2010 Supplement to the Annual Report
Table of Contents
Overview
1 2010 at a Glance 2 Financial Information
Upstream
Downstream
Other Businesses
Reference
11 Highlights 14 United States 18 Other Americas 21 Africa 25 Asia 32 Australia 34 Europe 36 Gas 37 Operating Data
47 Highlights 48 Refining and Marketing 50 Lubricants 50 Trading 51 Chemicals 52 Transportation 53 Operating Data
59 Technology 60 Power Generation 60 Chevron Energy Solutions 61 Mining
62 Glossary of Energy and Financial Terms 63 Additional Information 64 Organizations
Cover photo: A derrick barge lowers the Platong Gas II living quarters onto the topside utility deck, Platong Field, Gulf of Thailand. Inside front cover photo: The Platong Gas II living quarters after installation in the Gulf of Thailand. This publication was issued in March 2011 solely for the purpose of providing additional Chevron financial and statistical data. It is not a circular or prospectus regarding any security or stock of the company, nor is it issued in connection with any sale, offer for sale of or solicitation of any offer to buy any securities. This report supplements the Chevron Corporation 2010 Annual Report to stockholders and should be read in conjunction with it. The financial information contained in this 2010 Supplement to the Annual Report is expressly qualified by reference to the 2010 Annual Report, which contains audited financial statements, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other supplemental data.
2010 at a Glance Corporate Strategies Financial-return objective – Create shareholder value and achieve sustained financial returns from operations that will enable Chevron to outperform its competitors. Enterprise strategies – Invest in people to strengthen organizational capability and develop a talented global workforce that gets results the right way. Execute with excellence through rigorous application of the company’s operational excellence and capital stewardship systems and disciplined cost management. Grow profitably by using competitive advantages to maximize value from existing assets and capture new opportunities. Major business strategies – Upstream – grow profitably in core areas, build new legacy positions and commercialize the company’s equity natural gas resource base while growing a high-impact global gas business. Downstream – improve returns and grow earnings across the value chain. The company also continues to utilize technology across all its businesses to differentiate performance and to invest in profitable renewable energy and energy efficiency solutions. Accomplishments Corporate Safety – Achieved the company’s safest year ever, setting new world-class safety records in the daysaway-from-work performance metric in both Upstream and Downstream operations.
Financial Highlights:
• Sales and other operating revenues $198 billion
• Net income attributable to Chevron Corporation $19.0 billion $9.48 per share – diluted
• Return on capital employed 17.4%
• Return on stockholders’ equity 19.3%
• Cash dividends $2.84 per share
Financial – Achieved the highest operating cash flows in the company’s history, at approximately $31 billion, and a total stockholder return that led the peer group for the previous five-year period. Dividends – Paid $5.7 billion in dividends with 2010 marking the 23rd consecutive year of higher annual dividend payouts. Annual average dividend growth over the period was 7 percent. Capital and exploratory expenditures – Invested $21.8 billion in the company’s businesses, including $1.4 billion (Chevron share) of spending by affiliates. Announced 2011 projected outlays of $26.0 billion, including $2.0 billion of affiliate expenditures. Focus continues on exploration and production activities. Stock repurchase program – Resumed the company’s common stock repurchases in the fourth quarter, acquiring $750 million of the company’s shares. Upstream Exploration – Achieved an exploration drilling success rate of 57 percent. Results included several natural gas discoveries offshore western Australia. Additionally, acquired offshore exploration leases in China, Liberia, Turkey and the United States and captured of shale gas acreage in Canada, Poland and Romania. Production – Produced 2.763 million net oil-equivalent barrels per day, approximately a 2 percent increase over 2009, with about 75 percent of the volume outside the United States in more than 20 different countries. Acquisition – Announced plans to acquire Atlas Energy, Inc., providing a shale gas acreage position in the Marcellus Shale, primarily located in southwestern Pennsylvania. (Acquisition completed in February 2011.) Major projects – Continued progress on the company’s development projects to deliver future production growth. Achieved first production at the deepwater Perdido Regional Development Project and the Athabasca Oil Sands Project Expansion and continued to increase production at the Tengizchevroil Sour Gas Injection/ Second Generation Plant Project in Kazakhstan. The company also reached final investment decision on a number of major capital projects, including Jack/St. Malo, Big Foot and Tahiti 2 in the Gulf of Mexico; PapaTerra in Brazil; and expansion of the Caspian pipeline in Kazakhstan and Russia. Natural gas projects – Delivered first gas from the Escravos Gas Project Phase 3A in Nigeria. In Australia, continued construction on Barrow Island and awarded approximately $25 billion of contracts for materials and services for the Gorgon Project. The company also executed additional binding and nonbinding agreements with Asian customers for the delivery of liquefied natural gas from the Gorgon and Wheatstone projects. Downstream Refinery upgrades – Completed project start-ups, including the Pascagoula, Mississippi, refinery continuous catalytic reformer and the Yeosu, South Korea, gas-oil hydrocracker. Construction also began on a processing unit designed to further improve the El Segundo, California, refinery’s reliability, high-value product yield and flexibility to process a range of crude slates. Chemical – Commenced operations on the ethylene cracker and polyethylene/normal alpha olefins plants in Qatar. Continued construction on a petrochemical project in Saudi Arabia with start-up expected in late 2011. Sale of nonstrategic assets – Sold a 23.4 percent ownership interest in Colonial Pipeline in the United States. Additionally, concluded the sales of businesses in Malawi, Réunion and Zambia and 21 product terminals.
Chevron Corporation 2010 Supplement to the Annual Report
1
Financial Information
Financial Summary
Annual Cash Dividends Dollars per share 3.00
Millions of dollars, except per-share amounts
2.40
1.80
1.20
Per-share data Net income attributable to Chevron Corporation – Basic $ – Diluted Cash dividends Chevron Corporation stockholders’ equity at December 31 Market price – Close at December 31 – Intraday high – Intraday low
0.60
0.00 06 07 08 09 10
Return on Capital Employed Percent
Financial ratios* Current ratio Interest coverage Debt ratio Return on stockholders’ equity Return on capital employed Return on total assets Cash dividends/net income (payout ratio) Cash dividends/cash from operations Total stockholder return
30
24
17.4
12
* Refer to page 63 for Financial ratio definitions. 6
0 06 07 08 09 10
Debt Ratio Billions of dollars/Percent 125.0
$116.6
50
100.0
40
75.0
30
50.0
20
25.0
10
0
0.0 06 07 08 09 10
Debt (left scale) Stockholders’ Equity (left scale) Ratio (right scale)
2
2009
Net income attributable to Chevron Corporation $ 19,024 $ 10,483 Sales and other operating revenues 198,198 167,402 Cash dividends – common stock 5,674 5,302 Capital and exploratory expenditures 21,755 22,237 Cash provided by operating activities 31,359 19,373 Working capital at December 31 19,829 11,005 Total assets at December 31 184,769 164,621 Total debt and capital lease obligations at December 31 11,476 10,514 Chevron Corporation stockholders’ equity at December 31 105,081 91,914 Common shares outstanding at December 31 (Millions) 1,993.3 1,993.6
$2.84
18
Year ended December 31
2010
Chevron Corporation 2010 Supplement to the Annual Report
9.53 9.48 2.84 52.72
$
91.25 92.39 66.83 1.7 101.7 9.8% 19.3% 17.4% 10.9% 29.8% 18.1% 22.9%
5.26 5.24 2.66 46.11
2008
2007
2006
$ 23,931 $ 18,688 $ 17,138
264,958 5,162 22,775 29,632 4,447 161,165 8,901 86,648 1,990.1
214,091 4,791 20,026 24,977 5,579 148,786 7,232 77,088 2,076.3
$ 11.74 $
11.67 2.53 43.54
76.99 73.97 79.82 104.63 56.12 55.50 1.4 62.3 10.3% 11.7% 10.6% 6.4% 50.6% 27.4% 8.1%
1.1 166.9 9.3 % 29.2 % 26.6 % 15.4 % 21.6 % 17.4 % (18.4) %
8.83 8.77 2.26 37.13
204,892 4,396 16,611 24,323 7,895 132,628 9,838 68,935 2,150.4
$
7.84 7.80 2.01 32.06
93.33 95.50 64.99
73.53 76.20 53.76
1.2 69.2 8.6% 25.6% 23.1% 13.3% 25.6% 19.2% 30.5%
1.3 53.5 12.5% 26.0% 22.6% 13.2% 25.7% 18.1% 33.8%
Financial Information
Consolidated Statement of Income
Year ended December 31
2010
Millions of dollars
Revenues and Other Income Sales and Other Operating Revenues1,2 Gasoline Jet fuel Gas oil and kerosene Residual fuel oil Other refined products
2009
2008
2007
2006
$ 42,553 $ 37,336 $ 53,254 $ 47,074 $ 42,639
Total Refined Products Crude oil and condensate Natural gas Natural gas liquids (NGLs) Other petroleum revenues Chemicals Excise taxes Other
14,337 25,863 6,461 6,232
11,912 23,311 5,642 5,241
95,446 68,014 17,290 3,868 2,660 1,813 8,591 (117 )
83,442 133,594 108,811 102,672 53,488 78,600 61,542 61,842 15,007 31,814 24,437 22,515 3,130 5,517 4,483 3,488 2,123 3,116 2,460 2,862 1,502 1,694 1,493 1,330 8,109 9,846 10,121 9,551 (103 ) (90 ) (73 ) (65 )
23,056 40,940 9,937 6,407
16,333 32,170 7,348 5,886
15,577 31,647 7,086 5,723
Total Upstream and Downstream All Other
197,565 633
166,698 704
264,091 867
213,274 817
204,195 697
Total Sales and Other Operating Revenues
198,198
167,402
264,958
214,091
204,892
5,637 1,093
3,316 918
5,366 2,681
4,144 2,669
4,255 971
Total Revenues and Other Income
204,928
171,636
273,005
220,904
210,118
Costs and Other Deductions Purchased crude oil and products2 Operating expenses Selling, general and administrative expenses Exploration expenses Depreciation, depletion and amortization 3 Taxes other than on income1 Interest and debt expense
116,467 19,188 4,767 1,147 13,063 18,191 50
99,653 17,857 4,527 1,342 12,110 17,591 28
171,397 20,795 5,756 1,169 9,528 21,303 –
133,309 16,932 5,926 1,323 8,708 22,266 166
128,151 14,624 5,093 1,364 7,506 20,883 451
Total Costs and Other Deductions
172,873
153,108
229,948
188,630
178,072
Income Before Income Tax Expense Income tax expense
32,055 12,919
18,528 7,965
43,057 19,026
32,274 13,479
32,046 14,838
Net Income Less: Net income attributable to noncontrolling interests
19,136 112
10,563 80
24,031 100
18,795 107
17,208 70
Income from equity affiliates Other income
Net Income Attributable to Chevron Corporation
Sales & Other Operating Revenues Billions of dollars 300.0
250.0
$198.2
200.0
150.0
100.0
50.0
0.0 06 07
08 09 10
All Other Crude Oil & Condensate, Natural Gas, & NGLs Petroleum Products & Chemicals
Net Income Attributable to Chevron Corporation Billions of dollars 25.0
20.0
$19.0
15.0
10.0
$ 19,024 $ 10,483 $ 23,931 $ 18,688 $ 17,138 5.0
1 2006
to 2009 conformed to 2010 presentation. 2 Includes amounts for buy/sell contracts; associated costs are in “Purchased crude oil and products”: 3 Includes asset impairment charges:
$ $
– 121
$ $
– 542
$ $
– 351
$ $
– 415
$ $
6,725 44
0.0 06 07 08 09 10
Chevron Corporation 2010 Supplement to the Annual Report
3
Financial Information
Worldwide Upstream Earnings Billions of dollars 25.0
20.0
$17.7
Consolidated Statement of Comprehensive Income
Year ended December 31
2010
Millions of dollars
Net income Currency translation adjustment Net unrealized holding (loss) gain on securities Net derivatives gain (loss) on hedge transactions Defined benefit plan activity – (loss) gain
2009
2008
2007
2006
$ 19,136 $ 10,563 $ 24,031 $ 18,795 $ 17,208
Other comprehensive (loss) gain, net of tax
6 (4 ) 20 (167 )
60 2 (60 ) (399 )
(112 ) (6 ) 110 (1,901 )
31 19 (6 ) 685
55 (88 ) 67 (38 )
(145 )
(397 )
(1,909 )
729
(4 )
15.0
Comprehensive Income Comprehensive income attributable to noncontrolling interests
18,991 10,166 22,122 19,524 17,204 (112 ) (80 ) (100 ) (107 ) (70 )
10.0
Comprehensive Income Attributable to Chevron Corporation
$ 18,879 $ 10,086 $ 22,022 $ 19,417 $ 17,134
5.0
Retained Earnings 0.0
Year ended December 31
2010
Millions of dollars 06 07 08 09 10
United States International
Worldwide Downstream Earnings Billions of dollars
2009
2008
2007
2006
Balance at January 1 Net income attributable to Chevron Corporation Cash dividends Adoption of new accounting standard for stripping costs in the mining industry Adoption of new accounting standard for uncertain income tax positions Tax benefit from dividends paid on unallocated ESOP (employee stock ownership plan) shares and other
$ 106,289 $ 101,102 $ 82,329 $ 68,464 $ 55,738
Retained Earnings at December 31
$ 119,641 $ 106,289 $ 101,102 $ 82,329 $ 68,464
19,024 (5,674 )
10,483 (5,302 )
23,931 (5,162 )
18,688 (4,791 )
17,138 (4,396 )
–
–
–
–
(19 )
–
–
–
(35 )
–
2
6
4
3
3
4.5
3.5
Income Attributable to Chevron Corporation by Major Operating Area $2.5
2.5
1.5
0.5
06 07 08 09 10
– United States – International
– Total
Downstream1
– United States – International
– Total
Net Income Attributable to Chevron 1 2006
Year ended December 31
2009
2008
2007
2006
$ 4,122 $ 2,262 $ 7,147 $ 4,541 $ 4,285
Upstream1
All Other2
(0.5)
2010
Millions of dollars
13,555
8,670 15,022 10,577
9,208
17,677 10,932 22,169 15,118 13,493 1,339 1,139 2,478 (1,131 )
(121 ) 594 473 (922 )
1,369 1,783
1,209 2,387
2,353 1,808
3,152
3,596
4,161
(1,390 )
(26 )
(516 )
$ 19,024 $ 10,483 $ 23,931 $ 18,688 $ 17,138
to 2009 conformed to 2010 segment presentation. mining operations, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels and technology companies, and the company’s investment in Dynegy Inc. prior to its sale in May 2007.
International United States
2 Includes
4
Chevron Corporation 2010 Supplement to the Annual Report
Financial Information
Consolidated Balance Sheet
At December 31
2010
Millions of dollars
Assets Cash and cash equivalents Time deposits Marketable securities Accounts and notes receivable, net Inventories Crude oil and petroleum products Chemicals Materials, supplies and other
2009
2008
2007
2006
$ 14,060 $ 8,716 $ 9,347 $ 7,362 $ 10,493
2,855 155 20,759
– 106 17,703
– 213 15,856
– 732 22,446
– 953 17,628
3,589 395 1,509
3,680 383 1,466
5,175 459 1,220
4,003 290 1,017
3,586 258 812
5,493 5,519
5,529 5,162
6,854 4,200
5,310 3,527
4,656 2,574
Total inventories Prepaid expenses and other current assets
Total Current Assets Long-term receivables, net Investments and advances Properties, plant and equipment, at cost Less: Accumulated depreciation, depletion and amortization
48,841 2,077 21,520 207,367 102,863
37,216 2,282 21,158 188,288 91,820
36,470 2,413 20,920 173,299 81,519
39,377 2,194 20,477 154,084 75,474
36,304 2,203 18,552 137,747 68,889
Net properties, plant and equipment Deferred charges and other assets Goodwill Assets held for sale
104,504 3,210 4,617 –
96,468 2,879 4,618 –
91,780 4,711 4,619 252
78,610 3,491 4,637 –
68,858 2,088 4,623 –
Total Assets Liabilities and Equity Short-term debt Accounts payable Accrued liabilities Federal and other taxes on income Other taxes payable
Total Current Liabilities Long-term debt and capital lease obligations Deferred credits and other noncurrent obligations Noncurrent deferred income taxes Reserves for employee benefit plans
Total Liabilities Chevron Corporation stockholders’ equity Noncontrolling interests
Total Equity Total Liabilities and Equity
$184,769 $164,621 $161,165 $148,786 $132,628
187 $ 384 $ 2,818 $ 1,162 $ 2,159 19,259 16,437 16,580 21,756 16,675 5,324 5,375 8,077 5,275 4,546 2,776 2,624 3,079 3,972 3,626 1,466 1,391 1,469 1,633 1,403
$
29,012 11,289 19,264 12,697 6,696
26,211 10,130 17,390 11,521 6,808
32,023 6,083 17,678 11,539 6,725
33,798 6,070 15,007 12,170 4,449
28,409 7,679 11,000 11,647 4,749
78,958
72,060
74,048
71,494
63,484
105,081 730
91,914 647
86,648 469
77,088 204
68,935 209
105,811
92,561
87,117
77,292
69,144
$ 184,769 $164,621 $ 161,165 $ 148,786 $ 132,628
Segment Assets Millions of dollars
At December 31
2010
2009
2008
2007
2006
Upstream1,2 Downstream1
$120,242 $111,305 $ 108,440 $ 92,907 $ 80,677
Total Segment Assets
$162,207 $151,240 $ 146,282 $ 135,440 $ 116,968
All Other2
Total Assets
41,965 22,562
39,935 13,381
37,842 14,883
42,533 13,346
36,291 15,660
$184,769 $164,621 $161,165 $ 148,786 $ 132,628
1 2006
to 2009 conformed to 2010 segment presentation. goodwill associated with the acquisition of Unocal Corporation: $ 4,617 $ 4,618 $ 4,619 $ 4,637 $ 4,623 Other” assets consist primarily of worldwide cash, cash equivalents and marketable securities, real estate, information systems, the company’s investment in Dynegy Inc. prior to its disposition in 2007, mining operations, power generation businesses, technology companies, and assets of the corporate administrative functions.
2 Includes 3 “All
Chevron Corporation 2010 Supplement to the Annual Report
5
Financial Information
Cash From Operating Activities Compared With Capital Expenditures & Dividends
Consolidated Statement of Cash Flows
Billions of dollars
Operating Activities Net income $ 19,136 $ 10,563 $ 24,031 $ 18,795 $ 17,208 Adjustments Depreciation, depletion and amortization 13,063 12,110 9,528 8,708 7,506 Dry hole expense 496 552 375 507 520 Distributions less than income from equity affiliates (501 ) (103 ) (440 ) (1,439 ) (979 ) Net before-tax gains on asset retirements and sales (1,004 ) (1,255 ) (1,358 ) (2,315 ) (229 ) Net foreign currency effects 251 466 (355 ) 378 259 Deferred income tax provision 559 467 598 261 614 Net decrease (increase) in operating working capital composed of: (Increase) decrease in accounts and notes receivable (2,767 ) (1,476 ) 6,030 (3,867 ) 17 Decrease (increase) in inventories 15 1,213 (1,545 ) (749 ) (536 ) Increase in prepaid expenses and other current assets (542 ) (264 ) (621 ) (370 ) (31 ) Increase (decrease) in accounts payable and accrued liabilities 3,049 (1,121 ) (4,628 ) 4,930 1,246 Increase (decrease) in income and other taxes payable 321 (653 ) (909 ) 741 348
36.0
$31.4 27.0
$25.4
18.0
9.0
0.0 06
07
08
09
10
Dividends Capital Expenditures Cash From Operating Activities
Millions of dollars
Net decrease (increase) in operating working capital Increase in long-term receivables Decrease (increase) in other deferred charges Cash contributions to employee pension plans Other
Net Cash Provided by Operating Activities Investing Activities Capital expenditures Repayment of loans by equity affiliates Proceeds from asset sales Time deposits purchased Time deposits matured Net purchases of time deposits Marketable securities purchased Marketable securities sold Net (purchases) sales of marketable securities Net (purchases) sales of other short-term investments
Net Cash Used for Investing Activities
2009
2008
76 (12 ) 48 (1,450 ) 697
(2,301 ) (258 ) 201 (1,739 ) 670
(1,673 ) (161 ) (84 ) (839 ) 10
31,359
19,373
29,632
2007
685 (82 ) (530 ) (317 ) 326 24,977
2006
1,044 (900 ) 232 (449 ) (503 ) 24,323
(19,612 ) (19,843 ) (19,666 ) (16,678 ) (13,813 ) 338 336 179 21 463 1,995 2,564 1,491 3,338 989 (5,060 ) – – – – 2,205 – – – – (2,855 ) (90 ) 41
– (30 ) 157
– (3,236 ) 3,719
– (1,975 ) 2,160
(49 ) (732 )
127 244
483 432
185 (799 )
– (1,271 ) 1,413 142 –
(20,915 ) (16,572 ) (17,081 ) (13,933 ) (12,219 )
Financing Activities Net (payments) borrowings of short-term obligations Proceeds from issuances of long-term debt Repayments of long-term debt and other financing obligations Net (purchases) sales of treasury shares Cash dividends – common stock Distributions to noncontrolling interests
(212 ) 1,250 (156 ) (306 ) (5,674 ) (72 )
(3,192 ) 5,347 (496 ) 168 (5,302 ) (71 )
Net Cash Used for Financing Activities
(5,170 )
(3,546 ) (10,400 ) (14,295 ) (11,848 )
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Change in Cash and Cash Equivalents Cash and cash equivalents at January 1 Cash and Cash Equivalents at December 31
6
Year ended December 31
2010
Chevron Corporation 2010 Supplement to the Annual Report
2,647 – (965 ) (6,821 ) (5,162 ) (99 )
(345 ) 650 (3,343 ) (6,389 ) (4,791 ) (77 )
(677 ) – (2,224 ) (4,491 ) (4,396 ) (60 )
70
114
(166 )
120
194
5,344 8,716
(631 ) 9,347
1,985 7,362
(3,131 ) 10,493
450 10,043
$ 14,060 $ 8,716 $ 9,347 $ 7,362 $ 10,493
Financial Information
Capital and Exploratory Expenditures (Includes equity share in affiliates)
Year ended December 31
2010
Millions of dollars
2009
2008
2007
2006
United States Exploration $ 638 $ 605 $ 1,305 $ 736 $ 810 Production 2,800 2,656 4,211 3,822 3,313 Other Upstream1 12 33 132 37 20 Refining 948 1,505 1,593 1,099 770 Marketing 49 133 196 160 142 Chemicals 264 210 407 218 146 1 Other Downstream 195 239 261 280 244 All Other 286 402 618 768 403
5,192
5,783
8,723
7,120
5,848
International Exploration Production Other Upstream1 Refining1 Marketing Chemicals Other Downstream1 All Other
2,077 12,173 1,204 629 197 69 201 13
1,385 12,463 1,154 959 202 92 196 3
1,173 10,771 769 801 311 78 142 7
1,266 9,714 325 863 438 53 241 6
1,339 7,357 431 942 388 54 238 14
Total International
16,563
16,454
14,052
12,906
10,763
Worldwide Exploration Production Other Upstream1 Refining1 Marketing Chemicals Other Downstream1 All Other
2,715 14,973 1,216 1,577 246 333 396 299
1,990 15,119 1,187 2,464 335 302 435 405
2,478 14,982 901 2,394 507 485 403 625
2,002 13,536 362 1,962 598 271 521 774
2,149 10,670 451 1,712 530 200 482 417
Total United States
Billions of dollars 25.0
$21.8 20.0
15.0
10.0
5.0
Total Worldwide
$ 21,755 $ 22,237 $ 22,775 $ 20,026 $ 16,611
Memo: Equity share of affiliates’ expenditures included above
$ 1,388 $ 1,585 $ 2,306 $ 2,336 $ 1,919
Exploration Expenses2
0.0 06 07 08 09 10
All Other Downstream Upstream *Includes equity share in affiliates.
Year ended December 31
2010
Millions of dollars
255 $ 496 396
2009
2008
Total Exploration Expenses
$ 1,147 $ 1,342 $ 1,169 $ 1,323 $ 1,364
186 $ 961
451 $ 891
329 $ 375 465
370 $ 799
367 $ 507 449
2006
$
Memo: United States $ International
328 $ 552 462
2007
Geological and geophysical Unproductive wells drilled Other3
1 2006
Capital & Exploratory Expenditures*
511 $ 812
429 520 415
431 933
to 2009 conformed to 2010 presentation. companies only. Excludes amortization of undeveloped leaseholds. expensed well contributions, oil and gas lease rentals, and research and development costs.
2 Consolidated 3 Includes
Chevron Corporation 2010 Supplement to the Annual Report
7
Financial Information
Properties, Plant and Equipment
Net Properties, Plant & Equipment by Geographic Area
(Includes capital leases)
At December 31
2010
Millions of dollars
Billions of dollars 125.0
$104.5 100.0
Net Properties, Plant and Equipment at January 1 Additions at Cost Upstream1,2 Downstream1 All Other3
50.0
25.0
0.0 06 07 08 09 10
United States International
Net Properties, Plant & Equipment by Function Billions of dollars 125.0
$104.5 100.0
75.0
50.0
2008
2007
2006
$ 96,468 $ 91,780 $ 78,610 $ 68,858 $ 63,690
Total Additions at Cost 75.0
2009
19,315 1,560 270
14,321 2,330 357
20,392 2,598 603
16,270 2,093 685
11,041 1,708 278
21,145
17,008
23,593
19,048
13,027
Depreciation, Depletion and Amortization Expense4 Upstream1 Downstream1 All Other3
(11,055 ) (10,238 ) (1,179 ) (1,106 ) (316 ) (303 )
(7,750 ) (1,103 ) (245 )
(6,960 ) (1,151 ) (198 )
(6,029 ) (1,037 ) (165 )
Total Depreciation, Depletion and Amortization Expense
(12,550 ) (11,647 )
(9,098 )
(8,309 )
(7,231 )
Net Retirements and Sales Upstream1 Downstream1 All Other3
(254 ) (246 ) (18 )
(295 ) (90 ) (30 )
(504 ) (579 ) (35 )
(151 ) (373 ) (13 )
(192 ) (239 ) (34 )
Total Net Retirements and Sales
(518 )
(415 )
(1,118 )
(537 )
(465 )
Net Intersegment Transfers and Other Changes5 Upstream1,6 Downstream1,6 All Other3
(64 ) 6 17
(137 ) (122 ) 1
(346 ) 121 18
(136 ) (305 ) (9 )
(2 ) (140 ) (21 )
Total Net Intersegment Transfers and Other Changes
(41 )
(258 )
(207 )
(450 )
(163 )
Net Properties, Plant and Equipment at December 31 Upstream1,7 Downstream1 All Other3
87,665 14,327 2,512
79,723 14,186 2,559
76,072 13,174 2,534
64,280 12,137 2,193
55,257 11,873 1,728
Total Net Properties, Plant and Equipment at December 31
$ 104,504 $ 96,468 $ 91,780 $ 78,610 $ 68,858
Memo: Gross properties, plant and equipment Accumulated depreciation, depletion and amortization
$ 207,367 $ 188,288 $ 173,299 $ 154,084 $ 137,747
$ 104,504 $ 96,468 $ 91,780 $ 78,610 $ 68,858
Net properties, plant and equipment
(102,863 ) (91,820 ) (81,519 ) (75,474 ) (68,889 )
1 2006
to 2009 conformed to 2010 segment presentation. of exploratory well write-offs. mining operations, power generation businesses, real estate assets and management information systems. 4 Difference between the total depreciation, depletion and amortization (DD&A) and total DD&A expense shown on the income statement relates to accretion expense. Reconciliation as follows: DD&A on consolidated statement of income Less: Accretion expense 2 Net
3 Primarily
25.0
0.0 06
07 08 09 10
DD&A – Properties, plant and equipment
All Other Downstream Upstream
$
13,063 $ (513 )
12,110 $ (463 )
9,528 $ (430 )
8,708 $ (399 )
$
12,550
$
11,647
$
9,098
$
8,309
$
7,231
$
5,081
$
5,321
$
5,367
$
4,927
$
5,218
7,506 (275 )
5 Includes
reclassifications to/from other asset accounts. 6 Includes reclassification adjustments for “Assets held for sale” in 2008. 7 Includes net investment in unproved oil and gas properties:
8
Chevron Corporation 2010 Supplement to the Annual Report
Financial Information
Miscellaneous Data 2010
2009
2008
2007
2006
1,993.3 1,995.9 188
1,993.6 1,991.5 197
1,990.1 2,037.4 206
2,076.3 2,116.6 216
2,150.4 2,185.0 225
Common Stock Number of shares outstanding at December 31 (Millions) Weighted-average shares outstanding for the year (Millions) Number of stockholders of record at December 31 (Thousands) Cash dividends on common stock Millions of dollars Per common share Net income attributed to Chevron Corporation per common share – Diluted First quarter Second quarter Third quarter Fourth quarter Year Chevron Corporation stockholders’ equity per common share at December 31
Capital Employed at December 31 (Millions of dollars) Upstream – United States 6,7 – International 6,7 – Goodwill
$
2.27 $ 2.70 1.87 2.64
0.92 $ 0.87 1.92 1.53
2.48 $ 2.90 3.85 2.44
2.18 $ 2.52 1.75 2.32
1.80 1.97 2.29 1.74
$
9.48 $
5.24 $ 11.67 $
8.77 $
7.80
$ 52.72 $ 46.11 $ 43.54 $ 37.13 $ 32.06
58,267 3,929
59,963 4,169
61,604 5,041
59,162 5,873
55,882 6,572
100
$91.25
62,196
64,132
66,645
65,035
62,454
60
40
20
0 06 07 08 09
$ 4,918 $ 4,627 $ 4,473 $ 4,016 $ 3,500 $ 2,793 $ 2,473 $ 2,196 $ 2,100 $ 1,742 $ 1,886 $ 1,607 $ 1,441 $ 1,300 $ 1,265 $ 3,002 $ 2,436 $ 3,875 $ 3,200 $ 3,198 $ 6,488 $ 5,897 $ 5,661 $ 5,250 $ 4,775 $ 14,751 $ 15,636 $ 15,027 $ 13,684 $ 12,057
60,621 4,617
55,080 4,618
47,793 4,619
41,329 4,637
35,784 4,623
– Total
79,989
75,334
67,439
59,650
52,464
Downstream
– United States 6,7 – International 6,7
11,694 10,309
11,417 10,211
9,966 12,086
7,901 11,666
6,951 11,360
– Total
22,003
21,628
22,052
19,567
18,311
15,294
6,113
6,527
5,307
8,207
All Other
Total Capital Employed
Dollars per share
80
$ 5,674 $ 5,302 $ 5,162 $ 4,791 $ 4,396 $ 2.84 $ 2.66 $ 2.53 $ 2.26 $ 2.01
Personnel, Payroll and Benefits1 Number of employees at December 31 Excluding service station employees Service station employees Total Payroll costs2 (Millions of dollars) Employee benefit costs3 (Millions of dollars) Investment per employee at December 31 4 (Thousands of dollars) Average sales per employee 5 (Thousands of dollars) Average monthly wage per employee
Chevron Year-End Common Stock Price
$ 117,286 $ 103,075 $ 96,018 $ 84,524 $ 78,982
Petroleum Inventories at December 311,8 (Millions of barrels) Raw stocks Unfinished stocks Finished products Total
74 33 37
78 33 39
95 31 46
84 28 51
81 29 48
144
150
172
163
158
1 Consolidated
companies only. incentive bonuses. pension costs, employee severance, savings and profit-sharing plans, other postemployment benefits, social insurance plans and other benefits. 4 Investment = Total year-end capital employed. 5 Average sales per employee = Sales and other operating revenues (net of excise taxes)/Average number of employees (beginning and end of year). 6 2006 to 2009 conformed to 2010 segment presentation. 7 Includes a realignment of accounts receivable from Downstream to Upstream that reflects Upstream equity crude marketed by Downstream: United States International 2 Excludes 3 Includes
Total 8 On
$
1,141 2,298
$
1,052 1,881
$
270 702
$
1,055 2,052
$
725 1,464
$
3,439
$
2,933
$
972
$
3,107
$
2,189
an “owned” inventories basis (i.e., physical inventory adjusted for volumes payable to receivable from others).
Chevron Corporation 2010 Supplement to the Annual Report
9
10
Upstream Grow profitably in core areas, build new legacy positions and commercialize the company’s equity natural gas resource base while growing a high-impact global gas business.
Photo: Natural gas/fuel-oil fired steam generators for the Large-Scale Steamflood Pilot at the First Eocene heavy-oil carbonate reservoir in the Partitioned Zone.
Highlights
Highlights
Upstream
Upstream Portfolio
Worldwide net oil-equivalent production averaged 2.763 million barrels per day in 2010, 2 percent higher than in 2009. About 26 percent of 2010 production was in the United States and another 13 percent was in Kazakhstan. The company’s producing operations are geographically dispersed, with no other country accounting for more than 10 percent of the company’s total worldwide output. The company’s focus areas for exploration in 2010 were the deepwater regions of West Africa, the U.S. Gulf of Mexico and offshore northwest Australia. Drilling and seismic activities occurred or were in various stages of planning in several test areas, including offshore United Kingdom, the eastern coast of Canada and deepwater Brazil. In addition, new exploration areas were added in Canada, China, Liberia, Poland, Romania and Turkey.
Exploration
Production
Aligned with the activities in both exploration and production is the company’s strategy to commercialize its significant worldwide natural gas resource base through the development and integration of business activities, including producing, liquefying, transporting, regasifying and marketing natural gas. Industry Conditions Average prices for crude oil were higher in 2010 than in 2009. The spot price for West Texas Intermediate crude oil, a benchmark crude, averaged $79 per barrel for full-year 2010, compared with $62 in 2009. The increase in average prices from 2009 is largely associated with improved global economic conditions. In contrast to price movements in the global market for crude oil, price changes for natural gas in many regional markets are more closely aligned with supply-and-demand conditions in those markets. In the United States during 2010, benchmark prices at Henry Hub averaged $4.50 per thousand cubic feet (MCF), compared with about $3.80 per MCF in 2009. Fluctuations in the price for natural gas in the United States are closely associated with customer demand relative to the volumes produced in North America and the level of inventory in underground storage. In 2010, Chevron’s international natural gas realizations averaged approximately $4.60 per MCF, compared with about $4.00 per MCF during 2009. These realizations reflect a strong demand for energy in certain Asian markets. Business Strategies Grow profitably in core areas and build new legacy positions by:
• • • • • •
Achieving world-class operational performance. Maximizing and growing the base business. Leading the industry in selection and execution of major capital projects. Achieving superior exploration success. Growing and developing equity gas resource base. Identifying, capturing and effectively incorporating new core upstream businesses.
2010 Accomplishments Worldwide
• Achieved a world-class safety record in the days-away-from-work performance metric. • Reported net income of $17.7 billion. • Produced 2.763 million net oil-equivalent barrels per day including synthetic oil, 2 percent higher than oil-equivalent production, including oil sands, in 2009.
• Achieved an exploration drilling success rate of 57 percent.
Chevron Corporation 2010 Supplement to the Annual Report
11
Upstream
Highlights
United States • Accomplished major milestones on Gulf of Mexico projects:
—— Achieved first production at the deepwater Perdido Regional Development Project. —— Reached final investment decisions for the Big Foot, Jack/St. Malo and Tahiti 2 deepwater projects. —— Added 42 offshore leases – 15 in the deep water and 27 on the shelf. • Reached agreement to acquire Atlas Energy, Inc. • Produced the company’s 5 billionth barrel of net oil-equivalent production from the Permian Basin. International Exploration: • Angola – Made a pre-salt exploration discovery in Block 0 located near the planned Greater Vanza/Longui Area development.
• Australia – Announced several natural gas discoveries during 2010 and early 2011 offshore Western Australia that are expected to contribute to future growth at company-operated liquefied natural gas (LNG) projects.
• • • • • • •
Canada – Acquired shale gas acreage in Western Canada and secured a new exploration lease in the Beaufort Sea. China – Acquired interest in three deepwater exploration blocks in the South China Sea. Liberia – Acquired interest in three deepwater concessions. Poland – Acquired an additional shale gas concession area in southeast Poland. Romania – Awarded three shale gas exploration blocks. Russia – Signed Heads of Agreement (HOA) for deepwater exploration of the Shatsky Ridge in the Russian Black Sea. Turkey – Acquired a deepwater exploration lease in the Turkish Black Sea.
Project Execution: • Brazil – Reached final investment decision for the deepwater Papa-Terra project.
• • • • •
Canada – Achieved first production from the Athabasca Oil Sands Project (AOSP) Expansion. Canada – Received government approval for front-end engineering and design (FEED) at Hebron project. China – Continued construction of the natural gas purification plant at Chuandongbei. Indonesia – Received government approval of FEED for the Gendalo-Gehem natural gas project, offshore East Kalimantan. Kazakhstan – Continued to increase production at the Tengizchevroil (TCO) Sour Gas Injection/Second Generation Plant Project in Kazakhstan.
• Kazakhstan/Russia – Reached final investment decision for the Caspian Pipeline Consortium Expansion Project. • Thailand – Completed installation of a central processing platform jacket and living quarters module for the Platong Gas II project. • Vietnam – Awarded a contract for FEED for the Block B Gas Project offshore development and signed a Business Cooperation Contract for the Block B Gas Pipeline project.
• Venezuela – Signed an agreement to work toward commercializing a heavy-oil project in three blocks within the Carabobo Area of eastern Venezuela’s Orinoco Belt. Global Natural Gas Projects • Angola – Continued construction on the Angola LNG project and installed the roof on the first of four LNG tanks.
• Angola – Secured right-of-way for Congo River Crossing Pipeline. • Australia – Awarded approximately $25 billion of contracts for materials and services for the Gorgon Project. • Australia – Executed binding and nonbinding agreements with Asian customers for the delivery of LNG from the Gorgon and Wheatstone projects.
• Nigeria – Delivered first gas from the Escravos Gas Project Phase 3A.
12
Chevron Corporation 2010 Supplement to the Annual Report
Highlights
Upstream
2011 Outlook • Complete acquisition of Atlas Energy, Inc. (Acquisition completed February 2011.)
• Project execution – Advance major projects that are expected to add production in 2011 and beyond: —— Canada – Commence shale gas appraisal drilling program in Alberta. —— Canada – Complete AOSP Expansion 1 Upgrader modifications. —— China – Continue construction and development at Chuandongbei gas project. —— Indonesia – Commence FEED for the Bangka natural gas project. —— Kazakhstan – Commence FEED for the TCO Future Growth Project. —— Nigeria – Continue drilling at Agbami to maintain plateau production. —— Thailand – Achieve first production on the Platong Gas II Project. —— United Kingdom – Reach final investment decision for the Clair Ridge development. —— United States – Reach final investment decision for the Tubular Bells development. —— United States – Commence FEED for the Mad Dog II development project. —— Vietnam – Reach final investment decision for the Block B Gas Development Project. • Exploration – Deliver new hydrocarbon resources through continued exploration investment; build on previous discoveries and appraisal successes. Resume deepwater exploratory drilling in the U.S. Gulf of Mexico.
• Base business – Continue major initiatives to improve operating efficiencies, reduce decline rates and lower costs. • Global Natural Gas Projects – Progress activities to commercialize the company’s natural gas resource base: —— Angola – Continue construction of the Angola LNG Project. —— Australia – Continue construction of the Gorgon Project. In early 2011 signed a binding Sales and Purchase Agreement (SPA) with an Asian customer, bringing contracted volumes from signed binding SPAs and nonbinding HOAs to approximately 90 percent of the company’s LNG offtake for the project.
—— Australia – Reach final investment decision for the Wheatstone Project. —— Nigeria – Continue construction of the EGTL facility. Upstream Financial and Operating Highlights1 Dollars in millions
Segment earnings2 Gross liquids production 3 (Thousands of barrels per day) Net liquids production 3 (Thousands of barrels per day) Other produced volumes 4 (Thousands of barrels per day) Gross natural gas production 3 (Millions of cubic feet per day) Net natural gas production 3 (Millions of cubic feet per day) Gross proved liquids reserves 3 (Millions of barrels) Net proved liquids reserves 3 (Millions of barrels) Gross proved natural gas reserves 3 (Billions of cubic feet) Net proved natural gas reserves 3 (Billions of cubic feet) Natural gas sales (Millions of cubic feet per day) Natural gas liquids sales (Thousands of barrels per day) Net productive exploratory oil and gas wells completed 5 Net productive development oil and gas wells completed 5 Net productive wells at year-end 5,6 Net oil and gas acreage 7,8 (Thousands of acres) Exploration expenditures Production expenditures Other upstream expenditures2 Total upstream capital and exploratory expenditures2
United States
International
2010
2009
2010
2009
$ 4,122
$ 2,262
$ 13,555
$ 8,670
527 489 – 1,507 1,314 1,376 1,275 2,813 2,472 5,932 22 1 634 38,182 8,857 $ 638 $ 2,800 $ 12 $ 3,450
523 484 — 1,611 1,399 1,463 1,361 3,074 2,698 5,901 17 4 582 38,391 7,477 $ 605 $ 2,656 $ 33 $ 3,294
1,989 1,434 – 4,732 3,726 6,869 5,228 26,476 21,779 4,493 27 11 522 14,907 60,286 $ 2,077 $ 12,173 $ 1,204 $ 15,454
1,857 1,362 26 4,519 3,590 7,234 5,612 27,741 23,351 4,062 23 16 669 12,831 56,314 $ 1,385 $ 12,463 $ 1,154 $ 15,002
1 Includes
equity share in affiliates unless otherwise noted. conformed to 2010 segment presentation. production or gross reserves are the company’s share of total production or total reserves before deducting royalties (and a government’s agreed-upon share of production under a production-sharing contract [PSC]). Net production or net reserves are after deducting royalties (and a government’s agreed-upon share of production under a PSC). 4 Represents volumes produced at Athabasca (Canada) Oil Sands in 2009. 5 Net wells include all wholly owned wells and the sum of the fractional interests in wells that are associated with joint ventures or unitized operations. 6 Includes wells producing or capable of producing and injection wells temporarily functioning as producing wells. 7 Does not include mining acreage associated with synthetic oil production in Canada. 8 Consolidated companies only. 2 2009
3 Gross
Chevron Corporation 2010 Supplement to the Annual Report
13
Upstream
United States
United States Chevron’s U.S. portfolio is composed of a diverse group of assets concentrated in California, the Gulf of Mexico, Louisiana, Texas, New Mexico, the Rocky Mountains and Alaska. In February 2011, the company added natural gas resources and shale acreage primarily in southwestern Pennsylvania and Michigan with the acquisition of Atlas Energy, Inc. In 2010, exploratory drilling efforts were primarily concentrated in the deepwater Gulf of Mexico, where a successful appraisal well was completed early in the year. The governmentimposed deepwater drilling moratorium halted drilling activities at several exploration prospects and also impacted development drilling activity in the Gulf of Mexico. The company was the thirdlargest hydrocarbon producer in the United States during 2010, with net daily oil-equivalent production averaging 708,000 barrels, representing approximately one-fourth of the companywide total. California Operating primarily in the San Joaquin Valley, Chevron again ranked No. 1 in net daily oil-equivalent production in California in 2010 at 199,000 barrels, composed of 178,000 barrels of crude oil, 96 million cubic feet of natural gas and 5,000 barrels of natural gas liquids (NGLs). The majority of the production is from company-operated leases located in a portion of three major crude oil fields: Kern River, Midway Sunset and Cymric. In 2010, the total daily production from these leases was 136,000 barrels of crude oil (133,000 net) and 14 million cubic feet of natural gas (14 million net). With respect to these operated leases, Chevron’s interest by field was: Kern River, 100 percent; Midway Sunset, 99 percent; and Cymric, 100 percent. With approximately 84 percent of the company’s crude oil production in California considered heavy oil (typically with API gravity lower than 22 degrees), thermal recovery techniques utilizing steam are applied to increase oil recovery. Heat management continues to be a major operational focus in the recovery of these reserves, with emphasis on improved energy efficiency. The Kern River Field, a mature steamflood operation, had total average daily production from company-operated leases of 75,000 barrels of crude oil (74,000 net) and 2 million cubic feet of natural gas (2 million net). The company drilled 165 infill wells at Kern River in 2010 and planned to drill approximately 197 infill wells in 2011. More than 195 horizontal wells have been drilled in Kern River since 2006 to more efficiently develop remaining resources. Total daily production from these wells averaged 12,000 barrels of crude oil (12,000 net) in 2010. A pilot project to drill horizontal wells at depths of less than 500 feet (152 m) from the surface was initiated in 2010 and is planned to continue into 2011. In addition, the company continues to progress the development of increased water and natural gas handling capacity at the field, which is expected to be completed in third quarter 2011. Dewatering of the reservoir from areas underlying the crude oil accumulation is successfully reducing reservoir pressure and enabling economic steamflooding, resulting in incremental crude oil production and reserve additions. Diatomite Reservoirs Chevron has crude oil resources in diatomite reservoirs at the Cymric, McKittrick, Midway Sunset and Lost Hills fields. Formed from the remains of microorganisms called diatoms, diatomite is a reservoir rock with very high porosity and low permeability, making commercial production difficult. In 2010,
14
Chevron Corporation 2010 Supplement to the Annual Report
approximately 42,000 barrels per day, 21 percent of the company’s net oil-equivalent production in California, were produced from these diatomite reservoirs. The diatomite reservoirs at Cymric, McKittrick and Midway Sunset contain heavy oil. A recovery technique utilizing a high-pressure cyclic steaming process continues to improve recovery from Cymric’s Antelope reservoir, and the process is also being used at McKittrick and Midway Sunset. The company drilled 64 wells in new, infill and replacement locations during 2010 and plans to drill an additional 56 wells in these diatomite reservoirs in 2011. In the Lost Hills Field (a light-oil, diatomite reservoir), the company drilled 25 production wells during 2010. Waterflood technology is being used to improve recovery of the field’s hydrocarbons.
Lost Hills
Kern River
Cymric and McKittrick Bakersfield
Midway Sunset
Elk Hills
Taft
Chevron Activity Highlight
California
San Joaquin Valley Crude Oil Field
Elk Hills An active development program continued at the Elk Hills Field, in which the company has an average nonoperated working interest of 23 percent in four producing zones. During 2010, 197 development wells (including producers and injectors) and one delineation well were drilled, including drilling in shale zones, which continued to extend producing boundaries. Total daily production was 44,000 barrels of crude oil (10,000 net), 283 million cubic feet of natural gas (65 million net) and 18,000 barrels of NGLs (4,000 net). In the Shallow Oil Zone, nitrogen injection optimization continued and a second alkaline surfactant polymer flood pilot was initiated. These enhanced-recovery activities are intended to allow production of additional crude oil and natural gas that would not be recoverable using conventional methods. Gulf of Mexico During 2010, net daily oil-equivalent production for the company’s combined interests in the Gulf of Mexico shelf and deepwater areas and the onshore fields in the region averaged 260,000 barrels, composed of 169,000 barrels of crude oil, 445 million cubic feet of natural gas and 17,000 barrels of NGLs. Chevron has an interest in 686 leases in the Gulf of Mexico, 404 of which are located in water depths greater than 1,000 feet (305 m). At the end of 2010, the company was the largest leaseholder in the Gulf of Mexico.
United States
In April 2010, an accident occurred at the competitor-operated Macondo prospect in the deepwater Gulf of Mexico. Chevron was not a participant in the well. Subsequent to the event, the U.S. Department of the Interior placed a moratorium on the drilling of wells using subsea blowout preventers (BOPs) or surface BOPs on a floating facility in the Gulf of Mexico and the Pacific regions. During the moratorium, Chevron participated in a number of industry efforts to identify opportunities to improve industry standards in prevention, intervention and spill response. In July 2010, Chevron and several other major energy companies announced plans to build and deploy a rapid response system that will be available to capture and contain oil in the unlikely event of a potential future well blowout in the deepwater Gulf of Mexico. In October 2010, the Secretary of the Interior lifted the moratorium on deepwater drilling activity, provided that operators certify compliance with new rules and requirements. The moratorium and the ensuing slowdown in issuing drilling permits have resulted in delays in shallow water drilling activity, delayed drilling of exploratory deepwater wells and impacted development drilling in the Gulf of Mexico. The company’s net oil-equivalent production for 2010 in the Gulf of Mexico was reduced by about 10,000 barrels per day, as a result of these delays. In February 2011, the Marine Well Containment Company, that Chevron and other major energy companies formed, announced the completion and availability of an initial well containment response system located on the U.S. Gulf Coast that can operate in water depths up to 8,000 feet (2,438 m) and has storage and processing capacity for up to 60,000 barrels per day of liquids. Also in late February, the government issued the first deepwater drilling permit since April 2010 to another company. Mississippi Texas
15,000 feet (4,572 m), near producing infrastructure. A total of 27 new Outer Continental Shelf leases were added to the exploration portfolio following the Gulf of Mexico Lease Sale 213 (Central Planning Area) in further support of this deep-gas program. Deep Water Chevron is one of the top leaseholders in the deepwater Gulf of Mexico, averaging net daily production of 119,000 barrels of crude oil, 62 million cubic feet of natural gas and 8,000 barrels of NGLs during 2010. Production Blind Faith Total daily production in 2010 averaged 48,000 barrels of crude oil (36,000 net), 29 million cubic feet of natural gas (22 million net) and 3,000 barrels of NGLs (2,000 net). Chevron operates and holds a 75 percent working interest in this project. Blind Faith is a four-well subsea development with a tieback to a deep draft, semi-submersible facility, located in Mississippi Canyon. It is the company’s deepest operated offshore production facility, located in 6,500 feet (1,981 m) of water with the subsea wells located in 7,000 feet (2,134 m) of water. The field has an estimated production life of 20 years and is estimated to contain more than 100 million barrels of potentially recoverable oil-equivalent. Mad Dog Total daily production averaged 49,000 barrels of crude oil (8,000 net) and 8 million cubic feet of natural gas (1 million net) during 2010. Chevron has a 15.6 percent nonoperated working interest in this spar floating production facility and field. Due to the loss of the platform drilling rig during Hurricane Ike in 2008, development drilling was stopped. In 2009, the partners authorized replacement of the drilling rig, and development drilling is expected to resume in 2012 once the new rig is installed. An appraisal well to test the Mad Dog north flank potential is Alabama planned for 2011.
Pascagoula Louisiana New Orleans
Houston
Petronius
Tubular Bells
SHELF
Blind Faith
Genesis DEEP WATER Perdido Regional Development Silvertip Tobago Great White
Tahiti Caesar/Tonga
Knotty Head
Buckskin
Jack
Mad Dog Big Foot St. Malo
GULF OF MEXICO
Chevron Activity Highlight
Shelf Chevron is one of the largest producers of crude oil and natural gas on the Gulf of Mexico shelf. Average net daily production in 2010 was 50,000 barrels of crude oil, 382 million cubic feet of natural gas and 9,000 barrels of NGLs. The company drilled 50 development and delineation wells during 2010 and participated in two deep-gas exploration wells. Deep-gas exploration is focused on a series of trends and prospects with subsurface targets below
Upstream
Perdido Regional Development First oil at the Perdido development was achieved in first quarter 2010; however, production was shut-in shortly after first oil when issues with the compression and export gas systems arose. Production was reestablished during third quarter 2010. As of year-end 2010, three wells were online, producing 23,000 barrels of crude oil (9,000 net) and 6 million cubic feet of natural gas (2 million net). The Perdido Regional Development is located in the ultradeep Alaminos Canyon, approximately 250 miles (402 km) south of Houston. The development includes a producing host facility in which Chevron has a 37.5 percent nonoperated interest. The host is designed to service multiple Alaminos Canyon fields, including Great White (33.3 percent nonoperated working interest), Silvertip (60 percent nonoperated working interest) and Tobago (57.5 percent nonoperated working interest).
The development utilizes subsea wells and separation facilities with tieback to a spar floating production facility. The shared host, located in approximately 8,000 feet (2,438 m) of water, is the deepest spar production facility in the world. The development has an estimated production life of 25 years. The Perdido development is expected to include a total of 21 wells, which will be completed in a multiyear drilling program. A maximum daily production rate of 130,000 barrels of oil-equivalent is expected to be reached in 2013.
