Jordan Blum, editorial director, Hart Energy: We are here at the massive Gastech conference in Houston. I'm joined by Colin Parfitt, the president of midstream for Chevron. Thank you so much for joining us. Really appreciate it. Just to start out broadly on the natural gas side of things, LNG, obviously, what is your bullishness on just global demand going forward in the role that gas is going to play?

Colin Parfitt: Well, Jordan, thank you. Look, it's really nice to be talking to you again. And if I think about gas and gas' role really in the energy transition, I mean a couple of points to make. One is, we see demand growing. So we've got a worldwide population of about 8 billion people going to 10 billion people. We've got an increase in prosperity in people and all of that is more demand for energy. And we see gas as being a big part of that. Now, not least that gas really is one of the lower carbon intensity fuels that we have. So if we look at things like switching and switching from using coal to gas in power stations, that reduces carbon emissions by 50%. So we see a really strong future in gas, both because we see demand going up, but we also see its role of helping to reduce carbon intensity.

JB: Very good, thank you. So I want to give you a chance to talk about Chevron's overall global gas portfolio, but also I wanted to see if I get you to elaborate a bit on the strategy, kind of North America versus the rest of the world. You have a lot of direct LNG facilities, Gorgon, Wheatstone, Angola, but in North America it's more a contract-based strategy and an upstream strategy. So I wanted to get you to elaborate a bit on why that path? And if you would ever get into building LNG in the U.S. Gulf Coast?

CP: No, Jordan, thank you. Look, I'll take the two bits of questions and I'll do them one time. So how do we think about gas in our portfolio? Well, we are increasing our oil and gas production as Chevron. So we've been increasing and we're telling our investors we're increasing by about 3% per annum. So we're increasing. And why are we doing that? Because we think the world needs more energy. But what we also realize is that as we increase that oil and gas production, we've got to reduce its carbon intensity. So growing. And in our portfolio at the moment, roughly 40% of our upstream production comes in gas. Then your question is, so how do we think about different parts of the world around LNG? So we have LNG and we have LNG in Australia, we have it in Africa. In the U.S. we have gas, but actually with LNG, we contract with other people.

And so in the U.S. it's probably different from the rest of the world. There is what I'll call a large third-party sector that constructs midstream or LNG facilities. So in other parts of the world, we have to deploy essentially our own capital. So in Australia with the gas, we put our own capital in to build the LNG plant. In the U.S. it's a slightly different model, and what we do is we then do a contract with a third party provider who provides us that LNG. So we produce the gas, somebody else liquefies it, we then move it and we sell it to the customer.

JB: Very good. So obviously in the U.S. you have a huge upstream portfolio in the Gulf of Mexico, also growing in the Permian Basin. A lot of that Permian Basin gas is being used for LNG, but there's midstream issues, infrastructure issues, nitrogen-rich issues. So I wanted to get your take on the challenge there and also how it might fit in with growing domestic demand and data centers and everything else.

CP: So there's a couple of beats, and maybe I'll just go to demand first. I mean, generally I've said the demand in the U.S. is relatively flat with a lot of seasonality, and you see one of a lot of the extra demand coming internationally. So that means LNG, but actually your last one is what we see in the future is this big demand for, I call it electrification. So as the U.S. electricity system increases and we see demand both from general electrification, things like people driving EVs, but particularly we see this increasing demand around data centers, AI. Now, all of those need reliable power. So generally, renewable power, so wind solar aren't good for those by themselves because you have the issue of intermittency and so they don't work if the wind isn't blowing, the sun doesn't shine. So all of that we see is potential demand for gas. So in the future, a U.S. demand I described as flat, we actually see is going to increase. And so I think the demand on gas in the U.S. will be twofold: increasing LNG, but increasing U.S. electricity demand for things like the new data centers.

JB: Very good. And piggybacking on that a bit, just if I can get you to maybe elaborate on the challenges of utilizing Permian gas for LNG when it comes to maybe nitrogen content, pipeline, infrastructure, et cetera.

CP: Yeah, so the big thing we worry about is infrastructure. And so I mean, even if I describe it to you, you produce oil and gas in the Permian Basin, you then have to move it by pipeline to either a commercial center like Houston where we're sitting or to a port, and then to get it out and with gas, you have to liquefy it, so you have to build liquefaction plants. So all of that can be both slow in terms of permitting. In the U.S. at the moment, we do have an issue with what we call the LNG pause from the current U.S. government. And so that really is not that helpful. And [Chevron CEO] Mike Wirth was here yesterday [Sept. 17] talking and he talked about that as being politics over progress, but fundamentally it's not good for the climate because you stop this transition of gas to coal that reduces emissions and essentially it slows down economic growth that we've seen earlier.

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JB: Very good. Switching gears going to the Eastern Mediterranean for one last question, if you don't mind. Sure. Obviously there's increasing geopolitical issues there. Chevron has a lot of offshore gas in the region. Just wanted to get your take on the infrastructure and geopolitical challenges there, especially with everything in the news right now with Israel and Hezbollah, et cetera.

CP: Yeah, so the first thing I would kind of say is going to give sympathy to all the people who are involved in that conflict, but then think about our position there. So I mean, if I think about the Eastern Mediterranean, there a few pieces that we have. So we have production offshore Israel, and so there's gas there, there's an ability to increase. We're increasing some of our gas supply and that gas supply flows by pipeline to Israel, but also to Jordan and to Egypt. So you kind of have a connect there. We also have exploration in Egypt and we also, we have some exploration of Cyprus. If you put a ring around the whole Eastern Mediterranean, that's an area that could be, I'll call it upcoming in terms of gas. And at the moment, it's all flowing, I'll call it inland in that area. But there is potential in the future to turn some of that into LNG.

JB: Very good. Well now thank you again so much for joining us here at Gastech. Really appreciate it. To read and watch more, please visit online at hartenergy.com.

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