

During the annual analyst meeting earlier this month, Wirth had said “good rocks” were driving the focus in the legacy play, where it holds two million net-plus acres. However, he admitted that Chevron bided its time before moving more resources into the play.

As unconventional drilling techniques moved into the Permian a few years ago, the supermajor awaited results by the independents, as they finessed horizontal drilling and fracturing techniques. As the independents claimed overwhelming success, Chevron seized its opportunities in its vast legacy leasehold.

"Trial and error may not be our wheelhouse, but it's technology and scale," Wirth said. "In a factory drilling operation you do the same thing many times, and quickly you learn better ways to do things.”

Even for a producer with the size and capacity of Chevron, “the resource in the Permian Basin is much larger than we appreciated in the beginning," Wirth said. Chevron recently updated its assessment of the Permian to 16.2 billion boe unrisked, up about 75% from slightly more than 9 billion boe two years ago.

The myriad stacked layers of the massive play contain carbonates, limestone, siltstone, sandstone and shale. There are more oil-rich layers than initially were considered to be viable, according to Wirth.

Now primed with cloud computing and all-things-internet, Chevron is better able pinpoint the best areas to prospect and the best wells to drill. Holding the huge leasehold helps too, as longer horizontals across contiguous acreage have proven more successful than first predicted.

Expanding and integrating the remote operational technology is a next step, Wirth said, technologies that have been on full display at this year’s CERAWeek, where machine learning has been on full display.

"One of the technologies we're working on is remote geosteering of the drillbit," Wirth said. Geosteering of late has become de rigueur in the Permian, where explorers are able to optimally place wellbores using realtime downhole geological and geophysical logging measurements.

Operating more of the Permian leasehold from Houston also is a goal. “We're not drilling every well that way, but we're moving in that direction,” the CEO said.

In the Permian alone, plans are to produce 600,000 boe/d by the end of 2020 and 900,000 boe/d by 2023. The increase would represent nearly one-third of the San Ramon, CA-based operator’s current global output.

Wirth also shared some insight about how costs are falling in the the deepwater Gulf of Mexico (GOM) as projects become standardized. It’s made a big difference in expensive deepwater endeavors, he said.

As inefficient overhead is removed, Chevron’s operating costs in the GOM have fallen by about one-half, while development costs are down by close to 33%. Temporary changes in oilfield services costs may impact the bottom line, but overall, most of the savings achieved to date are permanent -- and that makes them much more viable.

"These projects have to get better to compete within the portfolio,” Wirth told the crowd.

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