Chevron Corporation 2010 Supplement to the Annual Report
15
Upstream
United States
Tahiti In 2010, total daily production averaged 108,000 barrels of crude oil (63,000 net), 42 million cubic feet of natural gas (24 million net) and 8,000 barrels of NGLs (4,000 net). Chevron operates and holds a 58 percent interest in the Tahiti Field, located in Green Canyon. Tahiti is a subsea development with tieback to a truss-spar floating production facility. A delineation well was completed in July 2010 and is producing back to the floating production facility. The field has an estimated production life of 30 years, and total potentially recoverable volumes from the Tahiti Field are estimated at 400 million to 500 million oil-equivalent barrels. Other Deep Water The company’s remaining deepwater production was from the Genesis, Petronius and Perseus fields. Total daily production at Genesis during 2010 averaged 8,000 barrels of crude oil (4,000 net) and 9 million cubic feet of natural gas (5 million net). Chevron is the operator with a 56.7 percent interest. Total daily production in 2010 from Petronius and the nearby Perseus Field averaged 15,000 barrels of crude oil (7,000 net) and 16 million cubic feet of natural gas (8 million net). Chevron is the operator with a 50 percent interest in both fields. Development Big Foot Work continues on the 60 percent-owned and operated Big Foot Project, located in Walker Ridge Block 29. The project completed front-end engineering and design (FEED) in June 2010, and a final investment decision was made in December 2010. The development plan is for a 15-slot drilling and production extended tension leg platform. Maximum total daily production is expected to reach design capacity of about 79,000 barrels of oil-equivalent. Project costs are estimated at $4.1 billion, and first oil is expected in 2014. At the end of 2010, proved reserves had not been recognized. The field has an estimated production life of 20 years. Caesar/Tonga The Caesar and Tonga partnerships formed a unit agreement for the area consisting of Green Canyon Blocks 683, 727, 770 and a portion of Block 726, which includes the Caesar, Tonga and West Tonga fields. Chevron holds a 20.3 percent nonoperated working interest in the unitized area. Development plans include a total of four wells, including two development sidetracks completed in 2009, and a subsea tieback to a nearby third-party production facility. Project costs are estimated at $1.7 billion, and maximum total daily production is expected to be 42,000 barrels of oil-equivalent. Facility construction activities commenced in 2009 with the subsea system and topsides modifications to the host facility. Topsides modifications were completed in 2010. Work on the subsea system, commissioning of the topsides and the initial well completion program carried over into 2011. First production has been delayed due to a mechanical issue with the production riser system. Proved reserves have been recognized for this project. Jack/St. Malo The Jack and St. Malo fields are located within 25 miles (40 km) of each other and are being jointly developed with a host floating production unit (FPU) located between the two fields. Chevron has a 50 percent interest in Jack (Walker Ridge Blocks 714, 715, 758 and 759 and a portion of Blocks 802 and 803) and a 51 percent interest in St. Malo (Walker Ridge Blocks 673, 674, 677 and 678), following the company’s acquisition in March 2010 of an additional 9.8 percent equity interest in St. Malo from a partner. Both fields are company-operated and combined have total potentially recoverable resources in excess of 500 million oil-equivalent barrels. Located in 7,000 feet (2,134 m) of water
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Chevron Corporation 2010 Supplement to the Annual Report
and with a reservoir depth of 26,500 feet (8,077 m), development is geologically and technically challenging. FEED activities continued in 2010 and a final investment decision was reached in October 2010. The facility is planned to have a design capacity of 177,000 barrels of oil-equivalent per day to accommodate production from the Jack/St. Malo development, which is estimated at a maximum total daily rate of 94,000 barrels of oil-equivalent, plus production from third-party tiebacks. Total project costs for the initial phase of the development are estimated at $7.5 billion, and start-up is expected in 2014. The project has an estimated production life of 30 years. At the end of 2010, proved reserves had not been recognized for these fields. Mad Dog II Development Project An appraisal well drilled in 2009 on the south flank of Mad Dog confirmed a significant resource base in this area of the field. Assessment of development concepts is ongoing for the appraised resource potential on the west and south flanks of the Mad Dog Field outside the drilling radius of the existing spar floating production facility. A decision on the development concept followed by the project moving into the FEED stage is expected to occur in the second-half 2011, and a final investment decision is anticipated in 2012. At the end of 2010, proved reserves had not been recognized for this project. Tahiti 2 Tahiti 2 is the second development phase for the producing Tahiti Field and is designed to increase recovery from the main producing interval and maintain well capability at the facility capacity of 125,000 barrels of crude oil per day. The project includes three water injection wells, two additional production wells and the facilities required to deliver water to the injection wells. The final investment decision was made in third quarter 2010 with total project costs estimated at $2.3 billion. Drilling began on the first water injection well in September 2010, and water injection start-up is expected to occur in 2012. At the end of 2010, proved reserves had not been recognized for the Tahiti 2 project. Tubular Bells Chevron has a 30 percent nonoperated working interest in the Tubular Bells unitized area encompassing Mississippi Canyon Blocks 681, 682, 683, 724, 725 and 726 and the northwest quarter of Block 727. The area is located in 4,300 ft (1,311 m) of water. Studies to screen and evaluate future development alternatives continued into early 2010. A subsea tieback to a planned third-party host has been selected as the development concept. FEED commenced in fourth quarter 2010, with a final investment decision targeted for second quarter 2011. At the end of 2010, proved reserves had not been recognized for this project. Exploration During 2010, the company participated in five deepwater exploratory wells – two wildcats, two appraisals and a delineation well. Drilling operations on two of these exploration wells were halted in second quarter 2010 as a result of the deepwater drilling moratorium in the Gulf of Mexico, including drilling of the first appraisal well at the 55 percent-owned and operated Buckskin discovery. The first appraisal well at Knotty Head was completed in March 2010 and interpretation of well results continues into 2011. Chevron has a 25 percent nonoperated working interest in this discovery. At the end of 2010, proved reserves had not been recognized for these exploration prospects. Chevron added 15 new leases to its deepwater portfolio as a result of bid awards stemming from the Gulf of Mexico Lease Sale 213 (Central Planning Area) in early 2010.
United States
Other U.S. Areas The company produces crude oil and natural gas across the mid-continental United States – primarily in Colorado, New Mexico, Oklahoma, Texas and Wyoming – and in Alaska. As a result of the February 2011 acquisition of Atlas Energy, Inc., new producing areas were added, primarily in southwestern Pennsylvania and Michigan. Chevron is one of the largest hydrocarbon producers in the Permian Basin of West Texas and southeastern New Mexico. Operations in the Permian date back to the 1920s and in 2010, the company’s total net production surpassed 5 billion barrels of oil-equivalent. In Alaska, the company has operated and nonoperated working interests in the Cook Inlet and holds nonoperated working interests on the North Slope. In October 2010, the company announced plans to sell its interests in the Cook Inlet, including the interests in two regional pipelines. In 2010, the company’s U.S. net daily oil-equivalent production outside California and the Gulf of Mexico averaged 249,000 barrels, composed of 91,000 barrels of crude oil, 773 million cubic feet of natural gas and 29,000 barrels of NGLs. Capital spending is focused in the Permian Basin, East Texas and the Rockies. During the year, the company drilled 130 wells and participated in drilling 287 partner-operated wells. CANADA
Wyoming Rangely Piceance Basin Colorado
New Mexico Vacuum
Upstream
Chevron has substantial reserves and resources in the United States recoverable through CO2 enhanced-recovery methods. CO2 projects are ongoing in fields such as Vacuum in New Mexico, Rangely in Colorado, and Slaughter, Dollarhide and Reinecke in West Texas. Expansions, using both horizontal and vertical drilling, are proceeding in these fields at a pace to optimize facility utilization rates while balancing CO2 demand and supply. Unconventional Resources Chevron continues to pursue opportunities in unconventional oil and gas resources. In West Texas, advances in drilling and completion technologies have opened up widespread targets in the Wolfcamp and associated “tight” rock formations, including the company’s Lupin Project, a 100 percent-owned and operated interest, where first oil commenced in mid-2010. Additional production growth is expected from both operated and nonoperated interests in these formations in future years through continued use of these advanced drilling and completion technologies.
In 2010, the company continued the appraisal of the Haynesville shale gas formation in East Texas, where an estimated 2 trillion cubic feet of natural gas is potentially recoverable from Chevron’s leases. The company commenced a large 3-D seismic survey of approximately 600 square miles (1,554 sq km) across Panola County, Texas, with final results from the survey expected in 2012. The company continues to evaluate data from other Haynesville operators and from earlier Antrim Shale appraisal drilling in preparation for Michigan resuming drilling in 2012. Pennsylvania Marcellus Shale
UNITED STATES
Oklahoma Slaughter Reinecke Dollarhide
Haynesville
Texas
Alaska MEXICO
Chevron Activity Highlight
Conventional Resources In this portion of the U.S. portfolio, the company is managing production decline rates in existing conventional fields with a combination of well workovers, artificial-lift techniques, facility and equipment improvements, enhanced-recovery methods such as water and carbon dioxide (CO2) injection, and additional development drilling.
In the Piceance Basin in northwestern Colorado, the company is continuing development of a 100 percent-owned and operated natural gas field consisting of approximately 35,000 acres (142 sq km). An estimated 3 trillion cubic feet of natural gas are potentially recoverable from this project. Completion activities continued in 2010, with 115 completed wells available to supply natural gas to the central processing facility. An eight-mile (13-km) pipeline to transport the natural gas to a gathering system was completed in 2008, and construction of compression and dehydration facilities to process 65 million cubic feet per day of natural gas production was completed in 2009. The 2010 work plan focused on optimization of the existing wells and facilities, completion of previously drilled wells, and designing a pilot to test liquefied petroleum gas (LPG) as an alternative fracture fluid. The LPG fracture fluid pilot is planned to begin in late 2011. The company expects an additional 89 wells to be completed and brought online by 2013. This program is highly scalable, and future work is expected to be completed in multiple stages. The full development plan includes drilling more than 2,000 wells from multiwell pads over the next 30 to 40 years, bringing the full development potential up to 350 million cubic feet per day. Proved reserves for subsequent stages of the project had not been recognized at the end of 2010.
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Other Americas
The Piceance Basin, along with other Rocky Mountain basins, contains a significant oil shale resource base. In 2007, Chevron was granted a research, development and demonstration lease by the Bureau of Land Management for the purpose of demonstrating a viable commercial technology for the extraction of hydrocarbons from oil shale in the Piceance Basin. In 2009, Chevron completed a 19-well hydrology testing program as a first step in attempting to unlock this resource. Further progress was made in 2010 with completion of an extensive core study, acquisition of multicom ponent and cross-well seismic data, a regional and local fracture characterization study, continued success toward converting kerogens to movable oil, and modeling reservoir stimulation. Next steps entail continuing to collect baseline ground water data while developing an environmentally responsible, sustainable and scalable recovery technology. In February 2011, Chevron acquired Atlas Energy, Inc. The acquisition provides an attractive natural gas resource position in the Appalachian basin, primarily located in southwestern Pennsylvania, and consists of approximately 850,000 total acres (3,440 sq km) of the Marcellus Shale and Utica Shale. The acquisition provides a 49 percent interest in Laurel Mountain Midstream, LLC, an affiliate that owns more than 1,000 miles (1,609 km) of natural gas gathering lines servicing the Marcellus. The acquisition also provides assets in Michigan, which include Antrim Shale producing assets and approximately 380,000 total acres (1,537 sq km) in the Antrim and Collingwood/Utica Shale.
Other Americas In Other Americas, the company is engaged in exploration and production activities in Canada, Greenland, Argentina, Brazil, Colombia, Trinidad and Tobago, and Venezuela. Net daily oilequivalent production of 247,000 barrels during 2010 in these countries represented about 9 percent of the companywide total. Canada Chevron has ownership interests in oil sands projects and shale gas acreage in the province of Alberta, exploration and development projects offshore in the Atlantic region, and exploration and discovered resource interests in the Mackenzie Delta and Beaufort Sea region of Canada’s western Arctic. Total daily production in 2010 from Canadian operations was 223,000 barrels of crude oil (29,000 net), 30 million cubic feet of natural gas (4 million net) and 126,000 barrels of synthetic oil from oil sands (24,000 net). Western Canada Production The company holds a 20 percent nonoperated working interest in the Athabasca Oil Sands Project (AOSP) and the AOSP Expansion 1 Project near Fort McMurray, Alberta. The AOSP Expansion 1 Project, which achieved first production from the Jackpine Mine in third quarter 2010, is expected to increase daily production design capacity from oil sands by 100,000 barrels to more than 255,000 barrels in early 2011. In 2010, total daily production from oil sands averaged 126,000 barrels (24,000 net) of synthetic oil. Oil sands are mined from both the Muskeg River and Jackpine mines, and bitumen is extracted from the oil sands and upgraded into synthetic oil using hydroprocessing technology. Expansion of the Scotford Upgrader, also part of the project, is expected to be completed in second quarter 2011.
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Exploration Through year-end 2010, the company increased its shale gas exploration leases in Alberta to approximately 200,000 acres (809 sq km), in the Duvernay formation. Exploration planning activities on these 100 percent-owned and operated leases have begun, with plans to commence an appraisal drilling program in the second-half 2011. At the end of 2010, proved reserves had not been recognized for any of these areas. Atlantic Canada Production Chevron holds a 26.9 percent nonoperated working interest in the Hibernia Field that comprises two key reservoirs, the Hibernia and Ben Nevis Avalon. Average total daily crude oil production in 2010 was 154,000 barrels (28,000 net). Development Hebron Chevron holds a 26.6 percent nonoperated working interest in the planned Hebron Field development located offshore the province of Newfoundland and Labrador. This heavy-oil field is estimated to contain between 400 million and 700 million of potentially recoverable barrels. A concrete gravity-base platform is planned to develop the field using directional drilling techniques. The FEED phase commenced in third quarter 2010, and the project has an expected economic life of 30 years. At the end of 2010, proved reserves had not been recognized for this project. Hibernia Southern Extension (HSE) The HSE development is expected to stem the production decline from the Hibernia Field. Chevron has a 23.6 percent nonoperated working interest in the unitized HSE areas of the Hibernia Field, with the Newfoundland and Labrador government’s energy corporation acquiring a 10 percent working interest in February 2010 as part of the project approval conditions. The development of these unitized areas requires the drilling of producing wells from the existing Hibernia concrete gravity-base platform and subsea drilling of supporting injection wells. Regulatory, federal and provincial government approval of the development plan was received in late 2010, with further government approval of required agreements received in early 2011. The project was subsequently approved by the joint venture. First production from the HSE unitized area is expected in late 2011. At the end of 2010, proved reserves had not been recognized for the HSE unitized blocks. BEAUFORT SEA
GREENLAND
Northern Canada Exploration
Block 4 CANADA
Northwest Territories
ATLANTIC OCEAN
Nunavut Athabasca Oil Sands Project Shale Gas Fort McMurray Leases Alberta
HUDSON BAY
Newfoundland and Labrador Exploration License 1109 Orphan Basin
Manitoba
St. John’s
Calgary Saskatchewan
Quebec Ontario
Terra Hebron Nova
Hibernia
UNITED STATES
Chevron Activity Highlight
Crude Oil Field
Oil Sands
Other Americas
Exploration Chevron operates and holds a 50 percent interest in an Orphan Basin exploration license totaling approximately 1.5 million acres (6,040 sq km). As of early 2011, Chevron has drilled two exploration wells in the Orphan Basin and is continuing to assess plans for further exploration. Drilling operations on the second Orphan well were completed in mid-2010, and the water depth, at 8,537 feet (2,602 m), set a new record for deepwater wells drilled in Canada. Planning for a seismic program is under way at the 100 percentowned and operated Exploration License 1109, totaling 574,000 acres (2,323 sq km) and located approximately 75 miles (121 km) offshore Labrador. At the end of 2010, proved reserves had not been recognized for either of these exploration prospects. Northern Canada Exploration Chevron holds a 25 percent nonoperated working interest in several onshore exploration leases in the Mackenzie Delta region of the Northwest Territories. In 2010 there were no exploration activities on these leases. In the Beaufort Sea, there are two exploration licenses that are 100 percent-owned and operated. One license was acquired in 2010 and covers 508,800 acres (2,060 sq km). Additionally, Chevron holds a 34 percent nonoperated working interest in the offshore Amauligak discovery and is continuing to assess development concept alternatives. The company also holds additional nonoperated minor working interests in other offshore licenses in the Beaufort Sea. At the end of 2010, proved reserves had not been recognized for any of these areas.
Production During 2010, total daily production averaged 50,000 barrels of crude oil (23,000 net). Frade The Frade Field lies in approximately 3,700 feet (1,128 m) of water, 230 miles (370 km) northeast of Rio de Janeiro. Frade includes subsea systems and flowlines tied back to a floating production, storage and offloading vessel (FPSO). Eight development wells and four injection wells had been completed as of year-end 2010. Development drilling is continuing, with planned additions of five development wells and three injection wells by the end of 2011. Maximum total daily production of 68,000 barrels of crude oil and 25 million cubic feet of natural gas is expected to be realized in mid-2011. The concession that includes the Frade Project expires in 2025. Development Maromba Evaluation of the field development concept continued in early 2011 for Maromba. The company has a 30 percent nonoperated working interest in this concession, which expires in 2033. At the end of 2010, proved reserves had not been recognized for this project.
TRINIDAD AND TOBAGO Dolphin Deep Cardon III Chuchupa Starfish Manatee Ballena Dolphin LL-652 Loran Riohacha Plataforma Deltana Block 3 Hamaca Boscan Carabobo 3 VENEZUELA ATLANTIC OCEAN
COLOMBIA
Greenland Exploration: Evaluation of seismic data for License 2007/26, which covers Block 4, offshore Disko Island West Greenland, commenced in 2010 and is planned to continue in 2011. Chevron holds a 29.2 percent nonoperated working interest in this exploration license. Argentina Chevron holds operated interests in five concessions in the Neuquen Basin. Working interests range from 18.8 percent to 100 percent. Chevron also holds a 14 percent interest in Oleoductos del Valle S.A., which owns and operates a crude oil pipeline from the Neuquen producing area to the Atlantic coast. Chevron sold its interest in the Puesto Prado, Las Bases and El Sauce fields in the Neuquen Basin in 2010.
Upstream
BRAZIL
Maromba Oliva
PACIFIC OCEAN
Frade Papa-Terra Atlanta
ARGENTINA
Neuquen Basin Leases
Production During 2010, total daily production averaged 48,000 barrels of crude oil (31,000 net) and 7 million cubic feet of natural gas (5 million net). In 2010, the company continued the development of El Trapial Field with sequential projects to reduce production declines. Brazil Chevron holds working interests in three deepwater fields in the Campos Basin: Frade (51.7 percent-owned and operated), PapaTerra and Maromba (37.5 percent and 30 percent nonoperated working interests, respectively). In the Santos Basin, the company holds a 20 percent nonoperated working interest in the deepwater Atlanta and Oliva fields.
Chevron Interest
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Papa-Terra The Papa-Terra Project, in which Chevron has a 37.5 percent nonoperated working interest, has potentially recoverable crude oil of approximately 380 million barrels and lies in about 3,900 feet (1,189 m) of water. The single-phase development project involves an FPSO and a tension leg well platform with a planned total daily capacity of 140,000 barrels of crude oil. A final investment decision was reached in January 2010. Major construction contracts were awarded in 2010, and development drilling is expected to begin in the second-half 2011. First production is expected in 2013. When completed, the project would be Chevron’s largest investment in Brazil. At the end of 2010, proved reserves had not been recognized for this project. The concession expires in 2032. Exploration Evaluation of the deepwater Atlanta and Oliva fields continued in 2010. At the end of 2010, proved reserves had not been recognized for either field. Colombia Chevron’s activities in Colombia are focused on the production and commercialization of natural gas from properties in the Caribbean Sea and adjacent coastal areas of the Guajira Peninsula. The company operates the offshore Chuchupa and the onshore Ballena and Riohacha natural gas fields as part of the Guajira Association contract. Chevron receives 43 percent of the production for the remaining life of each field and a variable production volume from a fixed-fee, Build-Operate-Maintain-Transfer agreement based on prior Chuchupa capital contributions. During 2010, Chevron conducted a seismic survey of the offshore, near-shore and onshore development areas, and the evaluation of the results are ongoing. Production Total daily production in 2010 averaged 714 million cubic feet of natural gas (249 million net). Trinidad and Tobago The company has a 50 percent nonoperated working interest in three blocks (Block E, Block 5(a) and Block 6) in the offshore East Coast Marine Area of Trinidad, which includes the Dolphin and Dolphin Deep producing natural gas fields. Chevron also operates and holds a 50 percent interest in the Manatee Area of Block 6(d). Production Total daily production during 2010 from the Dolphin and Dolphin Deep fields averaged 560 million cubic feet of natural gas (223 million net). These volumes were sold under four sales contracts. Exploration The company drilled a successful exploratory well in the Manatee Area of Block 6(d) in 2005. This well extended the six shallow gas sands discovered in Venezuela’s Loran Field in Block 2 into Trinidad and Tobago. In 2007, an overarching treaty supporting unitization was signed by the governments of Venezuela and Trinidad and Tobago. In August 2010, a Loran/Manatee field-specific treaty was signed by the two governments. At the end of 2010, proved reserves had not been recognized for this field.
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Venezuela Chevron’s production activities in Venezuela are performed by two affiliates in western Venezuela and one affiliate in the Orinoco Belt. Additionally, a Chevron-led consortium was selected to participate in another heavy oil project in the Orinoco Belt in 2010. Chevron also has interests in three offshore exploratory blocks – two in the Plataforma Deltana region and one off the northwest coast of Venezuela. Production During 2010, total daily production averaged 101,000 barrels of crude oil (26,000 net), 134,000 barrels of synthetic oil (28,000 net) and 116 million cubic feet of natural gas (25 million net). Petroboscan The company holds a 39.2 percent interest in Petroboscan, which operates the onshore Boscan Field in western Venezuela under a 20-year contract expiring in 2026. During 2010, Petroboscan total daily production averaged 96,000 barrels of liquids (25,000 net) and 15 million cubic feet of natural gas (6 million net). Fifteen development wells and two water injection wells were drilled during 2010. Petroindependiente The company holds a 25.2 percent interest in Petroindependiente, which operates the LL-652 Field in Lake Maracaibo under a 20-year contract expiring in 2026. During 2010, Petroindependiente total daily production averaged 5,000 barrels of liquids (1,000 net) and 52 million cubic feet of natural gas (9 million net). Petropiar Chevron holds a 30 percent interest in Petropiar, which operates the Hamaca Project. The project is located in Venezuela’s Orinoco Belt and has a total design capacity for processing and upgrading 190,000 barrels per day of extra heavy crude oil (8.5 degrees API gravity) into 180,000 barrels of lighter, higher-value synthetic oil (26 degrees API gravity). Total daily production averaged 134,000 barrels of synthetic oil (28,000 net) and 49 million cubic feet of natural gas (10 million net) during 2010. Enhanced oil recovery studies continued through 2010. Exploration Chevron operates and holds a 60 percent interest in Block 2 and a 100 percent interest in Block 3 in the offshore Plataforma Deltana region. In Block 2, which includes the Loran Field, a Declaration of Commerciality was accepted by the Venezuelan government in March 2010. Loran is scheduled to provide the initial natural gas supply for the Delta Caribe liquefied natural gas (LNG) plant, Venezuela’s first LNG project. Chevron has a 10 percent nonoperated interest in the LNG facility. At the end of 2010, proved reserves had not been recognized for either of these exploration prospects. Chevron operates and holds a 100 percent interest in the Cardon III Block, located north of Lake Maracaibo in the Gulf of Venezuela offshore region. At the end of 2010, proved reserves had not been recognized for this exploration prospect.
Africa
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In February 2010, a Chevron-led consortium was selected to participate in a heavy-oil project in three blocks within the Carabobo Area of eastern Venezuela’s Orinoco Belt. A joint operating company, Petroindependencia, was formed in May 2010, and work toward commercialization of the Carabobo 3 Project was initiated. The consortium holds a combined 40 percent interest with Petróleos de Venezuela, S.A., Venezuela’s national oil and gas company, holding the remaining interest. Chevron’s interest in the project is 34 percent.
Block 0 Production Block 0 is divided into areas A and B and contains 21 fields that produced a total daily average of 365,000 barrels of liquids (116,000 net) in 2010. Area A comprises 15 producing fields and averaged total daily production of 227,000 barrels of crude oil (72,000 net) and 4,000 barrels of LPG (1,000 net). Area B has six producing fields and averaged total daily production of 119,000 barrels of crude oil and condensate (37,000 net) and 15,000 barrels of LPG (6,000 net). The Block 0 concession extends through 2030.
Africa
Mafumeira Norte The first stage of the Mafumeira Field development, targeting the northern portion of the field, Mafumeira Norte, completed development drilling and achieved maximum total daily production of 57,000 barrels of crude oil in fourth quarter 2010.
In Africa, the company is engaged in exploration and production activities in Angola, Chad, Democratic Republic of the Congo, Liberia, Nigeria and Republic of the Congo. Net daily oil-equivalent production of 469,000 barrels during 2010 in these countries represented about 17 percent of the companywide total. Angola The company operates and holds a 39.2 percent interest in Block 0, a concession adjacent to the Cabinda coastline, and a 31 percent interest in a production-sharing contract (PSC) for deepwater Block 14, located west of Block 0. The company also has a 20 percent nonoperated working interest in Block 2, which is adjacent to the northwestern part of Angola’s coast south of the Congo River, and a 16.3 percent nonoperated working interest in the onshore Fina Sonangol Texaco (FST) concession area. During 2010, total daily liquids production averaged 580,000 barrels (152,000 net).
Djeno Terminal
Kitina
Wamba Nsano
Moho-Bilondo Moho Nord
Tomboco Lobito Lianzi Landana
Nsoko Lomba Kuito
Nemba Enhanced Secondary Recovery & Flare Reduction Work continued on the Nemba Enhanced Secondary Recovery & Flare Reduction Project. Development plans include enhancing crude oil recovery by increasing natural gas injection and eliminating routine flaring at the North and South Nemba platforms. The first stage of the project is expected to be completed in second quarter 2011 with the start-up of natural gas injection on the existing South Nemba platform. The total estimated cost for the first stage is $1.0 billion, and the modifications are expected to enhance total daily liquids production by 16,000 barrels. The next stage of the project includes additional compression facilities on a new platform, which will be connected to the existing South Nemba platform. Gas injection from the new platform is planned to start in 2014.
Takula Malongo Numbi
Nemba Vuko Belize Limba Kungulo Malange Vanza AREA A Longui Bomboco
Kokongo
BLOCK 0
Malongo Terminal
Mafumeira
N'Dola
Lucapa BLOCK 14
ANGOLA (CABINDA)
Nkossa
LIANZI DEVELOPMENT ZONE Benguela
Tombua
Banzala
Sanha Gabela
DRC
AREA B Libwa Tshiala East
Negage
Greater Vanza/Longui Area (GVLA) Development concept selection studies continued during 2010, with FEED planned to start in second quarter 2011. At the end of 2010, proved reserves had not been recognized for this project. Mafumeira Sul The second stage of the Mafumeira field development, Mafumeira Sul, is located in the Southern Malongo Area in 200 feet (61 m) of water. The development plans include a central processing facility, two wellhead platforms, approximately 75 miles (120 km) of subsea pipelines and 51 wells. The maximum total daily production is expected to reach 110,000 barrels of crude oil and 10,000 barrels of LPG. FEED began in January 2010, and a final investment decision is expected in fourth quarter 2011. At the end of 2010, proved reserves had not been recognized for this project.
REPUBLIC OF THE CONGO
Pointe-Noire ATLANTIC OCEAN
Development Gas Management Projects The Area A Gas Management Projects are a series of four projects designed to eliminate flaring of natural gas by reinjecting excess natural gas into the various Takula and Malongo reservoirs. Three of the four projects started up in 2008 and 2009, and as of year-end 2010, flaring has been reduced by approximately 65 million cubic feet of natural gas per day. Work on the fourth project, Malongo Flare and Relief Modification, continued during 2010 with expected completion in fourth quarter 2011.
Angola LNG Project ANGOLA
Chevron Activity Highlight
Crude Oil Field
Natural Gas Field
Terminal
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Africa
South N’Dola FEED activities continued during 2010 on the south extension of the N’Dola Field development, which is in 270 feet (82 m) of water. The development plans include a wellhead platform with production from 12 wells tied back to existing infrastructure. A final investment decision is anticipated in fourth quarter 2011. At the end of 2010, proved reserves had not been recognized for this project.
Block 2 and FST Area Production Total daily production averaged 18,000 barrels of liquids (2,000 net) in 2010.
Exploration During 2010, two exploration wells were completed in Area B targeting pre-salt opportunities. The first well was completed in February with successful flow tests from pre-salt zones beneath the Pinda formation of the planned GVLA development. The second well, completed in June, was not successful. Processing of additional seismic data in Area A started in mid-year 2010 and is expected to continue through the end of 2011. Plans are to drill two new exploration wells in Block 0 during the second-half 2011.
Natural Gas Commercialization Angola LNG Chevron has a 36.4 percent interest in Angola LNG Limited, which will operate the 5.2 million-metric-ton-per-year LNG plant. The onshore plant in Soyo, Angola, is designed with the capacity to process 1.1 billion cubic feet of natural gas per day with expected average total daily sales of 670 million cubic feet of regasified LNG and up to 63,000 barrels of NGLs. Construction continued throughout 2010, including the installation of the roof on the first of four LNG tanks. The project is expected to enter production in 2012. The estimated total cost of the plant is $9.0 billion, and the anticipated life is in excess of 20 years. Proved reserves have been recognized for producing operations associated with this project.
Block 14 Production In 2010, total daily production was 197,000 barrels of liquids (34,000 net) from Benguela Belize–Lobito Tomboco, Kuito, Tombua and Landana fields.
Angola–Republic of the Congo Joint Development Area Chevron is the operator and holds a 31.3 percent interest in the Lianzi unit located in a joint development area shared equally between Angola and Republic of the Congo.
Tombua-Landana Development drilling continued during 2010. At year-end, 12 development wells and five injection wells had been completed. Development drilling is expected to continue with maximum total daily production of 75,000 barrels of crude oil anticipated in second quarter 2011. Development and production rights for these fields expire in 2028.
Development The Lianzi Project continued FEED through the end of 2010. The project scope includes three producing wells and three water injection wells with a subsea tie-back to an existing platform in Block 14. A final investment decision is planned for fourth quarter 2011. At the end of 2010, proved reserves had not been recognized for the project.
Development Lucapa Studies to evaluate development alternatives for the Lucapa Field continued throughout 2010, with FEED expected in third quarter 2011. A successful exploration well was drilled in the Lucapa development area in fourth quarter 2010. At the end of 2010, proved reserves had not been recognized for Lucapa. Negage In 2009, a portion of the Negage Development Area situated in the southwest corner of Block 14 was designated to be in the Zone of Common Interest, a cooperative arrangement between Angola and Democratic Republic of the Congo. Development activities remain suspended pending final agreements between the two countries. At the end of 2010, proved reserves had not been recognized for this project. Malange A new development area was granted at Malange Field in 2010 after a successful appraisal well was drilled in 2009. Infrastructure Shared by Blocks 0 and 14 Congo River Canyon Crossing Pipeline Chevron holds a 38.1 percent interest in the proposed pipeline designed to transport up to 250 million cubic feet per day of natural gas from Angola’s Blocks 0 and 14 to the Angola LNG plant in Soyo, Angola. The development plans include 87 miles (140 km) of offshore pipeline routed under the Congo River subsea canyon. Project construction is scheduled to begin in the second-half 2011 with completion planned for 2013. A pipeline right-of-way convention was signed in November 2010 with Democratic Republic of Congo.
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Democratic Republic of the Congo Chevron has a 17.7 percent nonoperated working interest in a concession off the coast of Democratic Republic of the Congo. Production Total daily production in 2010 from seven fields averaged 14,000 barrels of crude oil (2,000 net). Republic of the Congo Chevron has a 31.5 percent nonoperated working interest in the Nkossa, Nsoko and Moho-Bilondo permit areas and a 29.3 percent nonoperated working interest in the Kitina permit area, all of which are offshore. The development and production rights for Nsoko, Kitina and Nkossa expire in 2018, 2019 and 2027, respectively. Production Average total daily production in 2010 from Republic of the Congo fields was 124,000 barrels of liquids (23,000 net). Development Drilling of development and injection wells continued in Moho-Bilondo during 2010. Maximum total daily production of 93,000 barrels of crude oil was reached in fourth quarter 2010. The development and production rights for Moho-Bilondo expire in 2030. Exploration During 2010, two exploration wells were drilled at the northern edge of the producing Moho-Bilondo Field, resulting in crude oil discoveries in two new reservoirs. Studies were planned to evaluate the feasibility of producing these reservoirs by tying back to the existing Moho-Bilondo facilities.
Africa
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Exploration Shallow-water exploration activities in 2010 included Chad/Cameroon Chevron holds a nonoperated working interest in crude oil fields in reprocessing 3-D seismic data over Oil Mining Lease (OML) 53 southern Chad. The produced volumes are transported about 665 and OML 95. Regional studies to identify deep gas prospects were miles (1,070 km) by underground pipeline to the coast of Cameroon ongoing in early 2011. A natural gas exploration well is scheduled for export to world markets. Chevron holds a 25 percent interest in to be drilled in fourth quarter 2011. At the end of 2010, proved the producing operations and an approximate 21 percent interest reserves had not been recognized for these exploration prospects. in the two affiliates that own the pipeline. The Chad producing operations are conducted Omuro Shango Opuekeba Isan West Benin River NIGER under a concession agreement that expires Gbokoda Gbadudu Bime Abigborodo Mina Isan Ojumole in 2030. Parabe Production Total daily crude oil production in 2010 from seven fields in the Doba Basin averaged 123,000 barrels (27,000 net). Nigeria Chevron operates and holds a 40 percent interest in 13 concessions, predominantly in the onshore and near-offshore regions of the Niger Delta. The concessions cover approximately 2.2 million acres (8,900 sq km) and are operated under a joint-venture arrangement with the Nigerian National Petroleum Corporation (NNPC), which owns a 60 percent interest. The company also holds acreage positions in 10 deepwater blocks with working interests ranging from 18 percent to 100 percent. Production In 2010, total daily production averaged 524,000 barrels of crude oil (237,000 net), 206 million cubic feet of natural gas (86 million net) and 5,000 barrels of LPG (2,000 net).
Ewan Ruta Hely Creek Olure Mejo Nedum Malu Makaraba Dibi Oloye Opolo Meta Tapa Utonana Meren Kito Olomu Delta Abiteye Delta South Warri Sonam
Mefa Awodi Offe
Meji
Mesan NIGERIA
Ekura Obokun Kudo TOGO
Doba
Konko BENIN
GHANA
GULF OF GUINEA
Olokola Lagos LNG OML 49 Escravos (EGTL and EGP) OML 95 OML 53 OML 113 Port OML 91 OML 90 Harcourt OML 89 OML 86 OML 52 OML 132 OML 85 OPL 221 OML 139 OML 140 OML 83 OPL 223 OPL 214 OML 127 OML 129 OML 138 OML 128
Chevron Interest
Swamp Areas
Crude Oil Pipeline
West African Gas Pipeline
Niger Delta Production In 2010, total daily production from 32 fields in the Niger Delta averaged 284,000 barrels of crude oil (97,000 net), 190 million cubic feet of natural gas (75 million net) and 5,000 barrels of LPG (2,000 net). In March 2010, gas sales resumed from the Nigerian Gas Company pipeline, which had been vandalized in 2009. In August 2010, three fields returned to production in following the repair of the Nembe Creek Trunk Line that was vandalized in 2008. Development Western Niger Delta Construction to rebuild the Olero Creek Flowstation continued in 2010 with project completion anticipated in 2013. Work to lay a new pipeline to transport natural gas from Abiteye to the processing facilities at Escravos continued in 2010 with completion planned for fourth quarter 2011. The Dibi Long-Term Project is designed to integrate the existing Early Production System (EPS) facility, purchased in 2009, into a permanent flowstation. This project also includes rebuilding the existing Dibi permanent facilities that were vandalized in 2003. FEED was completed in September 2010. A final investment decision is anticipated in second quarter 2011. Total daily production from the Dibi EPS averaged 32,000 barrels (10,000 net).
CHAD
Escravos Okan
Crude Oil Field
CENTRAL AFRICAN REPUBLIC
CAMEROON
Kribi Marine Export Terminal Terminal
Deep Water Production Agbami In 2010, total daily production from Agbami averaged 239,000 barrels of crude oil (140,000 net) and 16 million cubic feet of natural gas (11 million net). The Chevron-operated Agbami Field is located in a water depth of 4,800 feet (1,463 m), with subsea wells tied back to an FPSO. The geological structure spans 45,000 acres (182 sq km) across OML 127 and OML 128. The field is one of the largest deepwater discoveries in Nigeria and contains an estimated 1 billion barrels of potentially recoverable liquids. In July 2010, an equity redetermination of the unitization agreement for OML 127 and OML 128 reduced the company’s interest from 68.2 percent to 67.3 percent. Development Agbami 2 In 2009, a subsequent 10-well Phase 2 development program was initiated and is expected to provide 100,000 barrels of total daily liquids production to offset field decline and to sustain a maximum total daily liquids production rate of 250,000 barrels. Drilling began in May 2010 and is expected to continue through 2014. The first well is scheduled to commence production in the second-half 2011. Total costs for the drilling program are estimated at $1.9 billion. The leases that contain the Agbami Field expire in 2023 and 2024.
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Upstream
Africa
Bonga SW/Aparo The Aparo Field in OML 132 and OML 140 and the third-party-owned Bonga SW Field in OML 118 share a common geological structure and are planned to be developed jointly. The geological structure lies 70 miles (113 km) off the coast of the western Niger Delta region in 4,300 feet (1,311 m) of water. The proposed development plan involves subsea wells tied back to an FPSO. Chevron is expected to have an approximate 20 percent nonoperated working interest in the unit. The project was delayed in 2009 in order to secure stakeholder alignment on scope. During 2010, partners extended a pre-unitization agreement. A final unitization agreement will be signed in advance of a final investment decision. Subsurface and surface facility studies are expected to be completed in second quarter 2011. The project scope is expected to be finalized by third quarter 2011, prior to entering FEED. At the end of 2010, no proved reserves were recognized for this project. Nsiko Chevron operates and holds a 95 percent interest in the Nsiko discovery in OML 140. This discovery lies in approximately 5,800 feet (1,768 m) of water, 90 miles (145 km) off the coast of the western Niger Delta region. Subsurface evaluations and field development planning were completed in 2008. Development acti vities and FEED are expected to begin once commercial terms are resolved and further exploration drilling is completed. At the end of 2010, proved reserves had not been recognized for this project. Usan Chevron holds a 30 percent nonoperated working interest in this development project in OML 138, which lies in 2,461 feet (750 m) of water, 62 miles (100 km) off the coast of the eastern Niger Delta region. The development plan involves subsea wells producing to an FPSO. During 2010, development drilling and construction of the FPSO continued. The FPSO is expected to depart from the fabrication site in second quarter 2011. Maximum total daily production of 180,000 barrels of crude oil is anticipated within one year of start-up, which is expected in 2012. The total costs for the project are estimated at $8.4 billion. The PSC expires in 2023. Proved reserves have been recognized for this project. Exploration Chevron had no exploratory drilling activity in Nigeria in 2010. Exploration wells are scheduled to be drilled in third quarter 2011 in the Uge North prospect in Oil Prospecting License (OPL) 214 and the Owowo area in OPL 223. The company has nonoperated working interests of 20 percent and 27 percent in OPL 214 and OPL 223, respectively. The company’s interest in OPL 247 was relinquished at year-end 2010. Proved reserves had not been recognized for these exploration activities at the end of 2010. Natural Gas Commercialization Escravos Gas Project (EGP) Phase 3A Construction on the Chevron-operated and 40 percent-owned EGP Phase 3A expansion was completed in 2009, and first gas was delivered to the new facilities in June 2010. At the end of 2010, total daily input into the facility was 230 million cubic feet of natural gas, resulting in daily gas sales to the domestic market of 180 million cubic feet and export sales of 8,000 barrels of LPG and condensate. As a result of the expansion, the Escravos Gas Plant’s daily processing capacity increased from 285 million to 680 million cubic feet of natural gas and daily LPG and condensate export capacity increased from 15,000 to 58,000 barrels. The expansion also included infrastructure for offshore natural gas gathering and compression and the addition of a second processing facility to process natural gas from the Meji, Delta South, Okan and Mefa fields.
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Chevron Corporation 2010 Supplement to the Annual Report
EGP Phase 3B This Chevron-operated and 40 percent-owned development in Escravos is expected to be completed in 2013. EGP Phase 3B is a continuation of the company’s Western Delta Gas Development Program, focused on eliminating routine flaring of natural gas that is associated with the production of crude oil. The project includes installation of a 120 million-cubic-foot-per-day natural gas gathering and compression platform near the existing Meren 1 complex, installation of approximately 75 miles (121 km) of subsea pipelines, and modifications to nine existing production platforms. The project is designed to receive natural gas from the Meren, Parabe, Malu, Isan, Opolo, Ewan, Tapa and Delta fields and transport it to the Escravos Gas Plant for processing and sale. Construction of the pipelines and modifications to the production platforms continued through 2010. The engineering, procurement, construction and installation contract for the gas gathering and compression platform is expected to be signed in second quarter 2011. Total capital costs for the project are estimated to be $2.0 billion. Proved reserves have been recognized for the project. Gas Supply Expansion Project The Chevron-operated and 40 percent-owned project is designed to deliver 215 million cubic feet of natural gas per day to the domestic gas market and produce 43,000 barrels of liquids per day. The project scope includes facilities required to develop the Sonam natural gas field in the Escravos area as well as expansion of the Escravos Gas Plant to include a third gas processing train. A final investment decision is expected in third quarter 2011. At the end of 2010, proved reserves associated with the project had not been recognized. EGTL Chevron and the NNPC are developing a 33,000-barrelper-day gas-to-liquids facility at Escravos that is designed to process 325 million cubic feet per day of natural gas from the EGP Phase 3A expansion. Engineering, procurement and offsite fabrication are complete. Work on the project was approximately 70 percent complete at the end of 2010, with all large modules and equipment greater than 50 metric tons installed on their foundations. Chevron is the operator and has a 75 percent interest in the plant, which is scheduled for start-up in 2013. The estimated cost of the project is $8.4 billion. Olokola LNG Project Chevron has a 19.5 percent interest in the OKLNG Free Zone Enterprise (OKLNG) affiliate, which will operate the Olokola LNG Project. OKLNG plans to build a multitrain naturalgas-liquefaction facility and marine terminal located northwest of Escravos. As of early 2011, the timing of a final investment decision was uncertain. At the end of 2010, proved reserves associated with this project had not been recognized. Onshore Asset Gas Management (OAGM) Chevron operates and holds a 40 percent interest in six fields collectively referred to as the Onshore Area. In 2003, civil unrest in the area resulted in vandalism of the compression infrastructure. The OAGM project is designed to restore these facilities and supply 125 million cubic feet of natural gas per day to the Nigerian domestic gas market. Two onsite construction contracts were awarded in third quarter 2010. Construction activities are ongoing, with start-up scheduled for 2012.
Asia
West African Gas Pipeline Chevron is the largest shareholder in West African Gas Pipeline Company Limited, with a 36.7 percent interest, which owns and operates the 421-mile (678-km) West African Gas Pipeline. The pipeline supplies Nigerian natural gas to customers in Ghana, Benin and Togo for industrial applications and power generation. Start-up of compression facilities to increase the pipeline capacity to 170 million cubic feet of natural gas per day occurred in February 2011. Nigeria – São Tomé e Príncipe Joint Development Zone (JDZ) Chevron divested its 45.9 percent interest in JDZ Block 1 in fourth quarter 2010. Liberia Exploration In 2010, Chevron acquired a 70 percent interest in and is operator of three blocks off the coast of Liberia. The deepwater blocks, LB-11, LB-12 and LB-14, cover a combined area of 2.4 million acres (9,600 sq km). In September 2010, 3-D seismic data was purchased, and an exploration well is planned for fourth quarter 2011. GUINEA
SIERRA LEONE
LIBERIA
CÔTE D'IVOIRE
Monrovia LB-14 LB-12 LB-11 ATLANTIC OCEAN
Upstream
Production The AIOC’s total daily crude oil production in 2010 averaged 822,000 barrels (28,000 net). The AIOC exports the production primarily via the BTC pipeline and the Western Route Export Pipeline (WREP), which is wholly owned by the AIOC. The 1,094-mile (1,762-km) BTC pipeline has a capacity of 1.2 million barrels per day. The WREP runs 515 miles (829 km) from Baku, Azerbaijan, to the terminal at Supsa, Georgia, on the Black Sea and has a capacity of 100,000 barrels per day. As alternatives to the primary export pipelines, the AIOC could use rail tank cars that connect with a Georgian Black Sea port and/or, provided there is spare capacity, a northern pipeline route that connects to an existing pipeline system in Russia and extends to the Russian Black Sea port of Novorossiysk. Development In March 2010, the final investment decision was reached at the ACG Chirag Oil Project. The project is designed to further develop the deepwater Gunashli Field and includes a new 48-slot platform. The total estimated cost of the project is $6 billion with maximum total daily production capacity of 185,000 barrels of oil-equivalent. Proved reserves were recognized in 2010, and production is scheduled to begin in 2013. Kazakhstan Chevron has a 50 percent interest in the Tengizchevroil (TCO) affiliate and a 20 percent nonoperated working interest in the Karachaganak Field. TCO production is from the Tengiz and Korolev fields. Total daily production in 2010 from TCO and Karachaganak was 831,000 barrels of crude oil and NGLs (291,000 net) and 1.7 billion cubic feet of natural gas (487 million net).
Chevron Interest
Karachaganak
Asia In Asia, Upstream activities are located in Azerbaijan, Bangladesh, Cambodia, China, Indonesia, Kazakhstan, Myanmar, the Partitioned Zone between Saudi Arabia and Kuwait, the Philippines, Russia, Thailand, Turkey, and Vietnam. Net daily oil-equivalent production of 1,069,000 barrels during 2010 in these countries represented about 39 percent of the companywide total.
KAZAKHSTAN UKRAINE RUSSIA Atyrau
Korolev
Tengiz
Azerbaijan Chevron holds an 11.3 percent nonoperated working interest in the Azerbaijan International Operating Company (AIOC) and the crude oil production from the Azeri-Chirag-Gunashli (ACG) Project. AIOC operations are conducted under a PSC that expires in 2024. In third quarter 2010, Chevron increased its working interest in the AIOC from 10.3 percent to 11.3 percent. Chevron also has an 8.9 percent interest in the Baku-Tbilisi-Ceyhan (BTC) Pipeline, which transports the majority of the ACG production from Baku, Azerbaijan, through Georgia to Mediterranean deepwater port facilities at Ceyhan, Turkey.
Novorossiysk CASPIAN SEA
BLACK SEA 3921 West Supsa
GEORGIA
Baku ARMENIA TURKEY
AZERBAIJAN
ACG
IRAN Ceyhan SYRIA Chevron Activity Highlight
IRAQ Crude Oil Field
Karachaganak–Atyrau Transportation System
CPC Pipeline
Terminal WREP
BTC Pipeline
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Upstream
Asia
Tengiz and Korolev TCO is operating and developing the Tengiz and Korolev crude oil fields in western Kazakhstan under a concession that expires in 2033. Production Total daily production in 2010 averaged 567,000 barrels of crude oil (234,000 net), 822 million cubic feet of natural gas (338 million net) and 44,000 barrels of NGLs (18,000 net). In 2010, TCO continued to increase production from the Sour Gas Injection (SGI) and Second Generation Plant (SGP) facilities. During 2010, the majority of TCO’s crude oil production was exported through the Caspian Pipeline Consortium (CPC) pipeline. The balance of production was moved by rail to Black Sea ports or to Aktau, Kazakhstan, and then via tanker to Baku, Azerbaijan, also for shipment by rail to Black Sea ports. Development The Sulfur Expansion Project is expected to increase TCO’s sulfur-granulation capacity and eliminate routine addition of sulfur inventory at the storage pads. The project is scheduled to start up in 2012. TCO continues to evaluate options for an expansion project similar in scale to the SGI/SGP Project. The Future Growth Project will utilize sour gas injection technology developed for SGI/SGP and is expected to increase total daily crude oil production by 250,000 to 300,000 barrels. FEED is scheduled for the second-half 2011, with a final investment decision anticipated in 2012. At the end of 2010, proved reserves had not been recognized for this expansion project. Karachaganak The Karachaganak Field is located in northwest Kazakhstan, and operations are conducted under a PSC that expires in 2038. The development of the field is being conducted in phases. Production Total daily production during 2010 averaged 220,000 barrels of liquids (39,000 net) and 840 million cubic feet of natural gas (149 million net). Approximately 175,000 barrels per day of processed liquids (31,000 net) were exported and sold at prices available in world markets. Substantially all of the exported volumes were transported through the CPC pipeline. A portion was exported via the Atyrau-Samara (Russia) pipeline. Liquids not exported by these pipelines were sold as unstable condensate into the Russian market. Development During 2010, work continued on a fourth train that is designed to increase total liquids-stabilization capacity by 56,000 barrels per day. The project has a slight positive impact on field production rates and enables export of the stabilized condensate to world markets. The fourth train is expected to start up in second quarter 2011. Work continued on identifying the optimal scope for the next phase of expansion for the field. The timing of a final investment decision on a preferred development alternative for a Phase III expansion is uncertain. At the end of 2010, proved reserves had not been recognized for this expansion.
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Chevron Corporation 2010 Supplement to the Annual Report
Kazakhstan/Russia CPC The CPC operates a 935-mile (1,505-km) crude oil export pipeline from the Tengiz Field in Kazakhstan to tanker-loading facilities at Novorossiysk on the Russian coast of the Black Sea, providing the critical export route for crude oil production from both TCO and Karachaganak. Chevron holds a 15 percent interest in the CPC pipeline. During 2010, the CPC pipeline transported an average of 743,000 barrels of crude oil per day to Novorossiysk, composed of 607,000 barrels per day originating from Kazakhstan and 136,000 barrels per day from Russia. In addition, approxi mately 39,000 barrels per day of Tengiz crude oil was discharged from the CPC pipeline in Atyrau, Kazakhstan, for loading onto rail cars. In December 2010, CPC partners made a final investment decision to expand the pipeline capacity by 670,000 barrels per day at a total estimated project cost of $5.4 billion. The project is planned to be implemented in three phases with capacity increasing progressively until reaching full capacity in 2016. The expansion is expected to provide additional transportation capacity that accommodates future growth in TCO production. Russia In June 2010, Chevron signed a Heads of Agreement (HOA) covering the exploration, development, production and marketing of hydrocarbons from the Shatsky Ridge Block in the Black Sea. Technical and commercial evaluation of the opportunity is ongoing in 2011. At the end of 2010, proved reserves had not been recognized for these activities. Turkey In September 2010, Chevron signed a Joint Operating Agreement (JOA) for a 50 percent interest in the western part of License 3921 in the Black Sea. The license covers a 5.6 million-acre (22,505-sq-km) block located 220 miles (350 km) northwest of the capital city of Ankara. The initial exploratory well, which had started drilling prior to the JOA, was completed in November 2010 and was unsuccessful. Future plans are under evaluation. At the end of 2010, proved reserves had not been recognized for this area. Chevron relinquished its interest in the Silopi licenses in southeast Turkey subsequent to the February 2010 completion of the unsuccessful Lale exploratory well. Bangladesh Chevron holds interests in three operated PSCs in Bangladesh covering Block 7, Block 12 (Bibiyana Field), and Blocks 13 and 14 (Jalalabad and Moulavi Bazar fields). The company has a 43 percent interest in Block 7 and a 98 percent interest in Blocks 12, 13 and 14. The rights to produce from Jalalabad expire in 2025, from Moulavi Bazar in 2028 and from Bibiyana in 2034. Production In 2010, total daily production averaged 883 million cubic feet of natural gas (404 million net) and 5,000 barrels of condensate (2,000 net). Development In 2010, the development of the Muchai compression project progressed with the completion of preliminary construction and development activities at the plant site. The project is expected to support additional production starting in 2012 from the Bibiyana, Jalalabad and Moulavi Bazar natural gas fields. Proved reserves have been recognized for this project.
Asia
Other development activities included evaluation of a gas plant expansion at Bibiyana, additional development drilling at Moulavi Bazar and an enhanced liquids recovery project at Bibiyana.
Upstream
Most of the natural gas production from the Yadana Field is purchased by Thailand’s PTT Public Company Limited (PTT) for power plants in Thailand. The remaining volumes are dedicated to the Myanmar market. Production Total daily natural gas production during 2010 averaged 726 million cubic feet (81 million net).
Jalalabad Bibiyana Moulavi Bazar
BANGLADESH
Thailand In the Gulf of Thailand, Chevron has operated and nonoperated working interests in multiple offshore blocks. Operated interests are in the Pattani Basin with ownership interests ranging from 35 percent to 80 percent. Concessions for the producing areas in the Pattani Basin expire between 2022 and 2035. Chevron also has a 16 percent nonoperated working interest in the Arthit Field in the Malay Basin. Concessions for the producing areas in the Malay Basin expire between 2036 and 2040.
