Chevron's (NYSE:CVX) shares have underperformed both the wider market and those of its close peers ExxonMobil (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS.B) during the past year or so. However, Chevron has spent much of 2013, and will spend much of 2014 consolidating, priming itself for growth -- great news for long-term holders.

Growth through to the end of the decade
Chevron is planning to bring a number of huge projects around the world on-stream through the end of the decade, which should boost production faster than that of its peers. In particular, Chevron's biggest, most impressive projects include the Gorgon and Wheatstone liquefied natural gas developments in Australia, and the Jack/St Malo, Big Foot, and Tubular Bells deepwater oilfields in the Gulf of Mexico. In total, these projects will add 500,000 barrels per day to Chevron's existing production within the next three to four years.

What's more, Chevron has an additional 10 large projects commencing construction/production, and a further 13 smaller projects also under consideration all within North America. Projects within North American slated for start-up after 2017 include the Kitimat LNG project and the Hebron heavy oil project off the east coast of Canada, estimated to contain 400 to 700 million barrels of recoverable oil. Additionally, Chevron has plans to develop the Mad Dog II and Stampede oil fields in the Gulf of Mexico. Within North America alone, Chevron has an impressive amount of capacity common online before 2020. 

Rise of LNG
Chevron is also set to benefit from the rapidly rising demand for liquefied natural gas, or LNG, which is set to explode during the next few years. Actually, LNG prices hit a record high at the beginning of February as Asian demand hit a record level and importers struggled to meet demand. With many major LNG projects not scheduled to come online until 2015 it is likely that the price and tight supply of LNG will continue to rise.

Chevron's Gorgon LNG plant based in Australia is one of the larger LNG projects that will be coming online within the space of the next year or so. Gorgon has been somewhat of a trouble child for Chevron as the cost of getting the facility into production has spiraled out of control, from the initial estimate of $37 billion, projected back in September 2009, to a current figure of $52 billion. This extra $15 billion isn't small change, even for Chevron and its project partner Shell.

Still, the final cost of production from Gorgon, including construction, is currently expected to be in the region of $12 per million British thermal units, or mmBtu. Prices for the super-cooled gas hit $20 per mmBtu over the 2013/2014 winter period but has since fallen to $16.50. There is plenty of room to make a profit here for both Chevron and Shell, even with the rising cost of Gorgon.

Improving margins
Nevertheless, even though Chevron's investors have plenty to look forward to in the near future, the company is struggling right now. Unfortunately, Chevron is the latest oil major to come out and cut production forecasts. The company told investors at the beginning of March that production for 2017 is now expected to be in the region of 3.1 million barrels of oil equivalent per day, down from the original forecast of 3.3 million barrels per day -- that's a 6% decline.

That being said, Chevron produced 2.597 million net oil-equivalent barrels per day during 2013, so between now and 2017 the company is expecting to increase production by 19%, or an additional 500,000 barrels of oil per day, an increase of $50 million per day to Chevron's top line -- not bad.

Further, Chevron is seeking to reduce its involvement in expensive 'megaprojects,' pulling out of those that seem expensive, instead favoring projects with more bang for the buck -- quality not quantity. "Belt-tightening" is another phrase being used repeatedly by Chevron's management as they seek to boost company performance. Overall, cost reduction and a rise in output should lead to wider profit margins for the company -- of course this is dependent upon the oil price.

Chevron's larger peer Exxon is also following this 'belt tightening' strategy and is streamlining operations, or as the company's CEO Rex Tillerson described it, "we took a set of low margin barrels off the base." Unfortunately, this will mean a year of no output growth for Exxon, but the company does plan to cut capital spending at the same time, reducing its capex budget about 6% to $39.8 billion. Exxon spent $42.5 billion on capital projects last year, but the company has stated that this was peak expenditure.

Exxon's production is expected to return to growth during 2015 and 2017 as new projects come on-stream. Adding an additional 1 million barrels of production, this should boost production by 2% to 3% annually.

Foolish summary
So overall, Chevron has numerous projects coming on-stream during the next few years, which should boost production faster than that of its peers. The company is also set to benefit from the rise of LNG, justifying heavy expenditure on huge megaprojects. With this being the case, although Chevron has underperformed during the past year, the company is set to profit in the years ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.