explainer: what is the permian basin?

The Permian Basin is an oil- and gas-rich region spanning parts of West Texas and New Mexico.

And Chevron is among the largest producers there. Chevron is now producing an average of 1 million barrels of oil-equivalent per day from the Permian Basin.

The Permian Basin is the largest oil-producing region in the United States.

In fact, energy research and consultancy group Wood Mackenzie projects that nearly 70% of oil production from the lower 48 states will come from the Permian before 2040.

So what makes the Permian Basin one of the most prolific fields in the world? It all comes down to unique rock characteristics. The basin’s geology has several layers of shale rock that contain oil and natural gas.

Beyond production, the Permian Basin is an economic engine for New Mexico and Texas, as well as the United States.

Chevron’s success in the Permian Basin all began with the laying of some train tracks.

In 1871, the Texas & Pacific (T&P) Railway Company was chartered to construct the Southern Transcontinental Railroad. The T&P was given several square miles of surface rights (rights to the land’s surface) and mineral rights (rights to the natural resources beneath the land’s surface) in exchange for each mile of track laid.

Chevron has a long history and a diverse portfolio in the Permian Basin.

But when the T&P went bankrupt years later, its 3.5-million-acre land grant was put into a trust. Texaco bought 2 million of these acres, and when Chevron acquired Texaco, it became the basis of the company’s significant presence in the Permian today.

Chevron believes its long-standing presence in the Permian Basin can give it several advantages over its competitors.

For starters, Chevron has a revenue interest in one in every five Permian Basin wells. This gives the company visibility into operations and data across the basin.

Leveraging technology and artificial intelligence (AI), Chevron can unlock insights from this data to improve decision-making and performance. Linking AI to this broad presence allows for:

• Improved well design and execution
• Enhanced decision-making

Chevron continues to unlock value though a wide range of technologies. For instance, hydraulically fracturing multiple wells simultaneously, also known as the triple-frac technique, saves time and money. A key aspect of releasing resources from Permian rock formations is the use of horizontal drilling and hydraulic fracturing—technologies that became more widely used in the 2010s to help reach previously trapped oil and gas. Longer horizontal wells and hydraulic fracturing are more efficient than older methods, reaching more of the resource at a lower cost.