Our company has a long, robust history, which began when a group of explorers and merchants established the Pacific Coast Oil Co. on Sept. 10, 1879. Since then, our company’s name has changed more than once, but we’ve always retained our founders’ spirit, grit, innovation and perseverance.
leading the way
the quest for black gold
Spurred by memories of the gold rush, hordes of prospectors descended on California in the 1860s, seeking another kind of bounty – black gold, or oil. Their early efforts were fruitless.
Undeterred, petroleum pioneers Demetrius Scofield and Frederick Taylor of the California Star Oil Works, a Chevron predecessor, took aim at Pico Canyon, a remote portion of the rugged Santa Susana Mountains. In September 1876, driller Alex Mentry succeeded in striking oil in Pico No. 4, despite rattlesnakes, wasps, mud and underbrush.
The first successful oil well in California, Pico No. 4 launched California as an oil-producing state and demonstrated the spirit of innovation, ingenuity, optimism and risk-taking that has marked the company ever since.
Lacking the capital it would need to seize marketing opportunities in this growing area, California Star was acquired by the Pacific Coast Oil Co. on Sept. 10, 1879. Colonel Charles Felton, Coast Oil’s president, had incorporated the company less than seven months earlier, on Feb. 19, 1879.
Within the next year, Coast Oil built California’s largest and most modern refinery, with a capacity of 600 barrels a day, at Point Alameda on San Francisco Bay; constructed a pipeline that linked Pico Canyon with the Southern Pacific’s train station at Elayon in southern California; and undertook an extensive, largely successful drilling program.
In 1895, the company initiated its enduring marine history when it launched California’s first steel tanker, the George Loomis, which could ship 6,500 barrels of crude between Ventura and San Francisco.
a new force enters the region
In 1878, Standard Oil Co. opened a three-person, second-story office in San Francisco. Despite its modest trappings, Standard possessed marketing acumen, outstanding products, an aggressive advertising philosophy and financial backing from its New York parent.
By 1885, it consolidated its Western interests under its subsidiary, the Standard Oil Co. (Iowa), which controlled distribution stations throughout the West Coast. Iowa Standard quickly became the area’s major seller of kerosene, and by 1900, the company controlled a staggering 96.5 percent of the Western market in light oils.
Lacking Iowa Standard’s marketing savvy and financial clout, Coast Oil had been struggling, despite its successful record of exploration and production. As a result, in 1900, Coast Oil agreed to be acquired by Iowa Standard, while retaining the name of Pacific Coast Oil Co. Through the acquisition, Iowa Standard gained a presence in the production, transportation and refining businesses.
richmond’s colossal refinery
After buying 500 acres of rolling lands on the northeast shore of San Francisco Bay in 1901, Standard completed the Richmond Refinery a year later. To feed this new colossus of West Coast refineries, Standard laid a pipeline from Richmond to the prolific new oil fields at Kern River and Coalinga.
Since Richmond’s location also made it ideal for a marine terminal in San Francisco Bay, Standard expanded its fleet by acquiring several vessels – including the Asuncion, a 2,196-ton collier that was converted into a 21,000-barrel tank ship; the 12,000-barrel tanker, Maverick; the 38,000-barrel tanker Colonel E.L. Drake; and the 23,000-barrel Barge 9.
a new entity is born
As the company grew, it changed structurally. In 1906, a consolidation between Pacific Coast Oil and Iowa Standard created a new entity, Standard Oil Co. (California), finalizing an integration that had existed for six years.
The “new” company stepped up its marketing efforts, particularly in gasoline sales, which nearly doubled between 1906 and 1910, and lubricants, which were marketed under the Calumet, Diamond, Petrolite, Ruddy Harvester, Zerolene and Zone labels.
To meet the growing market for motor fuels, the company came up with a revolutionary new sales mechanism – the world’s first “service station,” started in Seattle by sales manager John McLean.
the first gusher
Until now, Standard had left the hunt for oil to others. In 1909, the company decided to gamble on its ability to find its own oil. After several initial failures, the drilling team had its first success on Jan. 22, 1910, when a gusher flowed in at 1,500 barrels a day at the Midway-Sunset Field in Kern County, California.
going it alone
The company’s expertise in searching for oil became increasingly important as a May 1911 Supreme Court decision separated Standard Oil Co. (California) from its parent, a giant New York-based corporation. The decision concluded the government’s 4 1/2-year suit under the Sherman Antitrust Act against the Standard Oil Co. (New Jersey), its subsidiaries and affiliates.
