HOUSTON—Despite a volatile environment, “I’m here to tell you the oil and gas industry is still relevant and here for the long term,” said Jay R. Pryor, vice president of business development for Chevron Corp.

“I’m confident brighter days are ahead…but we are likely to have a few butterflies next year as we watch various factors go up and down as we navigate through this time. But fortunately, our industry attracts people with a lot of backbone,” Pryor said at a recent Houston Producers Forum meeting.

He cited consulting firms and the U.S. Energy Information Administration that estimate the world will see a 40% increase in energy demand by 2035. Long-term gas demand is projected to rise more than 45%, and global LNG demand alone is estimated by Wood Mackenzie to double by 2025.

“The world depends on affordable, reliable energy for rising living standards for a growing middle class,” he said. “Many people are calling for rapid changes in the world energy system without realizing the scale of what they are asking for. Bill Gates recently pointed out that the replacements for many energy sources now exist, but it is the scale that matters.”

Chevron has a significant worldwide portfolio of gas assets, including two LNG export plants in Australia under construction, one already exporting from the North West Shelf, and a fourth in Angola. “We are on track to be a major LNG provider by 2020,” he said. Growth in this LNG business will help Chevron reach its target of 3.1 MM boe/d in 2017—a 20% increase from 2014’s production levels. Six new LNG tankers are on order to add to its fleet.

Production guidance for 2015 is between 2.5 and 2.6 MMboe/d, with about 777 Mboe/d in North America alone.

Chevron, like many companies, is right-sizing its teams, negotiating for lower service costs and shifting spending priorities, said Pryor, a petroleum engineer. It is in the middle of a multiyear, $15 billion divestment program in the upstream and midstream sector across the globe. He said he does foresee industry consolidation ahead.

“Strong companies are always willing to buy and sell assets. … The asset quality is a bigger driver now than ever.”

Citing ballooning costs over the past five years in all aspects of the industry, Pryor said changes are necessary not only for the short term, but for a longer view.

“Technology drives adaptation and innovation. In the same way we need to evolve our processes,” he said. “The capacity for technology has been one of our greatest strengths for exploration and production in shales, deepwater and in frontier exploration areas that are currently uneconomic. Technology-driven innovation is the flywheel that sustains adaptation” in volatile and uncertain times.

Chevron is on record supporting U.S. oil exports even though it has downstream assets that might be adversely affected. “The impact, to me, in this environment will not be that great, but it should make us more efficient. And, it is the right thing to do,” Pryor said.

“It’s really about exports having a positive business impact, not so much how it affects us [revenue-wise],” he said. “How can you go abroad and look someone in the eye and ask them to open their industry to you, or form a JV, when we don’t allow our own market to be open?”

Contact the author, Leslie Haines, at lhaines@hartenergy.com.

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