"We're spending $36.7 billion this year and about a quarter of that spending is in the U.S.," Watson said, citing investments in the Marcellus shale formation in the Northeast, and in West Texas and New Mexico.
But increasing the proportion of money Chevron puts into the U.S. will depend on more acreage being made available for exploration. In addition to easier permitting, Watson called for more prudent environmental regulations.
"The important point is we are investing and we've had an exploration rate that is second to none over the last 10 years," the executive said.
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Investing for growth should allow Chevron to continue to raise its dividend. "Our financial priorities have been to pay and increase the dividend as the pattern of future earnings and cash flow permit," Watson said.
He also acknowledged that Chevron has kept more cash on its balance sheet than some other companies—"one, because we've generated more cash from our investments, but also there can be ups and downs in the oil markets around the world," he said.
Watson is also optimistic that the U.S. can eventually become an energy exporter as it takes advantage of shale gas.
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"It will be difficult to be an oil exporter," Watson said. "What I see is we'll be producing more natural gas than we need, and we can export that. We're still likely to see imports of liquid fuels of oil going forward. But we can certainly make a big dent in those imports by allowing more investment."
Shale gas can also spur job creation and create a windfall for the Treasury. "There's an opportunity to generate a couple of trillion dollars in tax revenues over the next 20 years and generate millions of additional jobs," Watson said. He added, though, that he thinks the country needs a better tax system, good regulation and more permitting.