Texas is known as the energy capital of the world, but as Chevron’s Duncan Healey points out, other states play a crucial role in U.S. energy independence too.
Take New Mexico, for example. The Permian Basin, one of the most productive oil and gas regions in the country, stretches across both Texas and New Mexico. Right now, Chevron is ramping up production on the New Mexico side of the Permian, and they see big opportunities there.
“We see great potential there,” said Healey, who manages Chevron’s assets in New Mexico. “There are several reasons why it’s the place to be.”
New Mexico’s appeal lies partly in its high-quality source rock, Healey explained. This type of rock, formed with enough organic material over millions of years, generates oil and gas when exposed to pressure.
“New Mexico’s rock is very prolific,” Healey said. Since the area hasn’t been heavily developed before, there’s no depletion from existing wells to worry about, and the thickness of the rock makes it even more attractive. “The rock is thick and deep, which means it’s under high pressure and can push the oil and gas out more easily,” Healey added. “In the end, we expect to get more out of the ground here than in other parts of the Permian.”
Chevron also benefits from a strategic land position and a solid understanding of the subsurface geology, which adds to New Mexico’s allure.
But boosting production in the Permian Basin, especially on the New Mexico side, isn’t without challenges. One big issue Chevron is facing is limited takeaway capacity. The Permian Basin has grown rapidly, and production has often outpaced the infrastructure needed to transport oil and gas to market. This has led to bottlenecks, making it harder for companies to get their products where they need to go.
With production ramping up, the current pipeline infrastructure is struggling to keep up, creating serious takeaway capacity constraints. This lack of pipeline capacity has led to bottlenecks, resulting in discounted prices for Permian oil compared to other regions. For Chevron and other producers, being able to economically transport new production is a key concern.
Recently, projects have been launched to expand pipeline capacity, including key routes to the Gulf Coast. But these projects take time, and in the meantime, the industry faces continued challenges. “We need more infrastructure to keep up with the growth,” Healey admitted. “Until those pipelines are built, there’s always a risk that we’ll face challenges getting our product to market efficiently.”
These pipeline constraints don’t just affect oil; natural gas is impacted too. When natural gas can’t be transported, producers are often left with no choice but to flare it—a practice Chevron is working hard to avoid as they aim to meet both environmental and production goals.
Chevron’s approach to developing the New Mexico side of the Permian is aligned with the state’s focus on safety and environmental responsibility. Wherever possible, Chevron is using electric compressors instead of gas-powered ones, and the company has made efforts to reduce carbon emissions from its hydraulic fracturing operations.
“Reducing our carbon emissions intensity has been a big part of the development story here,” Healey said. “We’re trying to develop the land in a way that minimizes our environmental impact and ensures we’re not disturbing wildlife.”
Reducing emissions is even more important given the limits in takeaway capacity. With bottlenecks causing delays in getting oil and gas to market, keeping emissions low at the wellhead becomes critical to minimizing the environmental impact of higher production.
Chevron is aiming to produce 1 million barrels of oil-equivalent per day from the Permian Basin by 2025. To get there, Healey said they’re focusing on the most productive areas.
“It’s about delivering affordable, reliable energy with a lower carbon intensity that the world needs,” Healey said. “I’m proud of what we’re doing here and how we’re doing it.”
Chevron’s growth strategy in New Mexico is all about balance—leveraging favorable geology and strategic land positions, while managing infrastructure challenges and working to lower carbon emissions. As takeaway capacity improves over time, Chevron hopes to fully capitalize on the region’s potential, ensuring that its contributions to U.S. energy independence are both substantial and sustainable.