Before the end of 1911, Standard Oil Co. (California) added to its refining capacity with the completion of the El Segundo plant in Southern California, formed the California Natural Gas Co. to expand its search for natural gas in the San Joaquin Valley and beyond, and constructed a second pipeline linking Richmond and the Kern River Field.
In addition to demonstrating its overall growth, the company reaffirmed its pioneering spirit by naming Demetrius Scofield, who tapped the company’s first well, to be president of the Standard Oil Co. (California).
spirit of standard
a strong company in a dynamic market
Divested from its parent company in 1911, Standard Oil Co. (California) had strong financial discipline, an impressive product line, marketing savvy, a growing refining system, a flexible marine fleet and an extensive pipeline network. One critical challenge remained: finding the energy to meet spiraling demand in a dynamic marketplace.
Fortunately, Standard had the right person for the job in Fred Hillman, who became director of the Producing Department in 1911. Within four years, Standard moved from sixth place to first among California’s oil producers. And by 1919, Standard’s production had grown to more than one-quarter of the state’s total.
Casting aside his original misgivings about the value of science in exploration, Hillman soon built a strong staff of geologists under the leadership of Eric Starke. Using a scientific approach became particularly valuable in assessing California’s soft subsurface formations.
Hillman’s earliest oil and gas exploration successes came at Midway, where the company made seven discoveries in an 18-month period, including the largest, McNee No. 4, which produced a record 30,000 barrels a day in April 1912. That same month, Derby No. 1 blew out with a daily flow of gas estimated at 63 million cubic feet.
On July 24, McNee No. 10 came in at 2,480 feet, flowing at 10,000 barrels a day and prompting Hillman to send his former employer at Ohio Oil a cable that read: “Can you match it, or do I take first place?” Two days later, Hillman’s question was answered when the same well broke loose, at least doubling its output.
new reserves to meet growing demand
After moving into the Los Angeles basin, Fred Hillman led his exploration team in delivering five gushers at the Emery Field in the West Coyote Hills between December 1912 and October 1913.
Standard Oil Co. (California) scored big in December 1913 when it purchased the Murphy Oil Co. holdings in West Coyote and East Whittier. By 1917, Standard had added two other great Southern California discoveries in the Montebello and Baldwin No. 3 fields.
The company’s efficiency and ability to find new reserves helped it keep pace with the surging demand for energy products fueled by the dramatic population growth and increased reliance on automobiles throughout Standard’s marketing area. In January 1919, the company had the first of several discoveries in Elk Hills in California’s San Joaquin Valley.
While Standard was compiling an impressive producing record, it also became a leader in conserving energy resources. The Starke gas trap, an invention devised by Standard engineer C.C. Scharpenberg and geologist Eric Starke, was one of the more ingenious methods for “capturing” gas from a well that then could be used to meet energy needs.
To serve markets in areas such as the Northwest United States, Standard more than doubled its ocean-going capacity between 1912 and 1916 by adding five tankers, the A.F. Lucas, El Segundo, Richmond, J.A. Moffett and D.G. Scofield. By 1926, the fleet grew to 40 vessels, including 22 ocean-going tankers as well as stern-wheelers, launches, barges and tugs.
Standard saturated its marketing territory with sales outlets, tripling the number of small bulk plants by the end of 1916 and quadrupling the number of substations between 1911 and 1919. And, by turning from horse-drawn vehicles to motor transport, the company increased the speed and range of its sales operations.
coping with increased competition
Standard Oil Co. (California) also steadily expanded its service station network. It became the Western leader by the end of 1919 with a total of 218 stations, more than the next three rivals combined. By 1926, the number of service stations in the company's five-state marketing area more than tripled, to 735 units.
Though gasoline sales more than doubled between 1911 and the end of 1914, increased competition caused Standard’s market share to fall during that same period. By 1926, the company’s gasoline market share in its five-state Western area shrank to 28 percent – down from 55 percent in 1919.
Following upon the success of Red Crown automobile gasoline, Standard introduced Red Crown aviation fuel in 1918, promoting the product through advertisements and through wider commitment to the growth of the aviation industry. In 1924, the company painted town names on the rooftops of its bulk plants to help guide aviators flying overhead.
Standard excelled in developing new products, such as the line of petrochemicals manufactured to support the Allied effort in World War I. This production of benzol, toluol and xylol was a forerunner of the impressive line of petrochemicals that the company developed following the onset of the Second World War.
