U.S. oil production will likely peak “within the next five years or so,” according to Occidental Petroleum President and CEO Vicki Hollub.
“We think that between 2027 and 2030, it’s likely that the U.S. will see peak production and after that some decline,” Hollub said onstage at CERAWeek by S&P Global on March 11.
U.S. oil production growth is being driven by the Permian Basin, where output averaged 6.47 MMbbl/d in the fourth quarter, per Energy Information Administration data.
Occidental has a large Permian portfolio, made larger through a $12 billion acquisition of Midland Basin private CrownRock LP last summer.
In addition to unconventional assets, Occidental also has a sizable legacy conventional portfolio in the Permian.
Occidental’s first-quarter Permian production is expected to average between 745,000 boe/d and 765,000 boe/d.
The recently acquired CrownRock assets will average over 170,000 boe/d this year, a 5% year-over-year increase, Occidental said in earnings last month.
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Occidental believes secondary recovery methods, like waterfloods, and tertiary methods, like flooding reservoirs with CO2 and steam, can sustain Permian production.
The company sees opportunities to boost oil EURs in both conventional and unconventional fields using secondary and tertiary recovery methods, Hollub said.
“In conventional, we’ve gotten up to more than 75% of the oil in the reservoir out using CO2,” she said.
Even after water flooding, EURs would have been less than 50% without the tertiary CO2 flooding.
Occidental is also experimenting with CO2 floods in its Permian shale reservoirs. The company has run four pilot tests in the Midland Basin to experiment with tertiary recovery from unconventional fields.
“What the pilot tests indicate is that we can double our recovery of oil from the shale,” Hollub said.
Producers typically recover only around 10% of the oil in place in unconventional reservoirs, she said.
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Direct air capture
Even around 15 years ago, Occidental knew it would need additional CO2 in the Permian Basin to support its conventional tertiary recovery.
Occidental realized it wouldn’t have enough organic CO2 to recover the roughly 2 Bbbl of crude oil left downhole in conventional fields.
The company tried “for years” to use point-source capture methods near pipelines to move more CO2 to the Permian.
“That failed,” Hollub said.
Around 2008, Occidental discovered direct air capture (DAC) technology being developed by Canadian company Carbon Engineering.
Occidental found that Carbon Engineering’s technology was quite synergistic with the products Oxy manufactured in its chemicals business, she said.
“Those synergies were there for us, along with the fact that we could use the CO2 in our EOR operations,” she said.
Occidental acquired Carbon Engineering in 2023. Today, the companies are constructing the world’s largest DAC facility sited in the Permian Basin.
The first phase of the Permian DAC project, called Stratos, will remove 250,000 metric tons of CO2 per year from the atmosphere. A future second phase of construction aims to double capacity to 500,000 metric tons per year.
Hollub said Stratos’ first phase will come online this summer.
Some of that CO2 will be permanently sequestered in subsurface saline reservoirs under carbon credit agreements with climate-focused customers.
But significant CO2 volumes from Stratos will also support Oxy’s EOR operations in the Permian.
Oxy is also stepping up drilling in underdeveloped secondary zones in the Permian this year.
The company plans to allocate 30% of its Delaware Basin drilling program to secondary benches this year, up from around 25% in 2024.
Oxy’s secondary zones in the Delaware Basin include the Upper Bone Spring intervals and the deeper Wolfcamp C and D zones.
In the Midland Basin, Oxy is one of the top producers in the Barnett Shale.
Occidental Permian Ltd. produced approximately 3.85 MMBoe (54% oil) from the Midland Basin’s Emma Barnett Field during 2024, an average of 10,530 boe/d, according to Texas Railroad Commission (RRC) data.
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