Exploration and Production
Using the latest technology, Chevron continues to make major crude oil field discoveries in the United States while maintaining strong production in mature fields.
Chevron is the third-largest hydrocarbon producer in the United States. During 2010, we produced an average of 708,000 barrels of net oil-equivalent per day, representing approximately 26 percent of the companywide total.
Our company's major operations in the United States are 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 northern Michigan, with the acquisition of Atlas Energy, Inc.
Gulf of Mexico Shelf
As of the end of 2010, Chevron was the largest leaseholder in the Gulf of Mexico.
Chevron is one of the largest producers of crude oil and natural gas on the U.S. Gulf of Mexico shelf. Daily net production during 2010 averaged 50,000 barrels of crude oil, 382 million cubic feet of natural gas and 9,000 barrels of natural gas liquids.
In 2010, we drilled 50 development and delineation wells, which help map oil and natural gas formations in the earth, and participated with partners in two deep-gas exploration wells. Deep-gas exploration focuses on geologic structures below 15,000 feet (4,572 m). Twenty-seven new outer continental shelf leases were added to the exploration portfolio.
Gulf of Mexico Deep Water
Chevron is one of the leading leaseholders in the deepwater Gulf of Mexico, with a long history of technical achievement and operational safety.
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. Following the event, the U.S. Department of the Interior placed a moratorium on drilling of wells using subsea blowout preventers in the Gulf of Mexico and the Pacific regions. The suspension also covered surface blowout preventers on floating facilities. In October 2010, the Secretary of the Interior lifted the moratorium on deepwater drilling activity, provided the 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 activity, delayed drilling of exploratory deepwater wells and affected development drilling in the Gulf of Mexico. As a result of the delays, the company's net oil-equivalent production in the Gulf of Mexico was reduced by about 10,000 barrels per day for the full year. New teams have been formed to carefully manage the changing regulatory and permitting regime raised by the Bureau of Ocean Energy Management, Regulation and Enforcement, so that Chevron can resume its exploration operations in the deep waters of the Gulf of Mexico.
In the deepwater Gulf of Mexico, the company achieved an average net daily production of 119,000 barrels of crude oil, 62 million cubic feet of natural gas and 8,000 barrels of natural gas liquids during 2010.
Chevron has a 75 percent interest in and operates the Blind Faith Field. In 6,500 feet (1,981 m) of water, it is Chevron's deepest offshore facility. Total daily production in 2010 averaged 48,000 barrels of crude oil (36,000 net) and 29 million cubic feet of natural gas (22 million net).
The Tahiti Field, one of the largest in the Gulf of Mexico, was discovered at a water depth of approximately 4,100 feet (1,250 m). 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 natural gas liquids (4,000 net). Chevron holds a 58 percent interest in and operates Tahiti.
The company's remaining deepwater production was from the mature Genesis, Petronius and Perseus fields and the nonoperated Mad Dog Field.
Chevron holds a 56.7 percent interest in Genesis and a 50 percent interest in Petronius. We operate both. In 2010, Genesis averaged total production of 8,000 barrels of crude oil per day (4,000 net) and 9 million cubic feet of natural gas (5 million net) per day. At Petronius, total daily production averaged 15,000 barrels of crude oil (7,000 net) and 16 million cubic feet of natural gas (8 million net), including production from the nearby Perseus Field.
Two major capital projects in the deepwater Gulf of Mexico—Jack/St. Malo and Big Foot—continued their front-end engineering and design phases into 2010. Chevron operates both projects. In October, the final investment decision was made on the $7.5 billion Jack/St. Malo project. This was followed in December by the final investment decision on the $4.1 billion Big Foot project.
Chevron has nonoperated working interests in the Perdido Regional Development. In March 2010, first production was announced at Perdido. Production was halted when issues with the compression vessels and export gas system arose. Production resumed in the third quarter of 2010.
At the time the deepwater drilling suspension was enforced in May 2010, Chevron's 55 percent-owned and operated Buckskin prospect had drilled to a depth of approximately 5,000 feet before it was interrupted. 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.
Fifteen new deepwater leases were added to Chevron's deepwater portfolio in 2010.
California
Chevron is the largest producer in net oil-equivalent in California, at 199,000 barrels per day in 2010. Daily production in 2010 averaged 178,000 barrels of crude oil, 96 million cubic feet of natural gas and 5,000 barrels of natural gas liquids.
