I'm Jordan Blum, editorial director with Hart Energy here at CERAWeek by S&P Global and I'm joined by Richard Dealy, president and COO of Pioneer Natural Resources. Thank you very much.

Jordan Blum, editorial director, Hart Energy: I just wanted to see what’s kind of on tap for 2023. How are the growth projections, production trends looking for the year from the Permian?

Richard Dealy, president and COO, Pioneer Natural Resources: The Permian definitely is still going to continue to grow; not at the pace it has grown. You know, generally, if you go back a few years, it was growing a million barrels a day. Last year, If you look from kind of December of [2021] to December [2022] it’s about 500,000 barrels of oil per day. And I would expect kind of in that 300,000 to 400,000 barrels of oil per day for 2023 growth. So [it will] continue to slow. I think [we’ll] continue to see the basin grow, you know, up to ... About 7 million barrels a day between now and 2030 and then flatten out after that.

JB: Now Pioneer obviously has a massive acreage asset position in the Permian. But can you talk a little bit just about what concerns there are for Pioneer and maybe industrywide about just inventory issues going forward? And, you know, drilling well efficiency?

RD: Yeah, I'd say, you know, from a pure efficiency standpoint, the industry's continued to [have] gotten better in terms of drilling. You know, drilling days have continued to come down from what we used to be — 30 days or so, you know, a couple years ago to sub-15 [days]. And we're drilling longer laterals. So you're not only doing longer laterals, but you're doing it in shorter time periods. Completion side and you're seeing simul-frac come into the basin. So that's adding 50% increase in frac-feet per day, basically, that are happening out there. So you're continuing to see efficiencies. You're seeing it on the sand side where damp sands [are] coming closer to location. So it's helping on logistics. So there's lots of efficiency gains continuing going on. If you think about inventory in general, I mean I think inventory is really going to be operator specific in terms of what that depth of inventory looks like.

So you've seen privates drill up their inventory faster than, you know, maybe the public companies just because of their depth of inventory. So people like Pioneer, you know, we've got over 25,000 locations so we've got, you know decades of inventory drilling. Not everybody has that. But you know, I think the Permian is the only basin that is continuing to grow in the U.S. If you look out there, when you look at, you know, what's happened in the U.S., the Permian's up probably in the last six months, 400,000 barrels a day. The U.S. is up 400,000 barrels a day. [That] tells me that the rest of the basins in the U.S. Are flat production growth relative to the Permian. The Permian's the only growing basin left out there.

JB: So from Pioneer's perspective, especially not just industrywide, you're not too worried about those core-of-the-core [locations] being drilled when there's so much inventory you all have left at this point?

RD: From Pioneer's specific perspective, absolutely. I think we've got, you know, decades, like I said, of inventory to be drilled yet. So I'm not worried about from Pioneer's perspective, but I do think from an industry standpoint you'll continue to see that, you know, just like went from a million barrels a day to [500,000 to 300,000 to 400,000], it will continue to come down over time and the U.S. will get flat, you know, in a number of couple years.

JB: Any parts of Pioneer's position where you feel most bullish at this point where, where you all are having the most exploratory success?

RD: You know, we're really, most of ours is just development drilling. So we're not doing a lot of exploration. We are going to test, this year, deeper zones below our Spraberry and Wolfcamp zones. So the Barnett and Woodford zones that sit beneath our acreage position, we're going to drill four wells to kind of understand that productivity and understand what that cost would be, productivity and then how it competes with our portfolio. So if we're successful we'll probably …  add several thousand locations incremental to our inventory from those deeper horizons.

JB: Are there any takeaway or export capacity issues you all are dealing with right now or do you feel pretty well positioned at the moment?

RD: You know, I'd say on oil that enough pipelines got built over the last, you know, six to seven years that there's plenty of takeaway capacity to meet that growth going forward. There's probably seven million or so barrels of takeaway capacity on the basin.

Gas on the other hand is going to be short. We're going to need to continue to see [expansion]. You know, there's [pipeline] expansion projects going on now with Whistler, Permian Highway, Gulf Coast Express, that'll happen [in the] second half of this year, late this year. You’ve got Mattahorn [Pipeline coming online] in 2024. But we're going to need another 2 Bcf a day of pipe every two years because basically the Permian's growing ... about a Bcf a day annually. And so we expect to go from 15 Bcf a day to 16 [Bcf/d] where we sit the day to 22, 23 [Bcf/d] by the end of this decade.

JB: Apart from those long-haul gas pipelines are processing facilities a concern as well or are those being built out fast enough?

RD: You know, fortunately, we have a partnership with Targa [Resources]and, so we're able to kind of ... plan ahead for those things. And so, so far, you know, historically it's been just in time getting them done. We're trying to get ahead of it, working with Targa and planning for that. So, you know, hopefully, we're going to be ahead of that going forward now, but it's always something we got to manage and watch for and as long as that construction takes place and the capital's being spent, then I think we'll have plenty of processing takeaway capacity.

JB: You touched on it a little bit with global and export demand, but can you elaborate on just kind of how much need there is for Permian oil, especially what you all are contributing and not just obviously servicing Gulf Coast refineries, but the world at this point?

RD: Yeah, you know, today Pioneer's moving about 350,000 barrels a day to the Gulf Coast and then it's kind of split 50% that's going overseas in terms of exports and the other 50% is finding a home in refineries along the Gulf Coast. It varies. So we've been as high as 60% or 70% going to the world market. You know, last year a lot of that went to Europe, and over time historically more of it went to Asia. But it will just ebb and flow. You know, we look at it as whatever's the best economic outcome for Pioneer is where we're taking that oil. So either to the, you know, export market or to the local refinery market.

JB: Well, there's a lot of talk this week at CERAWeek and just industrywide regarding energy transition. Can you talk a little bit just about what role Pioneer is playing, especially with wind power and other resources?

RD: The one thing that we're real focused on is electrifying the basin and our acreage position specifically. So we're working with service providers to bring in transmission and get substations across the basin. Because once we get substations in the basin, we can within a 15-mile radius around those substations, you know, electrify our drilling operations, our completions operations, our compression operations and all those lower our CO2 emissions. And we get, you know, renewable energy credits from that. And so it has an added benefit of being able to offset our Scope 2 emissions. So we're putting, so we're doing that. Then in addition we've got four, 30,000-acre ranches that we own the surface of. So we're actually, we just announced in the last quarter a wind project with NextEra [Energy] on our surface where they're going to come build the wind turbines and then we're going to take a 100% of that power to not only do our field operations, but then our Targa gas plant operations as well. And so that's just the start. We're going to look at solar and wind on our other surface locations as well to kind of use that energy to help, you know, make it ever more and more green over time.

JB: Great. Well thank you so much for joining us. Really appreciate it.

To learn more about Pioneer Natural Resources, please visit @heartenergy.com.

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