Standard turned increasingly to international markets to maintain its sales growth. Between 1911 and 1914, export sales rose from 14 to 28 percent of the total business. In addition, the opening of the Panama Canal in August 1914 gave the company greater access to Eastern U.S. and European markets.
a new name for a growing company
As Standard Oil Co. (California) entered the 1920s, the market’s insatiable need for petroleum products continued. In 1925 alone, the company’s three refineries at Richmond, El Segundo and Bakersfield produced more than 56 million barrels of petroleum products as well as 13.6 million pounds of greases and 340,000 tons of asphalt.
In 1926, Standard boosted its production capacity by almost 50 percent when it acquired Pacific Oil Co., an organization that handled the oil properties of Southern Pacific Railroad. The company marked this achievement by creating a new corporate structure with a new name – Standard Oil Co. of California, or Socal.
One of the hallmarks of the newly named company continued to be the respect and fairness with which it treated its employees. This tradition of enlightened human relations dated back to the company’s founders, who espoused favorable wages, hours and working conditions for all company employees.
In 1916, Standard became the first company in the industry to adopt an eight-hour day for all salaried and contract employees. That same year, salaried employees were given two-week vacations. Other benefits, including sick leave and retirement benefits, were added within the next few years.
honoring the ‘standard oil spirit’
The fair treatment of company employees had a direct payoff in morale. In 1919, 94 percent of the employees who had served in World War I returned to work for the company at a time of high employment and opportunities for workers.
Recognizing the cooperation and mutual confidence throughout the company, President Kenneth Kingsbury in 1923 described this all-important attribute as the “Standard Oil Spirit,” which “represents, on the part of the personnel, a fine enthusiasm for the company, and a concern for its welfare, of which the company is justly proud.”
in war and peace
a far-flung search for new reserves
With U.S. crude oil supplies depleted by the Allies’ military needs during World War I, Standard Oil Co. of California (Socal) began seeking oil and gas reserves beyond U.S. shores in the postwar years. The long, intrepid quest would take more than 10 years before the company made its first international discovery in June 1932.
The search began in December 1920, when a 25-person exploratory team sailed from San Francisco to Bondoc Peninsula in the Philippines, followed by a freighter carrying 1,000 tons of equipment. Meanwhile, other Socal crews were deployed as far afield as Alaska and Colombia in the quest for oil. Despite each location’s geological promise, the quest proved elusive.
Undeterred, Socal next focused on the Middle East, an area with no history of discoveries and no obvious petroleum prospects. The company gained its first foothold in the region in 1928 when Gulf Oil Corporation offered its Bahrain concession to Socal (in a move that unknowingly foreshadowed the merger with Gulf by more than half a century).
After surveying the island, geologist Fred Davies and producing superintendent William Taylor selected a 12-mile-long oval-shaped depression called Jabal ad Dukhan, or the “Hill of Smoke” because its 453-foot mound was the highest point on the island.
Working in searing heat, the team met with success on June 1, 1932, after the bit pierced a layer of blue shale and the crew smelled oil.
next stop, Saudi Arabia
“Though only modest in production, the Bahrain discovery was a momentous event, with far wider implications,” wrote historian Daniel Yergin of the 1932 strike by Socal. “After all, the tiny island of Bahrain was only 20 miles away from the mainland of the Arabian Peninsula where, to all outward appearances, the geology was exactly the same.”
In June 1932, Socal began a year-long series of negotiations with the Saudi government before the two sides signed a concession agreement providing the company with exploration rights for the next 60 years over an area of about 360,000 square miles.
In November 1932, the company assigned the concession to its newly formed subsidiary, California Arabian Standard Oil Co. (Casoc), later to become Arabian American Oil Co., or Aramco.
After geologists surveyed the concession area, they identified a promising site and named it Dammam No. 1, after a nearby village. Over the next three years, the drillers were unsuccessful in making a commercial strike, but chief geologist Max Steineke persevered.
He urged the team to drill deeper, even when Dammam No. 7 was plagued by cave-ins, stuck drill bits and other problems, before the drillers finally struck pay dirt on March 3, 1938. This “stunning news” opened “a new era,” in Yergin’s words.
Fourteen months later, when the first tanker, Socal’s D.G. Scofield, arrived at Ras Tanura’s newly constructed deepwater port to load crude for international markets, Saudi Arabia’s King ’Abd Al‑’Aziz turned the valve to fill the tanker.
the birth of caltex
Socal had already found a potential market for its Middle Eastern oil by creating a historic partnership with Texaco in 1936. The joint venture, which became known as the California Texas Oil Company, or Caltex, melded the company’s Middle Eastern exploration and production rights with Texaco’s extensive marketing network in Africa and Asia.