The majority of the production is from Chevron-operated leases that are part of three major crude oil fields in the San Joaquin Valley—Kern River, Midway Sunset and Cymric. In 2010, the total daily production from these leases was 136,000 barrels (133,000 net) and 14 million cubic feet of natural gas (14 million net).
Heavy oil makes up about 84 percent of the crude oil production in the California fields, so we continue to employ steam injection—which makes the oil flow more easily—in the recovery of these reserves.
Chevron has crude oil resources in diatomite reservoirs in the San Joaquin Valley at Lost Hills, Cymric, McKittrick and Midway Sunset fields. Formed from the skeletons of prehistoric microorganisms called diatoms, diatomite is an unconventional reservoir rock with very high porosity and low permeability from which production can be difficult. In 2010, approximately 21 percent of the company's net oil-equivalent production in California was produced from these diatomite reservoirs.
A recovery technique using cyclic steam continues to improve recovery from Cymric, McKittrick and Midway Sunset fields. At the light-oil Lost Hills Field, the company is using waterflood technology to improve production.
Chevron has a nonoperated interest in the Elk Hills Field. In 2010, 197 development wells and one delineation well were drilled into areas that included shale to extend the producing boundaries. Enhanced-recovery techniques are being used to increase production of crude oil and natural gas that would not be recoverable using conventional methods.
Midcontinent and Alaska
Chevron operates producing fields in the midcontinental United States—primarily in Colorado, New Mexico, Oklahoma, Texas and Wyoming—and in Alaska. The company also holds interests in these and several other states. 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 1926, and in 2010, the total net production surpassed 5 billion barrels of oil-equivalent.
In Alaska, Chevron has operated and nonoperated working interests in the Cook Inlet. The company also has nonoperated working interests on the North Slope.
In 2010, the company's daily net U.S. production outside California and the Gulf of Mexico averaged 91,000 barrels of crude oil, 773 million cubic feet of natural gas and 29,000 barrels of natural gas liquids.
In the Piceance Basin in northwestern Colorado, Chevron continues natural gas development of approximately 35,000 acres (142 sq km), which we own and operate.
Shale Opportunities
Chevron is working to maximize the potential of shale resources in the midcontinent. Shale is a very fine-grained sedimentary rock that is capable of producing gas and, in some cases, oil in a commercially viable way.
Shale gas is natural gas found in shale formations. The company is appraising the Haynesville formation in Panola County, Texas, where Chevron operates 60,000 net acres (323 sq km) and in Nacogdoches County, Texas, where Chevron has 11,600 net acres (50 sq km). We are drilling five Haynesville appraisal wells and have three horizontal wells already producing. In 2010, a 3-D seismic survey of approximately 600 square miles (1,554 sq km) began across Panola County, with full results expected in 2012. Plans for 2011 include drilling horizontal wells in Nacogdoches County.
Oil shale is an organic-rich, fine-grained limestone that yields oil when heated, and Colorado's Piceance Basin contains the largest known concentration of oil shale worldwide. In 2007, the Bureau of Land Management granted Chevron a research, development and demonstration lease to test a viable and environmentally sustainable technology for extracting hydrocarbons from oil shale. Chevron has been moving forward with core studies, geophysical tests, groundwater monitoring wells and various low-temperature solutions that show promise in recovering a portion of this significant resource.
In February 2011, Chevron acquired Atlas Energy, Inc. The acquisition provides us with access to natural gas resources in the Appalachian basin, which consist of 850,000 acres (3,440 sq km) of Marcellus and Utica shale. The acquisition includes 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 serving the Marcellus. Chevron also gains assets in Michigan, which include Antrim producing assets and 380,000 acres (1,537 sq km) of the Collingwood/Utica Shale.
Natural Gas
Chevron's gas and midstream businesses play a key role in our strategic plans to make natural gas a growing part of our energy portfolio.
Chevron is developing a diverse portfolio of conventional pipeline gas, liquefied natural gas (LNG), gas-to-liquids (GTL) and shale gas.
LNG Import Terminals
Chevron's gas business continues to gain access to the natural gas market in the United States and other key areas. Chevron has capacity in a third-party pipeline system that connects the Sabine Pass LNG terminal in Cameron Parish, Louisiana, to the natural gas pipeline grid. The pipeline connects to two major salt dome storage fields and 10 major interstate pipeline systems, including Chevron's Sabine Pipeline, which connects to the Henry Hub. The Henry Hub connects to nine interstate and four intrastate pipelines and is the pricing point for natural gas futures contracts traded on the New York Mercantile Exchange.
