Exxon to Boost Crude Output by Automating Permian Basin Rigs

As volatility becomes the status quo for global oil markets, Exxon is embracing a new slogan: auto-drill, baby, auto-drill.

On Monday, as markets digested the potential impacts of an “Economic D-Day” waged by the US against Iran and its oil industry, Exxon revealed to Reuters that it has perfected automated drilling in the Permian Basin and, of course, plans to rapidly retrofit its more than 30 rigs across the region in the coming years.

Rigged Game

Two of the company’s rigs in the Permian Basin are now fully automated, one executive told Reuters, requiring just a single worker controlling the robotic machinery in a small office to do the exhausting work typically done by multiple humans on the rig floor. That dramatically reduces the odds of accidents and employee injury, Exxon stressed. It also, of course, will allow for a whole lot more drilling. The company said half its fleet of rigs will be fully automated by 2028, as it works to boost production in the West Texas basin by 40% by 2030. Presumably, the automation will also help Exxon achieve its previously stated goal of producing oil at a breakeven point of $35 per barrel by 2027 and $30 per barrel by 2030.

The expansion would strengthen Exxon’s Permian dominance even further:

• The planned increase is set to lift Exxon’s production levels in the Permian Basin from about 1.7 million barrels per day this year (an increase of 12% year-over-year in its own right) to 2.5 million barrels per day at the start of the next decade. Chevron, the basin’s next-top producer, has said it plans to maintain its current level of just 1 million barrels per day through 2040.
• Exports of US crude hit an all-time high of 5.7 million barrels a day in May as traffic through the Strait of Hormuz came to a near standstill. While exports contracted in June and July amid a temporary US-Iran ceasefire that reopened the Strait, the discount on West Texas Intermediate compared with Brent crude is once again widening, which analysts say will stoke US exports.

Fuel Fallout: Plans to launch an “Economic D-Day” against Iran announced by US Treasury Secretary Scott Bessent on Monday may increase demand for US oil even more. In a bid to turn Iran into an “economic outcast,” Bessent floated harsh sanctions for countries that continue to purchase Iranian oil.