Chevron announced last week its capital and exploratory budget for 2019, which sees the first annual increase in spending since the 2014 oil price crash.
While most of the investment is geared toward short-cycle projects that could start bringing in cash flows within two years, the U.S. supermajor continues to channel a significant portion of its upstream investment into a major capital-intensive project to boost the production of a supergiant oil field in western Kazakhstan.
Chevron will invest US$4.3 billion in 2019 in the Future Growth Project at the Tengiz field which lies deep beneath the western Kazakhstan steppe—the deepest producing supergiant oil field and the largest single-trap producing reservoir in existence. The investment in boosting production at the giant oil field will take most of Chevron’s US$5.1 billion upstream program for major capital projects in 2019. For this year, Chevron had allocated US$3.7 billion to the Tengiz field expansion project.
The Kazakhstan field expansion and the U.S. shale patch are the two pillars of Chevron’s capital spending for next year—growing shorter-cycle shale production and continuing investments in a supergiant oil field that is expected to pump oil for decades.
For 2019, Chevron has earmarked US$3.6 billion for expanding its production in the Permian and another US$1.6 billion will be invested in other shale plays in the United States. That makes a total of US$5.2 billion for U.S. shale, which is substantially higher than this year’s shale budget of US$4.3 billion.