HOUSTON (Reuters) - Nearly a century after Chevron Corp amassed the No. 2 stake in America’s largest oilfield, Chief Executive John Watson is hitting the accelerator on developing the company’s vast Permian Basin holdings.

FILE PHOTO - John Watson, Chevron's chairman and CEO, speaks during an interview on the floor of the New York Stock Exchange (NYSE) in New York, U.S. on March 8, 2017. REUTERS/Brendan McDermid/File Photo

In an interview, Watson made clear his desire to put the West Texas to New Mexico expanse in the ranks of Chevron’s biggest ventures. That is a stark change from just five years ago, when Chevron executives rarely mentioned the shale basin.

But with low oil prices, the company is now spending more than it makes to cover its prized dividend and find new reserves. Now, those 2 million Permian acres have emerged as to way to help fund both goals.

“Some of the best things we have in our portfolio are the shales,” Watson said during an interview on the 48th floor of the company’s Houston office tower. “My employees in the Permian know I’m featuring it as something very important.”

Gone, for the next few years at least, are plans for any new multi-billion-dollar mega-projects, he said. To survive and grow, San Ramon, California-based Chevron is turning to acreage it has always controlled and that largely is free of royalties to landowners.

“We’re just in a period now where markets are weak and everyone is focused on controlling costs,” Watson said.

Within a decade, Watson expects Chevron’s production in the Permian to grow eightfold to more than 700,000 barrels of oil per day. By the end of next year, nine drilling rigs will join the 11 that Chevron already has poking holes into Permian land.

It is all part of Watson’s plan to methodically pump Chevron’s more than 9 billion barrels of Permian oil, most of it owned outright by the company. That gives Chevron a cost advantage over rival Permian producers as the region in the past year has become the epicenter for the U.S. shale resurgence.

Chevron’s Permian portfolio, which was acquired in stages by predecessor companies, is worth at least $43 billion, Chevron believes, greater than the market value of Pioneer Natural Resources Co, Concho Resources and other Texas producers.

Watson bristles at critics who say the company is moving too slowly in the Permian. “We’re growing our portfolio in the Permian as fast as anyone,” said Watson, an economist by training who has worked at Chevron his entire career.

“We’re focused on growing value and growing the dividend over time.”

Chevron is valued more highly by investors than rival Exxon Mobil Corp partly because of that dividend, which has risen annually for the past 29 years. Watson has called protecting the $1.08 quarterly payout his top priority.

“We like inexpensive, recurring revenue streams” such as the Permian, said Oliver Pursche of wealth manager Bruderman Brothers LLC, which holds shares in the company.

Chevron, which does not hedge oil production, is boosting spending in the Permian by 67 percent this year to $2.5 billion, an implicit bet that oil prices will rise and lift the company to a profitable year after an annual loss in 2016.

That makes the Permian the second-largest area for spending this year for Chevron after the Tengiz project in Kazakhstan, which is not expect to come online until next decade.

CARBON TAX WOULD ADD COST

Watson said he is not worried about demand for oil hitting a ceiling for at least the next 20 years, despite the rising popularity of electric cars. Rising petroleum needs for air travel and petrochemical production should buffer any drop in demand from the automobile sector, he said.

“There is no sign of peak demand right now,” Watson said.

Like Exxon, BP and other oil peers, Chevron supports the Paris climate accord, a 2015 agreement between nearly 200 nations that aims to limit the rise in global temperatures to “well below” 2 degrees Celsius (3.6 degrees Fahrenheit).

“We have said that Paris is a first step, but we need to understand what that translates to in terms of policy,” Watson said.

Watson, however, has spoken out against a tax on carbon, something that Exxon supports.

President Donald Trump had considered a carbon tax as part of his proposed budget, but the White House on Tuesday said it was not under consideration. It could still be resurrected by Congress, where it has some support.

“A carbon tax will have the effect of adding cost on the people who can least afford it,” Watson said. “If you increase energy costs you are going to make it more difficult here for industrial activity.”

Watson said he is not opposed to renewable energy, just government financial support for it through subsidies and other means. He said he would be open to buying a Tesla or another electric vehicle.

“I have no particular aversion” to electric cars, he said. “I’ll buy a car that meets all my needs, particularly around size and other characteristics.”