Dhaka
INDIA
Block 7
The company sells all of the natural gas production to PTT under long-term natural gas sales agreements. The natural gas is used mainly in power generation, but is also consumed by the industrial and transportation sectors and the petrochemical industry. Chevron’s production in 2010 supplied approximately one-third of Thailand’s total demand for natural gas and half of Thailand’s total liquids output.
BAY OF BENGAL
Chevron Interest
Development The Medium Compression Project started commercial operation with one compression train in July 2010 to support additional natural gas demand.
Natural Gas Field
Exploration In 2010, the company completed seismic data evaluation and prepared to drill one exploration well in Block 7. The well is planned to be completed in mid-2011. At the end of 2010, proved reserves had not been recognized for these activities. Cambodia Chevron owns a 30 percent interest and operates the 1.2 millionacre (4,709-sq-km) Block A, located in the Gulf of Thailand. Development In 2010, the company drilled three successful exploration wells in Block A. A 30-year production permit under the PSC is expected to be approved by the government in second quarter 2011. A final investment decision for initial development of a wellhead platform and floating storage and MYANMAR offloading vessel (FSO) is expected in 2011. Yangon At the end of 2010, proved reserves had not been recognized for the project. Myanmar Chevron has a 28.3 percent nonoperated working interest in a PSC for the production of natural gas from the Yadana and Sein fields in the Andaman Sea. The company also has a 28.3 percent nonoperated interest in a pipeline company that transports the natural gas from Yadana to the Myanmar-Thailand border for delivery to power plants in Thailand. The PSC expires in 2028.
Myanmar Blocks
Production Total average daily production in 2010 was 145,000 barrels of crude oil and condensate (70,000 net) and 1.9 billion cubic feet of natural gas (875 million net). Development Construction continued on the 69.9 percent-owned and operated Platong Gas II project throughout 2010 with the installation of a central processing platform jacket and living quarters module. The project is expected to achieve first gas by fourth quarter 2011. The project is designed to produce an estimated 330 million cubic feet per day of natural gas and 18,000 barrels per day of NGLs. The estimated total cost is $3.1 billion. Proved reserves have been recognized for the project.
THAILAND
LAOS
Vietnam Block 122
Bangkok
CAMBODIA ANDAMAN SEA
GULF OF THAILAND
Phnom Penh VIETNAM Thailand-Cambodia Overlapping Ho Chi Minh City Claim Area Blocks
Thailand Blocks
Cambodia Block A Vietnam Blocks B, 48/95 and 52/97
Chevron Interest
SOUTH CHINA SEA
Natural Gas Pipeline
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Upstream
Asia
During 2010, 13 wellhead platforms were installed and 250 development wells were drilled in the Pattani Basin, and five wellhead platforms were installed and 58 development wells were drilled at the Arthit Field. Exploration In 2010, the company drilled seven exploration wells in the Pattani Basin. Four of the wells, located in Blocks G6/50, G7/50, 10 and 11, were successful and were under evaluation to validate further development strategy. The three unsuccessful exploration wells were drilled in Block G4/50. In fourth quarter, the company withdrew from the block, and government approval for the withdrawal is expected by the end of 2011. Additionally, at the Arthit Field, six exploration wells were drilled. At the end of 2010, proved reserves had not been recognized for these activities. For 2011, 11 operated exploratory wells are planned. Chevron also holds operated and nonoperated working interests in the Thailand-Cambodia overlapping-claims area that vary from 30 percent to 80 percent. As of early 2011, these areas were inactive pending resolution of border issues between Thailand and Cambodia. Vietnam The company is the operator of three PSCs in Vietnam. In the northern part of the Malay Basin offshore southwest Vietnam, Chevron has a 42.4 percent interest in a PSC that includes Blocks B and 48/95 and a 43.4 percent interest in another PSC that covers Block 52/97. In Phu Khan Basin, offshore eastern Vietnam, Chevron has a 20 percent ownership interest in a PSC that covers Block 122. Blocks B, 48/95 and 52/97 Development The Block B Gas Development is designed to produce natural gas from the two Malay Basin PSCs for delivery to state-owned Petrovietnam. The project includes installation of wellhead and hub platforms, an FSO, field pipelines, a living quarters platform, and a central processing platform. The offshore development project entered FEED in 2010. Targeted maximum total daily production is 490 million cubic feet of natural gas and 4,000 barrels of condensate. The final investment decision for the offshore development project is expected in fourth quarter 2011. In conjunction with the offshore development, the company has a 28.7 percent nonoperated working interest in a pipeline project that would deliver natural gas from the development to utility companies in southern Vietnam. The pipeline project entered FEED in 2009, and the engineering and design work is being developed by the operator of the pipeline. The pipeline project received its business license in July 2010. The expected total cost for the offshore development and pipeline projects is $4.3 billion. At the end of 2010, proved reserves had not been recognized for the development project. Exploration In 2010, analysis of well results and seismic data processing was completed and utilized to prepare for a drilling campaign expected in 2012. At the end of 2010, proved reserves had not been recognized for these activities. Other Vietnam In 2010, the seismic processing work and prospect mapping for Block 122 were completed. Evaluation of the prospects continued. Future exploration activities in Block 122 could be impacted by an ongoing territorial-claim issue between Vietnam and China. At the end of 2010, proved reserves had not been recognized for these activities.
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Chevron Corporation 2010 Supplement to the Annual Report
China Chevron has four operated and four nonoperated PSCs in China. Chuandongbei, located in the onshore Sichuan Basin, is 49 percentowned and operated and is composed of several natural gas fields. The PSC for Chuandongbei expires in 2037. Additionally, in September 2010, the company acquired operated interests in three deepwater blocks in the South China Sea’s Pearl River Mouth Basin, which cover exploratory acreage of approximately 5.2 million acres (21,000 sq km). The company is operator during the exploration phase and has a 100 percent interest in Blocks 53/30 and 64/18 and a 59.2 percent interest in Block 42/05. In the South China Sea, the company has a 32.7 percent nonoperated working interest in offshore Blocks 16/08 and 16/19, located in the Pearl River Mouth Basin. In Bohai Bay, the company holds a 16.2 percent nonoperated working interest in Block 11/19 and a 24.5 percent nonoperated working interest in the Qinhuangdao (QHD) 32-6 Field. The PSCs for Block 16/08, Block 16/19, the QHD 32-6 Field and Block 11/19 expire between 2013 and 2022. In the onshore Ordos Basin, the company relinquished the nonoperated working interests in all previously held blocks (Linxing, San Jiao Bei, Shenfu and Baode) in 2009. Government approval of the relinquishment is expected in mid-2011.
NORTH KOREA
Beijing QHD 32-6 Block 11/19
BOHAI BAY
SOUTH KOREA
CHINA EAST CHINA SEA Chuandongbei Natural Gas Area
Hong Kong
VIETNAM
Block 16/19
Block 16/08 Block 42/05 SOUTH CHINA SEA
Block 53/30 Block 64/18
Chevron Interest
Crude Oil Field
Natural Gas Field
Asia
Production In 2010, total average daily production was 86,000 barrels of crude oil and condensate (18,000 net) and 46 million cubic feet of natural gas (13 million net). Crude oil production from Blocks 16/08 and 16/19 in the South China Sea and Block 11/19 in Bohai Bay was partially restored in the first-half 2010 using temporary FPSOs after the fields were shut-in due to storm damage in 2009. Production is expected to fully resume in third quarter 2011 and in 2013, respectively.
Total daily production in 2010 from all producing areas in Indonesia averaged 477,000 barrels of liquids (187,000 net) and 611 million cubic feet of natural gas (236 million net). Sumatra Chevron’s interests in Sumatra include the 100 percentowned and operated Rokan and Siak PSCs. Chevron’s interest in a third PSC, Mountain Front Kuantan, was transferred to a local operator in April 2010. Production Total daily production averaged 370,000 barrels of crude oil (161,000 net) and 46 million cubic feet of natural gas (46 million net) in 2010.
HZ 25-3 and HZ 25-1 First production from the joint development of the HZ 25-3 and HZ 25-1 crude oil fields in Block 16/19 was achieved in March 2010.
During 2010, the majority of Chevron’s Sumatran production came from fields under primary or secondary recovery within the Rokan PSC. Duri is the largest producing field in the Rokan PSC. Duri has been under steamflood since 1985 and is one of the world’s largest steamflood developments. In 2010, 80 percent of the field was under steam injection, with total daily production averaging 188,000 barrels of crude oil (98,000 net).
Development Chuandongbei In 2010, the company continued construction of the first natural gas purification plant and initiated development of the Luojiazhai and Gunziping natural gas fields. Construction of a second natural gas purification plant and gathering system in the northern part of the concession is planned to commence in third quarter 2011. Upon completion of the project, the full development will include two new sour gas processing plants with an aggregate design capacity of 740 million cubic feet per day, connected by a gas gathering system to five natural gas fields. Planned maximum total daily natural gas production is 558 million cubic feet. Total project cost is estimated at $4.7 billion, and start-up of the initial phase is expected in 2012. Proved reserves have been recognized for the project.
The remaining production from the Rokan PSC is in the Sumatra light oil area, consisting of more than 90 active fields with total daily production that averaged 182,000 barrels of liquids (63,000 net) and 46 million cubic feet of natural gas (46 million net) in 2010. During 2010, 123 wells were drilled in this area. The Rokan PSC expires in 2021. Development The company continues to implement projects designed to sustain production, increase recovery and improve reliability from existing reservoirs.
Exploration In the Chuandongbei area, drilling is planned to begin for an exploration well by third quarter 2011. In the deepwater exploration blocks in the South China Sea, a 3-D seismic acquisition program started in fourth quarter 2010, and an environmental impact study and an exploration well are planned for 2011. Indonesia Chevron’s operated interests in Indonesia include two onshore PSCs on the island of Sumatra, four PSCs offshore East Kalimantan and two PSCs onshore in West Papua. In addition, the company operates two geothermal fields in West Java and a cogeneration plant in Sumatra. Chevron holds a nonoperated working interest in the offshore South Natuna Sea Block B, located northeast of the island of Sumatra.
Siak Block
PHILIPPINES
South Natuna Sea Block B
MALAYSIA
MALAYSIA
Rokan Block
Kalimantan Sulawesi
Suoh-Sekincau INDIAN OCEAN
In Area 1 through Area 11 of the Duri Field, 206 production and 16 steam injection wells were drilled during 2010. Development also continued in the northern region of the field, where approximately 110 million barrels of crude oil are estimated to be potentially reco verable. The development plan includes sequential development of additional northern expansion areas – North Duri Development Area 12 and North Duri Development Area 13. The Area 12 expansion, was completed in December 2010 with 72 production, 24 steam injection and 10 observation wells drilled during the year. Ramp-up of steam injection continued, with the project reaching a maximum total daily production rate of 45,000 barrels of crude oil in September 2010. A final investment decision for Area 13 was reached in May 2010 and is awaiting PACIFIC final development plan and bid award approvals OCEAN from the government of Indonesia, which are expected by year-end 2011.
Kutei Basin
Sumatra
Chevron Interest
Darajat
Maluku
West Papua
West Papua I & III Blocks
Jakarta Salak
Java
Geothermal Field
Upstream
In the Minas Field, 58 production wells were drilled during 2010, and efforts continued to optimize the waterflood program to sustain field production. Execution of the pilot project for a chemical injection process that could further improve recoverability of light oil in Minas and surrounding fields continued.
Nusa Tenggara Timur (NTT)
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Upstream
Asia
Exploration Two wells drilled in the Rokan Block in 2010 resulted in discoveries and were placed on production. Appraisal drilling near the Duri Field resulted in defining additional field expansion opportunities to be further assessed by planned 3-D seismic activity. A successful appraisal well was also drilled at the Bekasap Field. During 2011, additional appraisal drilling is planned in the Kulin and Bekasap fields.
Development The company continues to implement projects designed to sustain production, increase recovery and improve reliability from existing reservoirs in both the shelf and deepwater areas. In the shelf area, Chevron continued to execute the development program with 22 new wells drilled in 2010. Based on the positive results of the drilling program, additional seismic acquisition and processing is planned for the second-half 2011.
East Kalimantan Chevron’s operated interests in Kalimantan include four offshore PSC areas that cover approximately 2.8 million acres (11,100 sq km). The PSC areas are located offshore East Kalimantan in the Kutei Basin, including operated interests in East Kalimantan (92.5 percent), Makassar Strait (90 percent), Rapak (80 percent) and Ganal (80 percent). In December 2010, the company relinquished its interest in East Ambalat, located in the Tarakan Basin offshore northeast Kalimantan. The relinquishment is pending government approval, which is anticipated in the second-half 2011.
In addition, there are three deepwater development projects under way. The Gendalo-Gehem natural gas project includes two separate hub developments, each with its own FPU, subsea drill centers, natural gas and condensate pipelines, and an onshore receiving facility. In December 2010, the company awarded major FEED contracts for the FPUs, the subsea and pipeline components, and the onshore receiving facility. Completion of FEED is dependent on government approvals and achievement of project milestones. Maximum daily production from the project is expected to be 1.1 billion cubic feet of natural gas and 31,000 barrels of condensate. Also in 2010, the Bangka Project development plan was advanced and Chevron approved FEED in the fourth quarter. At the end of 2010, proved reserves had not been recognized for these projects.
In 2010, Chevron finalized an agreement to farm out an 18 percent working interest in the Makassar Strait, Rapak and Ganal PSCs, pending approval by the government of Indonesia, which is expected in the second-half 2011. In addition, under the terms of the Rapak and Ganal PSCs, the company is required to farm out to an Indonesian partner, which would further reduce the company’s ownership interest in Rapak and Ganal to 54 percent. The farmout to the Indonesian partner is expected to be completed by yearend 2011. Once the government has approved these agreements, the company’s share of production from the Gendalo-Gehem and Bangka projects will be 55.1 percent and 54.0 percent, respectively. Production Total daily production averaged 33,000 barrels of crude oil (17,000 net) and 144 million cubic feet of natural gas (104 million net) in 2010. During 2010, the majority of Kalimantan production came from 14 producing fields in the shelf area within the East Kalimantan PSC. The shelf area averaged 28,000 barrels of liquids (13,000 net) and 113 million cubic feet of natural gas (78 million net). Crude oil and natural gas produced from the northern fields are processed at the company-operated Santan terminal and liquids extraction plant. Natural gas is transported by pipeline to the state-owned Bontang LNG plant and to a fertilizer, ammonia and methanol complex. Crude oil and natural gas from the southern fields are sent to the company-operated Lawe-Lawe terminal. The stored crude oil is either exported by tanker or transported by pipeline to the state-owned Balikpapan Refinery. The natural gas is transported by pipeline for use as fuel gas at the Balikpapan Refinery. The East Kalimantan PSC expires in 2018. The remaining production came from the deepwater West Seno Field in the Makassar Strait PSC, with total daily production averaging 5,000 barrels of liquids (4,000 net) and 31 million cubic feet of natural gas (26 million net) in 2010. Products are separated offshore in an FPU and are exported by dual subsea pipelines to Santan Terminal. Crude oil is stored at Santan where it is exported by tanker, and natural gas enters the existing Bontang infrastructure. The Makassar Strait PSC expires in 2020.
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Chevron Corporation 2010 Supplement to the Annual Report
The third development project is the Extended Reach Drilling Project for the West Seno Field. The company reached a final investment decision for the project in August 2010. Proved reserves have been recognized for the project. East Java Sea Basin Exploration A third obligation well in the NE Madura III Block was drilled in 2009 and resulted in a dry hole. Due to the results of this well and the previously drilled exploration wells, the company settled its obligation to participate in three additional exploration wells and relinquished its 40 percent-owned and nonoperated working interest in the PSC; government approval for the relinquishment is anticipated in the second-half 2011. West Papua In June 2010, Chevron received final government approval to reduce its operated interest in two onshore exploration blocks in western Papua to 51 percent. During the year, geologic studies continued on West Papua I and West Papua III blocks, and 2-D seismic acquisition is expected to start in second quarter 2011. South Natuna Sea Block B Chevron holds a 25 percent nonoperated working interest in the offshore South Natuna Sea Block B. Production Block B production is from seven natural gas fields and four crude oil fields. Total daily production during 2010 averaged 75,000 barrels of liquids (9,000 net) and 421 million cubic feet of natural gas (86 million net). Development Block B has a five-phase development project to support two long-term natural gas sales contracts with Malaysia and Singapore. Drilling for the initial three development phases continued through 2010. The North Belut Project, the fourth phase of the Block B development, achieved first gas in 2009 and reached a maximum total daily production of 240 million cubic feet of natural gas and 33,000 barrels of liquids in February 2010. Additional development drilling in the North Belut Field is planned to continue through 2011.
Asia
During 2010, the Bawal and South Belut projects were progressed as part of the fifth phase of the development plan for Block B. A final investment decision was reached for the Bawal Project in October 2010, and start-up is expected in 2012. Proved reserves have been recognized for this project. Geothermal and Power Geothermal/Cogeneration The company operates and holds a 95 percent interest in the Darajat geothermal field located in West Java, Indonesia. The field supplies steam to a three-unit power plant with a total operating capacity of 259 megawatts. Also in West Java, Chevron operates and holds a 100 percent interest in the Salak geothermal field in the Gunung Salak contract area. The field supplies steam to a six-unit power plant with a total operating capacity of 377 megawatts. Chevron also operates and holds a 95 percent interest in the North Duri Cogeneration Plant in Sumatra, supplying up to 300 megawatts of electrical power to Chevron’s Sumatra operations as well as steam in support of the Duri steamflood project. In December 2010, Chevron acquired a 95 percent-owned and operated interest in the Suoh-Sekincau prospect area located in the Lampung Barat Regency, South Sumatra, Indonesia. Chevron was issued an exploration license for the area by the government of Indonesia and is in the early phase of geological and geophysical assessment. If successful, additional development could potentially add approximately 200 megawatts to Chevron’s geothermal portfolio. Kuwait The Chevron-led consortium, which was interested in developing Kuwait’s northern fields, ended in May 2010. Kuwait remains an important business relationship and investment partner for Chevron both in Kuwait and globally, and Chevron continues to monitor all business opportunities for possible future investment. The company’s Downstream Technical Service Agreement with Kuwait National Petroleum Corporation for technical assistance with local refineries ended in November 2010.
IRAQ IRAN KUWAIT
Partitioned Zone SAUDI ARABIA
Chevron Interest
Crude Oil Field
ARABIAN GULF
Upstream
Partitioned Zone Chevron holds a concession with the kingdom of Saudi Arabia to operate the kingdom’s 50 percent interest in the hydrocarbon resources of the onshore area of the Partitioned Zone between Saudi Arabia and Kuwait. Under the concession agreement, Chevron has the right to Saudi Arabia’s 50 percent interest in the hydrocarbon resources. The concession expires in 2039. Production During 2010, total daily production from four fields averaged 236,000 barrels of crude oil (94,000 net) and 45 million cubic feet of natural gas (23 million net). During 2010, 67 wells were drilled, and 1,062 wells were producing at the end of 2010. Development drilling, well workovers and numerous facility-enhancement programs scheduled for 2011 and 2012 are expected to partially offset overall field declines. Development The Large-Scale Steamflood Pilot Project was commissioned in 2009 and entailed drilling 16 injection wells and 25 producing wells, installing water-treatment and steam-generation facilities and commencing steam injection in the First Eocene carbonate reservoir. A successful application of steam injection could significantly increase recoverability of the heavy oil from the Wafra Field. In 2010, the pilot project was injecting steam and production had increased 600 percent over the initial baseline. In September 2010, a small-scale steam injectivity test was initiated in the Second Eocene reservoir, providing further support for expansion of the Large-Scale Pilot to test additional heavy oil resources. A decision to enter FEED for a full field application is expected in 2012. At the end of 2010, proved reserves had not been recognized for the project. During 2010, alternatives were being evaluated for the Central Gas Utilization Project. The project is intended to improve natural gas utilization and eliminate natural gas flaring at the Wafra Field. A final investment decision is expected in 2012. At the end of 2010, proved reserves had not been recognized for the project. Philippines Chevron holds a 45 percent nonoperated working interest in the Malampaya natural gas field, located about 50 miles (80 km) offshore Palawan Island in water depths of approximately 2,800 feet (853 m). The Malampaya development includes an offshore platform and a 314-mile (505-km) pipeline from the platform to the Batangas onshore natural gas plant. Drilling of one appraisal well was completed in July 2010, and studies are under way to optimize the next stage of development. Production Total daily production from Malampaya during 2010 averaged 350 million cubic feet of natural gas (124 million net) and 13,000 barrels of condensate (4,000 net). Geothermal Under an agreement with the Philippine government, Chevron develops and produces steam resources for the thirdparty Tiwi and Mak-Ban geothermal power plants, which have a combined generating capacity of 637 megawatts. By the end of 2011, Chevron expects to sign a 25-year renewable-energy contract with the government for the continued operation of the steam fields and to supply steam to the two geothermal power plants.
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31
Upstream
Australia
final field development plan scheduled to be submitted in mid2011. The company’s nonoperated working interests range from 16.7 percent to 20 percent in the blocks that contain these three fields. The fields are expected to be unitized prior to development, with Chevron’s unitized interest becoming effective upon a final investment decision. In addition, the company holds nonoperated working interests ranging from 24.8 percent to 50 percent in other blocks in the Browse Basin. At the end of 2010, proved reserves had not been recognized for any of the Browse Basin fields.
Kalinga
Manila Mak-Ban SOUTH CHINA SEA
Batangas
San Martin
Tiwi
PHILIPPINES
Malampaya
Chevron Interest
Natural Gas Field
Geothermal Field
Terminal
In November 2010, Chevron signed a farm-in agreement and a JOA with two Philippine corporations to explore, develop and operate the Kalinga geothermal prospect in northern Luzon, Philippines. Chevron acquired a 90 percent-owned and operated interest in this project, which is under a 25-year renewable-energy service contract with the Philippine government. The project was in the early phase of geological and geophysical assessment and could potentially add 100 megawatts to Chevron’s geothermal portfolio.
Australia Chevron is the largest holder of natural gas resources in Australia. During 2010, the company’s net daily oil-equivalent production averaged 111,000 barrels, representing approximately 4 percent of the companywide total, and was composed of 159,000 barrels of crude oil and condensate (29,000 net), 29,000 barrels of LPG (5,000 net), and 2.7 billion cubic feet of natural gas (458 million net). Barrow Island and Thevenard Island On Barrow Island and Thevenard Island off the northwest coast of Australia, Chevronoperated total daily production in 2010 averaged 7,000 barrels of crude oil (4,000 net). Chevron’s interests are 57.1 percent for Barrow and 51.4 percent for Thevenard. Browse Basin In early 2010, the Browse LNG development participants commenced design concept evaluation for the Brecknock, Calliance and Torosa fields as a condition of the retention lease renewal set by the Australian government in 2009. During third quarter 2010, the preliminary field development plan was submitted to the state and federal regulators for assessment, with the
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Chevron Corporation 2010 Supplement to the Annual Report
Greater Gorgon Area Chevron holds equity interests in the natural gas resources of the Greater Gorgon Area off the northwest coast of Australia. The company holds a 47.3 percent interest across most of the area and is the operator of the Gorgon Project, which combines the development of the offshore Gorgon Field and the nearby Io/Jansz Field as one large-scale project. Development Construction and other activities for the Gorgon Project on Barrow Island progressed during 2010 with the awarding of approximately $25 billion of contracts for materials and services, clearing of the plant site, completion of the first stage of the construction village, commencement of module fabrication, and progression of studies on the possible expansion of the project. Maximum total daily production from the project is expected to be 2.6 billion cubic feet of natural gas and 20,000 barrels of condensate. The development plan includes a three-train, 15.0 million-metric-ton-per-year LNG facility, a carbon sequestration project and a domestic natural gas plant with a capacity of 300 terajoules per day. Start-up of the first train is expected in 2014, and total estimated project cost for the first phase of development is $37 billion. Chevron has signed five binding LNG Sales and Purchase Agreements (SPAs) with various Asian customers for delivery of about 4.7 million metric tons per year. Negotiations continue to convert the remaining nonbinding HOAs to binding SPAs, which would bring combined delivery commitments to about 90 percent of Chevron’s share of LNG from the project. Proved reserves have been recognized for this project. The project’s estimated economic life exceeds 40 years from the time of start-up. Exploration During 2010 and early 2011, the company announced natural gas discoveries at the 50 percent-owned and operated Yellowglen, Sappho and Orthrus prospects in Blocks WA-268-P, WA-392-P and WA-24-R, respectively. These discoveries are expected to help underpin further expansion opportunities on the Gorgon Project. At the end of 2010, proved reserves had not been recognized for any of these discoveries. North West Shelf (NWS) Venture Chevron has a 16.7 percent nonoperated working interest in the NWS Venture in Western Australia. The joint venture operates offshore producing fields and extensive onshore facilities that include five LNG trains and a domestic gas plant. Production is from the Angel, Echo Yodel, Goodwyn, North Rankin and Perseus natural gas fields and the Cossack, Hermes, Lambert and Wanaea crude oil fields. The NWS Venture concession expires in 2034.
Australia
BROWSE BASIN
INDIAN OCEAN
Iago
Torosa Brecknock Calliance
Montague Hermes Eurytion Egret Lambert Goodwyn Perseus Geryon Urania Echo Yodel Wheatstone Yellowglen Angel Cossack Wanaea Iago Persephone Dixon Dionysus North Rankin Maenad Chrysaor Lady Nora Goodwyn South Orthrus Rankin Dockrell Wilcox Achilles West NORTH WEST Acme Tryal Satyr SHELF Clio Rocks North West Shelf Sappho Gorgon LNG Facilities Barrow Gorgon GREATER Island LNG GORGON Facilities lo/Jansz Chandon
Kentish Knock Brederode
Western Australia
Thevenard Island Wheatstone Project Chevron Interest
Natural Gas Field
Crude Oil Field
Terminal
Production Total daily production during 2010 averaged 152,000 barrels of crude oil and condensate (25,000 net), 29,000 barrels of LPG (5,000 net), and 2.7 billion cubic feet of natural gas (456 million net). Approximately 70 percent of the natural gas was sold in the form of LNG to major utilities in Japan, South Korea and China, primarily under long-term contracts. A total of 263 LNG cargoes were sold in 2010. Additionally, 785 million cubic feet of natural gas per day (131 million net) was sold to the Western Australia domestic market. Development Progress continues on several NWS Venture projects. The North Rankin 2 Project (NR2) progressed, with fabrication of North Rankin B jacket and topsides and modifications to North Rankin A for process tie-ins and a barge link. Upon completion, North Rankin A and North Rankin B platforms will be operated as a single integrated facility. NR2 is designed to recover remaining low-pressure natural gas from the North Rankin and Perseus fields to meet supply needs for contractual commitments. The maximum total daily production is expected to be 2.0 billion cubic feet of natural gas and 39,000 barrels of condensate. Total estimated project cost is $4.7 billion, and start-up is expected in 2013. Work also continued on the NWS Oil Redevelopment Project. The project is designed to replace the existing FPSO and a portion of existing subsea infrastructure that services production from the Cossack, Hermes, Lambert and Wanaea fields. In January 2011, the subsea infrastructure refurbishment commenced, and completion of construction and commissioning works on the new FPSO is expected in second quarter 2011. Production from wells tied in to the new FPSO is anticipated to commence in third quarter 2011. The project is estimated to cost $1.9 billion and is expected to extend production past 2020.
Upstream
The NWS Venture continues to progress additional natural gas supply opportunities through development of several fields on the western flank of the Goodwyn reservoirs. The project is expected to enter FEED in second quarter 2011. These fields contain potentially recoverable volumes of approximately 3 trillion cubic feet of natural gas and 100 million barrels of condensate. Wheatstone Development The Chevron-operated Wheatstone Project includes naturalgas-processing facilities that consist of a two-train, 8.9 million-metric-tonper-year LNG facility and a separate domestic gas plant, both located at Ashburton North, along the West Pilbara coast. The company plans to supply natural gas to the facilities from two Chevron-operated licenses, comprising the majority of the Wheatstone Field and the nearby Iago Field. The maximum total daily production is expected to be 1.4 billion cubic feet of natural gas and 25,000 barrels of condensate.
Through the end of 2010, Chevron had signed nonbinding HOAs with three Asian customers for the delivery of about 80 percent of Chevron’s net LNG offtake per year from the Wheatstone Project. Under these HOAs, the customers also agreed to acquire a combined 21.8 percent nonoperated working interest in the Wheatstone field licenses and a 17.5 percent interest in the foundation natural-gas-processing facilities, contingent on reaching a final investment decision. Negotiations continue to convert the three nonbinding HOAs to binding SPAs. Agreements were also signed in 2009 and 2010 with two companies to participate in the Wheatstone Project as combined 20 percent LNG facility owners and suppliers of natural gas for the project’s first two LNG trains. At the end of 2010, Chevron held an 80 percent interest in the foundation natural-gas-processing facilities. The project entered FEED in 2009, and in March 2010, submissions for environmental approvals were lodged with the Western Australian Environmental Protection Authority for public comment and consideration. Also in 2010, a Native Title HOA was reached with the local indigenous people, and the Native Title agreement for land required to develop the project was executed in December. In early 2011, key approvals were finalized on numerous agreements relating to the facilities and land sites. The final investment decision for the project is expected in the second-half 2011. At the end of 2010, proved reserves had not been recognized for this project. Exploration During 2010, the company announced natural gas discoveries at the Clio and Acme prospects in Block WA-205-P. These 67 percent-owned and operated discoveries are expected to support expansion opportunities at the Wheatstone LNG facilities. At the end of 2010, proved reserves had not been recognized for these discoveries.
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33
Upstream
Europe
Other Australia During 2010, the company announced a natural gas discovery at the 50 percent-owned and operated Brederode prospect in Block WA-364-P. At the end of 2010, proved reserves had not been recognized for this discovery.
Europe In Europe, the company is engaged in exploration and production activities in Denmark, the Netherlands, Norway, Poland, Romania and the United Kingdom. Net daily oil-equivalent production of 159,000 barrels during 2010 in these countries represented about 6 percent of the companywide total. Denmark Chevron holds a 15 percent nonoperated working interest in the Danish Underground Consortium (DUC). The DUC has interests in 15 Danish North Sea fields, of which 13 are producing. Production Average total daily production in 2010 from the DUC was 213,000 barrels of crude oil (32,000 net) and 775 million cubic feet of natural gas (116 million net). Development During 2010, four development wells were drilled and completed in the Halfdan, Tyra and Valdemar fields. The Halfdan Phase IV development is progressing, and production is utilizing existing facilities. Installation of the new Halfdan facilities were completed in 2010, with hook-up and tie-in planned for second quarter 2011. Exploration There were no significant exploration activities in 2010. Further appraisal of the Valdemar Field southern extension is planned for second quarter 2011 to assess the viability of broader development.
Norway Production Chevron holds a 7.6 percent nonoperated working interest in the Draugen Field. Total daily average production in 2010 was 44,000 barrels of crude oil (3,000 net). Exploration In 2010, Chevron processed data from a 2-D seismic survey acquired over the PL 527 exploration license and began evaluating options for a subsequent 3-D seismic survey. The 40PL 397 percent-owned and operated PL 527 license covers 891,423 acres (3,609 sq km) within the deepwater portion of the Norwegian Sea. In February 2011, Chevron relinquished its 40 percent nonoperated working interest in the PL 397 license in the Barents Sea.
PL 527
ICELAND NORWEGIAN SEA
Draugen FAROE ISLANDS
Rosebank Clair
Development The second stage of the A/B Gas Project, the B13 satellite development, is under construction. This stage is composed of a pipeline laid in December 2010, an unmanned platform planned to be installed in second quarter 2011 and four wells planned to be drilled in third quarter 2011. First production is expected in 2012. Exploration The P/1 and P/2 Blocks contain several natural gas discoveries. In late 2011, the first well since acquisition of the P/2 Block is expected to commence drilling.
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Chevron Corporation 2010 Supplement to the Annual Report
FINLAND
NORWAY
Shetland Islands
BALTIC SEA
Captain
Alder Callanish Britannia Alba Brodgar Erskine Elgin/Franklin
UNITED KINGDOM
Jade A/B
DUC DENMARK Valdemar Tyra Halfdan
LATVIA
RUSSIA POLAND
IRELAND
Grabowiec Krasnik Frampol Zwierzyniec
NETHERLANDS GERMANY
CZECH REPUBLIC AUSTRIA FRANCE
Crude Oil Field
BELARUS
UKRAINE
SLOVAKIA HUNGARY
SLOVENIA ITALY
Chevron Interest
ESTONIA
LITHUANIA
NORTH SEA
Netherlands Chevron operates and holds interests in 10 blocks in the Dutch sector of the North Sea. Five blocks, with a unitized interest of 34.1 percent, comprise the A/B Gas Project. The company also has interests ranging from 46.7 percent to 80 percent in three blocks that contain producing fields, and in September 2010, Chevron acquired a 60 percent interest in the P/1 and P/2 exploration blocks. Production In 2010, average total daily production was 3,000 barrels of crude oil (2,000 net) and 97 million cubic feet of natural gas (35 million net).
SWEDEN Strathspey
Barlad Block
ROMANIA Block 17 Block 18 SERBIA Block 19
Natural Gas Field
Poland Exploration In February 2010, Chevron acquired an exploration license for the Grabowiec shale gas concession in southeast Poland, which complements the three other shale gas concessions (Zwierzyniec, Krasnik and Frampol) held by the company. All the licenses are 100 percent-owned and operated and comprise a total of 1.1 million acres (4,433 sq km). The acquisition of 2-D seismic data across the four licenses commenced in October 2010. The data will be used to plan a multiwell drilling program expected to start in late 2011.
Europe
Romania Exploration In July 2010, Chevron submitted the winning bid for three blocks in the 10th Romanian Exploration Licensing Round. Blocks 17, 18 and 19 in southeast Romania comprise approximately 670,000 acres (2,700 sq km). Negotiation of the license agreements for these blocks continued into 2011. In February 2011, Chevron also acquired a 100 percent interest in the EV-2 Barlad concession. This license, which covers 1.5 million acres (6,257 sq km), is located in northeast Romania. A 2-D seismic program is planned to begin in fourth quarter 2011 on the EV-2 Barlad concession. United Kingdom Chevron has interests in 10 offshore producing fields in the United Kingdom, including four operated fields (Alba, 23.4 percent; Captain, 85 percent; Erskine, 50 percent; and Strathspey, 67 percent), one jointly operated field (Britannia, 32.4 percent) and five nonoperated fields (Brodgar, 25 percent; Callanish, 16.5 percent; Clair, 19.4 percent; Elgin/Franklin, 3.9 percent; and Jade, 19.9 percent). Production Total daily production in 2010 from the 10 fields averaged 243,000 barrels of crude oil and NGLs (64,000 net) and 1.05 billion cubic feet of natural gas (194 million net). Most of the production was from the Captain Field, with total average daily production of 37,000 barrels of crude oil (32,000 net) and 4 million cubic feet of natural gas (3.2 million net); the Britannia Field, with total average daily production of 11,000 barrels of crude oil (4,000 net) and 276 million cubic feet of natural gas (89 million net); and the Alba Field, with total average daily production of 28,000 barrels of crude oil (7,000 net). Alba A 4-D seismic survey over Alba was used to plan and execute three additional development wells during 2010. Active drilling programs from both platform and subsea templates are expected to continue beyond 2013. Captain At Captain, six new development wells, from both platform and subsea locations, added total daily production of 15,000 barrels of crude oil (13,000 net) in 2010. Continued development drilling is expected to maintain production rates through 2013. Enhanced oil recovery was tested through a field pilot study utilizing polymer injection with the objective of increasing rates of recovery. This pilot is planned to continue through 2011.
Upstream
Development Alder The 70 percent-owned and operated Alder high-temperature, high-pressure crude oil and natural gas discovery, located approx足 imately 17 miles (27 km) to the west of the Britannia Field, is being evaluated as a potential subsea development. During 2010, the decision was made to move to FEED following selection of the development concept. A final investment decision is expected in 2012. At the end of 2010, proved reserves had not been recognized for this discovery. Clair Ridge The Clair Ridge project comprises the second phase of the Clair field development. The preferred alternative has been selected and consists of a bridge-linked, twin-jacket structure that includes drilling, processing and living facilities. A final investment decision is expected in late 2011. At the end of 2010, proved reserves had not been recognized for Clair Ridge. Rosebank The Rosebank Field is 81 miles (130 km) northwest of the Shetland Islands in 3,658 feet (1,115 m) of water. The company operates and holds a 40 percent interest in the project. During 2010, seismic, geophysical, geotechnical and environmental surveys were conducted. Feasibility engineering activities are scheduled to continue through 2011. A final investment decision is planned for 2013. At the end of 2010, proved reserves had not been recognized for this discovery. Exploration West of the Shetland Islands, a three-well exploration and appraisal drilling program began in September 2010 and is expected to be completed in fourth quarter 2011. This program comprises exploration wells on the Lagavulin prospect in the 60 percent-owned and operated license block P1196 and the Aberlour prospect in the 40 percent-owned and operated license block P1194, followed by appraisal drilling and well testing of the Cambo discovery in the 32.5 percent nonoperated license blocks P1028 and P1189. Chevron will be the operator of the 2011 Cambo drilling activities. At the end of 2010, proved reserves had not been recognized for any of these prospects. In February 2010, the company sold its 10 percent interest in the nonoperated Laggan/Tormore discovery. In June 2010, Chevron relinquished its equity in the Torridon natural gas discovery. The 3-D seismic acquisition and processing was completed over the Clair Field Unit area, and interpretation of the data to the southwest over previously awarded 25th Round acreage is ongoing.
Chevron Corporation 2010 Supplement to the Annual Report
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Upstream
Gas
Gas Chevron’s gas strategy is to commercialize the company’s equity natural gas resource base while growing a high-impact global gas business. Significant progress was made in 2010 in reaching key milestones for the Gorgon and Wheatstone projects. In Africa, construction continued at the Angola LNG and EGTL projects. Centers of excellence in gas commercialization, marketing and trading, transportation, and power generation were leveraged to create value across all major segments of the enterprise. 2010 Activities Angola LNG Angola LNG is an integrated natural gas utilization project encompassing offshore and onshore operations to commercialize natural gas resources through LNG sales. Plant construction continued on schedule throughout 2010. For information on significant project milestones, refer to page 22. EGTL Chevron and the NNPC are developing a 33,000-barrel-per-day gas-to-liquids facility at Escravos that is designed to process 325 million cubic feet per day of natural gas from the EGP Phase 3A. For more information on this project, refer to page 24. Gorgon The Gorgon Project comprises the development of natural gas production from fields in the Greater Gorgon Area off the northwest coast of Australia and construction of LNG facilities on Barrow Island. For more information on the Gorgon Project, refer to page 32. NWS Venture Chevron has a 16.7 percent nonoperated working interest in the NWS Venture in Western Australia. The joint venture operates offshore producing fields and extensive onshore facilities that include five LNG trains and a domestic gas plant. Progress continues on several NWS Venture projects. For more information on these projects, refer to pages 32 and 33. Olokola LNG Chevron has a 19.5 percent interest in the OKLNG affiliate in Nigeria. Plans have been developed to build a multitrain natural-gas-liquefaction facility and marine terminal located northwest of Escravos. For more information on this project, refer to page 24. Wheatstone The Wheatstone Project comprises development of the Wheatstone and Iago offshore natural gas fields and an onshore LNG and domestic natural gas plant. For more information on the development of this project, refer to page 33. Natural Gas Marketing and Trading Chevron ranks among the top natural gas marketers in North America, with natural gas sales in 2010 averaging approximately 7 billion cubic feet per day. The company continues to build and develop long-term relationships with producers, end-use natural gas customers, and storage and pipeline operators. Chevron has contracted capacity in a third-party pipeline system, connecting the Sabine Pass LNG terminal to the natural gas pipeline grid. The pipeline provides access to two major salt dome storage fields and 10 major interstate pipeline systems, including access to Chevron’s Sabine Pipeline, which connects to the Henry Hub. The Henry Hub interconnects to nine interstate and four intrastate pipelines and is the pricing point for natural gas futures contracts traded on the New York Mercantile Exchange.
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Chevron Corporation 2010 Supplement to the Annual Report
Upstream Operating Data
Major Capital Projects1 Year of Start-Up/Project
Maximum Total Production 2 Location
Ownership Percentage Operator
Liquids (MBPD)3
Natural Gas (MMCFPD)3
2010 EGP Phase 3A Perdido Regional Development5
Nigeria United States
40.0 33.3-60.0
Chevron Partner
4 43 6,7 130
4 395 –
Nigeria Thailand
67.3 69.99
Chevron Chevron
100 8 18
– 330
Angola China Nigeria
36.4 49.0 30.0
Affiliate Chevron Partner
63 – 180
670 558 –
Nigeria Brazil Australia
75.0 37.5 16.7
Chevron Partner Partner
33 10 140 8 39
– – 8 1,980
United States Vietnam Nigeria Indonesia Australia United States Angola Australia
60.0 9 42.9 40.0 11 55.1 47.3 50.0-51.0 39.2 80.0 13
Chevron Chevron Chevron Chevron Chevron Chevron Chevron Chevron
75 4 43 31 20 6 170 120 25
25 490 215 1,071 2,580 6 42 – 1,410
2011 Agbami 2 Platong Gas II
2012 Angola LNG Plant Chuandongbei Usan
2013 EGTL Papa-Terra North Rankin 2
2014-2016
Big Foot Block B Gas Development Gas Supply Expansion Project Gendalo-Gehem Gorgon LNG Trains 1–3 Jack/St. Malo12 Mafumeira Sul Wheatstone LNG Trains 1–2
1 The
projects in the table above are considered the most noteworthy in the company’s development portfolio, each with an expected maximum net daily production of 25,000 barrels of oil-equivalent or more. These and other projects in the portfolio are discussed in detail beginning on page 14. maximum total production is total for each field or project except as footnoted. If the project is a new facility, an expansion of existing facilities or a phased project, the indicated production is for the incremental volumes directly attributable to the project or phase. 3 MBPD = thousands of barrels per day; MMCFPD = millions of cubic feet per day. 4 Represents incremental volumes to total plant processing capacity. 5 Perdido Regional Development includes interests in Great White (33.3 percent), Silvertip (60.0 percent), Tobago (57.5 percent) and the Perdido Regional Host Shared Producing facility (37.5 percent). 6 Represents total facility processing capacity. 7 Expressed in thousands of oil-equivalent barrels per day. 8 Volumes are not incremental. Project designed to maintain capacity. 9 Represents a weighted average of Chevron’s interest across multiple blocks. 10 Represents total plant outtake of liquids. 11 Represents the company’s ownership percentage following government approval of farm-out agreements. 12 Jack/St. Malo development includes interests in Jack (50.0 percent), St. Malo (51.0 percent), and the St. Malo Host Shared Producing facility (50.7 percent). 13 Represents the company’s ownership in the LNG facilities. 2 Targeted
Chevron Corporation 2010 Supplement to the Annual Report
37
Upstream Operating Data
Net Proved Reserves Billions of BOE* 12.0
10.5 10.0
8.0
6.0
4.0
2.0
0.0 06 07
08 09 10
Affiliates Europe Australia Asia Africa Other Americas United States *BOE (barrels of oil-equivalent) 2010 and 2009 include reserves for Canadian synthetic oil.
Proved Reserves – Crude Oil, Condensate, Natural Gas Liquids and Synthetic Oil (Liquids)1,2
At December 31
2010
2009
2008
2007
2006
Gross Liquids Consolidated Companies United States Other Americas Africa Asia Australia Europe
1,376 643 1,423 1,728 88 152
1,463 621 1,506 1,891 98 170
1,592 168 1,632 2,145 73 202
1,761 187 1,852 2,039 84 269
1,899 204 2,056 2,285 102 303
Total Consolidated Companies
5,410
5,749
5,812
6,192
6,849
Equity Share in Affiliates TCO Other
2,255 580
2,359 589
2,420 626
2,454 626
2,449 701
Total Equity Share in Affiliates
2,835
2,948
3,046
3,080
3,150
Total Worldwide
8,245
8,697
8,858
9,272
9,999
Net Liquids Consolidated Companies United States Other Americas Africa Asia Australia Europe
1,275 574 1,168 1,013 88 152
1,361 564 1,246 1,171 98 170
1,470 149 1,385 1,456 73 202
1,624 165 1,500 1,023 84 269
1,751 181 1,698 1,259 102 303
Total Consolidated Companies
4,270
4,610
4,735
4,665
5,294
Equity Share in Affiliates TCO Other
1,820 413
1,946 417
2,176 439
1,989 433
1,950 562
Total Equity Share in Affiliates
2,233
2,363
2,615
2,422
2,512
Total Worldwide
6,503
6,973
7,350
7,087
7,806
Gross Natural Gas Consolidated Companies United States Other Americas Africa Asia Australia Europe
2,813 2,358 2,944 10,594 6,056 277
3,074 2,589 3,022 11,191 6,245 345
3,630 2,879 3,056 11,102 1,961 490
4,249 2,882 3,049 10,698 2,105 721
4,678 2,828 3,206 10,132 2,391 849
Total Consolidated Companies
25,042
26,466
23,118
23,704
24,084
3,081 1,166
3,225 1,124
3,348 947
3,440 326
3,435 284
Millions of barrels
Proved Reserves – Natural Gas1,2 Billions of cubic feet
Equity Share in Affiliates TCO Other Total Equity Share in Affiliates Total Worldwide Net Natural Gas Consolidated Companies United States Other Americas Africa Asia Australia Europe Total Consolidated Companies Equity Share in Affiliates TCO Other Total Equity Share in Affiliates Total Worldwide 1 2006
4,247
4,349
4,295
3,766
3,719
29,289
30,815
27,413
27,470
27,803
2,472 1,815 2,944 7,193 6,056 275
2,698 1,985 3,021 7,860 6,245 344
3,150 2,368 3,056 7,997 1,961 490
3,677 2,378 3,049 7,207 2,105 721
4,028 2,334 3,206 7,103 2,391 848
20,755
22,153
19,022
19,137
19,910
2,386 1,110
2,833 1,063
3,175 878
2,748 255
2,743 231
3,496
3,896
4,053
3,003
2,974
24,251
26,049
23,075
22,140
22,884
through 2009 conformed to 2010 geographic presentation. reserves are estimated by the company’s asset teams, composed of earth scientists and reservoir engineers. These proved-reserve estimates are reviewed annually by the company’s Reserves Advisory Committee to ensure that rigorous professional standards and the reserves definitions prescribed by the Securities and Exchange Commission are consistently applied throughout the company. Refer to the Glossary for a definition of proved reserves. Net reserves exclude royalties and interests owned by others and reflect contractual arrangements and royalty obligations in effect at the time of the estimate.
2 Proved
38
Chevron Corporation 2010 Supplement to the Annual Report
Upstream Operating Data
Net Oil–Equivalent Production1,2 Thousands of barrels per day
Year ended December 31
2010
2009
2008
2007
2006
Consolidated Companies United States Alabama – Onshore – Offshore Alaska – Onshore – Offshore California Colorado Louisiana – Onshore – Offshore New Mexico Oklahoma Texas – Onshore – Offshore Wyoming Other states
8 8 22 9 199 27 2 233 36 9 117 10 25 3
10 9 23 7 211 26 2 214 37 10 132 9 23 4
9 10 24 10 215 25 3 127 38 11 149 11 28 11
10 10 27 10 221 27 4 174 38 12 153 16 29 12
11 11 30 10 224 27 5 175 40 13 150 22 33 12
Total United States
708
717
671
743
763
Other Americas Argentina Brazil Canada Colombia Trinidad and Tobago Venezuela3
32 24 54 41 38 –
38 2 28 41 34 –
44 – 37 35 32 –
47 – 36 30 29 –
47 – 47 29 29 7
Total Other Americas
189
143
148
142
159
Africa Angola Chad Democratic Republic of the Congo Nigeria Republic of the Congo
161 28 2 253 25
150 27 3 232 21
154 29 2 154 13
179 32 3 129 8
164 35 3 144 12
Total Africa
469
433
352
351
358
Asia Azerbaijan Bangladesh China Indonesia Kazakhstan Myanmar Partitioned Zone Philippines Thailand
30 69 20 226 64 13 98 25 216
30 66 19 243 69 13 105 27 198
29 71 22 235 66 15 106 26 217
61 47 26 241 66 17 112 26 224
47 21 26 248 62 15 114 24 216
Total Asia
761
770
787
820
773
Total Australia
111
108
96
100
99
51 8 3 97
55 9 5 110
61 9 6 106
63 4 6 115
68 4 6 115
159
179
182
188
193
2,397
2,350
2,236
2,344
2,345
308 30 26 2
274 28 24 2
201 35 28 3
176 41 28 3
167 38 7 1
Europe
Denmark Netherlands Norway United Kingdom
Total Europe Total Consolidated Companies Equity Share in Affiliates TCO Petropiar (Hamaca prior to 2008) Petroboscan 4 Petroindependiente4 Total Equity Share in Affiliates Total Consolidated Companies and Affiliates Other Produced Volumes Athabasca Oil Sands in Canada Boscan operating service agreement in Venezuela 5 Total Other Produced Volumes Total Worldwide
366
328
267
248
213
2,763
2,678
2,503
2,592
2,558
– –
26 –
27 –
27 –
27 82
–
26
27
27
109
2,763
2,704
2,530
2,619
2,667
Net Oil-Equivalent Production by Country* Percentage
United States Kazakhstan Nigeria Indonesia Thailand Angola Australia United Kingdom Partitioned Zone Others
25.6% 13.5% 9.2% 8.2% 7.8% 5.8% 4.0% 3.5% 3.5% 18.8%
*Includes equity share in affiliates.
Net Oil-Equivalent Production* Thousands of barrels per day 3000
2,763
2500
2000
1500
1000
500
0 06 07 08 09 10
Affiliates Europe Australia Asia Africa Other Americas United States – Offshore United States – Onshore *Includes other produced volumes in 2006 to 2009.
1 2006
through 2009 conformed to 2010 geographic presentation. oil-equivalent production excludes royalty interests and a government’s agreed-upon share of production under a production-sharing contract (PSC). production from LL-652 through September 2006. 4 Joint stock company formed in October 2006. 5 Includes volumes through September 2006. 2 Net
3 Includes
Chevron Corporation 2010 Supplement to the Annual Report
39
Upstream Operating Data
Net Liquids Production by Country* Percentage
United States Kazakhstan Nigeria Indonesia Angola Partitioned Zone Thailand United Kingdom Others
25.4% 15.1% 12.4% 9.7% 7.9% 4.9% 3.6% 3.3% 17.5%
*Includes equity share in affiliates.
Net Liquids Production* Thousands of barrels per day 2250
1,923 1800
1350
900
450
0 06 07 08 09 10
Affiliates Europe Australia Asia Africa Other Americas United States — Offshore United States — Onshore * Includes other produced volumes in 2006 to 2009.
Net Liquids Production1,2,3
Year ended December 31
2010
Thousands of barrels per day
2009
2008
2007
2006
Consolidated Companies United States Alaska – Onshore – Offshore California Colorado Louisiana – Onshore – Offshore New Mexico Texas – Onshore – Offshore Wyoming Other states
11 3 183 10 1 178 19 66 4 7 7
12 2 196 9 1 154 21 71 3 7 8
12 5 201 10 1 77 21 76 4 7 7
14 5 205 10 2 106 21 77 5 7 8
15 5 207 10 2 101 20 79 6 8 9
Total United States
489
484
421
460
462
Other Americas Argentina Brazil Canada Trinidad and Tobago 4 Venezuela
31 23 53 1 –
33 2 27 1 –
37 – 36 – –
39 – 35 – –
38 – 46 – 3
Total Other Americas
108
63
73
74
87
Africa Angola Chad Democratic Republic of the Congo Nigeria Republic of the Congo
152 27 2 239 23
141 26 3 225 19
145 28 2 142 11
171 31 3 126 7
156 34 3 139 11
Total Africa
443
414
328
338
343
Asia Azerbaijan Bangladesh China Indonesia Kazakhstan Partitioned Zone Philippines Thailand
28 2 18 187 39 94 4 70
28 2 17 199 42 101 4 65
28 2 19 182 41 103 5 67
60 2 22 195 41 109 5 71
46 – 23 198 38 111 6 73
Total Asia
442
458
447
505
495
Total Australia
34
35
34
39
39
Europe Denmark Netherlands Norway United Kingdom
32 2 3 64
35 2 5 73
37 2 6 71
41 3 6 78
44 3 6 75
Total Europe Total Consolidated Companies Equity Share in Affiliates TCO Petropiar (Hamaca prior to 2008) Petroboscan 5 Petroindependiente 5 Total Equity Share in Affiliates Total Consolidated Companies and Affiliates Other Produced Volumes Athabasca Oil Sands in Canada Boscan operating service agreement in Venezuela 6
101
115
116
128
128
1,617
1,569
1,419
1,544
1,554
252 28 25 1
226 26 24 1
168 34 27 1
144 39 28 1
135 36 7 –
306
277
230
212
178
1,923
1,846
1,649
1,756
1,732
– –
26 –
27 –
27 –
27 82
–
Total Other Produced Volumes
1,923
Total Worldwide
26
27
27
109
1,872
1,676
1,783
1,841
1 2006
through 2009 conformed to 2010 geographic presentation. liquids production excludes royalty interests and a government’s agreed-upon share of production under a PSC. 3 Net production of natural gas liquids: United States International 2 Net
Total 4 Includes
production from LL-652 through September 2006. 5 Joint stock company formed in October 2006. 6 Includes volumes through September 2006.