Natural Gas Marketing
Chevron is one of the top marketers of natural gas in North America. We offer an array of services and have established relationships with utility and industrial customers and pipeline operators.
Pipeline
Headquartered in Houston, Texas, Chevron Pipe Line Company owns and in some cases operates an extensive system of crude oil, refined-products, chemicals, and natural gas pipelines and storage facilities in the United States.
We operate a U.S. network of more than 10,200 net miles (16,532 km) of regulated and unregulated pipelines for moving crude oil, natural gas and refined products.
In 2010, we expanded our Keystone natural gas storage facility near Midland, Texas, by approximately 2 billion cubic feet, for a total expected capacity of nearly 7 billion cubic feet.
In December 2010, Chevron announced a new joint venture to build a 136-mile (219-km) pipeline in the Gulf of Mexico. Plans call for the pipeline to transport crude oil from the Jack/St. Malo deepwater production facility in the U.S. Gulf of Mexico. The project is expected to be completed in 2014.
Work also continued on a project to restore the Cal-Ky Pipeline that was decommissioned in 2002. When completed in 2012, the pipeline will deliver crude oil to our refinery in Pascagoula, Mississippi.
Shipping
Based in San Ramon, California, Chevron Shipping Company operates a fleet of Chevron-owned and chartered vessels to transport crude oil, refined products, liquefied petroleum gas and liquefied natural gas to customers worldwide. In 2010, Chevron managed approximately 2,500 deep-sea tanker voyages.
As part of our ongoing fleet modernization program, we now have four modern, double-hulled U.S.-flagged tankers. We replaced two U.S.-flagged tankers in 2010, and the company plans to retire another U.S.-flagged product tanker in 2011. The new tankers are expected to bring improved efficiencies to Chevron's fleet. To protect the environment, all the ships in Chevron's owned and bareboat-chartered fleet have double hulls.
Power Generation
Chevron has investments in 13 power generation facilities around the world.
Cogeneration facilities in the United States include seven in California and two in Nevada. Our owned and operated Casper Wind Farm in Casper, Wyoming, is a 16.5-megawatt wind power facility designed to optimize the efficient use of a decommissioned refinery site for delivery of clean, renewable energy to the local utility provider.
Marketing and Retail
Chevron manufactures and sells a range of high-quality refined products, including gasoline, diesel, marine and aviation fuels, premium base oil, finished lubricants, and fuel oil additives. We own five U.S. fuel refineries and have a network of Chevron® and Texaco® service stations.
Refining
Chevron has a crude refining capacity in the United States of approximately 941,000 barrels per day. Refineries are in Richmond and El Segundo, California; Kapolei, Hawaii; Salt Lake City, Utah; and Pascagoula, Mississippi.
In 2010, we continued working to improve refinery flexibility and their ability to process lower-cost crude oil. In late 2010, construction began on modifications to further improve the El Segundo refinery's reliability, high-value product yield and flexibility to process a range of crude oil types. The project is expected to be completed in 2012.
In the fourth quarter of 2010, we started up a continuous catalytic reformer at the Pascagoula refinery. These enhancements will improve equipment reliability.
Americas Products
Chevron's marketing efforts are managed by our Americas Products organization. Chevron has a network of more than 8,000 Chevron- and Texaco-branded service stations in the United States.
In the United States, Chevron is known through our two brands: Chevron® and Texaco®. Chevron and Texaco consistently rank as the "Most Powerful Brands" in the United States, according to the Oil Price Information Service. Chevron was recognized by the Lundberg Survey for its highest value margin at the pump of all U.S. brands. Our ExtraMile® convenience stores joined our Food Mart™ and Texaco Star Mart® stores in earning the Convenience Store Chain of the Year awarded by Convenience Store Decisions magazine.
We are among the leading global suppliers of jet fuel and aviation gasoline to commercial airlines, general aviation and military customers. Chevron markets aviation fuel at more than 400 airports, and we are the No. 1 commercial aviation provider in the United States.
