Strategy: Improve returns and grow earnings across the value chain.
Early in 2010 — in the face of a global oversupply of refining capacity — our downstream operations accelerated an effort to restructure and improve returns. By the end of the year, we were well along in our efforts to reduce our cost structure and were focused on areas where we have competitive strengths. Despite the stress and uncertainty that a restructuring brings, Downstream operated at its most reliable and safest levels ever.
We have made significant investments over the past few years to improve the reliability of our refineries and upgrade them to process a wide slate of crude oils. In 2010, the Pascagoula, Mississippi, refinery commissioned a state-of-the-art continuous catalytic reformer, which is expected to reduce feedstock costs and improve gasoline yield by 10 percent. At our affiliate refinery in Yeosu, South Korea, we started up a 60,000-barrel-per-day heavy oil hydrocracker under budget and ahead of schedule. Another major upgrade is in progress at our El Segundo, California, refinery and is expected to be completed in 2012. Since our benchmark year of 2008, we have captured approximately $275 million due to improvements in our refining operations.
Portfolio Upgrade
We took a number of steps during the year to upgrade our downstream portfolio and rationalize assets. In the United States, we withdrew the Chevron and Texaco motor fuel brands from 12 eastern states and the District of Columbia, areas where we had a relatively small presence. At the end of the year, we had sold six U.S. terminals and were negotiating the sale of seven others. We also sold our ownership interest in the Colonial Pipeline Company in the United States and certain marketing businesses in three East African countries. In addition, we announced plans to sell some of our European assets, including the Pembroke Refinery in the United Kingdom as well as assets in the Caribbean and select countries in Central America.
Posted: April 2011