40
Chevron Corporation 2010 Supplement to the Annual Report
51 21
50 20
47 19
51 18
48 19
72
70
66
69
67
Upstream Operating Data
Net Natural Gas Production1,2 Millions of cubic feet per day
Consolidated Companies United States Alabama – Onshore – Offshore Alaska – Onshore – Offshore California Colorado Louisiana – Onshore – Offshore New Mexico Oklahoma Texas – Onshore – Offshore Utah Wyoming Other states
Year ended December 31
2010
2009
2008
2007
2006
24 48 68 32 96 104 5 332 97 39 302 38 1 110 18
29 54 69 27 90 102 8 358 99 42 364 39 1 99 18
30 56 73 30 88 90 10 300 103 45 441 46 40 129 20
31 62 80 30 97 98 16 405 101 52 457 64 48 135 23
36 67 85 30 101 100 22 443 122 55 425 95 50 153 26
1,314
1,399
1,501
1,699
1,810
Other Americas Argentina Brazil Canada Colombia Trinidad and Tobago Venezuela3
5 7 4 249 223 –
27 – 4 245 199 –
45 – 4 209 189 –
50 – 5 178 174 –
54 – 6 174 174 21
Total Other Americas
488
475
447
407
429
52 6 1 86 10
49 5 1 48 13
52 5 1 72 12
48 4 2 15 7
47 4 2 29 8
Total Africa
155
116
142
76
90
Asia Azerbaijan Bangladesh China Indonesia Kazakhstan Myanmar Partitioned Zone Philippines Thailand
11 404 13 236 149 81 23 124 875
10 387 16 268 161 76 21 137 794
7 414 22 319 153 89 20 128 894
5 275 22 277 149 100 17 126 916
4 126 18 302 143 89 19 108 856
Total Asia
1,916
1,870
2,046
1,887
1,665
Total Australia
458
434
376
372
360
Europe Denmark Netherlands Norway United Kingdom
116 35 1 194
119 41 1 222
142 40 1 208
132 5 1 220
146 7 1 242
Total United States
Africa Angola Chad Democratic Republic of the Congo Nigeria Republic of the Congo
Total Europe Total Consolidated Companies Equity Share in Affiliates TCO Petropiar (Hamaca prior to 2008) Petroboscan 4 Petroindependiente4
United States Thailand Kazakhstan Australia Bangladesh Colombia Indonesia Trinidad and Tobago United Kingdom Others
26.1% 17.4% 9.7% 9.1% 8.0% 4.9% 4.7% 4.4% 3.8% 11.9%
*Includes equity share in affiliates.
Net Natural Gas Production Millions of cubic feet per day 5500
4400
3300
2200
346
383
391
358
396
4,677
4,677
4,903
4,799
4,750
338 10 6 9
289 8 6 9
195 9 7 11
193 10 6 11
193 9 1 3
363
312
222
220
206
4,989
5,125
5,019
4,956
through 2009 conformed to 2010 geographic presentation. natural gas production excludes royalty interests and a government’s agreed-upon share of production under a PSC; includes natural gas consumed in operations: United States International
62 475
58 463
70 450
65 433
56 419
Total
537
Total Worldwide
Percentage
5,040
5,040
Total Equity Share in Affiliates
Net Natural Gas Production by Country*
1100
0 06
07 08 09 10
Affiliates Europe Australia Asia Africa OtherAmericas United States — Offshore United States — Onshore
1 2006 2 Net
521
520
498
475
3 Includes
production from LL-652 through September 2006. 4 Joint stock company formed in October 2006.
Chevron Corporation 2010 Supplement to the Annual Report
41
Upstream Operating Data
Gross Oil–Equivalent Production1
Year ended December 31
Thousands of barrels per day
2010
2009
2008
2007
2006
Consolidated Companies United States Other Americas Africa Asia Australia Europe
778 230 588 1,233 111 158
792 179 519 1,226 108 178
749 172 451 1,265 96 183
838 168 432 1,246 101 188
863 185 427 1,211 99 192
Total Consolidated Companies
3,098
3,002
2,916
2,973
2,977
374 43 38 3
321 39 36 4
243 49 42 5
203 49 42 5
196 45 11 1
Equity Share in Affiliates TCO Petropiar (Hamaca prior to 2008) Petroboscan 2 Petroindependiente 2 Total Equity Share in Affiliates Total Worldwide
458
400
339
299
253
3,556
3,402
3,255
3,272
3,230
527 129 562 779 34 101
523 77 500 792 35 114
459 80 415 813 33 118
507 82 408 838 39 129
510 96 413 852 39 126
2,132
2,041
1,918
2,003
2,036
305 40 38 1
265 38 35 1
202 46 41 3
165 47 41 2
159 43 11 –
Gross Liquids Production1 Thousands of barrels per day
Consolidated Companies United States Other Americas Africa Asia Australia Europe Total Consolidated Companies Equity Share in Affiliates TCO Petropiar (Hamaca prior to 2008) Petroboscan 2 Petroindependiente 2
384
339
292
255
213
2,516
2,380
2,210
2,258
2,249
Consolidated Companies United States Other Americas Africa Asia Australia Europe
1,507 605 155 2,723 458 346
1,611 614 116 2,605 435 382
1,740 555 213 2,709 376 391
1,983 518 145 2,439 373 358
2,115 535 88 2,152 359 395
Total Consolidated Companies
5,794
5,763
5,984
5,816
5,644
411 15 6 13
337 11 6 13
246 14 5 16
230 13 6 17
222 11 1 5
Total Equity Share in Affiliates Total Worldwide
Gross Natural Gas Production1 Millions of cubic feet per day
Equity Share in Affiliates TCO Petropiar (Hamaca prior to 2008) Petroboscan 2 Petroindependiente 2 Total Equity Share in Affiliates Total Worldwide 1 2006 2 Joint
42
through 2009 conformed to 2010 geographic presentation. stock company formed in October 2006.
Chevron Corporation 2010 Supplement to the Annual Report
445
367
281
266
239
6,239
6,130
6,265
6,082
5,883
Upstream Operating Data
Natural Gas Realizations1,2
Year ended December 31
2010
Dollars per thousand cubic feet
United States International
2009
4.26 $ 4.64
$
2008
3.73 $ 4.01
7.90 $ 5.19
2007
2006
6.12 $ 3.90
6.29 3.73
Natural Gas Realizations Dollars per thousand cubic feet 8
7
Liquids Realizations2,3 Dollars per barrel
United States International
6
$ 71.59 $ 54.36 $ 88.43 $ 63.16 $ 56.66
72.68
55.97
86.51
65.01
57.65
Natural Gas Sales2
4
Millions of cubic feet per day
United States International
5,932 4,493
5,901 4,062
7,226 4,215
7,624 3,792
7,051 3,478
Total
10,425
9,963
11,441
11,416
10,529
Thousands of barrels per day
United States International
22 27
17 23
15 17
25 22
52 21
Total
49
40
32
47
73
natural gas realizations are based on revenues from net production. International natural gas realizations are based on revenues from liftings. 2 International realizations and sales include equity share in affiliates. 3 U.S. realizations are based on liquids revenues from net production and include intercompany sales at transfer prices that are at estimated market prices. International realizations are based on liquids revenues from liftings.
08 09 10
*Includes equity share in affiliates.
Liquids Realizations
90
80
Exploration and Development Costs1,2
Year ended December 31
2010
Millions of dollars
1 2006
06 07
Dollars per barrel
1 U.S.
Total Consolidated Companies Exploration Development
3
International* United States
Natural Gas Liquids Sales2
United States Exploration Development Other Americas Exploration Development Africa Exploration Development Asia Exploration Development Australia Exploration Development Europe Exploration Development
5
2009
2008
2007
2006 70
$
287 $ 576 $ 728 $ 658 $ 751 4,446 3,338 4,348 5,210 3,186 203 1,611
286 1,515
257 1,334
191 758
253 469
236 2,985
346 3,426
347 3,723
408 4,176
379 2,890
320 3,325
154 2,698
197 4,697
187 2,190
257 1,877
396 2,623
419 565
322 540
201 327
147 371
136 411
143 285
78 545
181 746
135 550
60
50 06 07 08 09 10
International* United States *Includes equity share in affiliates.
$ 1,578 $ 1,924 $ 1,929 $ 1,826 $ 1,922
15,401
11,827
15,187
13,407
9,343
through 2009 conformed to 2010 geographic presentation. companies only. Excludes costs of property acquisitions.
2 Consolidated
Chevron Corporation 2010 Supplement to the Annual Report
43
Upstream Operating Data
Oil and Gas Acreage1,2
Net Acres
2010
2010
2009
2008
United States Onshore Alaska California Colorado Louisiana New Mexico Texas Other states
1,182 303 267 436 536 4,924 1,061
464 277 234 386 355 3,575 694
461 289 224 275 335 3,265 645
761 292 232 272 343 3,280 661
850 294 234 274 354 3,405 753
805 291 274 344 376 3,684 817
Total Onshore
8,709
5,985
5,494
5,841
6,164
6,591
Offshore Alaska and Pacific Coast Gulf Coast
39 3,919
7 2,865
9 1,974
10 2,369
10 2,732
31 3,646
Total Offshore
3,958
2,872
1,983
2,379
2,742
3,677
Total United States
12,667
8,857
7,477
8,220
8,906
10,268
Other Americas Argentina Brazil Canada Colombia Greenland Trinidad and Tobago Venezuela
152 225 24,748 202 3,449 168 292
141 74 15,095 87 1,006 84 275
275 74 14,525 87 1,028 84 275
1,402 74 15,244 87 1,029 84 1,239
1,548 74 14,900 87 1,029 84 1,239
1,671 180 14,633 87 – 84 1,239
Total Other Americas
29,236
16,762
16,348
19,159
18,961
17,894
2,393 114 250 2,372 – 6,228 158
821 29 44 1,661 – 2,791 49
823 39 44 – 2,796 2,871 49
828 2,043 44 – 2,796 2,871 49
737 2,043 44 – 2,796 2,871 50
887 2,043 44 – 2,796 3,120 59
Total Africa
11,515
5,395
6,622
8,631
8,541
8,949
Asia Azerbaijan Bangladesh Cambodia China Georgia Indonesia Kazakhstan Myanmar Partitioned Zone Philippines Thailand Turkey Vietnam
108 2,036 1,164 5,833 – 10,387 80 6,460 1,576 205 17,975 5,561 2,515
12 973 349 4,766 – 6,695 16 1,826 788 93 9,281 2,781 684
11 1,828 640 294 – 6,695 16 1,832 788 93 9,233 125 684
11 1,828 640 1,081 – 6,695 16 1,832 788 93 9,531 125 1,201
11 1,258 640 1,079 206 6,234 16 1,832 788 93 9,531 251 1,479
41 2,115 853 812 206 6,885 16 1,832 788 93 8,059 251 1,479
Total Asia
53,900
28,264
22,239
23,841
23,418
23,430
Total Australia
16,651
7,323
8,660
7,950
9,106
8,740
Europe Denmark Faroe Islands Germany Netherlands Norway Poland United Kingdom
420 – – 54 1,405 1,085 1,765
63 – – 22 541 1,085 831
63 – – 21 609 790 962
63 68 26 22 252 – 980
81 68 26 22 549 – 979
79 68 26 22 549 – 1,328
Thousands of acres
Africa Angola Chad Democratic Republic of the Congo Liberia Libya Nigeria Republic of the Congo
Total Europe Total Consolidated Companies Equity Share in Affiliates Kazakhstan Venezuela Total Equity Share in Affiliates Total Worldwide 1 2006 2 Net
44
At December 31 Gross Acres
2007
2006
4,729
2,542
2,445
1,411
1,725
2,072
128,698
69,143
63,791
69,212
70,657
71,353
608 291
304 101
304 100
304 100
304 101
418 115
899
405
404
404
405
533
129,597
69,548
64,195
69,616
71,062
71,886
through 2009 conformed to 2010 geographic presentation. Table does not include mining acreage associated with synthetic oil production in Canada. acreage includes wholly owned interests and the sum of the company’s fractional interests in gross acreage.
Chevron Corporation 2010 Supplement to the Annual Report
Upstream Operating Data
Net Wells Completed1,2
Year ended December 31
2010
Productive
2009 Dry
Productive
2008
Dry
Productive
2007
Dry
Productive
2006
Dry
Productive
Net Productive Exploratory Wells Completed Number of wells
Dry 75
Consolidated Companies United States Exploratory Development
1 634
1 7
4 582
5 3
8 846
2 4
4 875
8 5
16 8 951 11
Total United States
879 13
967 19
635
8
586
8
854
6
Other Americas Exploratory Development
– 32
1 –
1 36
2 –
39 35
2 –
39 44
6 –
4 34
3 –
Total Other Americas
32
1
37
2
74
2
83
6
38
3
Africa Exploratory Development
1 33
– –
2 40
1 –
2 33
1 –
6 43
2 –
1 45
– 2
Total Africa
34
–
42
1
35
1
49
2
46
2
60
45
30
15
Asia Exploratory Development
5 5 445 15
9 1 580 10
9 665
2 1
13 597
9 –
18 493
7 1
Total Asia
450 20
589 11
674
3
610
9
511
8
12
0
06 07
08 09 10
Crude Oil Natural Gas
Australia Exploratory Development
5 –
2 –
4 –
2 –
4 –
– –
2 –
– –
3 –
– –
Net Productive Development Wells Completed
Total Australia
5
2
4
2
4
–
2
–
3
–
Number of wells
Europe Exploratory Development
– 4
– –
– 7
– –
1 6
– –
2 8
– –
1 9
– –
4
–
7
–
7
–
10
–
10
–
Total Europe Total Consolidated Companies Equity Share in Affiliates Exploratory Development Total Equity Share in Affiliates Total Worldwide
1,160 31
1,265 24
– 8
– –
– 6
– –
8
–
6
–
1,168 31
1,271 24
1,648 12 – 16
– –
16
–
1,664 12
1,633 30
1,575 32
– 3
– –
1 13
– –
3
–
14
–
1,636 30
1,589 32
1800
1350
1,156 900
450
1 2006
through 2009 conformed to 2010 geographic presentation. Wells Completed includes wholly owned wells and the sum of the company’s fractional interests in jointly owned wells completed during the year, regardless of when drilling was initiated. Completion refers to the installation of permanent equipment for the production of crude oil or natural gas or, in the case of a dry well, the reporting of abandonment to the appropriate agency. Some exploratory wells are not drilled with the intention of producing from the well bore. In such cases, “completion” refers to the completion of drilling. Further categorization of productive or dry is based on the determination as to whether hydrocarbons in a sufficient quantity were found to justify completion as a producing well, whether or not the well is actually going to be completed as a producer.
2 Net
Net Productive Wells1,2
2009
2008
2007
2006
32,462 5,720
32,720 5,671
33,595 5,569
33,217 6,043
33,067 6,212
Total United States
38,182
38,391
39,164
39,260
39,279
International Oil Gas
12,501 2,000
10,835 1,591
10,290 1,837
10,538 1,730
9,903 1,513
Total International
14,501
12,426
12,127
12,268
11,416
Total Consolidated Companies
52,683
50,817
51,291
51,528
50,695
404 2
403 2
413 2
375 –
375 –
Total Equity Share in Affiliates Total Worldwide
06 07
08 09 10
Natural Gas Crude Oil
At December 31
2010
Consolidated Companies United States Oil Gas
Equity Share in Affiliates Oil Gas
0
406
405
415
375
375
53,089
51,222
51,706
51,903
51,070
1 Net
Productive Wells includes wholly owned wells and the sum of the company’s fractional interests in wells completed in jointly owned operations. wells producing or capable of producing and injection wells temporarily functioning as producing wells. Wells that produce both crude oil and natural gas are classified as oil wells.
2 Includes
Chevron Corporation 2010 Supplement to the Annual Report
45
Downstream Improve returns and grow earnings across the value chain.
Photo: Continuous catalytic reformer, completed during 2010, at the Pascagoula, Mississippi, refinery.
Highlights
Downstream
Downstream Overview
Highlights The company enjoys a strong presence in all aspects of the downstream industry — refining, marketing, chemicals and transportation. Industry Conditions Earnings in refining and marketing in 2010 improved from historic lows in 2009 due to recovering global demand, but remained relatively weak with continued economic softness, excess refined product supplies and surplus refining capacity. Worldwide demand for motor gasoline, jet fuel, naphtha and distillates grew by approx imately 3.2 percent in 2010 from depressed levels in the prior year. Despite some capacity coming offline, global refining capacity increased by 1 million barrels per day, according to the December 2010 Oil & Gas Journal survey. Overall, these factors contributed to a modest recovery in refining margins during 2010 from very weak levels in 2009. Worldwide marketing margins remained narrow in 2010, but were above 2009 levels.
Fuel Refinery
Major Chemical Manufacturing Facility
Chemicals experienced improved business conditions driven by a rebound in product demand. Globally, demand recovered in electrical and electronic applications, transportation, and consumer packaging, which bolstered sales and margins. Business Strategies Improve returns and grow earnings across the value chain by: • Achieving world-class safety and reliability performance.
• Continuing to improve execution of the base business. • Driving earnings across the crude-to-customer value chain. • Adding value to upstream operations through integration, technology and organizational capability. 2010 Accomplishments • Achieved the lowest-ever total number of recordable safety incidents.
• Reported net income of $2.5 billion, including strong financial performance in the lubricants and chemicals businesses. • Commissioned a new 60,000-barrel-per-day heavy-oil hydrocracker at the Yeosu Refinery in South Korea and a continuous catalytic reformer at the Pascagoula, Mississippi, refinery.
• Commenced operations on two projects in Qatar, including an ethylene cracker located in Ras Laffan and a polyethylene and normal alpha olefins complex located in Mesaieed.
• Restructured the refining and marketing business to improve operating efficiency, reduce costs and achieve sustained improvement in financial performance. Completed the sale of businesses in Mauritius, Réunion and Zambia and 21 product terminals. 2011 Outlook Expecting ongoing challenging industry conditions, Downstream will continue to focus on lowering operating costs and sustaining reduced capital spending in order to improve efficiency and financial returns. Key objectives include the following:
• • • • •
Continue to improve safety and refinery reliability. Streamline the company’s refining and marketing asset portfolio. Advance projects that improve refinery feedstock flexibility, high-value product yield and energy efficiency. Advance projects in the chemicals and base-oil manufacturing businesses that add capacity to serve key markets. Complete cost-reduction programs as part of the restructuring that was announced in 2010.
Downstream Financial and Operating Highlights (Includes equity share in affiliates) Dollars in millions
Segment earnings* Refinery crude oil inputs (Thousands of barrels per day) Refinery capacity at year-end (Thousands of barrels per day) U.S. gasoline and jet fuel yields (Percent of U.S. refinery production) Refined product sales (Thousands of barrels per day) Motor gasoline sales (Thousands of barrels per day) Natural gas liquids (NGLs) sales (Thousands of barrels per day) Number of marketing retail outlets at December 31 Refining capital expenditures* Marketing capital expenditures Chemicals and other downstream capital expenditures* Total downstream capital expenditures*
2010
2009
$ 2,478 $ 473 1,894 1,878 2,160 2,158
64% 65% 3,113 3,254 1,221 1,275 217 232 19,547 21,574 $ 1,577 $ 2,464 $ 246 $ 335 $ 729 $ 737 $ 2,552 $ 3,536
* 2009 conformed to 2010 segment presentation.
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Downstream
Refining and Marketing
Refining and Marketing The company’s refining and marketing activities are coordinated by two geographic organizations, Americas Products and International Products, focused on optimizing the fuels value chain from crude to customer. Each organization’s activities include securing raw materials, manufacturing and blending products at its refineries, and selling finished products through its marketing and commercial networks. Americas Products The organization serves commercial and industrial, wholesale, aviation, and retail customers in Canada, Latin America and the United States through the world-class Chevron and Texaco brands. Serving the Crude-to-Customer Value Chain The Americas Products portfolio includes six wholly owned refineries in North America with a crude capacity of approximately 1 million barrels per day. Many of these refineries have hydroprocessing units capable of converting lower-quality crude oil into a variety of mid-distillate products. Through a network of more than 80 fuel terminals, the company serves customers at approximately 9,800 Chevron- and Texaco-branded retail outlets in Canada, Latin America and the United States. During 2010, the organization sold a daily average of approximately 1.6 million barrels of gasoline and other refined products. Chevron continues to leverage its proprietary Techron technology in these markets in order to maintain a leading position in branded fuels. Additionally, Chevron is a major supplier of commercial aviation fuel in the United States.
Industry Refining Margins Dollars per barrel 30
25
Selectively Improving Refining Flexibility and Yield In 2010, the company continued work on projects to improve refinery flexibility and the capability to process lower-cost feedstocks. In late 2010, construction began on a new processing unit designed to further improve the El Segundo, California, refinery’s reliability, high-value product yield and flexibility to process a range of crude slates. Project completion is scheduled for 2012. Additionally, in fourth quarter 2010, the company commissioned a continuous catalytic reformer at the Pascagoula, Mississippi, refinery, which will improve equipment reliability and utilization and allow the refinery to optimize production of high-value products. Also in Pascagoula, engineering and procurement activities continued on a lubricant base-oil facility. For additional details about this project, refer to the Lubricants section on page 50.
20
15
10
5
0 06 07
08 09 10
U.S. West Coast (Blended 5–3–1–1)* U.S. Gulf Coast (Maya 5–3–1–1)* Singapore (Dubai 3–1–1–1)* Northwest Europe (Brent 3–1–1–1)* *Numbers: A–B–C–D A = Crude oil B = Motor gasoline C = Diesel fuel — U.S. C = Gas oil — Non–U.S. D = Jet fuel — U.S. D = Fuel oil — Non–U.S.
Aligning the Marketing Portfolio Through market exits and divestitures, the company continues to align its marketing portfolio to source a greater percentage of its refined product sales directly from Chevron’s refineries. During 2010, the company discontinued sales of Chevron- and Texaco-branded motor fuels in the District of Columbia, Delaware, Indiana, Kentucky, North Carolina, New Jersey, Maryland, Ohio, Pennsylvania, South Carolina, Virginia, West Virginia and parts of Tennessee, where the company previously sold to retail customers through approximately 1,100 stations and to commercial and industrial customers through supply arrangements. Sales in these markets represented approximately 8 percent of the company’s total U.S. retail fuel sales volumes in 2009. Also in 2010 and early 2011, the company completed eight of its 13 planned U.S. terminal divestitures to strengthen the cost-competitiveness of its terminal network while maintaining the necessary scale to meet the needs of its customers. In 2011, the company expects to complete the sale of additional U.S. terminals as part of the previously announced plan to divest 13 facilities. Additionally, the company intends to grow sales of motor gasoline and diesel fuel under the premium Chevron and Texaco brands in select markets primarily in the western, southeastern and Gulf Coast regions of the United States, where the company enjoys leading market positions.
The company also signed an agreement in late 2010 for the sale of its fuels-marketing and aviation businesses in Antigua, Barbados, Belize, Costa Rica, Dominica, French Guiana, Grenada, Guadeloupe, Guyana, Martinique, Nicaragua, St. Kitts, St. Lucia, St. Vincent, and Trinidad and Tobago and expects to complete all transactions by third quarter 2011, following the receipt of local regulatory and government approvals.
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Chevron Corporation 2010 Supplement to the Annual Report
Refining and Marketing
Downstream
International Products The organization provides premium quality Caltex- and Texaco-branded fuel products to commercial and industrial, wholesale, aviation, and retail customers in Europe, Africa, the Middle East and the Asia-Pacific region. Serving the Crude-to-Customer Value Chain The International Products portfolio includes nine refineries and is anchored by its four large affiliates in South Korea, Australia, Singapore and Thailand, which are well positioned to supply expected growth in the Asia-Pacific region. The refinery network, including the company’s share of affiliates, has a crude capacity of more than 1 million barrels per day. Through a network of more than 90 fuel terminals, the company and its affiliates serve customers at approximately 9,800 Caltexand Texaco-branded retail outlets in Europe, Africa, the Middle East and the Asia-Pacific region. The organization sold a daily average of approximately 1.5 million barrels of gasoline and other refined products during 2010. Chevron continues to leverage its proprietary Techron technology in these markets in order to maintain a leading position in branded fuels. Additionally, commercial aviation fuel is marketed at more than 90 airports across these markets. Selectively Improving Refining Flexibility and Yield In 2010, work continued on projects to improve refinery flexibility and the capability to process lower-cost feedstock. In third quarter 2010, a new 60,000-barrel-per-day heavy-oil hydrocracker at the 50 percent-owned Yeosu Refinery in South Korea was commissioned and reached full capacity. The new hydrocracker is designed to reduce feedstock costs and improve Industry/Chevron Marketing high-value product yield and will further strengthen the refinery’s competitiveness. Also at the Yeosu Refinery, plans were announced to construct a 53,000-barrel-per-day gas-oil fluid catalytic cracking unit. The unit is designed to further reduce feedstock costs and improve high-value product yield. Project start-up is scheduled for 2013. Also in 2010, construction began on modifications to the 64 percent-owned Map Ta Phut Refinery in Thailand to meet regional specifications for cleaner motor gasoline and diesel fuels. Project completion is scheduled for 2012. Aligning the Marketing Portfolio Through market exits and divestitures, the company continues to align its marketing portfolio more closely with its refining system. During 2010 and early 2011, the company completed the sale of fuelsmarketing businesses in Malawi, Mauritius, Réunion, Tanzania and Zambia. Additionally, the company sold its interest in 15 terminals and converted more than 120 company-owned, company-operated service stations into retailer-owned, retailer-operated sites operating under the Caltex brand. In February 2011, the company announced agreements to sell its fuels-marketing and aviation businesses in Spain. In March 2011, the company announced agreements to sell its United Kingdom and Ireland refining and marketing business, including the Pembroke, United Kingdom, refinery.
Fuel Margins
Dollars per barrel 6
4
2
0 06 07
08 09 10
U.S. West Coast* Asia–Pacific/Middle East/Africa U.S. Gulf Coast* *Industry margins.
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49
Downstream
Lubricants and Trading
Lubricants Chevron is among the leading global marketers of finished lubricants and is a top U.S. supplier of premium lubricant base oil. The company provides differentiated products to meet the specific needs of commercial, retail, industrial and marine customers. The product line of lubrication and coolant products includes well-known brands such as Havoline, Delo, Ursa, Meropa and Taro. Through the company’s global network of 16 blending facilities, the Lubricants organization is well positioned to supply markets around the world. This global network has enabled the company to consistently meet customer needs at world-class levels of reliability. Through strategic partnerships with original equipment manufacturers, Chevron is also a leader in developing products to meet future engine and machinery needs at its lubricant technology centers in Australia, Belgium and the United States. Leveraging Success In 2010, the Lubricants organization achieved strong financial results and world-class reliability performance. Complexity of operations was further reduced as production facilities were optimized, product lines were streamlined and additional markets outside the United States were exited. In February 2011, the company announced an agreement to sell its finished lubricants business in Spain. The company’s strategic focus continued to be on key growth markets, such as China and Brazil, as well as building distribution channels, with an emphasis on its marketing network. In 2010, the company launched a major initiative to strengthen its network in Brazil and leverage its two Brazilian lubricants-manufacturing plants, which together produce 1 million barrels of lubricating oils, 15,000 tons of industrial greases and 35,000 barrels of coolants annually. Also, in China, the company increased lubricants sales volumes more than 25 percent from 2009 levels by expanding the distributor network and forging new relationships with both Chinese and globally based original equipment manufacturers. The company intends to continue growth initiatives in these and other key markets in 2011. Building a Premium Base-Oil Leader Preparations continued in 2010 for the 25,000-barrel-per-day premium base-oil facility at the company’s Pascagoula, Mississippi, refinery. The final investment decision was reached in first quarter 2011 on the $1.4 billion project, and construction is scheduled to be completed by year-end 2013. This addition to Chevron’s base-oil production capacity is expected to position the company as the worldwide industry leader in premium base-oil production.
Trading The Trading organization supports Chevron’s global supply chain by maximizing the company’s equity crude oil revenues, reducing Downstream’s raw material and transportation costs, capturing profitable trading opportunities, and managing the market risks associated with holding physical positions in crude and finished products. The organization’s activities include optimizing the supply of crude and other raw materials to Chevron’s refining network and integrating equity crude oil from Chevron’s upstream operations. In addition, the company markets crude oil from Upstream operations to third parties and supplies finished products to serve Chevron’s marketing system. Chevron handles more than 400 different grades of crude oil and petroleum products and manages nearly 5 million barrels per day in commodity transactions.
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Chevron Corporation 2010 Supplement to the Annual Report
Chemicals
Downstream
Chemicals The company’s chemical activities are divided into two businesses, Chevron Phillips Chemical Company LLC (CPChem) and Chevron Oronite Company (Oronite). CPChem CPChem is a 50 percent-owned affiliate and is one of the world’s leading producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins, styrenics, specialty chemicals and piping. At year-end 2010, CPChem had 36 manufacturing facilities and four research and technical centers around the world. Executing Strategy and Expanding the Portfolio During 2010, CPChem’s flexible feedstock capability allowed the company to capitalize on low input costs, which contributed to improved profit margins. In fourth quarter 2010, CPChem commenced operations for its 49 percent-owned Q-Chem II project, with plants located in both Mesaieed and Ras Laffan, Qatar. The project includes a 350,000-metric-ton-per-year high-density polyethylene plant and a 345,000-metric-ton-per-year normal alpha olefins plant in Mesaieed, each utilizing CPChem’s proprietary technology. Included in the project is a separate joint venture for a 1.3 million-metric-ton-per-year ethylene cracker in Ras Laffan, in which Q-Chem II owns 54 percent of the capacity rights, which provides ethylene feedstock to the high-density polyethylene and normal alpha olefins plants in Mesaieed. The ethylene cracker in Ras Laffan commenced operations in April 2010. Also in the Middle East, CPChem’s 35 percent-owned joint venture continued construction on a petrochemical project in Al Jubail, Saudi Arabia. The joint-venture project includes olefins, polyethylene, polypropylene, 1-hexene and polystyrene units. Project start-up is expected in late 2011. In the United States, CPChem announced in fourth quarter 2010 the development of a 200,000-ton-per-year 1-hexene plant at the Cedar Bayou facility in Baytown, Texas, with start-up expected in 2014. The plant is expected to be the largest 1-hexene unit in the world and will utilize CPChem’s proprietary 1-hexene technology. For more information on CPChem, refer to its Web site at www.cpchem.com Oronite Oronite is a world-leading developer, manufacturer and marketer of quality additives, which improve the performance of lubricants and fuels. As an industry leader, Oronite conducts research and development for additive component and blending packages to meet the needs of increasingly demanding engine and equipment performance requirements. At year-end 2010, Oronite manufactured, blended or conducted research at 10 locations around the world. Oronite lubricant additives are blended with refined base oils to produce finished lubricants used primarily in engine applications, such as passenger cars, heavy-duty diesel trucks, buses, ships, locomotives and motorcycles. Typically, several additive components, such as dispersants, detergents, inhibitors and viscosity index improvers, are combined to meet the desired performance specifications. Specialty additives are marketed for other oil applications, such as power transmission fluids and hydraulic oils. Oronite fuel additives are used to improve engine performance and extend engine life. The main additive applications are for gasoline and diesel fuels. Many fuel additive packages are unique and blended specifically to individual customer specifications. Fuel performance standards vary for customers throughout the world, and specific packages are tailored for each region’s markets. Expanding in Key Growth Markets Following start-up in late 2009, the company achieved full capacity in early 2010 at the detergent expansion facility in Singapore. This additional capacity enhances the company’s ability to produce detergent components for applications in marine and automotive engines and strategically positions Oronite to respond to growth in the Asia-Pacific region.
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Downstream
Transportation
Transportation The company’s transportation businesses, including Pipeline and Shipping operations, are responsible for transporting a variety of products to customers worldwide. Chevron owns and operates an extensive network of crude oil, refined product, chemical, NGLs and natural gas pipelines and other infrastructure assets in the United States. The company also has direct and indirect interests in other U.S. and international pipelines.
Spokane
The company’s marine fleet includes both U.S.- and foreign-flagged vessels. The U.S.-flagged vessels are engaged primarily in transporting refined products in the United States between the Gulf Coast and the East Coast and from California refineries to other U.S. West Coast locations, Alaska and Hawaii. The foreign-flagged vessels are engaged in transporting crude oil from the Middle East, Asia, the Black Sea, Mexico and West Africa to ports in the United States, Europe, Australia and Asia, as well as refined products to and from various locations worldwide.
CANADA
Northwest Salt Lake System
Raven Ridge (56.3%)
UNITED STATES
Salt Lake City Standard Pacific Gas (14.3%)
Salt Lake/Rangely System
KLM Bakersfield CUSA/Northam
Explorer (16.7%)
Mid-Valley (9%)
West Texas Gulf (28.3%) Sabine Endicott (10.5%)
Kuparak (5%)
Alaska Cook Inlet (50%)
Trans Alaska (1.4%)
Crude Oil
Pascagoula MAGS Chandeleur Bridgeline Cypress (50%) High Island (7.5%) Venice-Faustina TENDS Caesar (4%) MEXICO Gulf Coast Crude Cleopatra (2%) (Various %) Amberjack (25%) West Texas LPG (80%)
Natural Gas
Products (Including LPG)
Includes pipelines owned by Upstream but operated by the pipeline business. Interest in each pipeline is 100% unless otherwise noted.
Carbon Dioxide
In addition to the vessels described above, the company owns a one-sixth interest in each of seven liquefied natural gas (LNG) tankers, trans porting cargoes for the North West Shelf Venture in Australia. Chevron’s fleet of owned and char‑ tered tankers is completely double-hulled. Aligning the Transportation Portfolio Pipeline The company completed the expansion of approximately 2 billion cubic feet at the Keystone natural gas storage facility near Midland, Texas, bringing capacity to nearly 7 billion cubic feet.
In the U.S. Gulf of Mexico, Chevron is leading the construction of a 136-mile (219-km), 24-inch (61-cm) crude oil pipeline from the planned Jack/St. Malo deepwater production facility to a platform in Green Canyon Block 19 on the Gulf of Mexico shelf, where there is an interconnect to pipelines delivering crude oil to the Gulf Coast region. The project is expected to be completed by start-up of the production facility, projected for 2014.
Net Pipeline Mileage1,2 (Includes equity share in affiliates)
At December 31
2010
Crude Oil Lines United States International3
2,417 700
Total Crude Oil Lines
3,117
Natural Gas Lines United States International4
2,400 650
Total Natural Gas Lines
3,050
Product Lines United States5 International
5,456 424
Total Product Lines Total Net Pipeline Mileage
5,880 12,047
1 Partially
owned pipelines are included at the company’s equity percentage of total pipeline mileage. gathering pipelines relating to crude oil and natural gas production function. 3 Includes the company’s share of the Chad/Cameroon pipeline, the BTC Pipeline, the WREP and the CPC pipeline. 4 Includes the company’s share of the WAGP. 5 Includes the company’s share of chemical pipelines managed by the 50 percent-owned CPChem. 2 Excludes
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Chevron Corporation 2010 Supplement to the Annual Report
Work is in progress to return the Cal-Ky Pipeline, which was decommissioned in 2002, into crude oil service as a supply line for the Pascagoula Refinery. This pipeline, which spans 103 miles (166 km), begins in Plaquemines Parish, Louisiana, and ends at the refinery, is also expected to provide additional outlets for the company’s equity crude oil production. The pipeline is expected to return to service in 2012. In fourth quarter 2010, the company sold its 23.4 percent ownership interest in Colonial Pipeline, which transports products from supply centers on the U.S. Gulf Coast to customers located along the Eastern seaboard. Refer to pages 23, 25 and 26 in the Upstream section for information on the Chad/Cameroon pipeline, the West African Gas Pipeline (WAGP), the BakuTbilisi-Ceyhan (BTC) Pipeline, the Western Route Export Pipeline (WREP) and the Caspian Pipeline Consortium (CPC). Shipping During 2010, the company managed approximately 2,500 deep-sea tanker voyages, using a combination of single-voyage charters, short- and medium-term charters, and company-owned or bareboat-chartered vessels. As part of its fleet modernization program, the company replaced two U.S.-flagged product tankers in 2010. The new tankers are expected to bring improved efficiencies to Chevron’s U.S.-flagged fleet. The company plans to retire an additional U.S.-flagged product tanker in 2011. The company also has contracts in place to build LNG carriers to support future LNG projects. In addition to providing marine transportation services, the company is staffed with a team of marine technical and operational professionals who are responsible for managing marine risk across the company, assisting with marine project conceptual and feasibility studies and providing marine project construction support.
Downstream Operating Data
Refinery Crude Distillation Utilization1
Worldwide Refinery Utilization*
(Includes equity share in affiliates) Percentage of average capacity
United States Africa-Pakistan Asia-Pacific Europe Other Worldwide
Year ended December 31
2010
2009
2008
2007
2006
94.6 63.6 92.0 100.5 72.8 91.9
95.5 63.9 87.5 97.4 88.6 90.8
94.8 63.6 88.3 96.8 66.6 86.9
85.0 65.0 92.4 97.8 87.7 85.4
98.6 63.6 93.1 80.4 89.2 89.6
Percent of capacity 100
91.9 80
60
40
Utilization of Cracking and Coking Facilities2 (Wholly owned)
20
Percentage of average capacity
United States
90.3
84.5
86.1
77.6
85.8
0 06 07 08 09 10
Sources of Crude Oil Input for Worldwide Refineries
*Includes equity share in affiliates.
(Wholly owned) Percentage of total input
Middle East South America North Sea United States Mexico Africa Other
24.2 16.7 14.7 12.1 11.4 9.4 11.5
26.7 16.1 13.0 11.4 15.8 6.5 10.5
27.8 13.3 14.6 9.4 18.9 4.4 11.6
26.4 9.9 15.4 9.4 19.1 7.8 12.0
28.9 12.6 12.0 9.8 19.8 5.9 11.0
Total
100.0
100.0
100.0
100.0
100.0
Sources of Crude Oil Input for Worldwide Refineries (Wholly Owned) Percentage 100
80
60
Worldwide Refinery Production of Finished Products (Wholly owned)
40
Thousands of barrels per day
Gasoline Jet fuel Gas oil Fuel oil Other
579 232 293 81 133
656 256 307 90 146
565 252 278 99 152
598 217 266 99 146
569 236 265 90 149
Total
1,318
1,455
1,346
1,326
1,309
20
0 06
07 08 09 10
Other Africa Mexico United States
Sources of Crude Oil Input for U.S. Refineries (Wholly owned)
North Sea South America Middle East
Percentage of total input
Middle East South America United States – excluding Alaska North Slope United States – Alaska North Slope Mexico Africa Asia-Pacific Other
Total
28.8 23.2 8.7 7.7 15.6 6.3 5.7 4.0
30.8 21.4 8.6 6.7 21.0 3.2 5.9 2.4
35.0 16.8 6.3 5.5 23.8 3.0 3.8 5.8
31.7 13.8 7.6 5.6 26.9 5.5 6.7 2.2
33.0 16.5 7.0 5.9 26.0 3.9 6.3 1.4
100.0
100.0
100.0
100.0
100.0
Sources of Crude Oil Input for U.S. Refineries (Wholly Owned) Percentage 100
80
60
U.S. Refinery Production of Finished Products
40
(Wholly owned) Thousands of barrels per day
20
Gasoline Jet fuel Gas oil Fuel oil Other
417 194 187 43 115
487 213 202 51 128
426 211 170 56 128
431 174 157 58 128
416 200 170 51 132
Total
956
1,081
991
948
969
1 Utilization
for fuel refineries only. catalytic crackers and coking facilities are the primary facilities used to convert heavier products into gasoline and other light products.
2 Hydrocrackers,
0 06 07
08 09 10
Other Asia–Pacific Africa Mexcio
Chevron Corporation 2010 Supplement to the Annual Report
United States South America Middle East
53
Downstream Operating Data
Refining Capacities and Crude Oil Inputs
Refinery Capacity at December 31
(Includes equity share in affiliates)
Millions of barrels per day 2.5
2.2
Year ended December 31
Thousands of barrels per day
Chevron Share of Capacity At December 31, 2010
United States – Fuel Refineries/Asphalt Plant El Segundo, California Kapolei, Hawaii Pascagoula, Mississippi Perth Amboy, New Jersey1 Richmond, California Salt Lake City, Utah
2.0
1.5
1.0
0.0 06
07 08 09 10
United States International* *Includes equity share in affiliates.
Refinery Crude Oil Inputs Millions of barrels per day 2.0
1.9
1.5
0.0 06 07 08 09 10
United States International*
2007
2006
269 54 330 80 243 45
250 46 325 – 228 41
247 49 345 – 218 40
263 46 299 8 237 38
222 51 285 20 192 42
258 50 337 31 224 39
899
891
812
939
55 110 210
40 70 211
49 72 205
36 75 203
49 72 212
49 71 165
Total International – Wholly Owned
375
321
326
314
333
285
International – Affiliates Australia – Brisbane (50%) Australia – Sydney (50%) Cameroon – Limbe (8%)4 Côte d’Ivoire – Abidjan (3.7%) 5 Kenya – Mombasa (16%) 6 Martinique – Fort-de-France (11.5%) Netherlands – Europoort (31%) 7 New Zealand – Whangarei (12.7%) Pakistan – Karachi (12%) Singapore – Pualau Merlimau (50%) South Korea – Yeosu (50%) Thailand – Map Ta Phut (64%)
54 68 – – – 2 – 14 6 145 375 100
40 53 – – – 2 – 13 4 119 351 101
40 56 – – 3 1 – 12 5 113 327 96
40 53 1 – 5 2 – 12 5 128 327 80
44 58 3 2 6 1 24 12 5 132 307 94
42 57 3 2 5 2 104 12 5 129 307 97
764
683
653
653
688
765
Total International
1,139
1,004
979
967
1,021
1,050
Total Worldwide
2,160
1,894
1,878
1,858
1,833
1,989
Perth Amboy plant has been idled since early 2008 and is operated as a terminal. 2 Chevron holds 100 percent of the common stock issued by Chevron South Africa (Pty) Limited, which owns the Cape Town Refinery. A consortium of South African partners owns preferred shares ultimately convertible to a 25 percent equity interest in Chevron South Africa (Pty) Limited. None of the preferred shares had been converted as of March 2011. 3 Chevron announced the agreement to sell this refinery in March 2011. 4 Chevron sold its ownership interest in Société Nationale de Raffinage in June 2008. 5 Chevron sold its ownership interest in Société Ivoirienne de Raffinage in January 2008. 6 Chevron sold its ownership interest in Kenya Petroleum Refinery Ltd. in July 2009. 7 Chevron sold its interest in this refinery (Nerefco) in March 2007.
*Includes equity share in affiliates.
54
2008
890
1 The
0.5
2009
1,021
Total International – Affiliates 1.0
2010
International – Wholly Owned Canada – Burnaby, British Columbia South Africa – Cape Town 2 United Kingdom – Pembroke 3
Total United States Fuel Refineries/Asphalt Plant 0.5
Chevron Share of Refinery Inputs
Chevron Corporation 2010 Supplement to the Annual Report
Downstream Operating Data
Refining Capacity at Year-End 2010 Chevron Share of Capacity1
(Includes equity share in affiliates) Thousands of barrels per day
United States – Fuel Refineries/Asphalt Plant El Segundo, California Kapolei, Hawaii Pascagoula, Mississippi Perth Amboy, New Jersey7 Richmond, California Salt Lake City, Utah
Atmospheric Distillation 2
Catalytic Cracking 3
Hydro- cracking 4
Residuum Conversion 5
269 54 330 80 243 45
65 21 86 – 80 13
46 – 58 – 151 –
68 – 98 – – 7
– – – – 20 –
Lubricants 6
1,021
265
255
173
20
International – Wholly Owned Canada – Burnaby, British Columbia South Africa – Cape Town 8 United Kingdom – Pembroke 9
55 110 210
17 22 90
– – –
– 11 26
– – –
Total International – Wholly Owned
375
129
–
37
–
International – Affiliates Australia – Brisbane (50%)10 Australia – Sydney (50%) Martinique – Fort-de-France (11.5%)10 New Zealand – Whangarei (12.7%)10 Pakistan – Karachi (12%)10 Singapore – Pualau Merlimau (50%)10 South Korea – Yeosu (50%) Thailand – Map Ta Phut (64%)10
54 68 2 14 6 145 375 100
18 22 – – – 23 47 26
– – – 3 – 17 42 –
– – – – – 16 – –
– – – – – – 4 – 4
Total United States Fuel Refineries/Asphalt Plant
764
136
62
16
Total International
1,139
265
62
53
4
Total Worldwide
2,160
530
317
226
24
Total International – Affiliates
1 Capacities
represent typical calendar-day processing rates for feedstocks to process units, determined over extended periods of time. Actual rates may vary depending on feedstock qualities, maintenance schedules and external factors. distillation is the first rough distillation cut. Crude oil is heated at atmospheric pressure and separates into a full boiling range of products, such as liquid petroleum gases, gasoline, naphtha, kerosene, gas oil and residuum. 3 Catalytic cracking uses solid catalysts at high temperatures to produce gasoline and other lighter products from gas-oil feedstocks. 4 Hydrocracking combines gas-oil feedstocks and hydrogen at high pressure and temperature in the presence of a solid catalyst to reduce impurities and produce lighter products, such as gasoline, diesel and jet fuel. 5 Residuum conversion includes thermal cracking, visbreaking, coking and hydrocracking processes, which rely primarily on heat to convert heavy residuum feedstock to the maximum production of lighter boiling products. 6 Lubricants capacity is based on dewaxed base-oil production. 7 The Perth Amboy plant has been idled since early 2008 and is operated as a terminal. 8 Chevron holds 100 percent of the common stock issued by Chevron South Africa (Pty) Limited, which owns the Cape Town Refinery. A consortium of South African partners owns preferred shares ultimately convertible to a 25 percent equity interest in Chevron South Africa (Pty) Limited. None of the preferred shares had been converted as of March 2011. 9 Chevron announced the agreement to sell this refinery in March 2011. 10Source: 2010 Oil & Gas Journal Refining Survey. 2 Atmospheric
Chevron Corporation 2010 Supplement to the Annual Report
55
Downstream Operating Data
U.S. Refined Product Sales Thousands of barrels per day 1600
1,349 1200
Refined Product Sales 2009
2008
2007
2006
700 232 223 99 95
720 226 254 110 93
692 229 274 127 91
728 221 271 138 99
712 252 280 128 122
1,349
1,403
1,413
1,457
1,494
521 583 271 197 192
555 647 264 209 176
589 710 278 257 182
581 730 274 271 171
595 776 266 324 166
Total International
1,764
1,851
2,016
2,027
2,127
Worldwide2 Gasoline Gas oil and kerosene Jet fuel Residual fuel oil Other petroleum products
1,221 815 494 296 287
1,275 873 518 319 269
1,281 939 552 384 273
1,309 951 545 409 270
1,307 1,028 546 452 288
Total Worldwide
3,113
3,254
3,429
3,484
3,621
562 –
516 –
512 –
492 –
492 50
2010
2009
2008
United States Gasoline Gas oil and kerosene Jet fuel Residual fuel oil Other petroleum products Total United States
800
International1 Gasoline Gas oil and kerosene Jet fuel Residual fuel oil Other petroleum products
400
0 06 07 08 09 10
Other Residual Fuel Oil Gas Oil & Kerosene Jet Fuel Gasoline
International Refined Product Sales*
Year ended December 31
2010
Thousands of barrels per day
1 2
Includes share of equity affiliates’ sales: Includes amounts for buy/sell contracts:
Thousands of barrels per day
Light Product Sales1,2
2250
1,764
1800
1350
900
450
06 07 08 09 10
Other Residual Fuel Oil Gas Oil & Kerosene Jet Fuel Gasoline
2006
$ 39,501 $ 32,885 $ 51,279 $ 41,561 $ 38,474
Total Sales Revenues
$ 82,753 $ 72,559 $ 116,965 $ 95,465 $ 89,669
43,252
39,674
65,686
53,904
51,195
Sales Volumes (Thousands of barrels per day) United States International
1,155 1,005
1,200 1,129
1,195 1,256
1,220 1,278
1,244 1,329
Total Sales Volumes
2,160
2,329
2,451
2,498
2,573
companies only and includes amounts for buy/sell contracts prior to second quarter 2006. sales include motor gasoline, jet fuel, gas oils and kerosene.
2 Light-product
Natural Gas Liquids Sales (Includes equity share in affiliates)
Year ended December 31
2010
2009
2008
2007
2006
United States International
139 78
144 88
144 97
135 96
72 81
Total
217
232
241
231
153
Thousands of barrels per day
*Includes equity in affiliates.
56
2007
Sales Revenues (Millions of dollars) United States International
1 Consolidated
0
Year ended December 31
Chevron Corporation 2010 Supplement to the Annual Report
Downstream Operating Data
Marketing Retail Outlets1,2
At December 31
2010
Company
United States Canada Europe Latin America Asia-Pacific Africa-Pakistan
Total
Other
2009 Company
2008
Other
Company
2007
Other
Company
495 7,756 159 2 56 1,064 496 863 865 1,264 790 828
502 9,089 161 – 74 1,169 541 841 1,031 1,188 930 824
507 160 84 977 1,091 1,488
2,861 11,777
3,239 13,111
4,307 15,150
9,178 1 1,293 2,442 1,136 1,100
548 162 101 1,040 1,272 1,509
Other
Company
9,183 2 1,227 2,510 955 1,148
Other
578 162 396 1,134 1,229 1,480
4,632 15,025
Marketing Retail Outlets Number of outlets
2006
9,050 2 1,760 2,575 950 1,177
30000
25000
20000
19,547
15000
4,979 15,514 10000
1 Excludes
outlets of equity affiliates totaling 4,909, 5,224, 5,198, 5,095 and 5,033 for 2010, 2009, 2008, 2007 and 2006 respectively. outlets are motor vehicle outlets that are company owned or leased. These outlets may be either company operated or leased to a dealer. Other outlets consist of all remaining branded outlets that are owned by others and supplied with branded products.
2 Company
5000
0
Vessels – Crude Oil and Refined Product Tankers by Type, Dead-Weight Tonnage1 2010
U.S. Int’l.
2009 U.S.
Int’l.
2008 U.S.
Int’l.
At December 31
2007 U.S.
Int’l.
2006 U.S.
Int’l.
Company-Owned and Bareboat-Chartered 25,000–65,000 65,000–120,000 120,000–160,000 160,000–320,000 Above 320,000
5 – – – –
– 6 4 5 3
5 – – – –
– 6 4 6 3
5 – – – –
– 6 4 6 3
4 – – – –
– 6 5 6 3
3 – – – –
– 5 5 6 3
Total Company-Owned and Bareboat-Chartered
5
18
5
19
5
19
4
20
3
19
Time-Chartered2 25,000–65,000 65,000–120,000 160,000–320,000
– – –
6 6 2
– – –
7 8 2
– – –
10 7 –
– – –
16 8 –
– – –
14 8 –
Total Time-Chartered
–
14
–
17
–
17
–
24
–
22
Total Crude Oil and Refined Product Tankers
5
32
5
36
5
36
4
44
3
41
06 07 08 09 10
Affiliate Company Retailer
1 Consolidated 2 Includes
companies only. Excludes tankers chartered on a voyage basis, those with dead-weight tonnage less than 25,000, and those used exclusively for storage. tankers chartered for more than one year.
Cargo Transported – Crude Oil and Refined Products* 2010
Millions of barrels Billions of ton-miles
U.S. Int’l.
29 301 8 332
Year ended December 31
2009 U.S.
Int’l.
42 307 7 358
2008 U.S.
Int’l.
32 255 5 328
2007 U.S.
Int’l.
36 278 6 333
2006 U.S.
Int’l.
25 297 3 344
* Consolidated companies only. Includes cargo carried by company-owned, bareboat-chartered and time-chartered vessels; excludes cargo carried by single-voyage
charters.