Lubricants
Chevron sells finished lubricants to commercial, industrial and retail customers nationwide. Our line of lubrication and coolant products in the U.S. includes our well-known Chevron Havoline® and Chevron Delo® motor oils. We are the top U.S. supplier of premium base oil west of the Rockies, and we are still growing.
In the first quarter of 2011, the final investment decision was made on the 25,000-barrel-per-day premium base-oil facility at our Pascagoula refinery. The facility will use our ISODEWAXING® catalyst, which results in higher yields and enables a broader range of crude oil to be used in the manufacturing process. The $1.4 billion construction project is on target, with the plant scheduled to begin operations by the end of 2013.
Strategy, Technology & Commercial Integration
Chevron's Strategy, Technology & Commercial Integration (ST&CI) organization is a critical link between Chevron's upstream and downstream operations. It provides crude oil and refined products at the right time, to the right markets, at the best price.
The Crude Supply and Trading group manages trading for all major crude oil grades. Through the purchasing and marketing of substantial crude oil production volumes, the group fulfills the requirements of the company's global refining and product networks.
The Product Supply and Trading group engages in the global supply, trading and logistics of gasoline, diesel, jet fuel, refinery feedstocks and blendstocks, heavy fuels, biofuels, coke, sulfur, ammonia, and asphalt for Chevron's marketing network and third-party customers.
Together, these groups handle more than 400 grades of crude oil and petroleum products and manage nearly 5 million barrels per day in commodity transactions. By leveraging Chevron's downstream strategy, knowledge of commodity markets and technology, ST&CI achieves the highest value for Chevron's equity refinery production and the lowest cost supply for Chevron's global marketing needs.
Chemicals
Chevron is one of the world's top producers of commodity petrochemicals through the Houston-based joint venture Chevron Phillips Chemical Company LLC and all its affiliates (CPChem). We own half of the company. CPChem manufactures building-block chemicals used to make consumer and industrial products, including olefins, polyolefins, aromatics, styrenics and specialty products. Major U.S. plants are in Texas, Louisiana, Mississippi and Ohio.
Oronite, a Chevron subsidiary, is a world-leading developer and manufacturer of fuel and lubricant additives and chemicals designed to enhance the performance of all types of transportation and industrial equipment. Facilities in the United States include:
- A technology center in Richmond, California
- A manufacturing plant in Belle Chasse, Louisiana
- Sales headquarters for the Americas region in Houston, Texas
Mining
Chevron Mining Inc. owns and operates four mines in the United States:
- McKinley, a surface coal mine in New Mexico
- Kemmerer, a surface coal mine in Wyoming
- North River, an underground coal mine in Alabama
- Questa, an underground molybdenum mine in New Mexico
In 2010, the three coal mines had a combined annual production capacity of 7.8 million tons.
The company also owns a 50 percent interest in Youngs Creek Mining Company LLC, a joint venture to develop a coal mine in northern Wyoming.
In March 2011, we signed a purchase and sale agreement for the sale of the North River Mine and other coal-related assets in Alabama. And in January 2011, we announced our intent to sell the remaining coal mining operations, including the Kemmerer Mine and Chevron's interest in Youngs Creek.
We continue to build on our record of safety. The Questa Mine and the McKinley Mine shared the 2010 Safety Innovator of the Year Award presented by the New Mexico Mining Association. The Questa Mine also received an award for Rescue Response presented by the New Mexico Mining Association and the New Mexico Bureau of Mine Safety.
In 2010, the McKinley Mine focused on full reclamation efforts.
Technology
Chevron has three technology companies that support the company's businesses. The work that these companies do is integrated across Chevron.
Highlights in 2010 include the following:
- We deployed next-generation interpretation and earth modeling software systems that can help track the movement of oil through rock reservoirs to help Chevron manage reservoir assets as efficiently as possible.
- We piloted an autonomous underwater vehicle operation in the shallow water of the U.S. Gulf of Mexico. This vehicle could improve monitoring of deepwater subsea systems and be used for intervention planning and in response to major incidents such as hurricanes.
- We implemented interactive 3-D models to train operators of the Tahiti Field in the Gulf of Mexico and the Agbami Field in Nigeria. This training technique accelerates new facility commissioning, reduces downtime and improves safety.
- We constructed and commissioned a 1-megawatt concentrating photovoltaic solar facility at Chevron Mining's molybdenum mine in Questa, New Mexico.
- We constructed and commissioned a next-generation, 740-kilowatt 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.
Updated: March 2011