Capitalizing on Energy Efficiency

Exploration, production, shipping and refining operations require a significant amount of energy. The sources of this energy are primarily natural gas, crude oil, liquefied petroleum gas, diesel fuel and electricity.

As existing production fields mature, more energy is needed to produce the same amount of crude oil and natural gas. Also, additional energy is required as oil and gas production increases and refinery throughput increases. The need for cleaner products also increases the amount of energy needed to run our operations.

Consequently, improving the energy efficiency of our operations is increasingly important from an environmental and business perspective. The cost of energy to the company is substantial, averaging $3 billion annually from 2001 to 2005 and reaching $5.3 billion in 2006. The total energy consumption of our operated assets in 2006 was 900 trillion Btu.

In 2006, we beat our target on the Chevron Energy Index, which measures energy use at each facility and for each business activity. Chevron achieved a level of 73 on the index, an improvement of three points over 2005 and two points better than our goal of 75. Today, our operations are 27 percent more energy efficient than they were in 1992, the base year. This improvement translates into lower GHG emissions required to produce our products.

Our business units continue to make steady progress each year in improving their energy efficiency. Continuing this trend requires constant focus and progress on our key energy efficiency opportunities, including designing energy efficiency into our capital projects, keeping existing equipment efficient through proper maintenance and upgrading, and auditing and benchmarking our progress. Cogenerating power and steam in our facilities has also been an important part of our overall strategy since the early 1990s.