Chevron Corporation 2010 Supplement to the Annual Report
57
Other Businesses
58
Photo: One oftoseven next-generation, Chevron Corporation 2010 Supplement the Annual Report precommercial solar panel technologies installed at a solar evaluation project, Bakersfield, California.
Technology
Other Businesses
Technology Chevron’s technology organization supports the company’s worldwide businesses by identifying and deploying technology solutions and capabilities that differentiate business performance and create options for the future. 2010 Accomplishments Upstream and Gas • Deployed next-generation interpretation and earth modeling software frameworks across Chevron’s upstream business, enabling a step change in productivity and decision quality in reservoir characterization and simulation.
• Tested a new modular and mobile seawater injection system for waterflooding marginal offshore oil reservoirs at high rates and low cost.
• Progressed development of a single-trip multizone fracturing system that will provide significant savings in the company’s deepwater completions.
• Deployed the heavy oil thermal component of the next-generation reservoir simulator in the Hamaca Field in Venezuela, the Wafra Field in the Partitioned Zone between Saudi Arabia and Kuwait, and the Duri Field in Indonesia.
• Delivered Upstream Workflow Transformation solutions that enable better and faster operating decisions via improved data usage and automated workflows. Additional transformation solutions that added for well performance and waterflood management.
• Established a Machinery Support Center that enables experts to remotely monitor upstream rotating equipment and facilitate faster, cost-effective responses to major equipment problems. As of early 2011, the center supports the company’s Angola operations, and additional deployments are planned during the year.
• Commercialized Chevron’s patented LPG hydraulic fracturing technique, which offers an improved approach to enhancing production of tight gas reservoirs.
• Patented, in partnership with Colorado State University, a technique using in-well fluorescent tracers to accurately measure subsurface hydrocarbon movement.
• Piloted autonomous underwater vehicle (AUV) operations in the shallow water of the U.S. Gulf of Mexico. AUVs could enhance monitoring of deepwater subsea systems and be used for intervention planning and in response to major incidents, including hurricanes.
• Developed and deployed a proprietary, advanced geographic modeling tool to significantly improve and standardize pipeline route planning and economics.
• Commercialized new downhole communication technology that enables wireless transmission of well data. Downstream • Developed the next-generation Isodewaxing catalyst platform to achieve higher yields and improve product quality.
• Commercialized a new mid-distillate hydrocracking catalyst, ICR250, that is capable of processing a wide range of feedstocks, including gas-to-liquids oils.
• Developed ZeolitePlus, a breakthrough technology that enables manufacturing of high-performance zeolite catalysts at much faster throughput with fewer processing steps. Information Technology • Implemented interactive 3-D models to train operators of the Tahiti platform and the Agbami floating, production, storage and offloading vessel. The training technique has been deployed to accelerate new facility commissioning, reduce downtime and have a positive impact on safety.
• Completed successful laboratory tests on new fiber optic sensing technologies developed to improve operational efficiency in refining, production and reservoir recovery. Biofuels/Hydrogen • Completed a pilot project that utilized Chevron’s hydroprocessing and Isodewaxing technologies to refine nonedible bio-oils into renewable fuel that meets road diesel specifications.
• Concluded the multiyear hydrogen demonstration program successfully with the U.S. Department of Energy and the Florida Department of Environmental Protection. Safely completed decommissioning of four hydrogen refueling stations and transferred one prototype station to a third party. Emerging Energy • Constructed and commissioned a 1-megawatt concentrating photovoltaic (CPV) solar facility on the tailing site of Chevron’s molybdenum mine in Questa, New Mexico. The beneficial reuse project is one of the largest CPV solar installations in the world and will be used to evaluate the benefits of emerging solar technology and applicability to other operations and properties.
• Constructed and commissioned a next-generation 740-kilowatt solar photovoltaic installation on a former refinery site in Bakersfield, California. Seven solar panel technologies are being tested to establish the viability of these technologies for use at other Chevron sites.
• Continued construction of a 29-megawatt solar-to-steam demonstration project in the San Joaquin Valley in California. This new technology application is designed to use solar energy to produce steam for enhanced oil recovery. Chevron Corporation 2010 Supplement to the Annual Report
59
Other Businesses
Power Generation and CES
Venture Capital • Transferred 12 new technology applications into Chevron’s core operations, including remote visual tracking, remote monitoring and crude oil viscosity technology.
• Invested in five start-up companies involved in high-density materials for hydraulic fracturing, electric submersible pumps, innovative downhole data measurement and transmission, high-performance cloud data storage, and drilling fluid filtering and separation.
Power Generation Chevron’s Global Power Company manages interests in 13 power-generation assets with a total operating capacity of more than 3.1 terawatts, primarily through joint ventures in the United States and Asia. The company has more than 25 years of experience in successfully developing and operating commercial power projects for utilities and large industrial customers worldwide. Twelve of the assets consist of efficient combined-cycle and gas-fired cogeneration facilities that utilize waste-heat recovery to produce electricity and support industrial thermal hosts. The 13th facility is a wind farm, located in Casper, Wyoming, that is designed to optimize the use of a decommissioned refinery site for delivery of clean, renewable energy to the local utility provider. The global power organization also provides comprehensive technical services, utilizing state-of-the-art tools and technology, benefiting the company’s power-generation assets embedded within production and refining facilities, including a number of facilities that provide steam for enhanced recovery in heavy oil operations. As the company’s center of excellence for power generation, these assets deliver world-class reliability results. In addition, Chevron is the world’s largest producer of geothermal energy, with major operations in Indonesia and the Philippines. For additional information on the company’s geothermal activities, see pages 31 and 32.
Chevron Energy Solutions (CES) CES is a wholly owned subsidiary that develops and builds sustainable energy projects that increase energy efficiency and renewable power, reduce energy costs, and ensure reliable, high-quality energy for government, education and business facilities. Since 2000, CES has developed hundreds of projects that help customers reduce their energy costs and environmental impact. Projects announced in 2010 include the City of Brea Energy Efficiency and Solar Project in California, the Marine Corps Logistics Base Albany Landfill Gas Project in Georgia, and the University of Utah Thermal Storage and New Central Plant Project.
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Chevron Corporation 2010 Supplement to the Annual Report
Other Businesses
Mining
Mining Chevron’s U.S.-based mining company produces and markets coal and molybdenum. The company owns and is the operator of a surface coal mine in Kemmerer, Wyoming; an underground coal mine in North River, Alabama; a surface coal mine in McKinley, New Mexico; and a molybdenum mine in Questa, New Mexico. The company also owns a 50 percent interest in Youngs Creek Mining Company, LLC, which was formed to develop a coal mine in northern Wyoming. In March 2011, the company signed a purchase and sale agreement for the sale of the North River Mine and other coal-related assets in Alabama. Additionally, in January 2011, the company announced the intent to divest the remaining coal mining operations, including the Kemmerer Mine and Chevron’s interest in Youngs Creek.
CANADA
Youngs Creek Kemmerer UNITED STATES Questa McKinley North River
ATLANTIC OCEAN
MEXICO U.S. Coal Fields
Mines – Coal
Mine – Molybdenum
Underground development and production plans at the Questa mine remain scaled back in response to price levels in the molybdenum market. Industry Conditions Domestic demand for coal has improved from 2009, consistent with increases in electricity consumption. Demand for molybdenum continues to be impacted by the economic slowdown.
Coal Reserves Millions of tons 250
Coal markets are dominated by electricity generators, which consume about 90 percent of the coal used in the United States. During 2010, low natural gas prices relative to coal created a natural gas preference for some power customers.
200
189
150
Molybdenum is primarily used as an alloy agent in steel. The economic slowdown and the resulting decrease in demand for steel led to an overall sharp decrease in molybdenum prices that began in late 2008 and moderated through 2010.
100
2010 Accomplishments • Commenced full reclamation activities at the McKinley Mine in New Mexico.
50
• Shared the 2010 Safety Innovator of the Year at the Questa and McKinley mines, as presented by the
0 06 07 08 09 10
New Mexico Mining Association.
• Received an award at Questa for Rescue Response presented jointly by the New Mexico Mining
Developed Reserves Undeveloped Reserves
Association in cooperation with the New Mexico Bureau of Mine Safety.
Mining Operations1
State/ Country
Capacity2
Annual Sales
At 12/31/10
2010
2009
2008
2007
2006
5.5 – 3.1
4.8 0.1 2.9
4.5 2.6 2.7
5.0 3.2 2.9
5.2 3.7 3.1
4.6 5.2 2.8
Total Coal Sales
8.6
7.8
9.8
11.1
12.0
12.6
Minerals: Mountain Pass 4,5 California T&S Questa 4,6 New Mexico Underground CBMM (35%) 7 Brazil T&S
– 4.2 –
– 0.2 –
– 0.5 –
2.5 4.1 –
4.3 3.9 –
5.3 4.0 6.1
Mine Name/Affiliate
Principal Operation
Coal: Kemmerer Wyoming Truck-and-Shovel (T&S) McKinley3,4 New Mexico Dragline/T&S North River Alabama Longwall
Sulfur Content Low Low Medium Type of Mineral Rare Earths Molybdenum Niobium
1 Sales
represent the company’s share. Quantities at the coal facilities and niobium facility are shown in millions of tons. Volumes of the rare earth and molybdenum facilities are expressed in millions of pounds. 2 Quantity shown represents the estimated annual capacity. 3 Mining operations at McKinley were suspended at the end of 2009. 4 Environmental reclamation activities are in progress at McKinley, Questa and Mountain Pass (offsite remediation). 5 Mining operations at Mountain Pass were sold in September 2008. 6 Mining operations at Questa were scaled back in 2009. 7 Chevron’s interest in CBMM was sold in mid-2006.
Chevron Corporation 2010 Supplement to the Annual Report
61
Reference
Glossary of Energy and Financial Terms Energy Terms Acreage Land leased for crude oil and natural gas exploration and production. Additives Chemicals to control engine deposits and improve
lubricating performance. Barrels of Oil-Equivalent A unit of measure to quantify crude oil,
natural gas liquids and natural gas amounts using the same basis. Natural gas volumes are converted to barrels on the basis of energy content. See oil-equivalent gas and production. Biofuel Any fuel that is derived from biomass – recently living
organisms or their metabolic byproducts – from sources such as farming, forestry, and biodegradable industrial and municipal waste. See renewables. Condensate Hydrocarbons that are in a gaseous state at
reservoir conditions but condense into liquid as they travel up the well bore and reach surface conditions. Development Drilling, construction and related activities following discovery that are necessary to begin production and transportation of crude oil and/or natural gas. Enhanced Recovery Techniques used to increase or prolong production from crude oil and natural gas fields. Exploration Searching for crude oil and/or natural gas by
utilizing geological and topographical studies, geophysical and seismic surveys, and drilling of wells. Gas-to-Liquids A process that converts natural gas into
high-quality transportation fuels and other products. Liquefied Natural Gas (LNG) Natural gas that is liquefied under extremely cold temperatures to facilitate storage or transportation in specially designed vessels. Liquefied Petroleum Gas (LPG) Light gases, such as butane and propane, that can be maintained as liquids while under pressure. Natural Gas Liquids (NGL) Separated from natural gas, these include ethane, propane, butane and natural gasoline. Oil-Equivalent Gas The volume of natural gas needed to
generate the equivalent amount of heat as a barrel of crude oil. Approximately 6,000 cubic feet of natural gas is equivalent to one barrel of crude oil. Oil Sands Naturally occurring mixture of bitumen (a heavy,
viscous form of crude oil), water, sand and clay. Using hydroprocessing technology, bitumen can be refined to yield synthetic oil. Oil Shale Very fine grained sedimentary rocks containing a high
proportion of organic matter called kerogen, which may be converted into synthetic crude oil or natural gas. Petrochemicals Compounds derived from petroleum. These include aromatics, which are used to make plastics, adhesives, synthetic fibers and household detergents; and olefins, which are used to make packaging, plastic pipes, tires, batteries, household detergents and synthetic motor oils.
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Chevron Corporation 2010 Supplement to the Annual Report
Production Total production refers to all the crude oil (including synthetic oil), natural gas liquids and natural gas produced from a property. Gross production is the company’s share of total production before deducting both royalties paid to landowners and a government’s agreed-upon share of production under a PSC. Net production is gross production minus both royalties paid to landowners and a government’s agreed-upon share of production under a PSC. Oil-equivalent production is the sum of the barrels of liquids and the oil-equivalent barrels of natural gas produced. See barrels of oil-equivalent, oil-equivalent gas, and productionsharing contract. Production-Sharing Contract (PSC) An agreement between a government and a contractor (generally an oil and gas company) whereby production is shared between the parties in a prearranged manner. The contractor typically incurs all exploration, development and production costs that are subsequently recoverable out of an agreed-upon share of any future PSC production, referred to as cost recovery oil and/or gas. Any remaining production, referred to as profit oil and/or gas, is shared between the parties on an agreed-upon basis as stipulated in the PSC. The government also may retain a share of PSC production as a royalty payment, and the contractor may owe income taxes on its portion of the profit oil and/or gas. The contractor’s share of PSC oil and/ or gas production and reserves varies over time, as it is dependent on prices, costs and specific PSC terms. Refinery Utilization Represents average crude oil consumed in fuel
and asphalt refineries for the year expressed as a percentage of the refineries’ average annual crude unit capacity. Renewables Energy resources that are not depleted when consumed or converted into other forms of energy (e.g., solar, geothermal, ocean and tide, wind, hydroelectric power, biofuels, and hydrogen). Reserves Crude oil or natural gas contained in underground rock
formations called reservoirs and saleable hydrocarbons extracted from oil sands, shale, coalbeds or other nonrenewable natural resources that are intended to be upgraded into synthetic oil or gas. Proved reserves are the estimated quantities that geoscience and engineering data demonstrate with reasonable certainty to be economically producible in the future from known reservoirs under existing economic conditions, operating methods and government regulations. Estimates change as additional information becomes available. Oil-equivalent reserves are the sum of the liquids reserves and the oil-equivalent gas reserves. See barrels of oil-equivalent and oil-equivalent gas. The company only discloses proved reserves in its filings with the U.S. Securities and Exchange Commission (SEC). Certain terms, such as “probable” or “possible” reserves, “potentially recoverable” volumes, and “resources,” among others, may be used to describe certain oil and gas properties in this document, which is not filed with the SEC. These other terms are used because they are common to the industry, are measures considered by management to be important in making capital investment and operating decisions, and provide some indication to stockholders of the potential ultimate recovery of oil and gas from properties in which the company has an interest. In that regard, potentially recoverable volumes are those that can be produced using all known primary and enhanced recovery methods. Investors should refer to proved reserves disclosures in Chevron’s Annual Report on Form 10-K for the year ended December 31, 2010.
Reference
Shale Gas Natural gas produced from shale (clay-rich, very finegrained) formations where the gas was sourced from within the shale itself and is trapped in rocks with low porosity and extremely low permeability. Production of shale gas requires the use of hydraulic fracturing (pumping a fluid-sand mixture into the formation under high pressure) to help produce the gas. Synthetic Oil A marketable and transportable hydrocarbon liquid,
resembling crude oil, that is produced by upgrading highly viscous or solid hydrocarbons, such as extra-heavy crude oil or oil sands. Unconventional Oil and Gas Resources Hydrocarbons contained in formations over very large areas with extremely low permeability that are not influenced by buoyancy. In contrast, conventional resources are contained within geologic structures/stratigraphy and float buoyantly over water. Unconventional resources include shale gas, coalbed methane, crude oil or natural gas from “tight” rock formations, tar sands, kerogen from oil shale, and gas hydrates that cannot commercially flow without well stimulation. Wells Oil and gas wells are classified as either exploration or development wells. Exploration wells are wells drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil and gas in another reservoir. Appraisal wells are exploration wells drilled to confirm the results of a discovery well. Delineation wells are exploration wells drilled to determine the boundaries of a productive formation or to delineate the extent of a find. Development wells are wells drilled in an existing reservoir in a proved oil- or gas-producing area. Completed wells are wells in which drilling work has been completed and that are capable of producing. Dry wells are wells completed as dry holes; that is, wells not capable of producing in commercial quantities.
Financial Terms Capital Employed The sum of Chevron Corporation stockholders’
equity, total debt and noncontrolling interests. Average capital employed is computed by averaging the sum of capital employed at the beginning and end of the year.
Cash Flow From Operating Activities Cash generated from the
company’s businesses; an indicator of a company’s ability to pay dividends and fund capital and common stock repurchase programs. Excludes cash flows related to the company’s financing and investing activities. Current Ratio Current assets divided by current liabilities. Debt Ratio Total debt, including capital lease obligations, divided by total debt plus Chevron Corporation stockholders’ equity. Earnings Net income attributable to Chevron Corporation
as presented on the Consolidated Statement of Income. Goodwill An asset representing the future economic benefits arising from the other assets acquired in a business combination that are not individually identified and separately recognized. Interest Coverage Ratio Income before income tax expense, plus interest and debt expense and amortization of capitalized interest, less net income attributable to noncontrolling interests, divided by before-tax interest costs. Margin The difference between the cost of purchasing, producing
and/or marketing a product and its sales price. Return on Capital Employed (ROCE) Ratio calculated by dividing earnings (adjusted for after-tax interest expense and noncontrolling interests) by average capital employed. Return on Stockholders’ Equity Ratio calculated by dividing earnings by average Chevron Corporation stockholders’ equity. Average Chevron Corporation stockholders’ equity is computed by averaging the sum of the beginning-of-year and end-of-year balances. Return on Total Assets Ratio calculated by dividing earnings by average total assets. Average total assets is computed by averaging the sum of the beginning-of-year and end-ofyear balances. Total Stockholder Return The return to stockholders as measured by stock price appreciation and reinvested dividends for a period of time.
Additional Information Stock Exchange Listing Chevron common stock is listed on the New York Stock Exchange. The symbol is “CVX.” Publications and Other News Sources Additional information relating to Chevron is contained in its 2010 Annual Report to stockholders and its Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the U.S. Securities and Exchange Commission. Copies of these reports are available on the company’s Web site, www.chevron.com, or may be requested in writing to: Chevron Corporation Comptroller’s Department 6001 Bollinger Canyon Road, A3201 San Ramon, CA 94583-2324 The 2010 Corporate Responsibility Report is available in May on the company’s Web site, www.chevron.com, or may be requested in writing to: Chevron Corporation Policy, Government and Public Affairs 6001 Bollinger Canyon Road, A2098 San Ramon, CA 94583-2324 For additional information about the company and the energy industry, visit Chevron’s Web site, www.chevron.com. It includes articles, news releases, speeches, quarterly earnings information and the Proxy Statement.
Legal Notice As used in this report, the terms “Chevron” and “the company” may refer to Chevron Corporation, one or more of its consolidated subsidiaries, or to all of them taken as a whole, but unless the context clearly indicates otherwise, the term should not be read to include “affiliates” of Chevron, that is, those companies accounted for by the equity method (generally owned 50 percent or less) or investments accounted for by the cost method. All of these terms are used for convenience only and are not intended as a precise description of any of the separate companies, each of which manages its own affairs. Trademark Notice Caltex, Chevron, the Chevron Hallmark, Delo, Havoline, Human Energy, Isodewaxing, Meropa, Taro, Techron, Texaco and Ursa are registered trademarks of Chevron Intellectual Property LLC. ZeolitePlus is a trademark of Chevron Intellectual Property LLC. Investor Information If you have any questions regarding the data included herein, please contact: Chevron Corporation Investor Relations 6001 Bollinger Canyon Road, A3064 San Ramon, CA 94583-2324 925 842 5690 Email: invest@chevron.com
Chevron Corporation 2010 Supplement to the Annual Report
63
Reference
Organizations Principal Areas Organization Type/Name
Principal Business
of Activity
Operating Atlas Energy, Inc. Exploration and Production United States Cabinda Gulf Oil Company Limited Exploration and Production Angola Chevron Africa and Latin America Exploration Exploration and Production Africa and Latin and Production Company America Chevron Asia Pacific Exploration and Production Company Exploration and Production Asia-Pacific Chevron Australia Pty Ltd. Exploration and Production Australia Chevron Canada Limited Integrated Energy Activities Canada Chevron Europe, Eurasia and Middle East Exploration Exploration and Production International & Production Limited Chevron Geothermal Indonesia, Ltd. Power Generation Indonesia Chevron Global Energy Inc. Integrated Energy Activities International Chevron Global Gas Global Gas Activities Worldwide Chevron Global Power Company Electric Power and Cogeneration Worldwide Chevron Mining Inc. Mining United States Chevron Nigeria Limited Exploration and Production Nigeria Chevron North America Exploration and Exploration and Production North America Production Company Chevron Oronite Company LLC Lubricating Oils and Fuels Additives Worldwide Chevron Pipe Line Company Crude Oil, Refined Products and United States Natural Gas Transportation Chevron Products Company Refining, Marketing, Trading, Supply and United States Distribution of Crude Oil and Refined Products Chevron Thailand Exploration and Production, Ltd. Exploration and Production Thailand Chevron Transport Corporation Ltd. Marine Transportation International Chevron U.S.A. Inc. Integrated Energy Activities Worldwide PT Chevron Pacific Indonesia Exploration and Production Indonesia Saudi Arabian Chevron Inc. Exploration and Production Partitioned Zone Texaco Inc. Exploration and Production Worldwide Unocal Corporation Exploration and Production Worldwide
Affiliates Angola LNG Limited (36.4%) The Baku-Tbilisi-Ceyhan Pipeline Company (8.9%) Caltex Australia Limited (50%) Caspian Pipeline Consortium (15%) Catchlight Energy LLC (50%) Chevron Phillips Chemical Company LLC (50%) GS Caltex Corporation (50%) Petroboscan, S.A. (39.2%) Petroindependencia, S.A. (34.0%) Petroindependiente, S.A. (25.2%) Petropiar, S.A. (30%) Star Petroleum Refining Co., Ltd. (64%) Tengizchevroil LLP (50%) West African Gas Pipeline Company Limited (36.7%)
Liquefied Natural Gas Crude Oil Transportation Refining and Marketing Crude Oil Transportation Biofuels Petrochemicals Refining and Marketing Exploration and Production Exploration and Production Exploration and Production Exploration and Production Refining Exploration and Production Natural Gas Transportation
Angola Eurasia Australia Eurasia United States Worldwide International Venezuela Venezuela Venezuela Venezuela Thailand Kazakhstan West Africa
Services Chevron Business and Real Estate Services Property Management Chevron Energy Solutions Company Energy Services Chevron Energy Technology Company Integrated Energy Technology and Services Chevron Environmental Management Company Environmental Remediation Chevron Information Technology Company Information Technology Chevron Services Company Financial, Legal and Technical Support Services Chevron Technology Ventures Emerging Technologies
Worldwide United States Worldwide United States Worldwide Worldwide United States
Finance Chevron Corporation Texaco Capital Inc.
Commercial Paper Issuer and Debt Financing Debt Financing
Chevron Corporation has ownership interests in more than 1,000 subsidiaries, branches, divisions, partnerships and affiliates. The above listing represents the most significant of the company’s operations. These organizations may represent legal entities or divisions of operating units of legal entities. Chevron’s interest is 100 percent unless otherwise noted.
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Chevron Corporation 2010 Supplement to the Annual Report
Chevron History 1879 Incorporated in San Francisco, California, as the Pacific Coast Oil Company. 1900 Acquired by the West Coast operations of John D. Rockefeller’s original Standard Oil Company. 1911 Emerged as an autonomous entity – Standard Oil Company (California) – following U.S.
2010 Annual Report
Supreme Court decision to divide the Standard Oil conglomerate into 34 independent companies. 1926 Acquired Pacific Oil Company to become Standard Oil Company of California (Socal). 1936 Formed the Caltex Group of Companies, jointly owned by Socal and The Texas Company (later became Texaco), to manage exploration and production interests of the two companies in the Middle East and Indonesia and provide an outlet for crude oil through The Texas Company’s European markets. 1947 Acquired Signal Oil Company, obtaining the Signal brand name and adding 2,000 retail 2010 Annual Report
stations in the western United States. 1961 Acquired Standard Oil Company (Kentucky), a major petroleum products marketer in five southeastern states, to provide outlets for crude oil from southern Louisiana and the U.S. Gulf of Mexico, where the company was a major producer.
2010 Supplement to the Annual Report
1984 Acquired Gulf Corporation – nearly doubling the size of crude oil and natural gas activities – and gained significant presence in industrial chemicals, natural gas liquids and coal. Changed name to Chevron Corporation to identify with the name under which most products were marketed. 1988 Purchased Tenneco Inc.’s U.S. Gulf of Mexico crude oil and natural gas properties, becoming one of the largest U.S. natural gas producers. 1993 Formed Tengizchevroil, a joint venture with the Republic of Kazakhstan, to develop and produce the giant Tengiz Field, becoming the first major Western oil company to enter newly independent Kazakhstan.
2010 Supplement to the Annual Report
1999 Acquired Rutherford-Moran Oil Corporation. This acquisition provided inroads to Asian natural gas markets. 2001 Merged with Texaco Inc. and changed name to ChevronTexaco Corporation. Became the second-largest U.S.-based energy company.
2010 Corporate Responsibility Report
2002 Relocated corporate headquarters from San Francisco, California, to San Ramon, California. 2005 Acquired Unocal Corporation, an independent crude oil and natural gas exploration and production company. Unocal’s upstream assets bolstered Chevron’s already-strong position in the Asia-Pacific, U.S. Gulf of Mexico and Caspian regions. Changed name to Chevron Corporation to convey a clearer, stronger and more unified presence in the global marketplace. 2011 Acquired Atlas Energy, Inc., an independent U.S. developer and producer of shale gas resources. The acquired assets provide a targeted, high-quality core acreage position primarily in the Marcellus Shale.
2010 Corporate Responsibility Report
Cautionary Statement Relevant to Forward-Looking Information for the Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995 This 2010 Supplement to the Annual Report of Chevron Corporation contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “budgets” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond the company’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and natural gas prices; changing refining, marketing and chemical margins; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternate-energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental statutes, regulations and litigation; the potential liability resulting from other pending or future litigation; the company’s future acquisition or disposition of assets and gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading “Risk Factors” on pages 32 through 34 of the company’s 2010 Annual Report on Form 10-K. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed in this report could also have material adverse effects on forward-looking statements.
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2010 Corporate Responsibility Report
Welcome 3
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A Message From Our CEO
Australia: A Natural Partnership
Angola: Partnerships and Possibilities
California, United States: Finding Common Ground in Richmond
The Gorgon Project shows how energy development and the environment coexist. Climate Change 7 Executive Interview 9
Sustainable programs in Angola will improve the quality of life. Social Investments 13
The Richmond Refinery works with the community to identify and address local needs. The Environment 17
On the Cover: Marine biologists Anthony Bougher (left) and Luke Skinner conduct an intertidal survey in the Indian Ocean adjacent to the site of Chevron’s Wheatstone Project, which will process natural gas from fields offshore Western Australia.
Partnering for Shared Progress We believe that business and society are interdependent. This belief drives our commitment to partnership to create mutual benefit, or shared progress. At Chevron, partnership is a value that we honor every day, wherever we operate, from our business to our social investments. We welcome your feedback. Thank you for your interest in Chevron.
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Kazakhstan: Sea of Opportunity
U.S. Gulf of Mexico: Oceans of Promise
Our longstanding partnership with Kazakhstan contributes to economic and social change.
Our culture promotes safe operations, resulting in a safety record that leads the industry.
Nigeria: Healthy Employees, Healthy Community
Indonesia: Cultivating Gotong Royong
Additional Information and Data
Diversity 21
Operating With Excellence 25
In Nigeria, we work with partners to combat disease, and our efforts are making a difference.
We provide economic opportunities for Indonesians through our operations and support for local initiatives.
Performance Data GRI and API/IPIECA Index Assurance Statement Glossary About This Report
Executive Interview 27
Human Rights 31
Renewable Energy 35
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‘ Business and community partnerships that emphasize economic progress can help set countries on a better course.’
A Message From Our CEO
Shared Progress Energy is essential to human progress — it creates jobs, fuels innovation and powers virtually every element of the global economy. Providing that energy safely, reliably and economically is a great responsibility that we take seriously. We are proud that 2010 was the safest year in our company’s history, giving us one of the best records for safety in our industry.
We recognize that business success is deeply linked to society’s progress. Our investments in communities — developed in partnership with those communities — also are investments in the long-term success of our company. This approach delivers mutual benefit and shared progress. In 2010, we invested $197 million in our communities, more than twice the amount we invested in 2006.
Over the past few decades, our industry has changed dramatically. New technology and advanced skills have combined to unlock new production and growth in geologic areas once beyond our reach.
We make community investments in the three areas that we believe are the foundation of working societies the world over — health, education and economic development. Our investments in health focus on training, testing and treatment for such diseases as HIV/AIDS, tuberculosis and malaria, which are critical economic and public health challenges in some of our largest operating areas.
One of these frontiers, deepwater production, experienced a tragedy in the U.S. Gulf of Mexico, resulting in loss of precious life. It also took a toll on the economy and the ecology of the Gulf Coast. Following the BP Macondo incident, Chevron led the joint-industry task force to raise even higher standards for deepwater operations across the industry. The incident reinforced our own safety imperative to reach our goal of zero incidents wherever we operate. Toward that goal, all of our projects are guided by our strong safety culture. We leave nothing to chance because we have a deep, personal stake in operating safely — to sustain the public’s trust in our operations, to bring our employees safely home and to deliver value to those who invest in us. Our success rests on a culture true to our Chevron Way values — getting results the right way. Corporate responsibility at Chevron begins with safe operations, but it doesn’t end there.
Business and community partnerships that emphasize economic progress can help set countries on a better course. One such investment is the Niger Delta Partnership Initiative, launched in 2010 — an innovative, multipartner effort to promote economic development, conflict resolution and capacity building. Our initial commitment is $50 million. Our investments in education can strengthen communities. As part of our California Partnership initiative, for example, we’ve teamed up with leading educational nonprofits to create opportunities in critical STEM subjects — science, technology, engineering and math — for underserved students. In 2010, we reached more than 245,000 students and 3,900 teachers in California. Through multistakeholder collaboration, such as the Voluntary Principles on Security and Human Rights, we are promoting respect for global human rights. To emphasize the importance of our own commitment, in 2010 we developed plans and provided resources to implement our global Human Rights Policy. As you’ll read in this report, our community investments have increased, our partnerships are stronger and our impact is greater. These successes demonstrate shared progress for business and communities.
John S. Watson Chairman of the Board and Chief Executive Officer May 2011
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Australia:
A Natural
Partnership A nature reserve is an unlikely site for a major new energy plant, but Chevron is showing how it can work.
Barrow Island, offshore Western Australia, is the site of the Gorgon natural gas project. Chevron has been safely producing oil for more than 45Â years on Barrow.
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$56 billion
10,000 jobs
(AU$65 billion) will be contributed to Australia’s gross domestic product
will be created at peak construction
No. 1 in size, the Gorgon CO2-injection project is expected to be the world’s largest
Barrow Island, a Class A nature reserve off Australia’s west coast, will be home to the Gorgon Project, which will tap into vast natural gas resources 43.5 miles (70 km) northwest of the island. The island’s rich and unique biodiversity has remained intact since naturalist John Thomas Tunney’s writings secured its designation as a wildlife refuge a century ago. Its conservation is a national priority.
70%
of construction contracts for workforce housing will go to firms in Western Australia
Chevron is no stranger here, having successfully operated on Barrow for more than 45 years while minimizing our footprint on the island. Building on this environmental stewardship involves a mix of advanced technology and a commitment to detail, addressing everything from greenhouse gas (GHG) emissions to local concerns over light levels from our operations on Barrow’s nearby beaches where turtles lay their eggs. Our strong environmental performance has allowed us to expand operations, resulting in a benefit to our business and the Australian economy. Strengthening the Economy At $37 billion (AU$43 billion), the Gorgon Project will be Chevron’s largest investment, targeting 40 trillion cubic feet of gas. Gorgon represents the single biggest resource project in Australia’s history. Independent consulting firm ACIL Tasman estimates that Gorgon will contribute $56 billion (AU$65 billion) to Australia’s gross domestic product. More than $8 billion (AU$9 billion) has already been committed to companies in Australia — and total spending in Australia is targeted at $17 billion (AU$20 billion) over five years. “Many people don’t realize that through Gorgon, Chevron is providing opportunities and benefits on a scale never seen before in this country,” said Chevron Australia managing director Roy Krzywosinski.
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Above: Environmental scientist Daniel Joyce is at the site of the Wheatstone gas processing plant in Western Australia.
Natural gas will be offloaded from Barrow Island as liquefied natural gas (LNG) and transported mostly to Asian markets, while gas for Western Australia’s consumption will be piped ashore. Gorgon precedes our Wheatstone Project, a second offshore natural gas project currently in the planning stages. Australia’s prime minister, Julia Gillard, toured the project site in March 2010 and said, “Having been here and seen Barrow Island and [the] Gorgon Project, it’s given me a real sense of the size and scale of this project and what it is going to mean to the nation’s future. . . . This is a great project for employment in this country.”
Reducing Emissions Natural gas is the cleanest-burning fossil fuel. Gorgon will include the world’s largest carbon dioxide– (CO2-) injection project, which will inject 40 percent of the project’s GHG emissions underground. This will make Gorgon one of the world’s least GHGintensive LNG facilities. The injection project will separate the CO2, a natural component of produced gas, and inject it 1.6 miles (2.6 km) beneath the island into a deep sandstone reservoir. The Australian government is a partner here, having contributed $51 million (AU$59 million) to the injection project as part of its Low Emissions Technology Demonstration Fund. The plan was recognized internationally by the Carbon Sequestration Leadership Forum, a group of 24 national governments and the European Commission. We will share data from the project, which will accelerate and enhance scientific understanding of a technology some scientists believe could play an important role in reducing global GHG emissions. Partnering With Residents of Western Australia We are taking steps to make sure Gorgon benefits the residents of Australia, both economically and socially. Thus far, Gorgon has created 4,000 jobs in Australia. At peak construction, it will employ 10,000 people. A $394 million (AU$458 million) construction village is being designed and built by a joint venture between companies in Australia — Thiess, Decmil and Kentz. Thiess managing director David Saxelby said a significant aspect of the contract was that it offered enormous potential for local jobs, and up to 70 percent of the contract requirements would be sourced in Western Australia.
In 2009, Australia’s Ausco Modular was laying off workers. In 2010, it hired 200 people to build offices, labs and control rooms worth $51 million (AU$59 million) for Gorgon. Already some 80 vessels, employing hundreds of workers, are supporting Gorgon’s dredging and the delivery of supplies and materials. Other Australian companies have benefited through hundreds of jobs created in freight, construction, general utilities, accommodation, telecommunications and site preparation. Howard Porter, a local company, had 70 employees building 300 trailers for Gorgon under a $17 million (AU$20 million) contract that Porter called the single biggest transport manufacturing order ever in West ern Australia. Gorgon also is a magnet for talent. A recent Chevron employee meeting in Perth included many people who had been on the job less than a week, but that’s business as usual as the company fills a new 13-story office tower with about 800 Gorgon workers. Our collaborative approach played a significant role in developing the native title agreements with the Kuruma Marthudunera people in June 2010 and the Yaburara Mardudhunera people in November 2010 for the Gorgon Project’s domestic gas pipeline. Under the Chevron-operated Gorgon Project Cultural Heritage Management Plan, Australian Aboriginal people are involved to help the project avoid
Climate Change Gorgon’s CO2–injection project is one of the many ways we are working to address concerns about climate change. Now in its 10th year of implementation, our Action Plan on Climate Change continues to guide our efforts in greenhouse gas (GHG) emissions reduction, improved energy efficiency, and research and development in innovative, low-carbon energy technologies. • Since 1992, we have reduced the total energy consumption required to perform all our business operations by 33 percent compared with the energy we would have used to complete the same functions. • We advise customers on energy efficiency improvements and renewable power, reducing their energy use by an average of nearly 30 percent. • In 2010, the Carbon Disclosure Project’s Leadership Index recognized Chevron as a leader among
energy companies for transparency in monitoring and disclosure of our GHG emissions and carbon management practices. • As a member of the Global Gas Flaring Reduction Partnership, we are working to minimize gas flaring and venting. As of late 2009 in Kazakhstan, Tengizchevroil — in which Chevron is a 50 percent partner — eliminated routine flaring. In Nigeria, Angola and elsewhere, we continue projects to recover gas that would have been flared. • We deployed a new enterprise wide system for reporting GHG emissions and energy efficiency, implemented a strategy to manage future carbon-market activity growth, and conducted third-party verification of our GHG emissions.
For additional information on how we are addressing this issue, please visit Chevron.com/ClimateChange.
Right: Euros, or wallaroos (left), and perenties thrive on Barrow Island. Some native species now exist only on Barrow.
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To prevent invasive species and other pests from being brought onto the island, we have a rigorous and expansive quarantine plan, which Western Australia’s Environmental Protection Authority said “likely represents the best practice in the quarantine management of a large operation.”
heritage sites. “When we were surveying our country with the company [Chevron], we came across several important sites in the designated construction area,” Kuruma Marthudunera spokesperson Cyril Lockyer said. “And after talking with Chevron, the result is that the company will build the pipeline around these areas and not destroy these sites. This type of working relationship will help us preserve our heritage for future generations.” With our commitment to Aboriginal employment, construction contractors and others are encouraged to hire Aboriginal people. Additionally, we are working to identify longer-term career opportunities. Peter Eggleston, Chevron Australia’s External Affairs manager, said, “We’re now very much a part of and are engaged extensively with Aboriginal communities in the areas near our operations.” Business and Nature Coexist Barrow Island, once attached to the continent of Australia, now lies about 43.5 miles (70 km) offshore, having been separated from the mainland and becoming a sort of living ark. It is home to more than 350 species of native plants, 14 species of mammals, 100 species of birds and 54 species of reptiles. Some of them are found no other place on Earth. We have been working with Harry Butler, Ph.D., one of Australia’s premier conservationists, throughout oil production and Gorgon development to minimize any impact to the island ecology. “Today, all the species I experienced when I first visited Barrow Island in 1963 remain,” he said. “When you have a world-class quarantine process supported by a workforce that truly cares for the environment, this is what you can achieve.”
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Top: Ann Hayes, of the local Aboriginal Thalanyji group, accompanies Chevron contract botanist Jerome Bull on a botanical and indigenous heritage survey at the Wheatstone site. Bottom: Equipment headed for Barrow Island is shrink-wrapped during quarantining.
We minimized the project’s footprint on the island itself. The seismic survey of the underground geology where CO2 will be injected was also modified. A conventional survey, consisting of clearing paths to accommodate heavy trucks that haul necessary equipment, would have disturbed about 700 acres (283 ha). Instead, a freight helicopter did most of the heavy lifting — approximately 15,000 separate lifts — while lighter equipment was carried by foot. By the end, fewer than 47 acres (19 ha) were disturbed. Donna Parker, CO2-injection project manager, is one of those who are proud of the achievement. “This extraordinary effort by all involved was vital to delivering baseline survey results and maintaining our reputation as an environmental champion of Barrow Island,” she said.
Our quarantine management procedure, in place for more than 45 years, has improved over time. Goods being shipped through the Dampier supply base are tagged with one of three colors to make sure the required procedures are taken. Nothing is shipped to Barrow without a green tag. At the Australian Marine Complex in Henderson is a quarantine washdown area resembling a huge parking lot and a giant shed big enough to cover a football field. There’s also a larger-than-life hair dryer that cleans vehicles and goods bound for the island. And the process doesn’t end when the freight is put on ships. At the island, inspectors can stop goods and return them to the mainland on the next barge. Today, Barrow is the only island in the region free from introduced species such as cats, rabbits, rats and mice. Yet another environmental consideration is the nighttime lighting necessary for the new LNG plant. Four species of sea turtles nest on Barrow, and light can cause them and their hatchlings stress. Daniela Ratcheva, a senior environmental engineer with Chevron Australia, delivered a detailed presentation to a conference in Queensland in September 2010. She demonstrated how we engineered the plant’s lighting systems to not disturb turtles and to comply with the stringent environmental approval conditions and applicable safety laws and standards while not compromising safe operability.
Executive Interview
What
How
When
What is the biggest challenge that you face?
How are you addressing that challenge?
When will the Gorgon Project become a reality?
By 2030, world demand for energy is expected to grow by approximately 33 percent — with Australia’s neighbor, Asia, predicted to account for 60 percent of that growth. Chevron is fortunate to find itself in Australia, surrounded by natural gas resources on the doorstep of the growing demand in the region. The Gorgon Project alone is set to increase the supply of domestic gas to Western Australia by about 30 percent. We must link energy supply to energy demand while addressing the risks posed by climate change.
The development of Chevron’s world-class gas resources will provide Australia and the countries receiving the project’s LNG with opportunities to affect their greenhouse gas emissions. Compared with the use of coal to generate electricity, natural gas from the Gorgon Project will have the same effect on global emissions as removing two-thirds of the vehicles from Australian roads.
Benefits already are being realized. Though production of natural gas is not planned until 2014, billions of dollars in contracts have been awarded, putting people to work. Approximately 1,500 are employed on location on Barrow Island, and 4,000 across Australia are employed as a result of Gorgon. Those numbers will grow as the project gathers pace.
Most supply-demand forecasts predict that natural gas will play an integral role in the energy mix as the world transitions to a lower-carbon future. The Gorgon Project and Australia are set to be global leaders in the application of underground CO2-injection technology. We are committed to sharing information from the monitoring program at Gorgon to assist in building a greater understanding around this emerging and important technology.
The Greater Gorgon Area gas fields contain enough energy to power a city of 1 million people for 800 years. The Gorgon Project is long term and will benefit generations to come.
Roy Krzywosinski became managing director of Chevron Australia in January 2008 and helped steer the Gorgon Project to a final investment decision about 18 months later. Roy Krzywosinski Managing Director, Chevron Australia
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624,000
5,500
200,000
people were vaccinated against polio in Cabinda in December 2010
farmers received technical assistance and almost doubled their yields between 2007 and 2009
safe blood transfusions were administered through Chevron’s support
Chevron medical director in Angola, Dr. Ana Ruth Luis, consults at the company’s Luanda Clinic, which offers primary medical care to retirees, employees and their dependents. Nuno Miquel Baptista is an X-ray technician at the clinic.
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Angola:
Partnerships and Possibilities Angola’s South Atlantic coast, a land of rainforests, savannas and agricultural highlands, is rich in natural resources and possibility. Our business operations and community partnerships there offer support to a population trying to improve its infrastructure and grow its economy.
The Peace Agreement of April 2002 marked the end of a nearly 27-year civil war that devastated the economy and increased Angola’s dependence on the oil industry. As the country recovers, Chevron has been responding to community needs. Our investments in health, education and economic development in Angola improve livelihoods and foster stable operating environments that contribute to our ability to conduct business.
Following the Angola Partnership Initiative model, we are working to promote robust micro, small and medium-size businesses outside the oil industry. For example, we support the Luanda Business Incubator, a program to strengthen the operational and technical capabilities of service providers. The program has trained more than 200 entrepreneurs in business planning and helped create 143 new jobs in 2010.
Partnering for Sustainable Economic Growth In 2002, we launched the Angola Partnership Initiative, with $25 million and a commitment to address needs beyond those near the vicinity of our operations, focusing particularly on regions most damaged by the war.
“To many Angolans, the concept of entrepreneurship is new and needs nurturing,” said Eunice de Carvalho, Policy, Government and Public Affairs general manager for Chevron in Angola.
We are also pioneering business programs for high school students. Working with the National Institute for Educational Research and Development and the United Nations Industrial Development Organization, our $1 million contribution in 2010 is helping launch an entrepreneurship curriculum for more than 2,000 students in nine provinces. The Ministry of Education plans to roll out the curriculum nation wide, reaching 500,000 students by 2013. In 2010, with support from the European Union, UNESCO and UNICEF, we partnered with the Ministry of Education and donated $1.5 million to implement a teacher training program. Nearly 400 teachers and administrators attended.
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Partnership With the Global Fund Chevron’s partnership saving lives and improving with the Global Fund to health care in countries Fight AIDS, Tuberculosis where we operate. and Malaria has helped improve the health and Through our first three well-being of millions of years of investment in people in Africa and Asia. Global Fund grants in We made an initial $30 milAngola, Nigeria, South lion investment in the Africa, Thailand, Indonesia Global Fund between 2008 and the Philippines, we and 2010. The Global Fund’s contributed to significant performance-based funding results, including the model and rigorous meas following: urement and evaluation • As many as 3.4 million system have demonstrated people were directly that our investment has reached through HIV/AIDS yielded high-impact results, prevention programs.
Promoting Economic Diversity In 2007, Chevron became a minority partner in Banco Africano de Investimentos Micro Finanças (BMF), formerly called NovoBanco. Since then, BMF has made approximately $54 million in loans to Angolan entrepreneurs. From 2006 to 2010, BMF opened 10 branches in five Angolan provinces, and in 2010, BMF provided $9.9 million in loans to Angolan micro and small entrepreneurs. Also in 2010, we contributed $500,000 to expand BMF’s operations in Cabinda. Joaquina Manuel, an entrepreneur who exemplifies the country’s optimism, established a wholesale and retail business in the 1980s, but a national currency crisis drove it into bankruptcy. She started over with a $3,000 loan. Success bred success, and additional loans allowed her to expand her business. “These loans were like a rebirth for my business,” said Manuel.
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• About 380,000 people completed voluntary HIV/AIDS counseling and testing. • About 1 million malaria nets were distributed. • More than 1 million rapiddiagnostic tests for malaria were distributed. In 2010, we announced a commitment of an additional $25 million to the Global Fund, raising our six-year investment in the Global Fund to $55 million.
Chevron is the largest foreign oil-industry employer in Angola;
88% of Chevron’s employees in the country are Angolans
Cultivating Angola’s Fertile Land While the country was once a recipient of global food assistance, Angola’s fertile soil, plentiful water, conducive climate and hardworking farmers led many donors to end support for food aid programs. But despite more of Angola’s farmers cultivating the land, most are producing at a subsistence level. Still, they have enormous potential to transform their operations into businesses.
The ProAgro project, funded jointly by Chevron and the U.S. Agency for International Development from 2006 through 2010, facilitated sustainable business relationships between producers, banks, processors and distributors of cash crops. The project provided technical assistance to more than 5,500 farmers, who almost doubled their yields between 2007 and 2009. Fighting Disease Since 2008, when we funded a $350,000 vaccination campaign in Uige and Cabinda provinces, we have partnered with Angolan health authorities and UNICEF to provide vaccinations against the wild poliovirus. Through these campaigns and the country’s other efforts, polio was thought to have been eradicated in Angola and neighboring Republic of the Congo for a decade. But in Novem ber 2010, an outbreak erupted in Brazzaville, Congo. By December, it had killed an estimated 220 people. We responded by sending people and financial resources to prevent the disease from spreading into Angola, supporting an emergency campaign that vaccinated 624,000 people in Cabinda in December 2010 and donating $950,000 to the national campaign to fight polio, specifically for the provinces of Cabinda, LundaNorte, and Lunda-Sul. More than 15,000 Chevron employees, family members and contractors based in Cabinda province were vaccinated as part of the campaign. Polio is just one of the diseases that our programs address. “In the past 20 years, Chevron and partners have invested more than $29 million in medical training and treatment for and education about infectious diseases and in support for
blood banks and the construction of health facilities all over the country,” said Dr. Ana Ruth Luis, Chevron’s medical director in Angola. We remain committed to helping stop the spread of disease through unsafe blood. With our partners — the Angola Ministry of Health, the Safe Blood for Africa Foundation, and the U.S. Centers for Disease Control and Prevention — we established a safe blood program in Cabinda province. Our nearly 20 years of support for this blood bank has allowed for more than 200,000 safe transfusions. Fighting malaria remains an important battle in Angola. In 2010, we sponsored the first entomological course on malaria in the country. Organized by the Global Business Coalition on HIV/AIDS, Tuberculosis and Malaria and by the Corporate Alliance on Malaria in Africa, the course brought 41 health specialists from all 18 provinces to learn mosquito control techniques. In 2010, Cabinda’s program treated 25,317 children under age 5 and 5,408 pregnant women. “It takes community action and effective partnerships to fight a disease like malaria,” said Alan Kleier, managing director of Chevron’s Southern Africa operations in 2010. “We intend to continue working with the Ministry of Health and other partners toward prevention and treatment.”
Social Investments Our success as a business is inextricably linked to the well-being of our employees and our communities. Social investments at Chevron aim to foster economic stability and improve quality of life. They are delivered through participatory partnerships that build foundations for positive, lasting results. We invest in health, education and economic development — the building blocks of strong communities. In 2010, we made $197 million in social investments to help build community programs around the world.
Social Investment Spending In millions $197
$156 $144 $119 $91
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09
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For additional information, please visit Chevron.com/SocialInvestment.
Left: Prompted by Chevron’s local content program, NASA Comercial Importação e Exportação. Lda. participated in supplier development training to support the oil and gas industry. Nascimento Alberto is the managing director of NASA. Right: Joaquina Manuel’s business was expanded with Chevron-supported microfinancing.
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97%
245,000
60%
reduction in flaring at the Richmond Refinery has been achieved since 2007
California students benefited from Chevron’s partnerships in 2010
or more of the water the Richmond Refinery uses daily is treated or reclaimed
Through DonorsChoose.org, Chevron provides funds to Nystrom Elementary School in Richmond, California. Here, students observe butterflies during a science project.
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The century-old relationship between Chevron and the city of Richmond is on a new path to strengthen the company and the community.
California, United States:
Finding Common Ground in Richmond Chevron and the city of Richmond, California, share a rich history that stretches back more than a century. The refinery sits on about 2,900 acres (1,174 ha) 15 miles (24 km) northeast of San Francisco and was built before Richmond was incorporated in 1905. Richmond then was a small but growing industrial area of about 2,000 people. Today, it’s a city with a diverse economy of industrial, technological and maritime businesses and 103,000 residents. Together — through booms and recessions, 19 U.S. presidents, and economic and social changes — the relationship between the refinery and the people of Richmond has evolved. Over the past two decades, there has been a growing interest in refinery activities. Some citizens have expressed concerns about insufficient communication on issues such as community support, emissions and flaring.
“We listened to those concerns,” said Mike Coyle, refinery general manager, “and in 2008, we began efforts to strengthen local relationships. This is helping us overcome challenges that affect our business and the community.” We commissioned an independent nonprofit organization to interview community leaders. Coyle said the results proved enlightening. Among the findings: Citizen groups and nonprofit leaders felt that our community inter actions had decreased and that people were unaware of our long history of involvement. Many wanted us to be more active in helping the city address social and economic problems. As a result, we are in the midst of an effort to renew and strengthen our relationships. We meet regularly with residents and leaders, and based on their input, we’ve invested in job crea tion, public safety and K–12 education.
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Contra Costa Unified School District. “There’s a deep connection between Chevron and our students. Working together on science, math, engineering and other programs, we’re changing the student culture to raise expectations so that our students see college as the next step after high school.”
Chevron Humankind Our employees are active in nonprofits that strengthen communities where we live and work. In Richmond, for example, we mentor high school students interested in science, engineering, math and other technical careers; serve meals at local homeless shelters; and participate in community improvement projects.
Throughout our operations in the United States, employees participate in Chevron Humankind, the company’s U.S. employee and retiree giving and volunteer program. Contri butions made to nonprofits through the program are generally matched dollar for dollar by the company. Since Chevron Humankind
We also increased transparency. We responded to the call for information by creating public communications platforms, and for the first time in 30 years, we held an open house and tour to allow the community to see our operations for themselves. The community had the opportunity to engage with us directly, and we could clarify misconceptions about our operations. Investing in Our Community In West Contra Costa County, unemployment is more than 18 percent. Twenty-two percent of families in Richmond have incomes below the U.S. federal poverty level, and 40 percent of adults did not graduate from high school. To help the community address these challenges, we granted $3.7 million
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began in 2008, 19,000 participants plus company matches contributed more than $74 million to support more than 12,000 nonprofits. Above: Chevron employee Brent Tippen volunteers in a class to teach English as a second language in Richmond.
70% reduction
in regulated air emissions has been achieved at the refinery in 2010 to nonprofits in Richmond and the county for education, youth leadership programs, economic development and job training. But our investment in the community goes beyond financial contributions. “Support from Chevron and its volunteers comes with accountability and an expectation of mutual benefit,” said Bruce Harter, superintendent of West
Harter said program support instills a sense of optimism that can start with something as simple as new microscopes. Science teacher Catherine Vanier needed lab materials to teach cellular biology to her seventh grade students at Richmond’s Lovonya DeJean Middle School. With the help of Chevron’s Fuel Your School program and DonorsChoose.org, Vanier was able to buy the sorely needed supplies. In addition, the school received a $25,000 Chevron classroom grant. As a result, Chevron “has made a significant difference in the education of our students for years to come,” Vanier said. Our focus on supporting STEM (science, technology, engineering and math) education in California has resulted in more than 245,000 students and 3,900 teachers benefiting from our community programs in 2010. Another priority that residents voiced was economic opportunity. Chevron responded by supporting nonprofit organizations that increase local employment. For example, we awarded the nonprofit Stride Center a $211,000 grant in 2009 to create a job-training program. David Benjamin, once an unemployed high school dropout, now has a promising future in technology after receiving computer training from the center. “I wasn’t doing too much with my life and was in and out of trouble,” he explained. Now, he said, he’ll be qualified for jobs in computer technical support and software installation.