Though it began as a modest operation with a single “teapot” refinery, a piecemeal transportation system, and fuel and lubricant sales of just 22,500 barrels a day, Caltex would emerge as a major international marketer and refiner with operations in some 60 countries in the years following World War II.
The joint-venture partners also agreed to share exploration rights in Central Sumatra, Java and Dutch New Guinea, which had been granted to Socal in 1935. Just after the company discovered the Duri Field in 1941, the Japanese incursion in World War II suspended activity until the postwar years.
During the pre-war years, Socal’s aggressive exploration program extended to the Southeastern United States, where the California Company, a Socal subsidiary, made its first discovery at Bayou Barataria, Louisiana, in 1939. Socal subsequently made discoveries in the U.S. Gulf Coast, the U.S. and Canadian Rocky Mountains, and eastward to the Atlantic.
The company entered the Canadian market in 1935 when Standard Oil Co. of British Columbia was launched in a two-room suite of the Hotel Vancouver. That same year, the company moved quickly, purchasing local oil distribution companies, acquiring service stations, establishing dealerships, starting a new refinery and acquiring a tanker, the B.C. Standard.
moving forward in difficult times
During the 1930s, Socal expanded its operations in Central America, building upon its leadership position in Mexico. It added a road-surfacing plant and constructed a bulk plant in El Salvador in 1935 before expanding into Guatemala, Nicaragua, Honduras and Costa Rica.
To offset the Depression’s dramatic impact on earnings, the company stimulated sales by bringing out solidly researched new products, including Standard Gasoline in 1931, Flight and Standard Penn motor oils in 1932, Standard Unsurpassed Gasoline with Tetraethyl Lead in 1934, DELO (Diesel Engine Lubricating Oil) in 1935, and RPM Motor Oil in 1936.
fueling the war effort
The onset of World War II changed everything for the company – from the product line to the lives of its employees. With the entry of the United States into the war in December 1941, Socal became a key supplier of crude oil and refined products for the Allies in the Pacific.
Meeting a key need for a more efficient aviation fuel, the company spent more than $57 million to expand 100-octane plants at the Richmond and El Segundo refineries and converted the Bakersfield Refinery almost exclusively to 100-octane production. Company research scientists also developed compounds that enabled U.S. Navy submarines to triple their cruising range.
World War II also created a boom in petrochemical demand. Socal invested more than $9 million to boost production of synthetic toluene – the second “T” in TNT. When the supply of natural rubber from Southeast Asia was cut off, the company erected a plant at El Segundo to supply butadiene for synthetic rubber.
supporting the war at sea
With the United States at war, Socal’s fleet came under command of the War Shipping Administration. Its tankers towed large concrete barges to the South Seas and sometimes served as floating service stations, fueling other vessels in the open ocean.
During the war, Socal built two new ships, the J.H. Tuttle and the R.C. Stoner, which became, by far, the largest ships in the Standard fleet. At 18,000 tons each, they could transport almost 154,000 barrels of cargo.
Two company ships failed to survive the war: the Storey was sunk in the South Pacific, causing the death of two men; and the Collier sank after a submarine attack in the Arabian Sea, killing 30 men. In all, almost 9,000 Socal employees served in the Armed Forces during World War II; 232 lost their lives.
In the face of adversity, employees summoned up their “Standard Spirit” and pressed ahead. During this time, women broke new ground, playing increasingly important roles in offices, laboratories, refineries, service stations and, occasionally, oil fields.
The efforts of employees received many kudos from U.S. military and government leaders, such as General Douglas MacArthur, who wrote: “To the men and women of Standard of California: We, the soldiers of the fighting line, give thanks to you soldiers of the production line for the sinews of war that made our victory possible.”
a new identity
focusing on worldwide exploration
The resumption of peace following World War II infused Standard Oil Co. of California (Socal) with new energy, new opportunities and an enterprising quest for new oil and gas resources. To satisfy the growing need for petroleum products, the company frequently devoted more than two-thirds of its annual expenditures to exploration and development.
And the company’s high success rate helped to maintain its position as the third-largest oil producer in the United States and the No. 1 producer in California. Particularly encouraging news came from the jungles of Sumatra, where the company learned that the Japanese occupying force had actually struck oil at Minas No. 1, using a rig left behind by Caltex Pacific Indonesia when crews vacated the area in 1941.
In late 1949, when Caltex Pacific finally resumed development of the field, the company realized that Minas was an oil giant, which would yield 1 billion barrels over a 17-year period, from 1952 to 1969. