Chevron reaffirms 2017 target on oil, gas output

Chevron Corp. Tuesday reaffirmed that it would meet its target for a large increase in oil and natural gas output in 2017. The US oil giant, outlining its medium-term investment strategy to analysts, said it would hit 3.3 million barrels a day of oil-equivalent in 2017, up from 2.6 million barrels a day in 2012. Chevron also hinted it expects to keep growing output beyond the 2017 timeframe. "The 2017 target is on track, but there's more beyond that," Chevron chief executive John Watson told analysts. The second-biggest US oil company after ExxonMobil, Chevron expects its output growth in the 2013-2017 stretch to be "back-ended," meaning it will take off in 2014 and 2015 as major projects come on stream, Watson said. Chevron first set the 2017 output level in 2010. Chevron pointed to a range of large "mega-projects" that will enable the boost in output, such as the US$52 billion Gorgon liquefied natural gas project in Australia and a number of large deepwater projects in the Gulf of Mexico. Chevron's investment program comes as oil majors including ExxonMobil boost capital spending to advance a new generation of projects to make up for declining oil and gas fields. Chevron has boosted its 2013 capital budget to US$36.7 billion, up from US$34.2 billion in 2012. Watson predicted the spending in 2014 and 2015 would come in higher than the 2013 level. He cited one report that showed costs for oil and gas projects have risen by 250 per cent in recent years. "We're in the midst of a heavy investment period," Watson said. Chevron's set of projects for the post-2017 period includes Kitimat, a Western Canadian shale gas play that envisions transforming the gas into LNG and shipping it to Asia. Chevron bought out the Kitimat stakes of two smaller companies in December. Watson said the appeal of Kitimat included the fact that the project has already received key permits for the pipeline and LNG site. "One of the things that attracted us to western Canada is that Canada is a natural resource exporting country and they're very accustomed to exporting resources," Watson said.