The Environment
Above: The marshland at the refinery is a nourishing habitat for protected and endangered species. Great blue herons (left), egrets and mallards are some of the animals that make it their home.
Improving Operations We continually strive to minimize air emissions and waste, use resources and energy efficiently, and minimize environmental impact. The Richmond Advanced Recycled Expansion (RARE) Water Project is one example of our collaborative approach. In drought-prone California, fresh water has always been a valuable commodity. Population growth and stringent environmental regulations have increased its value. Water is also an essential component in oil refining, with each gallon of oil refined requiring one gallon of high-quality water. We are the San Francisco Bay Area’s largest refinery and thus the largest water customer for the East Bay Municipal Utility District (EBMUD), requiring about 11 million gallons a day. To reduce water use, the refinery and EBMUD completed a plant in 2010 to treat municipal wastewater for our steam-producing boilers. Each day, RARE sends 3.5 million gallons of treated wastewater to the refinery, in addition to the 4 million gallons of reclaimed water already used in the refining process. RARE saves
enough drinking water to serve about a quarter of Richmond’s population and could reduce severe rationing in future droughts. “This cooperative effort,” said Lesa McIntosh, an elected board director of EBMUD, “will benefit water customers well into the future.” Refinery air emissions have been a source of concern for the community. By installing new technologies and running plants more efficiently, we have reduced regulated air emissions by 70 percent since the 1970s. A refinerywide flare-minimization program that began in 2007 has helped decrease flaring by more than 97 percent. As the region’s largest refinery, the Richmond Refinery represents approximately 38 percent of oil refining capacity in the Bay Area but less than 1 percent of the volume of vented gas flared in 2009. While we have made progress, there is still work to be done. “Reestablishing a strong relationship and trust won’t happen overnight, and we are deeply committed to fulfilling that goal,” Coyle said. “We’ve recently taken some significant steps, but this commitment is a marathon, not a sprint.”
Our efforts to reduce flaring and increase water efficiency in Richmond illustrate our continued commitment to minimize pollution and waste, conserve natural resources, and reduce the environmental impact of our operations. Across the company, we developed a corporate environmental stewardship process that provides a consistent, systematic, risk-based approach to managing aspects of the environment, including air, water, biodiversity and waste. For example, in 2010, we developed an integrated, corporatewide freshwater management plan to enhance current activities on water stewardship.
To learn more about our environmental stewardship, please visit Chevron.com/Environment.
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Kazakhstan:
Sea of Opportunity In 1979, geologists discovered a 1-mile-thick (1.6-km) oil field near the windswept Caspian Sea. They named it “Tengiz,” Kazakh for “sea,” a fitting description considering its location and potential.
Today, Chevron is Kazakhstan’s largest private oil producer, holding stakes in the nation’s two biggest oil-producing projects — the Tengiz and Karachaganak fields. We hold a 50 percent interest in Tengizchevroil (TCO), which operates the supergiant Tengiz Field. Our commitment to the region began in 1993 with the formation of TCO and the five-year, $50 million Atyrau Bonus Fund that developed infrastructure projects. Since then, we have continued to cultivate opportunities that result in economic and social change for many Kazakhstanis. Our business is enhanced by strong local suppliers and a skilled workforce.
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“If you want to do business here, or anywhere else, you have two responsibilities — business and community,” said Jay Johnson, president of Chevron Europe, Eurasia and Middle East Exploration and Production Ltd. “We satisfy both by encouraging our Kazakhstani employees to continue to develop their skills. That is why we work closely with local schools and universities. As the community benefits, so does our business.” At year-end 2010, 85 percent of TCO’s workforce was Kazakhstani. TCO spent nearly $1.35 billion on Kazakhstani services and materials. Ongoing training and education programs contribute to the high number of Kazakhstan citizens among TCO’s workforce and in leadership positions.
A Commitment to Human Potential Longtime Kazakhstani employees still talk about adapting to Chevron’s business and engineering standards. Berik Dyussenov, TCO’s Health, Environment and Safety coordinator, said standards today are more stringent than what he saw during Tengiz’s infancy. Chevron’s decision “to partner with Kazakhstan on the Tengiz project was made shortly after Kazakhstan’s independence,” he said. “The partnership brought new opportunities to us working in Tengiz and contributed greatly to our country’s economy.”
85%
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of Tengizchevroil’s workforce in 2010 was Kazakhstani
technical universities in Kazakhstan were introduced to an energy efficiency course developed by Chevron
$645 million has been spent by Tengizchevroil on social programs since 1993
Gulbarshyn Matniyazova (left) and Kulyan Zhangutty are participants and trainers in the Chevron-sponsored Kazakhstan Artisan Business Development Program. Here, they are creating felt souvenirs for the Olympic Council of Asia’s 2011 Winter Games.
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intern explored ways to improve the injection performance for disposing of the field’s wastewater.
University Partnership Program Chevron’s University Partnership Program engages with key universities throughout the world by providing scholarships, grants and employee involvement. Through these efforts, we have provided approximately $18 million in funding per year, supporting research and academic excellence to help develop the professionals needed in the energy industry. We consider these educational partnerships also to be strategic investments in local communities.
In the United States, we support more than 75 schools in areas critical to our energy future, such as engineering, earth science, finance, information technology and environmental science. These programs include efforts to increase minority participation. Internationally, we focus our involvement in locations of our strategic operations, including Indonesia, West ern Australia, Kazakhstan, Thailand, Brazil and the
During his career, Dyussenov visited Chevron facilities across the United States and Canada and credits Chevron programs for offering Kazakhstani specialists an opportunity to receive state-of-the-art training and learn best practices in environmental safety. Our program at the Kazakh National Technical University (KazNTU) started in 2007 and has provided scholarships for 150 graduate and undergraduate students. Working with the university and international and local environmental nongovernmental organizations, we introduced a major addition to the country’s curriculum: Energy Efficiency and Sustainable
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United K ingdom. Further efforts are under way to finalize partnerships with universities in Angola and to explore partnerships in Poland and Bangladesh. We also pair programs at world-class institutions with less developed ones in order to strengthen the faculty and curriculum of the less developed programs. Above: The student chapter of the KazNTU Society of Petroleum Engineers plans for the 8th International Oil and Gas Youth Forum in 2011.
Development. This new course was introduced to all 23 technical univer sities in Kazakhstan. In 2010, TCO began working with Kazakhstan’s Bolashak (“future” in Kazakh) program, which allows talented students to study abroad with full government scholarships. Mike Sullivan, a reservoir surveillance coordinator, began an aggressive program to recruit Bolashak students for internships. Students were paired with senior mentors at TCO and were given a problem that required original research to solve. For example, one
“My internship helped me apply the theoretical knowledge I obtained in college and expand my understanding of petroleum engineering,” said Texas A&M graduate Merey Shinikulova, now a TCO production engineer. “I worked on interesting and challenging projects, and I was impressed that my projects were actually used after I left the internship.” Of the 12 new reservoir management employees in 2010, 11 came from the program. Three of them completed master’s degrees at the Colorado School of Mines with funding from Chevron’s University Partnership Program. Supporting Business Development Fostering emerging small businesses and suppliers is an important goal that we and our government and nongovernment partners share. Since 1997, TCO has provided more than $7.8 million to small business development loan programs that have helped entrepreneurs in agriculture, catering, and medical and community services. Jay Johnson cited Byelkamit, a local company that has been working with TCO since 1997. In addition to numerous other projects in 2009, Byelkamit was the prime contractor on a large fixed-roof crude-oil storage tank and employed 600 local workers at peak construction. Prior to this project, a Kazakhstani contractor had never built a tank this large, a new capability for the country’s industry, developed with TCO’s help. “We prefer to buy locally whenever we can,” said Johnson. “Byelkamit
produces high-quality equipment to international standards, delivers its products reliably and sells them at competitive prices.” Fueling Social Programs Since 1993, TCO has invested more than $645 million in social programs in the Atyrau Oblast. In 2010, TCO spent $20 million on its Egilik (Kazakh for “benefit”) social infrastructure program, and Karachaganak Petroleum Operating, in which Chevron holds a 20 percent interest, also contributed $20 million to social programs in the Western Kazakhstan Oblast. We and our affiliates have continually supported health programs, including current efforts to combat high rates of cardiovascular disease, a leading cause of death in Kazakhstan. The Kazakhstan Association of Family Physicians and TCO are partnering to educate the local medical community and public about how to prevent cardiovascular disease. In one program, more than 100 doctors are being trained to diagnose and improve treatment. Another program, for doctors at the Atyrau Cardiovascular Hospital, provided mentoring by surgeons from the Astana Cardio vascular Center.
Left: In 2010, TCO funded cardiovascular disease training for Atyrau doctors at the Astana Cardiovascular Center. Here, radiography surgical nurse Aizhan Saurbekova assists during a medical test. Right: At Chevron’s polyethylene pipe plant in Atyrau, all employees are Kazakhstan nationals. Chevron plans to build a new plant in Atyrau to produce valves that currently have to be imported. From front to back are operator Marat Imangaliev, manufacturer’s representative Jorg Kahl and operator Alimzhan Kuanshaliyev.
Diversity We need the diverse talents and full potential of every individual employee in order for Chevron to excel as a leader in the global marketplace. We recognize the benefits of maintaining a workforce that reflects the composition of the communities where we operate. Our commitment to diversity and inclusion is more than words, more than a set of goals. Our actions speak for themselves.
• We encourage managers and selection teams to hire from a diverse slate of candidates who represent a range of backgrounds.
• Approximately 22,500 Chevron employees participate in Employee Networks, which help eliminate barriers, improve communication among employees and cultivate links with communities.
• We have a robust supplier diversity program. In 2010 in the United States, we spent more than $2 billion on products and services from small businesses. We spent $364 million on products and services from women-owned businesses, and $254 million on products and services from minority-owned businesses.
• Diversity councils help promote a work environment in which every employee has the opportunity to contribute to company goals.
For additional information, please visit Chevron.com/Diversity.
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Chevron is a recognized leader in deepwater drilling. Our success in the deepwater Gulf of Mexico began more than 10 years ago when we tapped the Genesis Field 2,600 feet (792 m) below the water’s surface. Throughout that time, we have continued to drill safely by combining our technological know-how with a proven organizational culture of safety that begins with management and extends to employees and contractors.
U.S. Gulf of Mexico:
Oceans of Promise
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2010
13,000
27%
was another year with no recordable incidents for Chevron’s Gulf of Mexico shorebase and maritime transportation operations
Chevron employees live and work in the Gulf States
is the approximate amount of U.S. oil supply that is produced in the Gulf of Mexico
Transocean’s Discoverer Clear Leader is on lease to Chevron in the Gulf of Mexico. Workers are seen here on the drillship’s helipad.
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Below the earth’s surface under more than 2,000 feet (610 m) of water rests a vast promise of global energy. Below this depth, the global oil industry tripled its offshore capacity to 5 million barrels a day in the past decade and ultimately could double that number by 2015. In the United States, production in the outer continental shelf, almost all of which is in the Gulf of Mexico, currently accounts for 27 percent of the nation’s oil and 15 percent of its natural gas.
375
deepwater wells have been drilled safely by Chevron around the world since 1987
One example of our safety culture is our regularly held “safety standdowns” with drilling personnel and rig crews to reinforce safety practices. We share these extensive reviews of drilling processes, well-control contingency plans and risk management plans across our global operations.
“We know we can only operate with the public’s confidence that the energy we need will be produced safely and reliably,” said Chevron Chairman and CEO John Watson. “We have a very personal stake in operating safely because it is our home, too.”
David Payne, Chevron’s vice president of Drilling and Completions, said, “We address anticipated risks before we start, and we’re prepared to handle any others that come up during drilling.” This approach was crucial at the Tahiti Field. Discovered in 2002, Tahiti, which is estimated to contain 400 million to 500 million barrels of oil-equivalent recoverable reserves, represented a complex and dramatic challenge because it lies in more than 4,000 feet (1,219 m) of water,
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Practicing Safety In 2010, the company had a record-low injury and illness rate. “At Chevron, one goal overrides all others: making sure everyone goes home safe every day,” Watson said.
While offshore resources hold the promise of energy and profit, there are risks that have to be addressed.
One Team, One Goal Our commitment to safe drilling begins with a corporatewide dedication to operational excellence. This emphasis translates into specific programs and standards, such as empowering workers to stop work whenever they sense potentially unsafe operations, thus creating layers of protection in drilling practices, well design and construction.
in 2010 after the BP Macondo well incident in the Gulf of Mexico. “Chevron will adopt any new standards it doesn’t already apply.” He also stressed our commitment “to advancing safe operations through enhanced prevention, better well containment and intervention, and improved spill response.”
Above: Drilling engineer Jeremy Sokol (left) and subsea operations engineer Zachary Schneider do a routine safety walk on the Discoverer Clear Leader.
while the reservoir itself is more than 23,000 feet (7,010 m) below the water’s surface. Our team had to upgrade eight separate technologies just to finish its test well. In 2010, we helped lead the jointindustry task force that made recommendations to the U.S. Department of the Interior to raise industry standards on offshore equipment, operating procedures and subsea well control to even higher levels. “A majority of these standards are already embedded in Chevron’s operations,” Watson told the U.S. Congress
Since 1987, we have safely drilled 375 deepwater wells around the world. Deepwater drilling is particularly challenging because of the pressures involved, but our expertise with blowout prevention was evident during the task force work. A blowout preventer (BOP) is a series of valves that prevent a well’s fluids from escaping from the well. We have an in-house team of employees dedicated solely to understanding BOPs and subsea well interventions. We also operate our own well-control school, have drilling specialists overseeing every major well and constantly partner with suppliers on equipment quality. And we have the only operator-owned cement lab in North America. Operating a deepwater rig costs more than $1 million a day, and activating the BOP causes delays. “But we’d rather activate a BOP even when it isn’t necessary than risk a
blowout,” said Payne. He sees BOPs like seat belts: It’s important that they exist and are used, but it’s always better if they’re not needed. Rick Graff, who spent the past 13 years on Chevron’s Gulf of Mexico rigs as a deepwater drilling engineer, said his first boss taught him constant respect for high-pressure reservoirs in deep water. “We take great care as we drill to keep them safely contained with casing, cement, drilling mud and constant monitoring,” Graff said. “In my view, the human element is just as important as the mechanical.”
‘ At Chevron, one goal overrides all others: making sure everyone goes home safe every day.’ John Watson Chairman and CEO
At our Covington, Louisiana, operations center, offshore installation managers such as Mark Davis train on a simulator that is unique to our industry. The simulator mirrors high-tech control rooms on production platforms in the Gulf of Mexico. The training creates scenarios as diverse as fluctuating pressures on equipment, changing flow rates, and loss of communications between computer and equipment.
Operating With Excellence Our industry-leading performance is due to our commitment to excellence, from project design through operation. Chevron’s Operational Excellence Management System (OEMS) was developed to systematically manage all aspects of safety, health, the environment, reliability and efficiency to achieve industryleading performance. The system provides specific expectations for all employees and contractors to participate in promoting safety, caring for the environment, and making sure the company’s operations run reliably and efficiently. Chuck Taylor, vice president of Corporate Health, Environment and Safety in 2010, said protecting people and the environment is a company priority and a core value. “Many companies say this and
know what it means conceptually. We are incredibly fortunate to work in an enterprise where protecting people and the environment is both a practice and a heartfelt value,” he said. Over the past decade, our safety record has gone from trailing the industry to leading it. Our Days Away From Work Rate has dropped 90 percent, and nearly 800 fewer workers were injured in 2010 than were injured a decade ago. Since 2001, we’ve reduced the number of spills by 50 percent and reduced our spill volume by nearly 80 percent. And since 1992, we’ve improved our own energy efficiency by 33 percent.
For additional information, please visit Chevron.com/OE and Chevron.com/OEMS.
Right: Transocean drillship Discoverer Inspiration in the Gulf of Mexico is capable of drilling wells in 12,000 feet (3,658 m) of water to a total depth of 40,000 feet (12,192 m).
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Gulf Relief We provided $10 million to five Gulf Coast community organizations that participated in environmental and economic relief, spill response and cleanup after the BP Macondo well incident in the Gulf of Mexico. One group was the National Audubon Society. Our Pascagoula, Mississippi, refinery helped the group establish the Gulf Coast Audubon Volunteer Response Center to manage more than 35,000 inquiries by volunteers wanting to assist in Louisiana, Mississippi, Florida and Alabama.
“Our collaboration with Chevron allowed us to inform and mobilize volunteers across the country,” said Audubon President David Yarnold. “We provided much needed relief efforts and built a corps of citizen scientists committed to the long-term conservation of coastal bird populations and habitats across the Gulf.” Other groups we funded were The Nature Conservancy and America’s WETLAND Foundation, which used funding to address coastal restoration; the Committee for Plaquemines Recovery,
which supported hardhit commercial fishing communities along the Louisiana coast, where we have major facilities; and Greater New Orleans, Inc., which applied funding to economic recovery in concert with the Louisiana Economic Development Department. “These community partners had immediate needs to mobilize and respond to impacts on local residents,” said Warner Williams, vice president of Chevron’s Gulf of Mexico operations, “and we continue to work with them.”
Every employee and contractor has the authority and responsibility to stop work when he or she sees an unsafe act or condition.
“The simulator hones our skills to operate safely and is a unique tool to improve response through practice during the training,” said Davis. “The simulator is not just about reading a procedure, it’s about doing it.” Stop-Work Authority The authority to stop work on a project is another critical factor in keeping workers safe, and this authority extends to every employee and contractor. It includes five steps: Stop the unsafe or at-risk act with those potentially at risk, notify a supervisor if he or she is present, address the issue, resume work after the issue has been resolved, and share what is learned with others. Barry Smith, who was the offshore installation manager for Chevron’s Tahiti project in 2010, said the team reviews stop-work cases before every shift. “We discuss the incident to learn from it and to positively recognize those who used stop-work authority,” Smith said. “We want everyone to understand there are no negative repercussions for taking the time to do things right.” During the Tahiti hookup and commissioning phase, which lasted eight months, the Tahiti workforce logged stop-work authority more than 1,400 times, about five a day, for issues as diverse as hurricane-force weather and a shipping container that had arrived without a proper seal. Smith said there were almost 120 work stoppages onboard Tahiti in 2010.
Above: Offshore installation managers John Naquin (left) and Mark Davis train on simulators at Chevron’s Covington, Louisiana, operations center. The simulators replicate the control room on the Blind Faith production platform.
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“On Tahiti, I estimate that 60 percent to 70 percent of our work stoppages are called by our contractors,” Smith said. “This is a testament to our safety culture and to our business partners’ understanding that when we say it, we mean it. Our contractors notice that we ‘walk the talk.‘”
Executive Interview
Gary Luquette President, Chevron North America Exploration and Production Co.
Gary Luquette became president of Chevron North America Exploration and Production Co. in April 2006. He chaired the governing board that oversaw four joint-industry task forces formed after the BP Macondo well incident in the U.S. Gulf of Mexico.
What
Why
When
What was the biggest challenge you faced in the aftermath of the BP Macondo well incident?
Why is it important that we return to work now in the Gulf of Mexico?
When will the results of these task forces become a reality?
While this incident was the responsibility of a single operator, the entire industry felt the impact. We needed an immediate and unified industry response to learn from this tragedy and make sure it would never be repeated. That’s why the industry called together hundreds of experts to form four joint-industry task forces to identify tangible improvements that could be made in blowout prevention, well intervention and oil spill response. I was asked to chair the governing board that oversaw their work, and I assumed this role because I felt strongly that the industry needed to take quick and decisive action in order to earn the right to return to drilling in the deepwater Gulf of Mexico.
Oil and natural gas will be primary energy sources for decades to come. Production in the outer continental shelf — almost all of which is in the Gulf of Mexico — accounts for 27 percent of U.S. oil and 15 percent of U.S. natural gas supplies. Chevron alone has more than 13,000 employees living and working in Gulf States. We provide jobs, economic growth and government revenue.
We have made significant progress. In addition to submitting numerous reports on lessons learned to the U.S. Department of the Interior, we made recommendations in such key areas as well design, cementing and safety. Many of these recommendations evolved into regulations that are helping companies operate at a higher standard. And even after we submit our final reports from the task forces, the industry will continue to work together to improve operations and incident response. We committed to a number of initiatives that will show sustained improvements through technology, research and development, and training. We are safer today than we ever have been, and we will continue to improve in the years ahead.
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Nigeria:
Healthy Employees, Healthy Community Chevron’s business interests and community interests are linked, so our efforts to fight disease benefit all.
Chevron Nigeria Ltd. reaches out each day to people in Nigeria’s bustling cities and small towns to improve health through workplace and community-based HIV/AIDS, malaria and tuberculosis programs. While combating disease, we encounter prevailing myths and misconceptions, a social fabric that leaves women and children especially vulnerable, and a geography that makes it difficult to reach people. “We believe we can make a difference through our health programs, that we can save lives and give back hope,” said Femi Odumabo, Policy, Government and Public Affairs general manager for Chevron Nigeria Ltd. Many of the programs Chevron Nigeria Ltd. supports are part of our global strategies to help combat disease. In Nigeria, Chevron’s partnerships and programs target employees, contractors, suppliers and communities. We work together with local leaders, governments and
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nongovernmental organizations, youth groups, congregations, shopkeepers, and others active in the diverse communities of Nigeria. A fundamental element to operating successfully is a healthy workforce. “The threat of HIV/AIDS to our employees is inseparable from the threat it presents to communities around our operations. Taking a lead position in the fight against AIDS is the right thing to do, and it is good business,” said Andrew Fawthrop, chairman and managing director of Chevron’s Nigeria and mid-Africa operations. Information, Creating Hope As medical protocols for HIV/AIDS have evolved, communication, education and access remain hurdles. “While many people in urban centers are informed, you still meet people in rural areas who don’t know anything about the disease,” said Dr. Chinwe Okala, a Chevron public health physician.
Reducing the stigma associated with the HIV infection is important to battling it, according to Okala. “A few months ago,” she said, “a colleague said he had overcome his fears and had an HIV test. He tested positive, but in the same breath added that he wasn’t worried because he knew he and his family would be fine, thanks to the training on HIV he’d received from us. When I saw his smile, I knew in his case we had made progress.” Reaching Women and Children In Africa, HIV/AIDS disproportionally affects women, increasing the risk of mother-to-child transmission. Most of the 57,000 babies born HIV-positive in Nigeria each year become infected by their mothers. Through our investment in a Global Fund to Fight AIDS, Tuberculosis and Malaria grant in Nigeria, we have helped 50,213 HIVinfected pregnant women receive a complete course of antiretroviral treatment to prevent mother-to-child transmission. And to empower women
$5 million
50,000
400
in scholarships was awarded by Chevron and its Agbami partners to students in medical fields
HIV-infected pregnant women have received treatment to prevent mother-to-child transmission of the disease
communities benefit from programs created by Global Memorandums of Understanding between Chevron, communities and state governments
Employees at the Escravos gas plant in the Niger Delta region include (from left) electrical technicians Abigail Bateren and Akinfe Samuel, maintenance technician Adewale Adegbayi, and control systems technician Otokini Doore.
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who have HIV/AIDS, we provide microcredit to help them develop employment opportunities.
Empowering Communities for Their Own Progress Since 2005, we’ve engaged various communities near our operations through Global Memorandums of Understanding (GMOUs). The GMOUs are multiyear agreements between the communities, Chevron and state governments. Local participation in the company’s social investment decisions is vital. “It’s how we’re giving greater ownership of development activities to local communities,” said Dennis Flemming, community engagement advisor for Chevron Nigeria Ltd. in 2010. The eight GMOUs cover projects in five states of the Niger Delta. Each agreement has a Regional Development Committee
(RDC) that advocates for community interests and leads spending decisions. Each RDC’s subcommittees monitor accounting, conflict resolution and project management. The participatory, capacitybuilding approach is visibly changing these communities. Since 2005, Chevron Nigeria Ltd. has disbursed more than $56.7 million to the RDCs for a wide range of projects, including building bridges, constructing solar-powered water facilities, equipping hospitals with medical supplies and leading youth workshops. To further improve the RDCs’ effectiveness, in 2010, we ran a series of workshops on subjects such as financial management,
government budgeting, lobbying processes and community relations. In 2010, 849 people had been trained. The benefits from the GMOUs now reach more than 400 communities, villages and chiefdoms, involving 600,000 people in economic, health, education and environmental projects. In 2010 alone, we contributed more than $10 million to eight new GMOU projects. Also in 2010, we launched the Niger Delta Partnership Initiative, with an initial investment of $50 million for economic development, conflict resolution and capacity building in the region.
Supporting Women and Children “Chevron operates in some of the most challenging, complex and dynamic places in the world. We believe that empowering women and children with the resources, knowledge and tools they need to be successful members of their communities creates healthier communities. And healthy communities enable us to form longterm relationships in the geographies in which we conduct business,” said Rhonda Zygocki, Chevron
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executive vice president for Policy and Planning. The United Nations Millennium Development Goals 3, 4 and 5 were established to empower women and children through gender equality and maternal and child health. Our efforts align with these goals. Internationally, our initiatives to promote gender equity have focused on training, economic development
and health. In countries such as Brazil and Kazakhstan, training programs resulted in job placements, and in Bangladesh, programs led to handmade goods being sold in markets around the world. We contribute to the Global Fund to Fight AIDS, Tuberculosis and Malaria, whose grants have created anchor programs that produce results in AIDS education, treatment and reducing mother-to-child transmission rates.
Promoting Wellness We partner with the National Agency for the Control of AIDS to deliver a workplace wellness program to small and medium-size businesses in Lagos. One of these organizations is the Lady Mechanics Foundation, an auto-repair training program that empowers young women. Along with learning a skill, the women learn about disease prevention and treatment. Peer educators, including employee volunteers from Chevron, provide disease-awareness training to the staff, who in turn help educate the community. Efforts include distributing mosquito nets to fight malaria. During a visit to Ejigbo (a Lagos suburb) to demonstrate net installation, Chevron and Lady Mechanics volunteers visited a mother in her home. “Today she is showing others how to install the net, and this is creating a multiplier effect in awareness and good health care practices,” said Sunday Okegbemiro, Chevron Corporate Responsibility coordinator. “Knowing that these relatively inexpensive nets could very well save someone’s life is remarkable and unforgettable.” Different Roads to Treatment The Chevron-sponsored Riverboat Clinic, now a decade old, has become crucial in delivering primary health
care and disease intervention to thousands of people in 33 towns along the Escravos and Benin rivers in the Niger Delta. The floating clinic carries doctors and nurses, who bring medicines and perform surgeries. Services include prevention education, malaria programs for pregnant women and children under 5, and free immunizations for approximately 1,000 women and children yearly. We annually give $1.5 million for the boat and medical supplies, and the Delta State government provides the medical staff. Without the riverboat docked in these communities, the nearest facility would be a hospital more than 62 miles (100 km) away, accessible only through serpentine delta creeks. Education: A Disease-Fighting Investment To address Nigeria’s need for skilled health professionals, we and our Agbami deepwater partners created the merit-based Agbami Medical Professionals Scholarship. Over the past two years, Chevron gave $5 million to students of medicine, dentistry, nursing and laboratory sciences from the Delta, Ondo, Bayelsa, Rivers, Lagos, Imo, Akwa Ibom, Abia, Cross River and Edo states. The deepwater partners also spent $6 million to build and equip 20 laboratories across Nigeria, in institutions from grammar schools to universities.
Human Rights Our commitment to respecting human rights is embodied in The Chevron Way. To further this commitment, we adopted a Human Rights Policy in 2009. The policy, which replaced our 2006 Human Rights Statement, is now a standing corporate policy in our Business Conduct and Ethics Code. All employees are required to comply with the policy. In 2010, we developed tools and processes associated with implementing the policy, and full implementation is expected by 2013. These efforts are governed by an executive leadership body and guided by a global cross-functional team. The policy addresses four human rights areas relevant to our business: employees, security providers, the community and suppliers. Our corporate policies, management processes,
community investment programs and participation in voluntary initiatives are complementary and help reinforce our commitment to respecting human rights in each of these areas. For example, human rights considerations are embedded in our Operational Excellence Management System; our Environmental, Social and Health Impact Assessment; our leadership in industry collaboration; and our participation in the Voluntary Principles on Security and Human Rights. Ongoing engagement with our stakeholders provides us with valuable input on the implemen tation of our policy.
For additional information, please visit Chevron.com/HumanRights, Chevron.com/ChevronWay and Chevron.com/BusinessEthics.
Opposite page: Dr. Chinwe Okala, a Chevron public health physician in Nigeria, educates employees and the community about HIV/AIDS and malaria. Left: Imagbe Igbinoba is general manager of Light Level, a small business that benefited from wellness training. Right: Favour Thompson, a member of the Ejigbo community in Lagos, attends a wellness session offered by peer educators — employee volunteers from Chevron and the Lady Mechanics Foundation. 31
Indonesia:
Cultivating Gotong Royong In Indonesia in 1924, we took our first significant step in exploration and production in Asia. So, too, began our journey of shared progress in the region.
97%
4,600
No. 1
of Chevron managers and employees in Indonesia are nationals
small businesses were helped by Chevron in several provinces in Indonesia
is Chevron’s position as the world’s largest producer of renewable geothermal energy
Ki Odo’s sheep breeding business is helped by Chevron’s support of small businesses in the Pamijahan subdistrict of Bogor Regency, near Chevron’s geothermal operations. 32
In Indonesia, two simple words, gotong royong, convey the complex idea of cooperation, of offering assistance, sharing burdens and working with others. For decades, we have embraced gotong royong, working with Indonesians to strengthen economic opportunities that benefit operations and local communities. “Helping improve social and economic conditions beyond our operations promotes a better standard of living and expands our ability to conduct business,” said Steve Green, managing director of Chevron’s IndoAsia operations in 2010. “In addition to providing opportunities to businesses
that supply our operations, we help support a diversity of ventures, such as agriculture, fisheries and homebased businesses.” Chevron’s operations range from crude oil and natural gas to geothermal projects in West Java. Our Salak and Darajat projects, together with our geothermal projects in the Philippines, make us the world’s largest producer of geothermal energy, a renewable resource that turns the earth’s steam to electricity while producing almost no greenhouse gas emissions.
Supporting Local Businesses Our investments in Indonesia create a diversity of jobs. About 97 percent of our employees and managers are Indonesian nationals, while many other nationals are employed by our local suppliers. These businesses play an important role in providing the services and supplies we need to operate. Through education, training and funding, we work with businesspeople such as Erinawati, a maintenance contractor in Minas who wanted to become part of our supply chain. She said, “At first I knew nothing about projects like this. Then I attended a workshop organized by Chevron. We were shown how to prepare proposals and bids.”
33
Erinawati learned that to work with Chevron, businesses must meet certain standards of production, technology and safety. She earned a Chevron Local Business Development (LBD) certificate, qualifying her to bid on contracts for fence painting and drainage. “I’m now able to empower not only myself but also the many people on my team — my neighbors and young people from around here,” Erinawati said. The LBD program has helped more than 4,600 small companies and cooperatives in Riau, East Kalimantan and West Java. Workshops provide training in health and safety, environmental management, procurement, business ethics, project management, technology and financial management. LBD participants grew their businesses
from $1.3 million in 2001 to more than $123 million in 2010. Since LBD began, more than 815 small suppliers have been certified, 3,600 contracts have been awarded and 7,200 jobs have been created. In all, we have purchased $52 million in local goods and services. The Indonesian Ministry of Energy and Mineral Resources recognized the success of the program with its Padma Community Development Award, the second time Chevron has received this award. Microfinancing Grows Businesses Microfinancing provides Indonesians with business opportunities. The programs we support, through the delivery of low-cost loans, reach a variety of enterprises outside of our operations.
Educating Professionals Since 2001, Chevron has sponsored Politeknik Caltex Riau, the province’s first polytechnic university. More than 880 students have graduated, and about 85 percent found jobs within three months of graduation. Following the 2004 tsunami, more than 300 students from Aceh completed a three-month program at
34
the polytechnic, studying construction, electrical installation and computers — obtaining skills that would help them rebuild their communities. About 80 percent of these graduates are now employed in Aceh, and several started their own businesses, employing others. In September 2008 — through a partnership
between Chevron, the governments of Aceh and Nias, and the U.S. Agency for International Development — a second polytechnic opened its doors, offering courses in disciplines essential to industry, such as electronics engineering, robotics and information technology. Currently, Politeknik Aceh has 580 students. The first class will graduate in 2011.
“Microfinancing is about enabling people to build businesses and employ others, resulting in stronger communities,” said Ted Etchison, Chevron senior vice president for operations in Kalimantan. “Microfinance is not charity. It’s about building capability and empowerment, and it places the responsibility for success on the participants. We help plant the seed. The people then develop their own livelihoods.” In East Kalimantan and West Java, we partnered with government-owned financial institutions Permodalan Nasional Madani and Baitulmaal Muamalat to form the Community Enterprise Development program, offering access to low-cost loans and management training to communitybased business groups and small businesses. “Before [microfinancing], it was difficult just to keep my small business running, but now I can make a tidy profit,” said Wistiningsih, a vegetable seller at Petukan Market in Balikpapan. “The money we earn every day can be used as capital to buy vegetables to sell. Thanks to the help we’ve received, my children have been able to go to school.” In Salak and Darajat, home to our geothermal operations, we helped establish farmers’ networks, where farmers turn idle land into fields of abundant crops. We provide training, and the
Left: Chevron-funded training and development for local suppliers helped Erinawati’s maintenance business qualify to work with Chevron. Below left: Darajat geothermal operations, West Java, Indonesia. Right: Near Chevron’s Salak geothermal operations, Aah Sutiah Elia benefits from a mushroom farming project that has helped the local economy since 2007.
farmers support and share knowledge with each other. In Pasirwangi, Garut Regency, we initiated the pioneering, mosque-based Muamalat Community Micro Enterprise program. Currently, four mosques participate, providing entrepreneurs with low-cost loans. Promoting Entrepreneurship We are committed to helping create sustainable livelihoods and self-sufficiency. Those livelihoods come in many forms. In Dumai, known for its exquisite Malay textiles, we support a program to preserve the traditional art of weaving. We provided training, hand looms, and the construction of a center and gallery. In Garut Regency, we support goat breeding; farmers earn money not only by selling goats but by selling goat manure as fertilizer to organic farmers.
Renewable Energy To meet the need for affordable and reliable energy, the world will have to rely on all sources. While applying new technologies to develop oil and natural gas resources, we also are investing in renewables. We are the world’s largest producer of geothermal energy, and we continue to explore for more geothermal resources in Indonesia and the Philippines. Our investments in renewables focus on technology that can operate at industrial scale without subsidies. For example, Catchlight Energy LLC, our joint venture with Weyerhaeuser Co., is working to commercialize advanced biofuels made from forest-based resources. In California, we are developing and demonstrating solar technology that will produce steam needed for production operations at our Coalinga oil field.
To learn more, please visit Chevron.com/EnergyEfficiency and Chevron.com/EmergingEnergy.
In our efforts to preserve the Mount Halimun Salak National Park, we and our community partners helped launch ventures such as organic gardening and rabbit breeding to help people develop more sustainable livelihoods. Traders and craftspeople, for example, are encouraged to switch from making furniture from park timber to cultivating vegetables and fruits. Each day in Indonesia, we embrace gotong royong — a chance for business and communities to work together and thrive.
35
Additional Information and Data Our success is driven by our people and their unrelenting focus on delivering results the right way — by operating responsibly, performing with excellence, applying innovative technologies and capturing new opportunities for profitable growth.
Global Geographic Breakdown of Employees at Year-End 2010
At year-end 2010, Chevron’s worldwide employee staffing was 58,267 (excluding 3,929 service station employees). This represents a decrease of 3.11 percent over the previous year. U.S. workers numbered 26,428, and approximately 13.3 percent were represented by unions.
North America 46.2% Asia-Pacific 27.3% Africa 14.7% Europe/Middle East 8.1% South America 3.7%
36
33%
58,267
100%
is the amount Chevron has improved its own global energy efficiency since 1992
employees worked for Chevron at year-end 2010
rating was achieved by Chevron on the Human Rights Campaign Corporate Equality Index for the 6th consecutive year
As of year-end 2010, Chevron was the third-largest producer of oil in Argentina. Project engineer Florencia Rodriguez Aponte and plant supervisor Jorge Nelson Paz are seen here at the El Trapial Field in western Argentina. In 2010, the workforce in Argentina received 11,000 hours of training. 37
Performance Data
GHG Emissions by Source 1
GHG Emissions by Sector 1
Total GHG Emissions by Type 1, 2
Millions of metric tons of CO2 equivalent
Millions of metric tons of CO2 equivalent
Millions of metric tons of CO2 equivalent
Combustion
Flaring and venting
2010
Other
41.9
Upstream
Downstream
Other
2010
Direct Indirect
2010 2009 2008 2007 2006
35.6
13.4
22.4
3.9
1.2
2009
40.3
2009
31.8
12.2
24.0
4.5 41.3
2008
34.4
13.2
Net
0.0 —0.9 —1.0 —0.5 —0.9
59.2 57.0 59.2 60.3 61.5
Energy Efficiency Performance 3
23.5
4.8
Percentage improvement since 1992 baseline
1.4
2007
41.0
2007
35.9
14.6
2010
22.8
4.7
1.5
2006
39.8
2006 1.3
Air Emissions 4, 5
Air Emissions by Sector 4, 5
Metric tons
Metric tons
Upstream
Downstream
2009
265,819 221,734
2007
260,640
2006
27
2006
27
Parts per million
248,770
2008
28
2007
Average Oil Concentration in Discharges to Water 6
Other
VOCs 2010
30
2008
37.1 23.2
5.3
33
2009
16.4
383,914
Upstream
Downstream
Other
VOCs
2010 2009 2008 2007 2006
215,578 225,949 201,209 240,716 357,727
32,732 39,630 18,648 18,788 26,100
461 240 1,878 1,136 87
2010 2009 2008 2007 2006
137,676 125,520 97,731 63,223 82,922
17,514 15,997 18,496 20,451 25,574
428 536 8,810 7,970 9,714
NOX
2010 2009 2008 2007 2006
122,825 110,068 95,717 121,378 113,001
11,852 12,133 12,282 14,041 16,020
1,262 711 26,785 9,257 9,083
Upstream
2010
2010
SO X
155,618
2009
142,052
2008
125,036 91,644 118,210
Manufacturing and Chemicals
13.06 2.11
2009
11.28 3.87
2008
SOX
2006
—2.9 —2.4 —2.4 —2.9 —3.0
1.1
2008
2007
62.1 60.3 62.7 63.7 65.4
Grid Credits
12.94 3.73
2007
15.64 3.70
2006
32.03 4.51
NOX 2010
135,939
2009
122,911
2008
134,785
2007
144,676
2006
138,104
Improvements in reporting methodology during the reporting period make year-to-year comparisons difficult.
Petroleum Spills 7, 8
Petroleum Spills 8
Volume in barrels
Number of spills
Spills to land Spills to water
Fines and Settlements 9
Environmental, Health and Safety Fines and Settlements
Secondary containment Volume recovered
2010
2010
12,139 10,390
2009
2009 2008
9,368 7,512
2007
2008
17,492
2006
YEAR
639 798
Total number
06
07
699 684
08
09
10
564 460 524
760 826 803
14,399
2007
9,245 6,920
2006
6,099 3,923
Footnotes are on page 41.
38
GHG Emissions In 2010, our total emissions were 59.2 million metric tons of CO2 equivalent, exceeding our goal of 59.0 million metric tons.1 In 2010, the reporting basis for total GHG emissions Chevron used was revised to exclude power generation grid credits to align with industry best practices. If the grid credits of 0.9 had been included, the net emissions of 58.3 would have achieved the goal. Our GHG emissions intensity in 2010 was approximately 33 metric tons of CO2 equivalent per 1,000 barrels of net oil-equivalent production from our Upstream operations, up from 32 metric tons in 2009. Our Downstream intensity was approximately 34 metric tons of CO2 equivalent per 1,000 barrels of crude oil that was input into our refineries, down from 36 in 2009. Our preliminary goal for 2011 is 60.0 million metric tons of CO2 equivalent. We expect to achieve further emissions reductions through energy efficiency improvements and reduced flaring and venting. We also expect normal production levels and emissions to resume in areas where disruptions occurred in 2010; and we expect emissions from new facilities that will begin operation in 2011. We estimate that combustion of our products resulted in emissions of approximately 418 million metric tons of CO2 in 2010, approximately 2 percent more than the 410 million metric tons in 2009. We calculate product emissions based on total 2010 Upstream liquids, gas and coal production. The emissions factors used are from the American Petroleum Institute’s Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Natural Gas Industry,2 published in 2004 and revised in 2009. When compared with the International Energy Agency’s Key World Energy Statistics (2010 edition), these emissions represent approximately 1.4 percent of global CO2 emissions from fossil fuels, which is lower than the 1.7 percent of global CO2 emissions when we first began estimating the GHG emissions from our products in 2002.
Waste In 2009, we began reporting a total waste metric to track the amount of total hazardous and nonhazardous waste that is recycled (which includes reused and recovered) from our operations. In 2010, total recycling was 59 percent of generated hazardous waste and 42 percent of generated nonhazardous waste.
39
Performance Data
Total Recordable Incident Rate 10
Lost-Time Incident Frequency 10
Days Away From Work Rate 10
Incidents per 200,000 work hours
Days Away From Work incidents and fatalities per million work hours
Incidents per 200,000 work hours
Year 06 07 08 09 10 Workforce 0.42 0.35 0.36 0.27 0.24 Benchmark 0.59 0.56 0.55 0.40 N/A
Year 06 07 08 09 10 Workforce 0.50 0.37 0.27 0.25 0.18 Benchmark 0.72 0.65 0.64 0.44 N/A
Year 06 07 08 09 10 Workforce 0.09 0.07 0.05 0.05 0.03 Benchmark 0.14 0.13 0.12 0.09 N/A
Employees 0.34 0.40 0.31 0.32 0.22 Benchmark 0.51 0.49 0.47 0.42 N/A
Employees 0.41 0.48 0.33 0.33 0.17 Benchmark 0.64 0.57 0.57 0.52 N/A
Employees 0.08 0.09 0.07 0.07 0.03 Benchmark 0.13 0.11 0.11 0.10 N/A
Contractors 0.46 0.34 0.37 0.26 0.24 Benchmark 0.64 0.61 0.59 0.39 N/A
Contractors 0.53 0.33 0.25 0.23 0.19 Benchmark 0.78 0.71 0.67 0.39 N/A
Contractors 0.10 0.06 0.05 0.04 0.03 Benchmark 0.15 0.14 0.13 0.07 N/A
Work-Related Fatalities
Process Safety In 2010, there were a total of 95 loss-of-primary-containment incidents of significance (ANSI/API12 Recommended Practice 754 Tier 1) across the company, compared with 104 incidents in 2009. Of the 95 incidents, 63 occurred in Upstream and 32 in Downstream, which includes Manufacturing and Chemicals. There were no fatalities resulting from loss-of-primary-containment incidents.
Year Workforce Employees Contractors
06 12 1 11
07 17 3 14
08 5 0 5
09 9 0 9
10 5 0 5
Global Diversity Year
Women in total workforce Women represented at midlevel and above Women and non-Caucasian men represented at senior executive levels
Motor Vehicle Safety 11
09 22.9% 11.7% 26.5%
10 23.1% 11.8% 27.0%
09 34.9% 28.9% 11.2% 27.5% 14.4% 27.4% 31.4% 32.4%
10 35.4% 29.3% 11.1% 27.4% 15.3% 26.9% 31.7% 32.8%
Company vehicle incidents per million miles driven
U.S. Equal Employment Opportunity Commission Statistics 2010
0.01
2009
0.06
2008
0.06
2007
YEAR 0.10
2006
0.11
Minorities among total employees Women among total employees Minorities among executives and senior managers Minorities among first- and midlevel managers Women among executives and senior managers Women among first- and midlevel managers Minorities among professionals Women among professionals
07 33.9% 29.0% 9.6% 26.5% 14.1% 25.6% 29.1% 32.0%
08 35.3% 29.2% 11.0% 26.9% 15.0% 24.7% 30.6% 32.4%
Footnotes are on page 41.
40
Notes to pages 38 and 39 1 In 2010, Chevron deployed a new greenhouse gas (GHG) and energy reporting system. The new system incorporates the reorganization of Global Downstream and emissions estimation methodologies from mandatory GHG reporting requirements imposed in the U.S. state of California and nationally in Australia, the European Union and the United States. Going forward, these systematic changes will make comparing emissions with years prior to 2010 difficult. Nevertheless, the 2009 to 2010 net increase of approximately 2.2 million metric tons of CO2-equivalent emissions can be attributed to several factors. Beginning in 2010, in conform ance with industry best practices, Chevron no longer accounts for grid credits in its power generation emissions, which increased emissions by more than 0.9 million metric tons. Azerbaijan International Operating Co. is now included in the corporate inventory, resulting in an emissions increase of more than 0.4 million metric tons. Operationally, flaring emissions in Angola increased due to turnaround activity, and emissions in U.S. Midcontinent operations increased due to new gas processing. Improved data collection and accounting also account for the increased emissions from the Canadian Upstream operations as well as from Shipping operations, which now account for time-chartered vessels. Emissions increases were offset largely by flare reductions in Nigeria and at Tengiz in Kazakhstan and by decreased emissions at the Pascagoula Refinery, which experienced high turnaround activity in 2010. Other emissions offsets resulted from the shutdown of a mine in New Mexico and the sale of marketing assets. The 2010 flaring and venting emissions number is based on flare gas volume of approximately 846 million cubic feet per day plus any venting of gas in terms of CO2 equivalents. Chevron’s GHG emissions data are reported on an equity basis for all businesses in which Chevron has an interest, except as noted below. The following entities are not currently included in the Chevron corporate GHG inventory: Chevron Phillips Chemical Co., the Caspian Pipeline Consortium, the Chad/Cameroon pipeline joint venture, Caltex Australia Ltd.’s Lytton and Kurnell refineries, and other refineries in which Chevron has an equity interest of 16 percent or less. These are entities over which Chevron does not have full operational control or which do not generally follow Chevron’s corporate GHG inventory protocol or a compatible protocol. Chevron’s 2007–2009 emissions have been restated, primarily due to a data revision by one business unit, resulting in an annual emissions reduction of nearly 0.3 million metric tons. Due to rounding, individual numbers may not sum to the total numbers.
2 Direct emissions come from sources within a facility. Indirect emissions come from electricity and steam Chevron imports, less the emissions credits from electricity and steam Chevron exports. Grid credits account for the electricity Chevron exports that is produced more efficiently than electricity from the regional or national grid. 3 In 2010, Chevron’s total energy consumption for Chevron’s operated assets was 747 trillion Btu (approximately 788 million gigajoules), based upon a lower heating value. This performance is an improvement over 2009’s consumption of 770 trillion Btu (approximately 812 million gigajoules). 2009 numbers have been restated. In 2010, Chevron changed its reporting of energy consumption from including nonoperated jointventure refineries to reporting on operated refineries only. 4 Volatile organic compounds (VOCs) derive primarily from fugitive emissions from equipment (such as valves, pumps and compressors), flaring and venting, and flashing gas. Nitrogen oxides (NOX) and sulfur oxides (SOX) occur during combustion. 5 In 2010, Chevron improved its estimation methodology and updated the emission factors in its guidance documents and tools. The updated methodologies resulted in variances in reporting compared with 2009. 2010 reported VOC emissions were lower than in 2009. The VOC emissions from Nigeria/MidAfrica operations decreased due to the use of updated methodologies, and International and Americas Products emissions decreased due to divestitures of our transportation fleet and facilities. This decrease was somewhat offset by Asia South operations, which reported an increase due to a change in flaring operations. 2010 NOX and SOX emissions were each reported to be higher than 2009. In each case, a significant portion of the increase can be attributed to Shipping operations, which updated its emission factors to better account for the fuel and engine types specifically used by ships.
6 Global Upstream average oil concentration in discharges to water increased in 2010 mainly due to pit maintenance and a new procedure driven by regulatory requirements for testing oil-in-water concentration in IndoAsia operations. Manufacturing and Chemicals average oil concentration in discharges to water decreased mainly due to the construction of a new effluent treatment plant that came fully on line in November 2009 at the Pascagoula Refinery. 7 Secondary containment volume — which is not released to the environment — is included in the total volume listed at the end of each bar. Approximately 21 percent, or 2,529 barrels, of the total volume was spilled to secondary containment in 2010. 8 All spills to water are included. Spills to land and secondary containment that are greater than or equal to one barrel are included. 9 Environmental fines and settlements were $93.9 million in 2010 and accounted for 3.24 percent of our total environmental expenditures. Total environmental expendi tures were $2.9 billion, of which capital expenditures were $1.4 billion and noncapital expenditures were $1.5 billion. Health and safety fines and settlements accounted for approximately 0.2 percent of the total fines and settlements, representing $0.19 million. Notes to page 40 10 American Petroleum Institute’s Benchmarking Survey of Occupational Injuries, Illnesses, and Fatalities in the Petroleum Industry data are used as industry benchmarks. 2010 benchmark data were not available at the time of publication. 11 Data include catastrophic and major incidents only. 12 American National Standards Institute/American Petroleum Institute.
Other increases resulted from power operations in the IndoAsia region, which began reporting NOX emissions in 2010. Saudi Arabia/Partitioned Zone reported an increase in SOX emissions due to an improved method for tracking gas sent to flares. Global Gas, previously reported as “other,” was included with Upstream in 2009 and 2010. “Other” includes Chemicals, Chevron Business and Real Estate Services, Chevron Mining Inc., Chevron Environmental Management Co., and Corporate Aviation. Due to rounding, individual numbers may not sum to the total numbers.
41
GRI and API/IPIECA Index
This index refers to:
• 2006 Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI), Version 3.0 • American Petroleum Institute/International Petroleum Industry Environmental Conservation Association (API/IPIECA) Oil and Gas Industry Guidance on Voluntary Sustainability Reporting, 2nd edition, 2010 For more information on GRI and API/IPIECA reporting guidelines, please visit globalreporting.org and ipieca.org.
GRI
API/IPIECA
Where Reported
Profile Disclosures Strategy and Analysis
1.1 1.2
Organizational Profile
2.1 2.22 2.32 2.42 2.52 2.62 2.72 2.82 2.92 2.10
3
Report Parameters
Report Profile 3.1 3.2 3.3 3.4
41
Report Scope and Boundary 3.5 3.6 3.7 3.8 3.9 3.10 3.11
36–45
GRI Content Index 3.12
42
Assurance 3.13 Governance, Commitments and Engagement
Governance 4.13 4.2 3 4.32 4.42 4.52 4.62 4.72 4.8 4 4.95 4.102
SE182
1, 25
Commitments to External Initiatives 4.11 4.122 4.132 Stakeholder Engagement 4.141 4.151, 5 4.161, 5 4.17 1, 5 Economic
Economic Performance EC13 EC2 3 EC33 EC43 EC53
SE135
Market Presence EC66 EC76
SE4 SE7 1, 6
Indirect Economic Impacts EC87, 8 EC9 1, 7, 8 Environmental
18–21 13
Materials EN1 EN2 Energy EN3 EN4 EN59, 10 EN69, 10 EN72, 9
E2 E311
7, 35, 38, 39
E6
17
Biodiversity EN1113 EN12 13 EN1313 EN1413 EN1513
E513
6, 8, 17, 26
Emissions, Effluents and Waste EN16 EN17 EN1814 EN19 EN20 EN2112 EN22 EN23 EN24 EN25
E8 E9 E1 E414 E10 E7
7, 17, 38, 39
Water EN8 EN9
EN1012
Products and Services EN2612 EN27 EN29 Compliance EN28
39
Overall EN30 Social Labor Practices and Decent Work
Employment LA1 LA2 LA3
SE6
Employee Satisfaction
SE16
11–13, 18–21, 36, 40
Labor/Management Relations LA45 LA5 Occupational Health and Safety LA6 LA7 LA815 LA9
HS1 HS2 15 HS3 HS5
Training and Education LA10 LA11 LA12
SE17
Diversity and Equal Opportunity LA132, 6 LA14 Human Rights
24–26, 28–31, 40 21, 40
Investment and Procurement Practices HR116 HR2 HR3
SE816 SE9 16
31
Nondiscrimination HR4
SE156
21
Security Practices HR816
SE1016
31
Indigenous Rights HR9
SE2 16
8
Community SO11, 7
SE11 SE3 SE41, 7 SE51
13, 40
Corruption SO2 SO35 SO4
SE115 SE125
Public Policy SO517 SO65
SE145, 17
Freedom of Association and Collective Bargaining HR5 Child Labor HR6 Forced and Compulsory Labor HR7
Society
Compliance SO7 SO8 Product Responsibility
Customer Health and Safety PR14 PR5
HS4 4, 18
25
7 Chevron.com/SocialInvestment 8 ChevronCalifornia.com 9 WillYouJoinUs.com 10 Chevron.com/EnergyEfficiency 11 Chevron.com/EmergingEnergy 12 Chevron.com/Environment
13 Chevron.com/Biodiversity 14 Chevron.com/ClimateChange 15 Chevron.com/HealthSafety 16 Chevron.com/HumanRights 17 Chevron.com/EnergyPolicy 18 Chevron.com/MSDS
Product and Service Labeling PR318 Marketing Communications PR6 Compliance PR2 PR4 PR7 PR8 PR9 Key to Indicators: Fully reported in 2010 Partially reported in 2010 Not covered in 2010
42
Information responsive to these indicators appears on our websites:
1 Throughout
print and online report
2 Chevron.com 3 Chevron.com/AnnualReport 4 Chevron.com/OE 5 Chevron.com/BusinessEthics 6 Chevron.com/Diversity
Assurance Statement
Scope of the Assurance Lloyd’s Register Quality Assurance, Inc. (LRQA) was engaged by Chevron U.S.A. Inc. to assure the reporting processes used in the creation of Chevron’s 2010 Corporate Responsibility Report (“the Report”). The objectives of the review were to validate the integrity of Chevron’s reporting p rocesses and to evaluate consistency with the IPIECA/API Oil and Gas Industry Guidance on Voluntary Sustainability Reporting (2010). LRQA has reviewed Chevron’s Corporate Responsibility Report reporting processes since 2008 (for the 2007 Corporate Responsibility Report). The LRQA scope of assurance was limited to processes for the reporting of health, environmental and safety (HES) performance indicators. Verification of the accuracy of data and information was not included in the assurance scope. The Report has been prepared and approved by Chevron management, who are solely responsible for the collection, presentation, and accuracy of all data and information contained within it. Approach LRQA’s assurance approach was risk-based and undertaken as a sampling exercise. It covered the following activities: • Visiting Chevron’s Global Upstream and Gas facility in Midland, Texas, and Chevron’s Downstream refinery in Pascagoula, Mississippi, to assess local understanding and implementation of Chevron’s HES reporting requirements. • Visiting Chevron’s Downstream and Chemicals headquarters in San Ramon, California, to assess business unit understanding and implementation of Chevron’s HES reporting requirements. • Interviewing key personnel to identify and gain an understanding of Chevron’s reporting requirements.
Conclusions and Findings To form our conclusions, LRQA obtained sufficient evidence considered necessary for us to give limited assurance of Chevron’s HES reporting processes. Based on the scope of the assurance and the data and information presented for review, nothing has come to our attention that would cause LRQA not to believe that Chevron’s reporting process is effective in delivering HES indicators for the purpose of evaluating and communicating corporate performance in these areas. Our other conclusions: • Processes are in place that ensure that sites contributing to core HES metrics understand corporate reporting procedures and requirements. • The methods to be used for calculating each HES performance metric are clearly defined and communicated. • Chevron’s reporting requirements for HES metrics are understood and carried out. Data collected at the site/local and business unit levels are checked and aggregated into corporationwide metrics. • Responsibility for annually reviewing and updating reporting guidelines is clear, with improvement in methodology regularly undertaken. • Chevron’s reporting process is effective in delivering HES indicators that are useful for assessing corporate performance and reporting information consistent with IPIECA/API/OGP Oil and Gas Industry Guidance on Voluntary Sustainability Reporting (2010). Observations and areas for potential improvement are provided in a report to Chevron management. These observations do not affect our conclusions.
• Reviewing the documented reporting requirements to v alidate consistency of scope, definition and reporting for each of the HES performance indicators. • Reviewing the processes used at the corporate level to aggregate data and information for inclusion in the final report. Andrea Bockrath On behalf of Lloyd’s Register Quality Assurance, Inc. March 24, 2011
Third-Party Liability LRQA, its affiliates and subsidiaries and their respective officers, employees or agents are, individually and collectively, referred to in this clause as the “Lloyd’s Register Group.” The Lloyd’s Register Group assumes no responsibility and shall not be liable to any person for any loss, damage or expense caused by reliance on the information or advice in this document or howsoever provided unless that person has signed a contract with the relevant Lloyd’s Register Group entity for the provision of this information or advice, and, in that case, any responsibility or liability is exclusively on the terms and conditions set out in that contract. LRQA’s Competence and Independence LRQA ensures the selection of appropriately qualified individuals based on a rigorous appraisal of their training, qualifications and experience. The team conducting the assurance of the Report was multidisciplinary and has been involved in assurance assessments from the outset of external verification of nonfinancial performance reports. LRQA’s internal systems have been designed to manage and review assurance and certification assessments. This involves independent review by senior management of the outcome derived from the process applied to the assurance of corporate reports. Independence of LRQA From Chevron LRQA and Chevron operate as discrete and independent legal entities. LRQA provides Chevron with third-party attestation assessment services to ISO 14001 and OHSAS 18001 as well as certification assessment services to other ISO standards. The assurance, attestation and certification assessment services are the only work undertaken by LRQA for Chevron. Conflict of Interest LRQA is part of the Lloyd’s Register Group. Lloyd’s Register Group entities recognize that potential conflicts of interest may exist that could have an impact on its independent assurance and certification activities. Lloyd’s Register Group entities are committed to identifying and managing such conflicts so that they do not adversely affect its independence and impartiality. To protect the integrity, neither LRQA nor any other Lloyd’s Register Group entity will provide services that create a conflict and compromise the independence and impartiality of third-party assurance and certification. The Lloyd’s Register Group entities will never verify their own solutions to a customer’s problem.
43
Glossary
Aa
Dd
Ll
Pp
API American Petroleum Institute
Downstream The industry term for operations related to refining crude oil into finished petroleum products, and for marketing crude oil and the many products derived from petroleum.
Liquefied natural gas (LNG) Natural gas that is liquefied under extremely cold temperatures to facilitate storage or transportation in specially designed vessels.
Ff Flaring and venting The burning or release of natural gas that is often produced in association with crude oil, a process that typically occurs when there is no market or onsite use for the gas.
Nongovernmental organization (NGO) An organization that is indepen dent from government, generally a nonprofit organization devoted to providing assistance to or advancing a particular cause or issue.
Partner In this report, partner is used in its broad sense to mean a person or organization associated with another in a common activity or one that shares a mutual interest. It does not imply a member of a contractual partnership in which the partners jointly own and carry on a business and proportionally share in liabilities, profits or losses of the business.
Gg
Oo
Geothermal energy A renewable source of energy that uses the heat energy of the earth for heating or to create electricity.
OGP International Association of Oil & Gas Producers
Bb Biodiversity Refers to the diversity of life on the planet. It encompasses genera, species, habitats and ecosystems, and the processes that support them.
Cc Capacity building A key area of focus for Chevron’s community engagement efforts, which means targeting support toward programs that help individuals and institutions develop the skills, capabilities and expertise they need to succeed. Carbon sequestration Capturing and storing carbon dioxide in various ways, such as capture by vegetation or by injection into geologic formations for long-term storage, so that it does not enter or remain in the atmosphere as a greenhouse gas. The Chevron Way Explains our values: who we are, what we do, what we believe and what we plan to accomplish.
Greenhouse gases (GHGs) Gases that trap heat in the atmosphere; such gases include water vapor, ozone, carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluoro carbons and sulfur hexafluoride.
Ii IPIECA International Petroleum Industry Environmental Conservation Association ISO 14001:2004 Environmental management system standard developed by the International Organization for Standardization.
Biodiversity The pig-tailed macaque (Macaca nemestrina) is commonly found near PT Chevron Pacific Indonesia’s operations in Rumbai and Minas, Sumatra, where production operations coexist with healthy vegetation and pristine forests.
44
Nn
OHSAS 18001:2007 An international Occupational Health and Safety Assessment Series management system specification. Operational Excellence Management System (OEMS) Chevron’s standard approach to systematic management of safety, health, the environment, reliability and efficiency in order to achieve world-class performance.
Rr Renewable energy Energy resources that are not depleted when consumed or converted into other forms of energy (for example, solar, geothermal, ocean and tide, wind, hydroelectric power, and biofuels).
Ss Stakeholder At Chevron, defined as those who affect, are affected by, or have a legitimate interest in our company’s performance.
Uu Upstream The industry term for operations related to exploring for, developing and producing crude oil and natural gas; for marketing natural gas; and for transporting crude oil, natural gas and petroleum products by pipeline and marine vessel.
We embrace shared progress across our operations around the world. To learn more, please visit Chevron.com/CorporateResponsibility.
About This Report This report covers 2010 data and activities. We also occasionally mention activities that took place before 2010 and in early 2011 when they help provide a clearer picture of our performance. This report covers our owned or operated businesses and does not address the performance of our suppliers, contractors or partners unless otherwise noted. All financial information is presented in U.S. dollars unless otherwise noted. Our previous report was published in May 2010 and covers 2009 data and activities. We continue to be informed by reporting frameworks and guidelines that include the Global Reporting Initiative (GRI) and the Oil and Gas Industry Guidance on V oluntary Sustainability Reporting, 2nd edition, published in 2010 by the International Petroleum Industry Environmental Conservation Association (IPIECA) and the American Petroleum Institute (API). We included an index to help readers find information corresponding to the GRI and API/IPIECA indicators (see page 42). This report, previous editions of our report and additional information can be found at Chevron.com/CorporateResponsibility. We welcome your comments and feedback.
Ms. Silvia Garrigo Chevron Corporation 6001 Bollinger Canyon Road San Ramon, CA 94583-2324
Cautionary Statement Relevant to Forward-Looking Information
WRITER
This Corporate Responsibility Report by Chevron C orporation contains forward-looking statements relating to the manner in which Chevron intends to conduct certain of its activities, based on management’s current plans and expectations. These statements are not promises or guarantees of future conduct or policy and are subject to a variety of uncertainties and other factors, many of which are beyond our control.
PHOTO CREDITS
Therefore, the actual conduct of our activities, including the development, implementation or continuation of any program, policy or initiative discussed to forecast in this report, may differ materially in the future. The statements of intention in this report speak only as of the date of this report. Chevron undertakes no obligation to publicly update any statements in this report. As used in this report, the term “Chevron” and such terms as “the company,” “the corporation,” “their,” “our,” “its,” “we,” and “us” may refer to one or more of Chevron’s consolidated subsidiaries or affiliates or to all of them taken as a whole. All these terms are used for convenience only and are not intended as a precise description of any of the separate entities, each of which manages its own affairs.
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2010 Annual Report
2010 Annual Report
2010 Supplement to the Annual Report
2010 Corporate Responsibility Report
2010 Supplement to the Annual Report
2010 Corporate Responsibility Report
earn More Online L The Annual Report, the Supplement to the Annual Report and the Corporate Responsibility Report are available on the Internet at Chevron.com/Publications.
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Chevron Corporation 6001 Bollinger Canyon Road San Ramon, CA 94583-2324 www.chevron.com
Next
*
* The Next Generation of Energy Technology
Energy for the 21st Century
In this issue: A special report on Gorgon, a natural gas project of unprecedented scale–page 10
Contents
Departments
Features
2 Here and Now
36 The Innovation Pipeline
Advances in technology increase oil and gas
10 Uncovering the Vast Resources of Gorgon
recovery rates.
A natural gas project of unprecedented
advances ingenuity.
Chevron’s in-house venture capital firm
complexity and scale will supply lower-carbon
46 Next Generation
energy to help power the 21st century.
Young professionals exemplify Chevron’s promising future.
38 Biofuels: Refining the Options From many, many choices in nature’s bounty,
20 Enticing More From the Reservoir
researchers look for the best options for commercial-scale biofuels production.
Enhanced oil recovery techniques reach for
On the Cover
reticent reserves.
42 Shining the Light on Solar Technologies
24 The Virtues of Virtuality
Experts from Chevron operations pool their
Video gaming becomes a business resource
talents to install a massive solar-demonstration
for a new generation.
project on the site of a former refinery.
28 Investing in a Renewable Energy Future
44 Bright Minds, Bright Future
Chevron explores turning renewables into a
the University of California, Davis.
Chevron fosters energy efficiency research at
viable enterprise.
Location: Tokyo, Japan. most energy-efficient economies in the
34 Innovation Scouts: Bringing Emerging Technologies to Chevron
world. Chevron will supply Japan and other
Desmond King, president of Chevron
Asian countries with liquefied natural gas
Technology Ventures, discusses the
from projects in Western Australia.
portfolio of innovations his organization brings to Chevron. Next* Issue 4, November 2010 John W. McDonald Vice President and Chief Technology Officer Chevron Corporation Diane Padurean Manager Technology Communications Tommy Lyles Lara Sweeney Editors Eileen Ostrow Feldman Managing Editor Contributors Nancy Boas, Kim Copelin, Carol Cox, Jim Hendon, Russell Johnson, Mike Marren, Harvey Marks, Mike Slocum Design by DCP
Next* Chevron Corporation A-2 P.O. Box 6078 San Ramon, CA 94583-0778 Chevron.com/Next Tell Us What You Think— and Join Us! We are pleased to mail this publication free of charge to our valued external stakeholders. To receive future issues, simply fill in the enclosed postage-paid reply card, if you haven’t previously done so. Also tell us what you think of Next*. Your views will help us shape this publication to meet our readers’ needs. For a downloadable version of Next* and to view Chevron technology videos, please visit Chevron.com/Next.
Each company affiliated with Chevron Corporation is a separate entity that manages and controls its own affairs. The use of such terms as “company,” “Chevron,” “organization,” “it(s),” “our(s),” “their(s),” “we,” and “us” and of abbreviated job titles is only for convenience and is not intended as an accurate description of individual status and corporate relationship. © 2010 Chevron U.S.A. Inc. All rights reserved. Material in this issue may be reprinted with permission. NEXT*® is a registered trademark of Chevron Intellectual Property LLC.
Articles in Next* are for informational purposes only. In publishing them, and in using terms of convenience such as “stakeholder(s),” “partner(s)” and “partnership,” Chevron does not bestow any legal right upon, or assume any legal duty to, any person, entity or group beyond those already existing by operation of governing law or regulation. Chevron specifically reserves its full legal rights, including the right to assert all appropriate legal defenses, and no articles should be interpreted as a waiver, legal admission or acceptance of legal responsibility.
C O V E R P H O T O : V L A D I M I R Z A K H A R O V/ G E T T Y I M A G E S
Japan is widely reported to be one of the
Welcome
Many Paths to the Future Energy fuels human progress. Around the world, local economies depend on access to safe, reliable and affordable energy to meet basic human needs—light, heat, food, transportation—and to raise living standards. And the demand for this energy will continue to rise, as the world’s population is expected to grow by about 20 percent over the next 20 years. As a global society, how will we meet the aspirations and growing energy needs of developed and developing nations as populations increase, and how do we deliver this energy at the enormous scale required while minimizing impacts on the environment? This is one of the great challenges of our time. The solutions depend not just on the choices made by business and government, but by people like you and me. And the solutions are enabled by technology. Technology, and the know-how required
Collaborating with government, academic
new technologies that enhance oil recovery,
and research institutions helps Chevron differ-
to develop and deploy it at scale, will deliver
shale gas production and reservoir man-
entiate its performance through technology—
the breakthroughs, just as they have done in
agement. These technologies can increase
by delivering superior performance in its core
the past. The world will need all the energy
the ability to meet current demand while
businesses and leading in emerging technolo-
it can get from all sources, using technology
improving efficiency and reducing our envi-
gies, moving ideas off the lab bench onto pilot
to tap the high energy density, reliability and
ronmental footprint.
demonstrations and into large-scale commer-
fungibility of hydrocarbons and to find ways
This issue also explores one university’s
cial applications.
of turning less dense feedstocks, such as bio-
work to develop our greatest and most plenti-
mass, into energy supplies at scale.
ful source of new energy, the energy each
immense, yet so are the opportunities
By necessity there will be many paths to
of us can save through efficiency. Accessing
for human ingenuity to create solutions.
the future, using different technology break-
this resource involves choices: the individual
At Chevron, we call this human energy.
throughs to get more energy from resources
choices we all make each day—the cars we
As you’ll see in this issue of Next*, it’s one
we already have—technologies that reduce
drive, appliances we use and lifestyles we
form of energy in great abundance and is the
carbon, enable resources of cleaner-burning
adopt—and the choices businesses and institu-
catalyst for new technologies that facilitate
natural gas or unlock renewable resources.
tions make to boost energy efficiency.
human progress.
To be sustainable, these solutions must be
PHOTO: SUZIE SAKUMA
carbon dioxide–injection project. It looks at
Technology is a great enabler. But even
built on business models and technologies
the greatest of enablers is ultimately just a
that are scalable, environmentally sound and
tool. And tools rely on people, processes and,
economically viable.
in a larger sense, collaboration in order to
This issue of Next* probes such break-
The challenges facing our world are
Sincerely,
“get it right” on a safe and sustained basis.
throughs, including the development of a
That’s the value of partnership and an inte-
huge natural gas resource in Australia that
grated approach to technology development
John W. McDonald, Chevron Corporation
has the world’s largest commercial-scale
and deployment.
Vice President and Chief Technology Officer
Next* | 1
H ere and N ow
Envisioning perfect oil fields, growing future energy streams INTERSECT™: This speedy, next-generation reservoir simulator helps maximize future flow
game, earth scientists and engineers blend
recovery, we should be able to improve
Manhattan and the shape of a gigantic
geology, geophysics, chemistry, mathematics,
our plan. We can put wells in more or
ice-cream sundae, two miles (3 km) under-
software and know-how to cram powerful
better locations and recover 38 percent or
ground, crisscrossed with cracks, and
computers full of data and make them reveal
42 percent. Over the life of a billion-barrel
saturated with a high-pressure soup of
how to capture the most energy from oil and
field, the potential gains are enormous, and
dissolved minerals, hot water and raw
gas fields.
most of the world’s oil fields have not been
petroleum—say, a billion barrels. Next, build a computer model of this
In Kazakhstan, Australia, China, the United
fully optimized with simulators.”
States—and soon in many other countries—
remote geologic wonder. Now, insert a virtual
Chevron is stepping up to this critically
Proving the potential
network of pipes, some to produce crude oil
important job with a powerful, next-generation
INTERSECT is steadily proving its potential,
and natural gas, some to inject water, each
simulator named INTERSECT™. Developed
especially to support ongoing field man-
placed perfectly among the jumbled layers
over 10 years under a continuing partnership
agement and planning for large, complex
and hidden pockets of energy. Start circu-
with Schlumberger, a top international oil field
structures such as the giant, high-pressure
lating the fluids and make the model move
services company, this speedy, new tool in
Tengiz reservoir in Kazakhstan, site of
through the future like a living creature.
association with other proprietary tools and
Chevron’s most extensive INTERSECT deploy-
techniques promises to help Chevron optimize
ment so far. Greg King, a Tengiz reservoir
through bone marrow,” said Paul Fjerstad,
productivity in new fields and make mature
engineer, said, “The simulator has improved
a petroleum engineer and simulation expert
fields give up more of their resources.
run time of simulations and has delivered
“Kind of like imagining blood flowing
with Chevron Energy Technology Co.
“Once we can predict how much oil and
better results and better grid and well-bore
gas we can capture, we can start design-
physics. We’ve also reduced the time required
Boosting world oil supplies
ing ways to get more,” said Fjerstad, who
to build the reservoir’s actual behavior and
Congratulations. You have just constructed
is managing Chevron’s phased rollout of
production into our model, which greatly
a reservoir simulation model. In this obscure
INTERSECT. “If we can predict 36 percent
increases the accuracy of simulations.”
2 | Next*
GRAPHIC: CHEVRON ENERGY TECHNOLOGY CO.
P
icture a mass of rock the size of
pressures, inject water, predict how much each
increasing simulation speed. Significant uncer-
well will produce—all very expensive to test in
tainty in the understanding of the subsurface
the field. And we can identify the best ways to
requires testing a large number of scenarios to
improve or redevelop older fields and capture
construct better development plans and field
new oil missed by past development schemes.”
improvements, said Jitendra Kikani, program manager for INTERSECT at Chevron.
The advantage of ‘unstructured gridding’
eight days now take eight hours, Fjerstad
INTERSECT depicts the personalities and
added. For Gorgon, INTERSECT reduced to 10
moods of reservoirs in greater, sharper detail
minutes some tasks that once took six hours.
At Tengiz, simulations that once took
than did previous generations of simulators.
INTERSECT enables Chevron earth scientists and engineers to incorporate geologically realistic structures into flow simulations. The thin blue line represents a well.
For the mammoth Gorgon natural gas
The earlier technologies broke reservoirs
Putting INTERSECT to work
down into three-dimensional configura-
Chevron plans to steadily deploy INTERSECT
tions of rectangular-shaped building blocks.
throughout its business, focusing first on the
INTERSECT does this better—plus it elevates
top 20 largest, highest-potential fields and on
simulation wizardry to a new level with
areas such as the rich, heavily faulted reser-
“unstructured gridding,” crisply depicting
voirs off the coast of Africa.
faults and other difficult areas in the reservoir rock with curvy, individually shaped blocks.
“I believe INTERSECT will give us a technical and competitive advantage and significantly strengthen our overall capabil-
The power of speed
ity as an energy company,” said Tim Magner,
Perhaps most exciting, INTERSECT works
general manager of reservoir and production
its magic via parallel processing on high-
engineering. “I see it adding a great deal of
performance computing clusters, dramatically
value for decades to come.” ■
development off the coast of Western Australia, INTERSECT sped up project planning and approval and enhanced production forecasting to help Chevron secure contracts for future output. And it is helping other operations better apply various recovery processes, including steam injection, to unlock heavy oil deposits, which hold great promise for supplementing the world’s oil supplies, noted Viet Hoang, Ph.D., who specializes in adapting INTERSECT for Chevron’s highly complex, thermal heavy oil projects in Indonesia, the Middle East, South America and the United States. “INTERSECT gives us more realistic pro-
PHOTO: MAURA WARNECKE
duction scenarios that we can play with on a computer,” said Fjerstad. “We can try different
Bill Milliken, a Chevron researcher in reservoir simulation, explains how the colors indicate oil saturation in the reservoir model. The black rods show the location of wells.
Next* | 3
H ere and N ow
Transforming Information Technology Driving large-scale, fundamental changes to process, technology and culture defined a long-term strategy with three-
and the United States, Tengiz operations
engineer quickly accesses an engineering
year targets:
adopted a tool for network configuration that
contract from a database in the Singapore
• Prioritize IT investments to better align
resulted in increased reliability and a simpli-
e-hub and reviews it with the design team
with Chevron’s business strategy.
fied network environment.
in Houston, Texas. Meanwhile, a manager in
• Simplify the IT environment, with fewer
the United States reviews her team’s training
data centers, applications and suppliers.
continually improve its environmental perform-
needs with a simple click of the mouse. Across
• Integrate global IT assets through
ance, six emissions reporting projects, including
Kazakhstan, planning analysts for the Tengiz
consistent planning, control and standards.
greenhouse gas reporting, collaborated across
oil field seamlessly exchange ideas online
“At the heart of each objective is the
about a new financial forecasting model.
relationship between the line businesses and
At company operations throughout
the IT function, which is changing from cus-
Additionally, as part of Chevron’s efforts to
the corporation to develop one comprehensive report for government regulatory agencies. In another example, the joint efforts of
the world, employees are experiencing
tomer and service provider to great business
the Australasia operations and IT teams
improved data access and productivity,
partners,” said Louie Ehrlich, Chevron’s chief
in California and Texas identified an exist-
as Chevron’s information technology (IT)
information officer.
ing enterprisewide search solution that is
function transforms. In 1997, Chevron implemented a global
expected to deliver robust technical capabili-
Early successes
ties now and in the future.
initiative to standardize desktop hardware
The transformation has already improved
and software. This indicated things to come,
operations. Through a collaboration of IT
lying factor was that the business and IT
as Chevron has continually increased the
members in Kazakhstan, the United Kingdom
tackled issues together,” George said. ■
speed and reliability of communications and improved collaboration capabilities. Now Chevron is moving to the next level and embarking on an IT transformation that will help the company more effectively leverage information and information technology, according to Willy George, general manager of the IT transformation program. “Critical to a successful transformation is the mindset ‘One Vision. One Journey. One Team,’ ” said George. “Organizations are working together and taking an enterprisewide approach to achieve what’s best for Chevron.” Given the scale and complexity of the IT operations that span Chevron’s diverse businesses and locations, the transformation
Willy George, general manager of the IT transformation program, is leading the way to prioritize, simplify and integrate.
4 | Next*
“In each of these successes, the under-
In just over a year, the information technology transformation delivered more than $100 million in value to Chevron.
PHOTO: MAURA WARNECKE
I
n remote Western Australia, a Chevron
Operational Readiness in the Deep
I L L U S T R A T I O N : C O U R T E S Y O F E X X O N M O B I L C O R P.
Chevron and partners plan a new well-containment system for deepwater operations
T
he BP Macondo well incident was a
system components will be maintained in a
Energy Technology Co. “While we believe
tragic event that deeply affects com-
state of continuous operational readiness.
that spills are always preventable, this new
munities on the U.S. Gulf Coast. In light of
Chevron’s involvement in this initiative is part
system significantly enhances the industry’s
this, Chevron is joining with ConocoPhillips,
of an overall industry effort, which includes
ability to effectively respond to any unfore-
ExxonMobil and Shell to develop and deploy a
the formation of several multidisciplinary
seen incidents.”
new deepwater well-containment system. The
task forces, to improve prevention, interven-
four companies are committing $1 billion to
tion and oil spill recovery capability.
design, build and maintain the new system.
“We understand that we only operate
Development of this new system will
The planned new system’s flexible and adaptable design will allow it to operate in deepwater depths up to 10,000 feet (3,048 m),
with the public’s confidence that the energy
in adverse weather conditions, and with flow
enhance deepwater safety and environmen-
we need will be produced safely and reliably,”
rates exceeding the size and scope of any
tal protection in the gulf. Once constructed,
said Melody Meyer, president of Chevron
previously recorded spill. ■
Next* | 5
A Breakthrough in Fracturing A new hydraulic fracturing fluid increases production without using water resources
I
f the prediction continues to hold true and the era of easy energy is behind us,
then technologies that increase the yield of new or existing crude oil and natural gas wells are of extraordinary value. A new fracturing fluid using liquefied petroleum gas (LPG) to improve the productivity of low-permeability reservoirs is one such technology. Hydraulic fracturing is a technique used to create fissures, or fractures, that extend from the well bore into rock formations. These fractures allow oil and gas to travel more easily to the production well from the pores, where it is trapped. At Chevron Energy Technology Co., engineers and scientists recognized the need for a significant improvement in fracturing technology. Wells often experienced long cleanup periods in tight gas sands in south Texas when using water-based fracturing fluids. A better fracturing fluid was needed; LPG ultimately became the natural choice. wells, water-based products are often the fluids of choice,” said Tim Magner, genMike Langill, safety manager for GASFRAC, explains that all equipment is operated remotely using process logic controllers, remote observers, continuous gas monitors and closed-circuit television.
6 | Next*
eral manager of reservoir and production engineering. “While water has been used for decades with much success, it has drawbacks for ultralow-permeability reservoirs.
PHOTO: JIM MACDONALD
“When fracturing oil or natural gas
H ere and N ow
Vast resources of crude oil and natural gas lie trapped in reservoirs of low-permeability sand and shale, such as the rock at left.
To fracture today’s tight formations, you
proppant farther into the hydraulic fracture
need millions of gallons of water, which cre-
than water typically can, creating longer,
ates logistical and environmental obstacles.
effective fractures.”
Additionally, water can damage the reservoir rock, resulting in decreasing yields.”
P H O T O S : C E N T E R , © 2 0 1 0 I N A C I O P I R E S / S H U T T E R S T O C K . C O M ; R I G H T, J I M M A C D O N A L D
Finding a substitute for water-based
The LPG eventually vaporizes, mixing with the formation’s natural gas and returning to the surface. “Gasification is crucial to the
fracturing fluids was no easy task. The fluid
value of LPG,” said Stacey Walker of Chevron
needed to be nondamaging to tight rocks yet
Energy Technology Co. “Dollar for dollar,
have sufficient viscosity to carry proppant—
LPG is more expensive than water. But when
usually sand or a ceramic material—that props
it gasifies and flows back through the well,
the fractures open. The fluid couldn’t block
it saves the driller substantial cleanup and
the pores, or fractures, and had to be safe to
disposal costs. Additionally, the LPG can be
use, for both workers and the environment.
recycled and used for other purposes or to
LPG became a clear choice, and after several years of research, testing and patenting,
liquefy and fracture another well. “By using LPG, we are able to realize a
Chevron commercialized the fluid. Chevron
higher yield of gas or oil,” Walker continued,
licensed the LPG fracturing fluid technology
“and we don’t take water away from other
to GASFRAC Energy Services Inc., headquar-
uses or have the demanding logistics of
tered in Calgary, Alberta, Canada.
transporting millions of gallons of water to
“GASFRAC Energy Services developed a
a well. We’re friendlier to the environment,
pumping process that uses a closed, pres-
and the flow-back costs—the time and effort
surized system,” said Magner. “At moderate
of recovering, filtering and reusing the fluid—
pressure and ambient temperature, the
are drastically reduced. It’s exciting to use
LPG—mostly propane—can be gelled and
this technology and have a positive effect on
viscosified. This enables the LPG to carry
our industry.” ■
Next* | 7
H ere and N ow
New oil supplies from the fourth dimension Geophysical reservoir surveillance provides clues to tracking hidden oil and gas—and the benefits promise to be huge
W
elcome to the fourth dimension, an underground frontier of time and
space where Chevron’s earth detectives are moving beyond their usual tough job of finding hidden energy resources to take on an even tougher job: tracking the migration of oil through giant rock reservoirs. Comparing 3-D surveys of the same area
is buried 15,000 feet (4,572 m) underground
as geophysical reservoir surveillance (GRS),
a few years apart allows geophysicists to
beneath 3,000 feet (914 m) of ocean?
has the potential to add billions of barrels of
see these changes through time—seismic’s
Comparing your seismic survey to another
oil and trillions of cubic feet of natural gas
fourth dimension—helping companies fine-
from a few years back, could you map differ-
to the world’s energy reserves, said Larry
tune their follow-up development work as
ences in air conditioning efficiency from one
Sydora, leader of the company’s GRS team.
fields are depleted.
building to the next?
Ultimately, GRS will help Chevron manage its assets as efficiently as possible.
The dimension of time
“The technology is evolutionary, but the impact could be revolutionary,” said Steve
How to be precise, twice
Smith, Chevron manager of deepwater pro-
Emerging over the past 20 years, GRS
ducing assets in the Gulf of Mexico.
doesn’t work everywhere because some reservoirs don’t readily reveal their secrets
GRS employs several kinds of tools. But the most powerful is four dimensional, or time-
Enjoying hard problems
with acoustics. For 4-D to work, surveys must
lapse 4-D seismic surveying, based on the
Looking out his office window in downtown
try to hit precisely the same places twice—not
concept that two surveys are better than one.
Houston, Texas, Mike Allison, Chevron’s head
easy in deep water. “Repeatability is the key
Said Bernard Regel, deepwater geologist with
of reservoir management, applauds the con-
thing in 4-D,” said Regel.
Chevron’s U.S. Gulf of Mexico operations:
tributions of GRS but also puts the situation in
“The more pieces of information we have, the
perspective.
more puzzles we can solve in the earth.”
“You want to be sure the technology will
As options mature, 4-D technology has already proved itself or shown great promise in fields operated by various companies
work as planned to generate new information
in the Gulf of Mexico, Norway’s North Sea,
shock waves into the earth’s crust, then reads
you can act on,” he said. “Better pictures of
Brazil’s Campos Basin and other areas.
the bounced-back waves to reveal targets
what’s down there can produce potentially
Chevron is planning global deployments of
for exploratory drilling. But every discovered
revolutionary results.”
the technology.
Three-dimensional seismic testing shoots
reservoir changes as resources flow out.
Try to imagine, he suggested, using
“In my view, GRS has a very bright future,
Pressures drop. Groundwater moves. Layers
seismic waves to map the floor plans, walls
especially in Africa,” said Pete Mitchell,
settle. The acoustic properties of the rocks
and ventilation systems within all the big
geophysical team leader for the company’s
change, creating opportunities to gather new
buildings in the metropolitan skyline. What if
Southern Africa operations. He has high
clues as production proceeds.
something the size and shape of that skyline
expectations for a planned 4-D survey of
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P H OTO : AT L I M A R H A F S T E I N S S O N / N O R D I C P H OTO S/G E T T Y I M A G E S
What’s learned from this work, known
‘The technology is evolutionary, but the impact could be revolutionary.’
Chevron is planning to use GRS 4-D technology in the North Sea offshore Norway.
the oil fields operated by Chevron offshore
stifling the ability of injected water to sweep
Valuable in deep water
Angola. “This will be our first 4-D survey,
oil toward the wells.
GRS is most powerful offshore and especially
and we’ll compare the new data to a baseline
“The whole idea of GRS is trying to see
survey from 2003.”
in deep water, where costs and logistics limit
where you’ve done a good job and where
the number of wells in a field. Why? Wells
there may be bypassed oil or inefficient
directly provide many of the same kinds of
survey in one of the producing sands of the
recovery,” said Smith. “It’s about precision
information as GRS tools, such as well produc-
Gulf of Mexico’s Petronius Field reservoir,
and managing risk—we can’t make this work
tivity, reservoir pressure, rock types and the
compared with an earlier survey, revealed a
risk-free, but by better understanding the
ratio of oil to water.
“baffle,” or rock obstruction, that had been
risks, we make better decisions.”
According to Regel, a 2006 seismic
Fields on land can often afford to have hundreds of wells. Offshore fields have a few
Xline
1210
1230
1250
1270
1290
1310
Xline
dozen very costly wells, and in between are massive, mysterious expanses of jumbled rock
1900
1900
where no wells provide production or clues. In the deepwater areas, where wells can cost $50 million or more, GRS can prove its value simply by confirming that a new well wasn’t needed because it likely wouldn’t produce much.
GRAPHIC: CHEVRON ENERGY TECHNOLOGY CO.
2000
2000
The next GRS hurdle: tallying and forecasting benefits against costs. “Quantifying the benefits is difficult,” said Regel, “but at the end of the day, we know we’re adding important
2100
2100
new data and new oil. GRS is a very valuable tool, and it’s becoming a best practice.” ■
ms
ms
Explore how technology is intrinsic to With 4-D seismic imaging, Chevron is able to track the movement of oil underground over time. In this segment, which shows approximately six years of acoustic impedance, black lines delineate the producing reservoir. The green and red areas, respectively, show contact of oil with water pre- and post-production.
Chevron’s operations at Chevron.com/Next/ TechOverview.
Next* | 9
Uncovering the Vast Reso
Go
A worker surveys the area around Barrow Island, the site of the Gorgon Project. For more than 45 years, Chevron has been operating safely on Barrow, showing that oil production and the environment can coexist.
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urces of
rgon P HOTO : J ERE M Y ASHTON
Deep beneath the Indian Ocean’s surface, on the edge of Australia’s continental shelf, lies a hidden energy resource that can help lead to a lower-carbon future
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W
ithin the vast water wilderness, off the remote northwest coast of Western
Australia, Chevron has discovered massive gas fields containing an estimated 40 trillion cubic feet of natural gas. This is enough energy to power a city of 1 million people for 800 years,
with cleaner, natural gas capable of meeting rapidly growing energy demands more efficiently and with less impact on the environment. The Chevron-operated Gorgon Project will harness this energy, becoming Australia’s largest single resource project, incorporating its biggest subsea development and the world’s largest commercial-scale project for carbon dioxide (CO2) injection.
A project without equal The complexity and scale of Gorgon are unprecedented—a long-term, technically challenging, complex energy development exemplifying a dramatic advancement of engineering know-how and environmental stewardship. And Gorgon will be among the world’s most greenhouse gas–
The Karratha gas plant in Western Australia produces liquefied natural gas for the North West Shelf Venture, in which Chevron is a joint-venture participant. Liquefaction reduces the volume of gas approximately 600 times, making it more economical to transport between continents.
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PHOTO: CHEVRON U.S.A. INC.
efficient liquefied natural gas (LNG) facilities.
I L L U STRATION : D AVI D B ERNHAR D T / CHEVRON INFOR M ATION D ESIGN AN D CO M M U NICATIONS
The project plans include a 15 million-metric-ton-per-year LNG plant and a domestic gas plant to be constructed on Barrow Island, 43.5 miles (70 km) from the Greater Gorgon Area gas
Barrow Island, 35 miles (56 km) off the northwest coast of Western Australia, will process natural gas from the Greater Gorgon Area gas fields.
fields. LNG will be offloaded for transport primarily to markets in Asia, while domestic gas will be piped to the mainland. Additionally, Gorgon will position Australia as a world leader in commercial-scale CO2injection technology. The company plans to safely inject and permanently store about 2 trillion cubic feet of CO2 more than 8,200 feet (2,500 m) beneath Barrow’s surface—four times more CO2 than any previous project. This technology will help reduce the project’s net greenhouse gases by 40 percent (see story on page 17). The selection of Barrow Island as the preferred site for the development presents a unique situation for the project teams. The island was declared a Class A nature reserve in 1910, and its rare native fauna and flora have been sharing their home with Australia’s largest onshore oil (continued on page 15)
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Barrow Island: Chevron’s Track Record of Leaving Few Tracks Barrow Island, a Class A nature reserve, has
Following the discovery of crude oil on
Butler’s message is simple and direct—
been home to Australia’s largest onshore oil
Barrow in 1964, production began in April
Chevron has proved that conservation and
field for more than 45 years. Chevron’s suc-
1967 and to date has delivered more than
development can work together, but living
cessful track record of operating on Barrow
300 million barrels of oil and loaded more
and working on Barrow remains a privilege.
while protecting the environment helped the
than 1,000 tankers without a major environ-
company gain the necessary permits to make
mental incident. Now, more than at any time
I first visited Barrow Island in 1963 remain.
the island the site for the Gorgon Project.
in its history, Australia is focused on ensuring
When you have a world-class quarantine
that Chevron’s successful custodianship of
process supported by a workforce that truly
the island continues.
cares for the environment, this is what you
The project underwent a rigorous and thorough environmental assessment that culminated with some of the most strin-
One man has done more than any other
“Today, all the species I experienced when
can achieve,” said Butler.
gent conditions imposed on a major project
to raise and maintain the profile of Barrow
anywhere in the world. Thus, Chevron’s man-
Island in the nation’s psyche—eminent natu-
See how Chevron works to protect biodiver-
agement of the Gorgon Project raises the bar
ralist, conservationist and former Australian
sity at Chevron.com/Next/BarrowIsland.
for environmentally responsible, large-scale
of the Year, Harry Butler, Ph.D. Butler has
technology deployment and innovation.
worked with the company to make sure that
The island, renowned for its unique biodi-
every employee and contractor understands
versity and conservation value, was originally
the island’s environment and has a role in
part of the Australian mainland before rising
protecting and, where possible, enhancing
sea levels created a “living ark” for some
its conservation value.
native species that now exist only on this tiny patch of earth, protected from the introduction of nonindigenous plant and animal
World-renowned naturalist and conservationist Harry Butler is a consultant on the Barrow Island development. He poses here near a termite mound on the island.
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P H O T O : si m on westlake
species.
The Chevron-operated Northwest Swan is the newest and largest of the North West Shelf Venture’s fleet. Unlike the other eight ships, which use spherical tanks, the Northwest Swan uses a membrane containment system. Chevron is a joint-venture participant in the North West Shelf Venture.
(continued from page 13) field for more than 45 years. Chevron’s custodianship of Barrow has been recognized internationally as a successful example of the coexistence of industry and the environment. Balancing the dual goals of development and conservation, the Gorgon Project will occupy just 741 acres (300 ha), or 1.3 percent, of the island’s uncleared land mass (see opposite page).
Four thousand feet down Gorgon’s story of technological advancement and human innovation begins on the ocean floor. Design of the subsea system, in depths of up to 4,265 feet (1,300 m), has intrigued some of Chevron’s finest minds and is expanding the boundaries of the technology. The depth and terrain require technical innovations designed to make sure that the pipeline will withstand the formidable environment for the next 50 to 60 years. For example, Gorgon requires largerdiameter, thicker-walled pipelines engineered for higher pressures and corrosive fluids. Between 20 and 30 producing wells will be drilled over 30 years. Subsea trees will connect to cluster manifolds via well jumpers, all on the ocean floor. Flow lines of various sizes, managed to guard against corrosion, will connect the pipeline termination structures together and form PHOTO: CHRISTIAN SPROGOE
the conduit for produced fluids to the LNG plant on Barrow. One major engineering hurdle was the need for the pipeline to traverse the continental shelf en route to Barrow, crossing an underwater escarpment 328 to 656 feet (100 to 200 m) high with slopes of up to 70 degrees. A thorough analysis considered two routes: the southern route, with terrain that was more benign but added 28 miles (45 km) to the pipeline distance, would have resulted in increased (continued on page 16)
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(continued from page 15) back pressure and significant costs; the northern route, which was ultimately selected, saved installation costs and improved operability because of the shorter pipeline length.
Expanding the boundaries of technology While the LNG facilities on Barrow Island will appear typical, the scale and complexity at this location will be unprecedented. Con Kalimeris, a senior LNG process engineer with Chevron Energy Technology Co. (ETC) who works on Gorgon in Perth, Western Australia, explained, “One complication will be water in the well-stream fluids that are directed to shore. Water introduces the possibility of hydrate formation, which may lead to operating problems. We will inject monoethylene glycol (MEG) into the well-stream fluids to prevent hydrates from forming,” said Kalimeris. The Gorgon natural gas development on Barrow Island will occupy 741 acres (300 ha) of uncleared land, some of which will be just south of the Western Australia oil terminal tanks, above.
“While this won’t be the first MEG system associated with an LNG plant, the size of the system and importance of preventing feed disruptions to the onshore plant require extensive design efforts and proper management during operation.” Additionally, to significantly reduce environmental impact to the island, many of the components will be prefabricated and assembled offsite into transportable parts. Other plants have been redesigned to enable modularization in expansion phases, but Gorgon is one of the only LNG projects in the world for which modularized construction was designed from the outset.
Gorgon will position Australia as a world leader in commercial-scale carbon dioxide–injection technology.
World’s largest commercial-scale CO2-injection project Gas CO2
1
Natural gas is fed from the reservoir to the plant.
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2
CO2 is separated from the natural gas.
3
Product
CO2 is compressed and injected more than 1.6 miles (2.5 km) underground into the Dupuy Formation beneath Barrow Island.
P HOTO : RO B ERT GARVE Y
(continued on page 19)
The World’s Largest Commercial-Scale CO2-Injection Project As the search for new sources of natural gas
which must be separated before liquefaction.
CO2 in brine-filled rock, the thermal effects
pushes farther and deeper than ever before,
Depending on the final, ultimately recover-
of injecting cooler CO2 into hot rocks and
extraction becomes more difficult and more
able volumes, the cumulative volume of
the tendency of CO2 to vaporize connate
complex. And the responsibility to protect
reservoir CO2 to be disposed of during the
water—water that was trapped in the rock
the environment becomes more critical.
operating life of the project is expected to be
pores when the rock was formed—in the
about 2 trillion cubic feet.
region near the well bore.
I L L U STRATION : A M Y K W ONG / CHEVRON INFOR M ATION D ESIGN AN D CO M M U NICATIONS
One of the most successful advancements in improving efficiencies and minimizing envi-
In addition to these factors is the mass-
The destination for this CO 2 is almost
ronmental impact is carbon sequestration,
8,200 feet (2,500 m) below the sur-
balance effect of injecting large volumes of
used to varying degrees on projects around
face of Barrow Island, within the Dupuy
a new substance into an aquifer. The pres-
the world.
Formation, a sand-rich reservoir with the
sure management system was designed to
properties required for a saline aquifer
partially offset the pressure increase from
CO 2 -injection project.
injection. The hot formation water from
Now, in a remote corner of Australia, as part of the Gorgon Project, Chevron is planning the largest project for carbon dioxide
Donna Parker, Gorgon’s CO2 -injection proj-
the four water-production wells will be
(CO2) injection developed to date, four
ect manager, clearly understands the scale
reinjected into a shallower aquifer, which
times the size of the largest existing opera-
and complexity of the task ahead. “This will be
will also minimize the environmental
tion. CO2 injection is expected to reduce
the largest project of its kind and will position
impact on Barrow Island.
Gorgon’s overall emissions by approxi-
Chevron as a world leader in commercial-scale
mately 40 percent, or 3.4 million metric
injection technology,” she said. “We will be
spread the CO2 and result in lower concen-
tons of CO2 per year.
doing something never achieved before. It
trations within the injection interval,” said
will be within a designated nature reserve;
Trupp. “This will help with long-term residual
the technical robustness of this project has
gas and CO2 trapping. Seismic surveys, sur-
therefore been exhaustive, and our modeling
veillance wells and surface-soil gas mapping
of the reservoir has been long and iterative.”
will monitor and verify CO2 movement.”
Raw gas from the Greater Gorgon Area fields contains up to 14 percent of CO2 ,
“The use of nine injection wells will help
Gorgon will be capable of an average
Drilling is expected to start in 2012,
CO2 -injection rate of 220 million standard
with 17 wells in the initial project plans. LNG
cubic feet per day via nine injection wells
production of Greater Gorgon Area gas is
spread over three drill centers. The project
expected to begin in 2014 with the startup of
also includes four water-production wells
the Gorgon CO2 -injection project.
outside the expected CO2 injection area in order to maintain reservoir pressure within
AU$60 million to the Gorgon CO2 -injection
accepted limits.
project as part of the Low Emissions Tech-
Mark Trupp, the project’s subsurface
nology Demonstration Fund, which supports
team lead, explained that at this depth, CO2
the commercialization of technologies that
has a viscosity of a gas but a volume and
can reduce greenhouse gas emissions on a
density closer to a liquid.
large scale.
“CO2 -injection rates are established by
4
Movement of the CO2 underground is monitored by repeated seismic surveys and in surveillance wells.
The Australian government has committed
a complex interplay of factors,” said Trupp,
Learn how Chevron is addressing climate
“starting with the maximum bottom-hole
change through carbon capture and storage
pressure required to avoid fracturing the
at Chevron.com/Next/CO2.
formation.” Injectivity, he explained, is also affected by the relative permeability of
Next* | 17
Innovative Survey Techniques Minimize Chevron’s Footprint Acquiring baseline seismic data over the
tasks from a dual mindset—maximizing our
informed the placement of buffers around
Gorgon C02-injection project area on Barrow
conservation effort while not compromising
environmentally sensitive areas. To limit the
Island presented a unique situation for
our ability to achieve quality results.”
access tracks, vibroseis trucks were recon-
To meet the geophysical, technical and
structed to reduce tire and axle widths. Stilts
environmental objectives, an innovative
were used under support equipment, and
and measure their echoes, are the most com-
survey design using three different seis-
hydraulic legs were constructed under drill-
mon industry method of acquiring data on
mic energy source types were required. In
ing rigs to raise them above the vegetation.
the geological properties of rock strata below
areas of higher elevations, shallow porous
Barrow Island’s geology makes drilling
the land surface, in this case to monitor and
limestone layers and varied terrain, seismic
difficult, particularly without the use of drill-
safely store injected C02 .
charges were placed into shot holes drilled to
ing fluids. Also, standard methods using mud
below sea level; whereas at lower elevations,
pits were not chosen for the survey, given the
area of more than 33,360 acres (13,500 ha),
a vibroseis source was used to better attenu-
land-use constraints and risks associated with
which would normally result in the disturb-
ate background field noise. In the shallow
heliportable operations. Instead, purpose-
ance of 628 to 741 acres (250 to 300 ha) of
waters adjacent to Barrow, a low-energy air-
built air-percussion, or sonic, drilling rigs were
land. Chevron, however, in keeping with its
gun source array maximized seismic signals
designed to penetrate interbedded layers of
ongoing commitment to minimize the develop-
while minimizing potential impact on marine
fine sands and rock. The seismic team’s safety
ment footprint on Barrow, set itself a ground
fauna.
commitment ultimately resulted in 15,000
Seismic surveys, which use sound waves
On Barrow, data were needed for a surface
disturbance limit of just 62 acres (25 ha) and
“To minimize land transportation wher-
safe heli-lifts over 927 helicopter hours.
ultimately disturbed less than 47 acres (19 ha),
ever possible during deployment,” said
just 0.01 percent of the total survey area.
Parker, “we used helicopters to transport
involved was vital to delivering baseline sur-
drilling rigs and supporting equipment while
vey results and maintaining our reputation as
crews carried lighter equipment by foot.”
an environmental champion of Barrow Island.
Seismic surveys generally require clearing access tracks across the survey area,
“This extraordinary effort by everyone
providing unencumbered access for vibroseis
Shot points, vibroseis lines, offices
trucks and equipment. Vehicles are used over
and lay-down areas for equipment and
said Parker.
rough terrain to lay geophone array lines.
cabling were placed where possible on
C02-injection project manager Donna
existing cleared roads, tracks and land
Join employee Julia Baggs for an explana-
Parker, Ph.D., explained that for this survey
already earmarked for the Gorgon Project.
tion of seismic technology at Chevron.com/
on Barrow, “The survey team approached
Environmental and heritage surveys
Next/Seismic.
We are all very proud of the achievement,”
To reduce impact on the Barrow Island environment, a K-MAX helicopter transports seismic equipment during survey work for the CO2-injection project.
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PHOTO: TIMOTHY LOFTHOUSE
Chevron’s survey team.
‘This collaboration has already resulted not only in the discovery of dozens of new species but also in unprecedented documentation of never-before- seen behaviors.’
This deep-sea octopus was studied by scientists using Chevron’s remotely operated vehicles.
(continued from page 16) Bobby Martinez, technical team leader of LNG systems for ETC in Houston, added, “The proj-
Uncovering New Worlds
ect team has multiple yards working on different components to exacting design specifications. Every component must fit exactly to the framework so that there are no integrity issues. Then the completed modules must comply with intensive quarantine standards before reaching Barrow. “Designing Gorgon has taught us many things, such as how to bend 60-inch (1.5-m) pipe
Chevron and a group of Australian universities entered into a research agreement
and how high we can construct our plant without compromising operational integrity—valuable
that will give marine scientists access
knowledge that we can apply to future sites,” continued Martinez.
to the company’s underwater robots to
Other aspects of the plant design relate to the unique environment within which it will operate, such as waste streams and water management. Modified lighting and ground flare use will
explore marine life at ocean depths rarely obtainable in the region. Under the three-year agreement,
minimize potential impact on nearby turtle-nesting areas. “Every plant is different in terms of its location, but there is no doubt that Gorgon is on the
research teams from the University of
cutting edge, not only in technology but also in the execution methods required to meet strin-
Western Australia, the University of
gent environmental-approval conditions,” added Martinez.
Sydney, the University of Technology and the University of Wollongong will partici-
A talented team
pate in SEA SERPENT, an international,
Chevron researchers, scientists and engineers throughout the world, led by people such as Bob
voluntary collaborative of scientific insti-
Dimitroff, unit manager of ETC process engineering in Houston, have contributed to Gorgon’s
tutions and oil and gas companies. The program works by engaging
design advancements. “Building our LNG competency has been a long-term objective. In the early 2000s, we real-
remotely operated vehicles equipped with
ized that the scale and complexity of planned future projects such as Gorgon would require an
video and photographic equipment to
extensive suite of LNG engineers as well as experts in designing compressors, piping and other
study, photograph and collect samples of
key plant components,” said Dimitroff. “We began by identifying the most experienced talent
marine life. The three-year project began yield-
within Chevron and from our contractors, the wider industry, and the research and development sector. Once these competencies were established, we began attracting university graduates to
ing results after its first expedition in
help further build capability. The result is strong team competency within project locations such
January this year, said Steve Vellacott,
as Western Australia, from which we send people around the world to provide technical support
a Chevron environmental specialist. “It’s
at critical stages of development and execution.”
always remarkable that we find this type
Gorgon also has benefited from the establishment of Chevron’s Asia-Pacific Global
of animal life with relative ease despite
Technology Center in Perth in 2007. Center manager Paul Jones said, “We’ve got some of our
there being limited food, water tem-
biggest challenges here in Australia and great opportunities to differentiate our performance
peratures hovering between 41 and 50
through technology. Our staff has the capabilities to face these challenges head-on.”
degrees Fahrenheit (5° and 10° C), and
Jeff Buckles, ETC’s team leader for LNG development, agreed: “From modeling pipeline
depths of 1,300 feet (400 m) and beyond. “This collaboration has already
P HOTO : CHEVRON A U STRA L IA
behavior to cutting-edge research in liquids separation and modularization techniques, Gorgon is giving us opportunities to apply our expertise and build our capability, capability
resulted not only in the discovery
we can transfer to other projects.” ■
of dozens of new species but also in
unprecedented documentation of never-
For videos and animation on Chevron’s activities in Australia, please visit Chevron.com/Next/
before-seen behaviors.”
GorgonProject, Chevron.com/Next/LNG and Chevron.com/Next/PartnerAustralia.
Please visit www.serpentproject.com.
Next* | 19
In western Kazakhstan, Gulfara Mukhambetova is a lead safety specialist at the Tengiz Field, site of an industry-leading pilot project to reinject sour gas.
Enticing More From the Reservoir
p h o t o : J OH N S M A L L W OO D
Specialists in enhanced oil recovery improve production from maturing fields
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T
o many in the oil and gas industry, a mature oil field with steadily declining production is a prime candidate for permanent shutdown. But not at Chevron, where a group of engineers and scientists—such as vice president of Chevron Energy Technology Co., Chevron Fellow Ganesh Thakur, Ph.D.—
is working to increase the yield of maturing assets. To Thakur and his colleagues, such a field offers an exciting opportunity to bring fresh thinking and new approaches to economically squeeze more production and reserves out of the ground. Across Chevron’s global activities, collaboration among company operations and partners has led to successful applications and leading-edge techniques to recover untapped reserves, significantly boosting volumes by 10 percent to 40 percent of their original oil in place. Moreover, Chevron’s growing suite of enhanced oil recovery applications at complex and unconventional reservoirs is creating a competitive edge in attracting new business opportunities around the world. At most producing fields, primary and secondary recovery efforts—such as injecting water or natural gas into a reservoir—are sufficient to bolster production after output begins to fall. However, at difficult reservoirs—which include heavy oil, shale and sour gas—enhanced recovery techniques are necessary to tap into reserves that otherwise would be undeveloped. “Through advanced processes, we can increase recovery of hydrocarbons from a reservoir by up to three or more times what would be produced by conventional methods,” said Thakur. There is a wide range of enhanced oil recovery techniques, including thermal processes, such as steamflooding; nonthermal processes, which use gas, such as carbon dioxide, hydrogen sulfide, nitrogen and natural gas; and processes using chemicals, polymers and other products. All methods involve pumping gas, steam, chemicals or other specialty fluids into a reservoir to increase underground pressure and sweep hydrocarbons to a well bore. For steamflooding, it’s all about recovery. For shallow heavy oil reservoirs, primary methods may recover only about 10 percent of the original oil in place. With steamflooding, Chevron has been able to reach recovery rates of 50 percent to 80 percent. “The type of application depends on the reservoir’s geology and other factors. Chevron’s specialists are well versed in unique characteristics of different recovery techniques,” said
photo: MICHAEL LEWIS
Jack Stevenson, an area manager for heavy oil. “Although most oil companies use enhanced
Chevron and partners operate a steamflood pilot project in the Partitioned Zone between Kuwait and Saudi Arabia.
Next* | 21
Investing in NextGeneration Researchers
Alfian works for Chevron as a senior operator at Gathering Station Area 4 at the Minas Field in Sumatra. The Minas Field has the largest waterflood project in Indonesia.
To supplement Chevron’s internal research and development on enhanced oil recovery, Chevron has teamed up with the University of Texas’ (UT’s) Center for Petroleum and Geosystems Engineering to address novel recovery techniques and processes. Through a multiyear joint research initiative, the Chevron and UT alliance has already contributed technological breakthroughs, including novel surfactants that offer cost savings, new models of complex enhanced recovery processes for heavy oil fields, and advanced forecasting tools. In 2010, Chevron extended its support for the alliance, with the next phase investigating solutions to handle viscous crudes and carbonate reservoirs. Along with bringing innovations, Chevron’s investment in the UT alliance is helping prepare the next generation of enhanced recovery specialists. Chevron Fellow Ganesh Thakur noted, “Supporting the development of future researchers
recovery applications, what sets Chevron apart is our extensive portfolio of practical knowledge and hands-on experience with a far-reaching range of techniques around the world. It takes both technology and technique.” A quick look at some of Chevron’s enhanced oil recovery projects shows the breadth and scope of the company’s technology leadership:
who will be directly engaged in addressfor us at Chevron, it’s personally rewarding to work with young researchers who share our passion for unlocking the potential of challenging reservoirs.” To learn more about enhanced recovery, please see the videos on California’s Kern River Field, where steamflooding coaxes out hard-to-reach oil and benefits local agriculture at Chevron.com/Next/ Steamflooding and Chevron.com/Next/ EnergyAndOranges.
• Kern River, United States Since the introduction of steamflooding more than four decades ago, enhanced recovery techniques have already captured 67 percent of this 100-year-old heavy oil field’s estimated 3 billion barrels of original oil in place. A pilot program to use horizontal steam-injection wells seeks to push ultimate recovery to 75 percent or higher at this field, one of the largest and most prolific in the United States, and this technology will have application throughout Chevron’s portfolio. • Duri, Indonesia Onshore Sumatra operations have applied steamflooding to about 80 percent of the Duri Field since 1985, ranking it among the world’s largest steamflood developments. Chevron continues to expand recovery projects in Duri’s northern section, which holds excellent potential for adding more reserves. • Partitioned Zone, Middle East Leveraging Chevron’s experience from the United States and Indonesia, the company and its partners operate a steamflood project at the Wafra Field in the Partitioned Zone between Kuwait and Saudi Arabia. The large-scale pilot project, which became operational in 2009, is expected to lead to full-field steamflooding in the First Eocene
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photo : P E T E R C A N N O N
ing the world’s energy needs is vital. And,
‘What sets Chevron apart is our extensive portfolio of practical knowledge and hands-on experience. ... It takes both technology and technique.’
reservoir. If successful, it will be the first commercial steamflood in a carbonate reservoir in the world. • Permian Basin, United States Nearly four decades ago, Chevron pioneered the injection of carbon dioxide (CO2) into mature fields in the Permian Basin of West Texas and New Mexico, resulting in the world’s first commercial-scale CO2-recovery operation. Chevron’s CO2 projects have extended the productive life of these fields by up to 10 to 20 years. To advance its use of CO2-recovery efforts, Chevron is conducting a pilot project at New Mexico’s Vacuum Field to apply CO2-recovery methods in the high-water-saturation transition zone between the oil and water zones. • Minas, Indonesia At the Minas Field in Sumatra, Chevron is advancing a pilot project that uses a chemical surfactant-polymer flooding process to recover additional reserves. The surfactant polymer project represents Chevron’s ongoing efforts to economically capture more reserves and sustain production at Minas, where secondary recovery techniques have made this field the largest waterflood project in Southeast Asia. • Agbami, Nigeria At the Agbami Field, Chevron’s vast experience in miscible gas and water injection is being deployed with a novel application of crestal gas injection and peripheral waterflood concurrently. This technique allows Chevron to maximize oil recovery and production by squeezing oil out of the reservoir with a “top down and bottom up” displacement mechanism. • Captain, U.K. North Sea In an innovative approach to unlock this offshore field’s reserve potential, Chevron is testing enhanced oil recovery applications using polymers and chemicals to access resources not recovered during its initial development. • Tengiz, Kazakhstan At Tengiz, the world’s deepest producing supergiant oil field, Chevron and its partners are making excellent progress with an industry-leading pilot project to safely reinject sour gas into reservoirs to yield higher production and boost recovery rates. Sour gas operations at Tengiz began in 2007, with full operations launched in mid-2008. These efforts along with plant expansions enabled Tengiz to double its overall production capacity. Looking ahead, enhanced oil recovery will play an even greater role in bringing new energy supplies to the market as the industry focuses on developing complex and unconventional resources.
photo : J A M E S G L O S S O P
“Maximizing recovery from difficult reservoirs requires a commitment to research and development, a highly trained workforce, knowledge sharing, superior execution and worldwide operational experience,” Thakur said. “Our long history in managing a wide spectrum of enhanced oil recovery projects has placed Chevron at the forefront of this critical technology. Chevron affiliates are well positioned to help our global partners optimize the economic recovery of their oil and gas assets.” ■
Through enhanced recovery operations at the Captain Field, offshore Aberdeen, United Kingdom, plans are to increase estimated oil recovery from 34 percent to 50 percent and beyond.
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Senior technology consultant Kevyn Renner poses with life-size replicas of the virtual avatars he and his colleagues inhabit when they enter virtual worlds.
The Virtues of
Virtuality
24  |  Next*
Chevron is adding a new dimension to planning, training and collaboration through cutting-edge 3-D technology
T
he way humans learn and collaborate is enhanced by our environment. We quickly process and retain information through sensory experiences. We relate to one another and to situations based on the context of our environment, our shared knowledge and the application of our own specific acumen. Today, Chevron is leveraging
technology to apply these realities of the human condition to training, planning and collaboration using 3-D environments that blend science and simulation to create a virtual world. The Real Asset Virtualization Environment, a computer application developed by Chevron senior technology consultant Kevyn Renner, is believed to be the first of its kind in the industry.
PHOTOS: MAURA WARNECKE
The application offers a 3-D virtual model of Chevron assets such as refineries, in which colleagues can work together using real-time information on real problems, training scenarios or future planning.
Choose an avatar In the program, users are represented by avatars—3-D virtual replications of themselves— and can walk through virtual reconstructions of Chevron assets while collaborating with
Next* | 25
Renner immerses himself in a virtual conference room while waiting for operations colleagues at the Salt Lake and Richmond refineries to enter. Renner recounts an experience in which trainees, when they were in the physical refinery, identified aspects that hadn’t been discussed during the virtual training but that they had noticed on their own.
colleagues from around the world in real time. In this virtual world are note-taking tools, process documents and all the necessary resources for collaboration. If it sounds like something out of a video game, you’re not far off. “I saw how my kids became so immersed in gaming that they were in another world, and I knew educators were leveraging that in school and home-learning environments,” said Renner. “I thought it would be interesting and useful to try and bring those same 3-D immersive advantages to Chevron. It has proved to be a powerful tool with almost limitless possibilities to help us work smarter, more safely and more effectively.” The journey from concept to reality, or virtual reality, required collaborating with operations throughout Chevron. They needed to buy in to this new technology and the real-world advantages it offered. After evangelizing his vision and allocating a budget, Renner and his partners built a proof-of-concept model—a precursor to the pilot—of the Salt Lake Refinery. “Funding and building the system were just the initial hurdles,” said Renner. “The level of computer savvy varies across the company. Some people are more used to manipulating avatars and exploring 3-D virtual environments. With others, their eyes sort of glaze over when you begin to talk about technology like this. So we had to find the right way of communicating our vision to those who would be using it and get them not only proficient in it but excited to use it.”
Three test cases The Salt Lake Refinery offered the perfect proving ground for Renner’s program because a 3-D virtual model of its new hydrotreating unit already existed and could be imported into the new system with no additional design time or costs. nance planning, Renner created a scenario in which a compressor wasn’t operating properly; colleagues from different parts of the refinery had to collaborate on how to rearrange the plant while maintenance was conducted. “Colleagues in specific roles look at a compressor differently in this situation,” said Renner. “Our program allowed all of these people to interact in a virtual room, bringing their specific area of expertise and the ability to access all relevant documents.”
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PHOTOS: MAURA WARNECKE
Three test cases were designed for the virtual environment. For operations and mainte-
Another test case was for hazardous-operations reviews. Specialists, who are often brought in for these reviews, now can remotely conduct them using 3-D virtual environments while the information is collected and saved for the U.S. Occupational Safety and Health Administration.
What about retention? Perhaps the immediate use is in training. The virtual environment allows new operators who have never been in a refinery unit to learn in hands-on virtual environments by manipulating their avatars in a 3-D reconstruction of the refinery. The result is a safer training environment that can condense the training time needed to learn the same material in a classroom setting.
‘I saw how my kids became so immersed in gaming that they were in another world, and I knew educators were leveraging that.’
“It’s very powerful,” said Renner. “People are apprehensive at first, especially if they’re completely unfamiliar with using avatars or gaming. But it’s a pleasure to see them begin to get it, then enjoy it, then want to come back for more. We knew we were successful when people we had just trained on the system began suggesting additional test cases.” User surveys confirm what Renner was experiencing anecdotally: colleagues are responding to learning and working in 3-D virtual environments. Retention is higher and efficiency is greater. And practicing in a virtual environment before working in the real environment contributes to safety. “We’re taking a leadership position in adopting these innovative technologies and looking at applications throughout Chevron,” said Renner. “The company has a lot of real assets that can be viewed in three dimensions and realized in a virtual world. This is just the beginning. We’re still in the early stages of this technology. There’s a lot more to come.” ■
PHOTO: MAURA WARNECKE
For a demonstration and tour, please visit Chevron.com/Next/DigitalRefining.
The architect’s 3-D drawing of the vacuum gas oil hydrotreater, seen below, already existed when virtual-training testing began, helping minimize development costs.
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Operators Tedi Kusyanto and Sutono walk along the cooling tower at the Darajat Unit III geothermal power plant in Garut, West Java, Indonesia. Darajat Unit III is Chevron’s first project to earn carbon credits for reducing emissions.
P H OTO : TA N T YO B A N G U N
The Darajat geothermal project is expected to reduce emissions by 650,000 tons of CO2-equivalent per year.
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Investing in a Renewable Energy Future Chevron explores renewables as a viable enterprise
W
here oil refineries once stood in California and Wyoming, Chevron has begun testing seven emerging photovoltaic solar technologies, and the company’s first wind farm recently started churning out power for the local grid.
Chevron is focusing on biofuels made from raw materials, such as high-biomass sorghum, that do not materially affect food or feed supplies.
Meanwhile at a Mississippi tree farm, a forest-products company, under a
research joint venture with Chevron, grows switchgrass to advance second-generation biofuels
that use cellulose instead of corn or other food crops. And in Indonesia and the Philippines, Chevron taps boiling brine from deep in the earth to generate more than 1,250 megawatts of electricity for thousands of homes, making Chevron the world’s largest geothermal power producer.
Promise and pragmatism Renewable energy technologies such as these are hailed as sustainable alternatives, full of promise to provide clean, new energy and cut carbon emissions. But because of major technical hurdles—such as scalability, performance and costs—as well as market-based barriers, broader adoption can’t happen overnight. PHOTO: NANCY DUNHAM
So Chevron pursues a strategy to promote energy efficiency while exploring renewables as a viable enterprise, according to John McDonald, Chevron vice president and chief technology officer.
World energy demand “The world is going to need every molecule and electron of energy from all sources,” said McDonald. “Our focus is on new sources that are feasible from a business standpoint, such
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Purpose-grown energy crops such as miscanthus are among the lignocellulosic feedstocks that Chevron is investigating as raw material for biofuels.
as geothermal power and energy efficiency. The key is to find and develop those tech-
‘The world is going to need every molecule and electron of energy from all sources.’
nologies that show promise not just in the laboratory but in the commercial marketplace as well.” Global demand for oil is approaching 88 million barrels per day, according to a recent International Energy Agency (IEA) report. Indeed, from 2007 to 2030, demand for energy of all kinds is forecast to increase nearly 40 percent, as reported in IEA’s 2009 World Energy Outlook. Fossil fuels will meet most of that new demand, but IEA forecasts that renewables can increase their contribution in the years ahead.
Chevron’s strategy “Renewables can play an important role in the world’s future energy mix if we can unlock the secrets to providing them on a very large scale and at affordable prices,” said Des King, president of Chevron Technology Ventures, the company’s Center of Excellence for renewables strategy, research and development. As part of its major business strategies, Chevron seeks to integrate renewable energy technologies into its business—including installing them at former operations sites—to improve Chevron funds research and alliances with universities and government research facilities, including the U.S. Department of Energy’s National Renewable Energy Laboratory, to evaluate, test and apply these technologies. The company is actively involved in developing selected renewables—such as biofuels—that could complement its established capabilities in refining and fuel distribution.
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PHOTO: NANCY DUNHAM
its own operations, with a goal of reducing both costs and greenhouse gas emissions.
Additionally, through Chevron Technology Ventures, Chevron’s venture capital arm, the company invests in emerging technologies and promising startups (see story on page 36). “We make sound investments in research and testing in real-world applications to help solve tomorrow’s energy challenges,” said King.
Driving energy efficiency Some technologies are ready now. Chevron Energy Solutions Co. (CES) is one of the United States’ leading energy efficiency and renewable energy services companies and the nation’s largest developer of solar installations for education facilities. CES develops and builds sustainable energy projects that increase energy efficiency and renewable power, reduce energy
Chevron is the world’s largest producer of
geothermal energy
costs, and deliver reliable, high-quality energy. Consistent with Chevron’s renewable energy and energy efficiency strategy, CES helps its customers, including Chevron, reduce their own energy use and find ways to put renewable power to work. “Energy efficiency is the cheapest, cleanest and most plentiful source of ‘new’ energy we have,” said Jim Davis, president of CES. Citing a McKinsey & Co. study, he noted that with a positive investment climate and a national commitment, the United States could reduce energy consumption up to 23 percent by 2020. “That would save about $1.2 trillion and reduce greenhouse gas emissions by an amount equal to that produced by all the nation’s cars and trucks.”
$1 billion in energy savings CES has developed hundreds of projects that in aggregate are reducing customers’ energy costs by nearly 30 percent on average, saving a total of more than $1 billion and reducing greenhouse gas emissions by more than 3 million metric tons since 2000. Customers include U.S. cities,
PHOTO: ALEX BALUYOT
In the 1970s, two discoveries in the Philippines led to the development of the Makiling-Banahaw (shown) and Tiwi geothermal plants, which supply power to Luzon, the country’s most populous island. Chevron innovations helped make the Philippines the second-largest geothermal energy–producing country in the world, after the United States.
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A wind farm now sits on the site of a former Texaco refinery in Casper, Wyoming. The farm’s energy output of 16.5 megawatts, enough renewable energy to power approximately 4,400 homes, is sold to a local utility company for distribution to customers. Surveying the site are Chevron Global Power Co. employees Chris Buchholz, construction and operations manager, and Kara Cox, project engineer.
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PHOTO: STEPHANIE WHITFIELD
‘Renewables can play an important role in the world’s future energy mix if we can unlock the secrets to providing them on a very large scale and at affordable prices.’
counties, states and the federal government, school districts, community colleges, universities and correctional facilities. Meanwhile, a corporatewide initiative has lowered Chevron’s own energy consumption per unit of output by 31 percent since 1992, the baseline year. And the company has endowed the Chevron Chair in Energy Efficiency at the University of California, Davis, committing $2.5 million to help lead to the commercialization of new energy-saving technologies.
Integrating renewables Pursuing beneficial reuse, Chevron this year started generating renewable power—enough for about 4,400 homes—with 11 wind turbines on a former oil refinery site near Casper, Wyoming. At a similar site near Bakersfield, California, Chevron’s Project Brightfield is testing seven emerging photovoltaic technologies to see which performs best. The results will help Chevron evaluate solar technologies for a variety of uses across the company. Power from the arrays will meet a small share of electricity needs at a Chevron oil field. “This is one of the first projects to demonstrate solar technology on a reclaimed industrial site,” said Jerry Lomax, Chevron Technology Ventures’ vice president for emerging energy. “We hope what we learn here will be a bridge to a future with more renewables.” Meanwhile, at a Chevron Mining Co. reclamation project near Questa, New Mexico, the company is building a concentrating solar power installation. The largest of its kind in the United States, the 1-megawatt facility will use lenses that intensify strong alpine sunlight to feed highefficiency photovoltaic cells. “The demonstration will help us understand the benefits of this technology and determine its applicability in other Chevron operations and properties,” said King.
Seeking biofuels synergies The company is pursuing another promising renewable energy prospect: biofuels. For decades, ethanol—an alcohol fuel made from corn and sugar cane—has been successfully blended into gasoline in large volumes in the United States, Brazil and other countries. But first-generation biofuels feedstocks often compete for food needed by humans and livestock. Chevron’s biofuels research alliances focus on new feedstocks—such as nonedible plant materials and algae—and on process technologies for converting this nonfood biomass into transportation fuels at commercial scale (see story on page 38).
From seed to scale One example of a promising commercial partnership is Catchlight Energy LLC, Chevron’s 50-50 joint venture with forest-products giant Weyerhaeuser Co. Catchlight is working to commercialize advanced biofuels made from forest-based biomass. Formed in 2008, Catchlight combines Weyerhaeuser’s forest biomass expertise with Chevron’s fuel processing and distribution capabilities to form a potential “from seed to scale” advanced biofuels supply chain. Biomass production could include intercropping—growing and harvesting biomass between tree rows in Weyerhaeuser’s vast, managed forests. “It’s especially important to assess a variety of biomass sources because enormous quantities will be required to meet the potential demand for biofuels,” said King. “And any new biomass initiatives need to incorporate the three major components of sustainability— environmental protection, economic feasibility and the minimization of social impact.” ■
For links to information and videos on Chevron’s activities in renewable technologies, please visit Chevron.com/Next/Geothermal and Chevron.com/Next/Biofuels.
Next* | 33
Next*: What is Chevron Technology Ventures’
I like to say that we are not the people with
exit it because we find it’s not a good fit. One
(CTV’s) role within the corporation?
the white lab coats, test tubes and beakers;
example of that is our battery joint venture,
Des King: CTV is the “on ramp” into
rather, we are the people with the business
Cobasys, which we decided to exit in 2009.
Chevron for emerging technologies. We act
calculators and spreadsheets who work with
as a technology scout—looking for develop-
the technologists.
ments that can help our core businesses
Two, we shelve it because it’s not ready for widespread deployment and commercialization. An example of that is our hydrogen
operate more competitively and in a more
Next*: How do you access and demonstrate
demonstration program. We successfully
environmentally sustainable manner. That
technologies?
demonstrated hydrogen refueling technology
covers a broad spectrum—everything from
King: We use several avenues to bridge the
at five U.S. locations over a period of several
new fuel sources to tools for managing
gap between Chevron’s technology needs and
years and determined that it would have to
information. Our objective is to identify and
possible solutions that exist in the outside
overcome several hurdles before it could go
demonstrate emerging technologies that
world. They include academia, government
any further.
can benefit our operations.
laboratories, entrepreneurs and early-stage
Three, the technology proves successful
companies. Our expertise in investigating and
at demonstration scale and we integrate
Next*: How does CTV differ from other
identifying possible technology providers is
it into our base businesses. At that point,
technology groups within Chevron?
key to creating value. Of course, we also tap
that business would take it over and deploy
King: In a few ways. The first is the maturity
Chevron’s internal expertise—for example,
it further, and we would move onto the
of the technologies in our portfolio. CTV
scientists in Chevron Energy Technology Co.—
next thing.
looks at early-stage technologies developed
to aid us in our evaluation.
potential to be deployed in the future. The second is our commercial focus.
So, if CTV is doing its job correctly, its portfolio will turn over frequently and look
Next*: What happens once you identify
different in three years than it does today.
a promising emerging technology?
CTV’s expertise lies in the ability to evaluate
King: We develop a business model for it,
Next*: Let’s talk about a few technologies in
the commercial potential of a technology
often invest in it, and demonstrate it. After
CTV’s current portfolio. What is the status of
and develop a business model around it.
that, one of three things happens. One, we
advanced biofuels?
34 | Next*
PHOTO: MAURA WARNECKE
mostly outside of Chevron that have the
Innovation Scouts Bringing Emerging Technologies to Chevron Desmond King, president of Chevron Technology Ventures, discusses the organization’s unique role in Chevron’s technology strategy and some of the promising emerging technologies in its current portfolio
King: CTV’s goal is to evaluate all of the
technologies to help determine the potential
options and make recommendations by the
application of renewable power at other
on land that is part of an existing Chevron-
end of 2012 as to how we can best fulfill our
company-owned facilities.
owned mine, and it will supply carbon-free
advanced biofuels obligations in the most
We are using a former Chevron refin-
power to the equivalent of about 300 resi-
profitable way possible. Since 2006, we’ve
ery site to test these technologies side by
dents of Questa while we test the viability of
made a tremendous amount of progress
side—six thin-film technologies and one
CPV technology in a real-world application.
evaluating many feedstocks and conversion
crystalline-silicon photovoltaic technology,
technologies and have zeroed in on a handful
all by independent solar companies. The
Next*: How do you see CTV’s role in
of each. Now we are working with com-
power produced during the testing phase
the future?
mercial partners to determine whether our
will be directed to the local utility grid as
King: There will always be a need for new
preferred feedstock-conversion technology
well as used by our production operations
technology at Chevron. Competitive pressure
combinations can be scaled up economically
at the Kern River Field.
and the necessity to be more efficient and
to produce intermediates and finished products that qualify as advanced biofuels.
Our Questa solar project in Questa, New Mexico, is another example of using existing assets to demonstrate renew-
PHOTO: HEMERA/THINKSTOCK
The Questa facility is being constructed
more productive require that we be proactive in seeking new solutions. In other words, we can’t rely on today’s
Next*: What are some other interesting
able technologies. When completed in the
technology indefinitely. CTV plays a critical
areas in CTV’s portfolio?
fourth quarter of 2010, Questa will be one
role in helping bring the future to Chevron
King: CTV is demonstrating advanced
of the largest—if not the largest—installa-
so that we can continue to deliver the energy
solar technologies and how they could be
tions of concentrating photovoltaic (CPV)
the world needs and do it efficiently. I believe
integrated into our operations. In 2009, we
solar technology in the United States.
that will be as important 10, 20, 50 years
began Project Brightfield, a demonstration of
CPV technology is more expensive but
next-generation solar energy technologies in
about twice as efficient as traditional solar
Bakersfield, California.
power because the lenses used capture more
Project Brightfield is evaluating seven emerging, potentially low-cost photovoltaic
from now as it is today. ■
available sunlight, then concentrate it and make it more powerful.
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The Innovation
Pipelin In-house venture capital: an ‘on ramp’ for innovation
Fueling New Technologies and Entrepreneurs For Chevron, the development of new energy
contestants raise more than $125 million while
knowledge and expertise we bring as a global
technologies is an important focus.
making thousands of green-collar jobs possible.
energy company involved in every stage
The company’s commitment to entrepre-
“We joined the Cleantech Open as a
of the technology development cycle. We
neurship, ingenuity and new technologies led it
global partner based on the competition’s
believe this is how the future of energy will
to become the inaugural global partner for the
outstanding track record of success,” said
be created—through great ideas, strong
2010 Cleantech Open. This one-of-a-kind annual
John McDonald, Chevron vice president and
collaboration and business development.”
business competition and mentorship program
chief technology officer.
has enabled hundreds of clean-technology
McDonald added that “along with
startups to bring their breakthrough ideas to
significant financial support, Chevron can
fruition. In the process, it has helped alumni
offer something even more valuable—the
36 | Next*
Learn more about the competition at Chevron.com/Next/CleantechOpen.
ne
T
he innovations below are diverse
• Emerging energy technologies such as
but have something in common:
biofuels and other renewables.
• High-performance storage
• Advanced materials, including atom-sized
systems for computer data
nanotechnology devices and micro-electro-
that facilitate faster and better business
mechanical systems.
decisions.
• Wireless communications and advanced
• A revolutionary new process that can
networking infrastructure.
rapidly deposit diamondlike coatings on
• Information technology hardware and
production tubing and other critical parts to
software innovations.
protect them from harsh environments.
Once Chevron invests in a company,
• Specialty chemical polymers that remove
it works with that company to create a
heavy metals and other soluble contaminants
product or service best suited for adoption
from water.
within Chevron.
• Streaming real-time video sent from phones and other handheld devices to loca-
Shoot for the triple win
tions anywhere in the world.
Since 1999 when the program was first
The common thread is that each innova-
conceptualized, CTV has assessed approxi-
tion was brought to Chevron by Chevron
mately 3,500 early-stage companies—nearly
Technology Ventures (CTV). As the com-
one company per day for 10 years. It invested
pany’s venture capital arm, CTV continually
in 54 of them, resulting in 114 technology
monitors emerging technologies, moving
transfers. A technology transfer occurs when
quickly to invest in commercial break-
a Chevron business uses the technology.
throughs within the world’s laboratories and
CTV aims for at least 10 such transfers a year.
early-stage companies.
“We shoot for a triple win with every investment we make,” said Trond Unneland,
Clear strategic value
vice president and managing executive of
“Our venture capital team provides a valu-
CTV. “The daring entrepreneurs whose work
able innovation pipeline to new technologies
we champion receive Chevron’s minority
that meet specific business needs in increas-
equity investment, become our suppliers
ingly complex environments,” said Des King,
and may grow to the point where they are
president of CTV.
acquired at an attractive price by another
PHOTO: JOHN FOXX/STOCKBYTE/THINKSTOCK
Currently, CTV manages almost
company. At the same time, investors who
$200 million in strategic investments.
fund the emerging enterprise achieve an
Financial support can occur at any phase of
attractive return on their investment, and the
the technology development cycle and may
Chevron operations that, as early adopters,
involve everything from seed investments
embrace the new technology gain valuable
to capital for full-scale commercialization.
operational advantages.” ■
However, to be a viable candidate, a company
must meet strict criteria, providing clear
A video highlighting some of CTV’s recent
strategic value for Chevron as well as a
successes can be found at Chevron.com/
superior financial rate of return. Current
Next/TechInvestment.
areas of investment interest include: • New developments for the company’s core crude oil and natural gas business.
Next* | 37
Manager Michelle Long and her feedstock supply team at Chevron Technology Ventures helped Chevron quickly climb the biomass learning curve.
38  |  Next*
Biofuels
Refining the Options
Advanced biofuels research is breaking botanical barriers
M
ichelle Long stopped in the middle of a central Texas jatropha field, leaned down, plucked a few pods off a plant and looked closely at them in her hand. “The fruit is too green. The seeds have not reached maturation for oil content,” she said.
These days, Long, manager of feedstock supply for Chevron Technology Ventures’ (CTV’s)
biofuels unit, is as comfortable examining jatropha seeds as she used to be exploring ways to efficiently manufacture products from long-chain hydrocarbons. But that wasn’t always the case. A quick glance at Long’s background, education and professional career shows her to be an unlikely expert in germination, fermentation and a host of other terms straight from botany textbooks. A chemist by education and training, she has spent 15 of her 23 years in the industry in refining and lubricants operations. Long’s fast ascent up the biofuels learning curve mirrors Chevron’s experience in feed-
P H OTO S : PAU L S . H OW E L L
stock research to date.
Scaling up conversion technology from the laboratory to the marketplace is a primary challenge for the future of advanced biofuels.
Next* | 39
Chevron researchers Yunguan Liu and Curtis Krause are evaluating a variety of technologies for converting biomass into transportation fuels.
That education began in 2006 when CTV—the “on ramp” for emerging technologies coming into Chevron—was charged with launching and building Chevron’s biofuels unit. Its task was to help Chevron plan and execute a biofuels strategy based on increasing volume mandates and the need to supplement traditional petroleum-based fuels to meet increased energy demands. “Our first task was to find out what we knew and didn’t know about biofuels,” recalled Jeffrey Jacobs, CTV vice president for biofuels and hydrogen. He explained that there are three major components of biofuels development: feedstock, conversion and product. “We knew a lot about conversion and product because we’d been using advanced engineering and manufacturing techniques to turn raw materials into high-quality transportation fuels for more than 100 years. But our knowledge about biomass—the raw materials for biofuels—was minimal. We had to get up the learning curve quickly.”
‘Focus on what we do best’ How does an oil company rapidly build organizational capability and institutional knowledge about biomass? One option—a very expensive one—would have been to staff up with botanists, agronomists and foresters and conduct all of its research in-house. But that’s not always the way Chevron develops technology.
300,000
known plant species to evaluate for biofuels conversion
40 | Next*
with the best and brightest in industry, national laboratories and universities to augment the areas where we need additional expertise,” said Long. The research being done in cooperation with these groups includes a focus on biomass identification, characterization, cultivation and harvest. Additionally, Chevron formed a 50-50 commercial joint venture, Catchlight Energy LLC, with Weyerhaeuser Co., one of the world’s largest forest-products companies.
P H OTO : PAU L S. H OW E L L
Mother Nature provides about
“Chevron’s technology strategy calls on us to focus on what we do best and collaborate
Using pond algae as the sole feedstock for advanced cellulosic biofuels would require a pond about the size of Lake Erie.
What Needs to Happen Chevron believes that advanced biofuels are a natural extension of the company’s core competencies and that they will play an increasingly important role. But significant difficulties stand in the way. “Perhaps the most important outcome of our research is the realization of the enormous complexity facing commercialization,” explained Des King, president of Chevron Technology Ventures. “The industry must continuously produce massive amounts of biomass and build hundreds of biomass conversion facilities. Many companies are focused solely on developing conversion technology, but it’s those who have stepped back to look at the whole ‘seeds to wheels’ concept who appreciate the magnitude of the scale issue.” Consider the following: The U.S. Renewable Fuel Standard calls for advanced
Thousands of possibilities
cellulosic biofuels for blending into transport
Before Long and her feedstock team could begin hands-on field trials of potential feedstocks,
fuel to be ramped up from virtually zero
they first had to tackle the not-so-small problem of the sheer number of choices.
today to 16 billion gallons (60.6 billion liters)
Mother Nature provides plenty of options: about 300,000 known plant species plus a huge
per year by 2022. Hybrid poplar trees as the
number of potential nonplant feedstocks such as algae, animal products and waste streams.
sole feedstock for that amount of fuel would
It was difficult to know where to start.
require growing and managing a forest about
“Our goal was to zero in on the handful of feedstocks with the greatest potential to produce
the size of New Mexico and harvesting yearly
biomass at scale and in an environmentally and economically sustainable manner,” explained
a portion of it about the size of New Jersey.
Long. “In 2007, we evaluated 110 potential feedstocks and eliminated all but 24.”
Using pond algae as the sole feedstock would
Long’s team then applied more rigorous selection criteria to those 24 feedstocks. The four major criteria for passing this phase were volume potential, risk assessment, feedstock charac-
require a pond about the size of Lake Erie, harvested continually throughout the year.
teristics and delivered economics.
“Those are sobering numbers,” said King, “and they demonstrate why multiple
Lignocelluloses and lipids
feedstocks—and multiple conversion tech-
By the end of 2008, CTV had prioritized 11 feedstocks in two broad categories—lignocelluloses
nologies—will be required to meet advanced
and lipids. Included in the first category are forest residues, agricultural residues and purpose-
biofuels obligations.
grown energy crops such as switchgrass and miscanthus. Examples of lipid-based feedstocks
biofuels puzzle,” explained King. “But society
internal R&D, while others are the focus of Catchlight.
must be realistic about the difficulties and
CTV is now learning where feedstocks grow most effectively in large quantities and how to P H OTOS : PAU L S. H OW E L L
“We are working diligently on the advanced
include algae and oil seeds such as jatropha. Some of these feedstocks are the focus of CTV’s
the time needed for technical and scientific
harvest and transport them cost effectively. It is particularly interested in those that thrive on
breakthroughs. As our scientists are fond of
marginal land that food or feed crops wouldn’t use.
reminding us, ‘You can’t schedule innovation.’ ”
“We’ve come a long way in four years,” said Jacobs. “From an almost infinite number of
feedstock-to-product pathways, we are now able to concentrate on fewer than 10 that we
Learn more about emerging fuel
believe can give Chevron a competitive advantage.” ■
technologies at Chevron.com/Next/Biofuels.
Next* | 41
Shining the Light on Solar Technolog Experts from three Chevron subsidiaries combine their expertise in a unique solar project
42  |  Next*
Experts from different businesses within Chevron have been collaborating on Project Brightfield. Here, hydrogeologist Leslie Klinchuch (left) and former president of Chevron Environmental Management Co. Janeen Judah inspect the installation of solar panels.
C
ies
hevron looks for ways to meet the
Seven of the best
increasing demand for energy not
The team combined its expertise to design,
only on a global scale but also on
build and operate a comprehensive research
a regional scale, considering the energy
and demonstration facility. With the phe-
resources available and the viability of
nomenal growth and competition in the solar
specific technologies. Chevron’s Project
industry over the past five years, the team
Brightfield is a prime example. Located on a
had to find the best technologies and viable
former refinery site in southern California,
suppliers. It narrowed its selection to seven
this unique renewable power installation is
promising, next-generation technologies from
demonstrating a valuable new use for the
among hundreds.
land while testing the potential of promising solar technologies.
The power of three
The five-year demonstration project covers about 8 acres (3 ha), includes 7,700 solar panels and produces about 740 kilowatts of energy that may be used to augment nearby
A collaborative team of three Chevron
Chevron oil production operations or be inte-
companies—Chevron Technology Ventures,
grated into the local power grid. The facility
Chevron Environmental Management Co.
includes a station that monitors sun radiance,
and Chevron Energy Solutions Co.—looked
temperature, rain, wind and humidity to cor-
at how it could make best use of some of
relate technology performance with weather.
Chevron’s existing assets. The team realized
Each provider can access data about its solar
that former refinery sites or other repur-
technology, find out how well it performs in
posed lands might be suitable locations for
various conditions and compare it against an
renewable facilities.
industry benchmark.
One of the biggest hurdles for integrat-
Based on the demonstration, Chevron will
ing renewable technologies is finding an area
determine whether it makes sense to integrate
large enough for a mid- to large-scale facility.
these technologies at other facilities and, if so,
The team identified four California sites
which technologies might prove more viable.
that provided enough land mass and were conducive to solar energy production. They
about renewable technologies based on what
selected a former refinery site in Bakersfield,
we’re seeing firsthand,” said hydrogeologist
California, close to Chevron’s Kern River
Leslie Klinchuch, with Chevron Environmental
Field and near the local power grid.
Management Co. “Installation factors, tech-
“When we looked at the land mass P H O T O S : D O N S TAC Y
“This facility allows us to make decisions
available, we recognized an opportunity to
nology performance, and durability will help us determine whether we can make even
explore a renewable technology in a way
better use of other remediation sites.” ■
that hadn’t been done in our industry,”
said Chevron Technology Ventures project
Please see the video at Chevron.com/Next/
manager Adam Williams.
Brightfield.
Next* | 43
C
hevron and the University of
partners, accelerates the development and com-
California, Davis (UC Davis) have a
mercialization of energy-efficient technologies
uniquely positioned,” said Biggart. “We have
long, successful relationship dating
and trains future leaders in energy efficiency.
deep research connections worldwide and ven-
back to the 1970s. Through the years, the two
In 2009, the relationship between the two
“The UC Davis Energy Efficiency Center is
ture links with entrepreneurial hubs like Silicon
organizations have established key part-
organizations took an important step forward
Valley and Sacramento’s clean-tech sector.”
nerships, based in part on the university’s
when the company contributed $2.5 million to
Biggart added, “Chevron’s endowment
proven ability to turn new developments
endow the center’s Chair in Energy Efficiency.
will help ensure that our strategic research
in its research labs into solid commercial
Following a nationwide search, Nicole Biggart,
continues as we work toward our goal of com-
ventures. Areas of cooperation currently
Ph.D., was selected in June 2010 to fill this
mercializing groundbreaking energy-efficient
include the UC Davis Energy Efficiency Center
critical role. Professor Biggart will serve as
technologies.”
and its affiliated technology centers, as well
the EEC’s permanent director, working to
as the Biofuels Joint Research Program. The
expand the impact of the center’s research,
endow the Arthur H. Rosenfeld Chair in
university also is a core school in Chevron’s
education, commercialization and outreach.
Energy Efficiency, which over time will
University Partnership Program.
An expert in organizational theory and inno-
support the research and other work of
vation management, Biggart has conducted
an exceptional faculty member.
Additionally, the company helped to
Energy-efficient technologies
wide-ranging research into the social basis of
Chevron has been a Leadership Sponsor of the
technology adoption. She has written seven
the work of the EEC,” said John McDonald,
UC Davis Energy Efficiency Center (EEC) since
books in her field, published more than 30
Chevron vice president and chief technol-
2007. The world’s first university Center of
scholarly articles and frequently presents at
ogy officer. “Advancing energy efficiency,
Excellence in energy efficiency, the EEC, with its
international meetings.
which is the cheapest, cleanest and most
“Chevron is pleased to contribute to
Fostering innovations in energy efficiency
At the California Lighting Technology Center, a UC Davis student works on a prototype for Professor Michael Siminovitch’s class in energy-efficient LED (light emitting diode) luminaire design.
44 | Next*
P H O T O : K AT H R E E N F O N T EC H A /C A L I F O R N I A L I G H T I N G T EC H N O L O GY C E N T E R /© U C DAV I S
Bright Minds, Bright
In June 2010, Nicole Biggart, Ph.D., was selected as the first Chevron Chair of Energy Efficiency.
forest byproducts or municipal solid waste, second-generation biofuels are likely to play an important role in meeting the world’s growing energy needs. Through this program, Chevron supports a broad range of UC Davis scientists and engineers with funding of up to $25 million through 2013. The collaboration involves research to develop commercially viable processes for producing transportation fuels and a demonstration facility to test the commercial readiness of these emerging technologies.
University partnerships One of California’s leading research and educational facilities, UC Davis is a core school within Chevron’s University Partnership Program, which includes 18 universities around the world with which the company works closely for recruitment and research. “Energy is a collaborative venture. The
PH OTOS , FRO M TO P : N EI L M I CH EL /A XI O M PH OTO D E SI G N/© U C DAVIS; D EB B I E ALD R I D G E /© U C DAVIS
Future
best solutions are built through partner-
Net-zero energy
ships,” said Melody Meyer, president of
Chevron helped shape the energy strategy
Chevron Energy Technology Co. “Chevron is
and leads the energy team for UC Davis West
pleased to support the work of outstanding
Village, a public-private housing and commer-
universities like UC Davis and other research
cial development adjacent to the campus.
facilities. Through their commitment to inno-
This new, approximately 220-acre (89-ha)
vation, they are helping change the way the
abundant form of new energy, is critical to
mixed-use district will become one of the
world uses energy.” ■
the challenge of meeting the world’s growing
nation’s first “net-zero energy” communi-
energy needs. California has been a pace-
ties, integrating sustainable design to enable
Visit UC Davis’ centers of innovation and hear
setter in energy efficiency, so it is fitting that
residents to reduce their reliance on the auto-
a Chevron energy efficiency success story at
one of the state’s leading universities and
mobile and limit energy consumption.
Chevron.com/Next/UCDavis.
California’s largest company should partner on the next generation of energy efficiency.”
“Chevron is pleased to be a participant in this innovative endeavor,” said Jim Davis, president of Chevron Energy Solutions Co.
Light
“We applaud UC Davis and the West Village
One of the EEC’s affiliated technology
Community Partnership on their long-term,
centers, the California Lighting Technology
strategic goal to create a pathway to an
Center, works to facilitate and accelerate
affordable and sustainable net-zero energy
the development and commercialization of
community.”
energy-efficient lighting and daylighting technologies. The center provides a
Second-generation biofuels
variety of educational activities and
In 2006, Chevron formed a strategic collabo-
outreach with such partners as utility
ration with UC Davis to explore the potential
companies, lighting manufacturers and
of second-generation biofuels in transporta-
government agencies.
tion. Made from nonfood agricultural and
University of California, Davis.
Next* | 45
N ex t G eneration
Rising to the Occasion Young Chevron engineers and scientists make their mark The energy industry faces some tough is estimated to grow nearly 40 percent. To meet this increasing demand, the industry will need to drill in ever deeper and more technically difficult places while at the same time intensifying efforts to discover and develop alternative sources of energy. Compounding the difficulty, many of the industry’s most innovative and knowledgeable thinkers are edging closer to retirement. Where will this next generation of technical leaders with the passion and vision to meet these looming circumstances be found? Here are six portraits of human energy at Chevron—young scientists and engineers who are already making a difference.
Djuro Novakovic: Puzzle Solver Djuro Novakovic leads a team of reservoir simulation engineers, supporting Chevron’s exploration and development activities in Nigeria and the mid-Africa region. In that capacity, he and his group perform comprehensive reservoir studies to determine where to drill wells and how to optimize production. Before his assignment in Africa, Novakovic was part of the asset team that worked on the early stages of the Perdido deepwater wells in the U.S. Gulf of Mexico, now in the final phase of development. He also worked on the Jack 2 well, which was successfully drilled to more than 5 miles (8 km) total depth, making it at the time the deepest test well in the gulf. “Reservoirs are vast, and the data we have to understand them are always limited,” said Novakovic. “Our work involves putting the clues together to figure out what the reservoir is telling us. Based on our understanding, we then create a series of simulation models that will allow us to predict the optimal well location and depletion scenario, enabling us to drill the well safely while creating the most value with the appropriate level of investment. In that respect, we’re a bit like Sherlock Holmes. We examine the evidence, analyze it and solve the puzzle.” Novakovic has worked for Chevron for eight years. He did his undergraduate work at the University of Zagreb in Croatia and has a master’s degree and Ph.D. in petroleum engineering from Louisiana State University.
46 | Next*
P H OTO : O LU K AYO D E O LU F E M I
obstacles. By 2030, global energy use
N ex t G eneration
Laura Verduzco: Carbon Mitigator Currently, Laura Verduzco divides her time between Chevron Energy Technology Co. (ETC) and Catchlight Energy LLC, a Chevron-Weyerhaeuser joint venture to develop the next generation of renewable, cellulose-based transportation fuels from nonfood sources. As a lead planning engineer in ETC, Verduzco develops and supports a wide variety of tools, models and work processes to aid decision making related to climate change and sustainability. She helps identify potential improvements in greenhouse gas mitigation and monitoring and assists with the implementation of government policies. At Catchlight, Verduzco coordinates policy between the two parent organizations and various U.S. federal and state regulators to help avoid unnecessary impediments to the production of biomass and its conversion into biofuels. Among her recent accomplishments, Verduzco managed Chevron’s response to the 2009 Carbon Disclosure Project, the world’s only global climate change reporting system. “It was a huge effort, requiring us to collect and collate data from every part of the corporation,” said Verduzco. “Based on our comprehensive reporting, Chevron ranked first among energy companies on its level of carbon disclosure and was fifth overall among all respondents.” Verduzco is a four-year Chevron employee. She has an undergraduate degree in chemical engineering from Universidad Nacional Autónoma de México and a doctorate in engineering management from the George Washington University in Washington, D.C.
Umut Ozdogan: Global Field Hopper Umut Ozdogan is the subsurface leader for the Kuito life-extension development in Angola’s deepwater Block 14, a major capital project with important reserves for Chevron and its partners. In that role, Ozdogan works to optimize subsurface and subsea elements of field development by performing reservoir forecasting for facility redesign.
P H O T O S , F R O M T O P : M A R I LY N H U L B E R T; PA U L S . H O W E L L
In his six years with Chevron, Ozdogan has been involved with a series of major development optimizations, beginning with Tahiti in the deepwater Gulf of Mexico and continuing on to Tengiz in Kazakhstan and Agbami in Nigeria, then back to the Gulf of Mexico for the Jack and St. Malo deepwater developments. He worked at Angola’s Takula Field, which has produced more than 700 million barrels of oil to date. “We have developed and deployed advanced, highly practical forecasting technologies to address key asset management and project decisions for both brownfield and greenfield development,” said Ozdogan. “But for me, what makes Chevron great is not just its strong portfolio of projects or the advanced technologies; it’s also the tremendous diversity of people who work here.” Ozdogan did his undergraduate work at Middle East Technical University in Turkey and has a master’s degree in petroleum engineering from Stanford University in California.
Next* | 47
N ex t G eneration
Krista Heidersbach: Corrosion Fighter Krista Heidersbach faces a tough situation. She manages corrosion-related research within Chevron, with a significant focus on top-of-the-line corrosion, which occurs in wet-gas pipeline systems when water carried by the gas condenses during transportation, damaging the pipeline. According to Heidersbach, this problem is especially prevalent in the Asia-Pacific region
Recent projects include a wet-gas pipeline
a big problem, and we have a constant goal—
and Australia’s North West Shelf, costing
system in Thailand. She has worked on major
making sure pipe can last for the design life
the industry millions of dollars annually in
offshore capital developments in Angola,
of the project.”
pipeline replacements. Heidersbach is also
Nigeria and the U.S. Gulf of Mexico. “Through
actively involved in research on corrosion
our research, we are gaining a better under-
employee, received her bachelor’s degree from
caused by microorganisms found in seawater
standing of the various causes of corrosion
Southern Methodist University in Texas and has
that compromise nearly every engineering
and the steps we can take to prevent or
a Ph.D. in engineering science and mechanics
metal and alloy used offshore.
mitigate it,” said Heidersbach. “Corrosion is
from Pennsylvania State University.
Heidersbach, a nine-year Chevron
Trevor Demayo: Alternative Energy Investigator Trevor Demayo leads ETC’s low-carbon energy team. In that capacity, he supervises four people and collaborates extensively, performing due diligence on various alternatives: including solar, wind, geothermal, nuclear, fuel cell and electric vehicle technologies. Demayo and his team project future energy trends, developing economic and technical assessment models to help guide Chevron’s strategic planning. Recent activities include a project in Angola to eliminate gas flaring by tracking the works with Chevron’s university partners, helping to rank and prioritize research proposals for company funding and developing strong collaborative relationships in advanced energy research and development. Demayo is currently representing Chevron on the Intergovernmental Panel on Climate Change special report on renewable energy sources, for which he and his team are helping write and co-edit chapters on geothermal energy, bioenergy and transportation. “Chevron is one of the few companies involved in coordinating this effort,” said Demayo. “Projects such as this one underscore the seriousness of our commitment to studying and promoting alternative energy among virtually the entire range of potential applications.” Demayo has been with Chevron since 2003. He did his undergraduate work at Simon Fraser University in British Columbia, Canada, and has a master’s degree and Ph.D. in mechanical and environmental engineering from the University of California, Irvine.
48 | Next*
P H O T O S , F R O M T O P : PA U L S . H O W E L L ; M A R I LY N H U L B E R T
progress of reduction plans and reporting the results to senior management. Demayo
N ex t G eneration
Dulcineia Carvalho: Modeling Maven Dulcineia Carvalho is an information technology (IT) architect for oil and gas exploration and production. For the past two years, she and her colleagues have worked on the architecture framework for exploration and production, a cohesive set of business and information models for standardizing, integrating and simplifying IT systems across exploration and production activities. “We are developing an architecture that functions as a frame of reference for the integrated operation of IT systems, enabling business objectives to be achieved more efficiently and effectively,” said Carvalho. “Ultimately, our work will develop an infrastructure so lean, robust and adaptable to change that will be invisible to the core business.” Among her other accomplishments, Carvalho has worked on Chevron’s i-field™ initiative for emerging production technologies, helping establish a key software-integration facility at the University of Southern California. This initiative uses new developments in real-time technology, including downhole sensors that allow continual adjustments to wells based on current conditions. Carvalho joined Chevron in 2007. She has a bachelor’s degree in electrical engineering from Agostinho Neto University in Angola and a Ph.D. in computer science from the University of Illinois at Urbana-Champaign. ■
P H O T O : T O M M Y LY L E S
© 2010 Chevron U.S.A. Inc. All rights reserved. NEXT* is a registered trademark of Chevron Intellectual Property LLC. Cautionary Statement Relevant to Forward-Looking Information for the Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995: This publication of Chevron Corporation contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energyrelated business. Words such as “anticipates,” “expects,” “intends,” “plans,” “planned,” “targets,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “budgets” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond the company’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and natural gas prices; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternate energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company’s joint venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or startup of planned projects; the potential disruption or interruption of the company’s net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental statutes, regulations and litigation; the potential liability resulting from other pending or future litigation; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on the scope of company operations; foreign currency movements compared with the U.S. dollar; and the factors set forth under the heading “Risk Factors” on pages 30 through 32 of the company’s 2009 Annual Report on Form 10-K. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed in this report could also have material adverse effects on forward-looking statements. U.S. Securities and Exchange Commission (SEC) rules permit oil and gas companies to disclose only proved reserves in their filings with the SEC. Certain terms, such as “probable” or “possible” reserves, “potential” or “recoverable” volumes, “recoverable” volumes, “resources,” and “crude oil in place,” among others used in this publication, may not be permitted to be included in documents filed with the SEC. U.S. investors should refer to disclosures in Chevron’s Annual Report on Form 10-K for the year ended December 31, 2009.
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Behind every innovation is the most powerful source of energy on Earth. To meet the energy demands of tomorrow, we’re developing advanced technology today. Through collaboration and innovation, our solutions are increasing the energy supply for generations to come. And with a global network of employees leading the way, we can utilize the most powerful energy of all — human energy. To learn more, visit us at chevron.com.
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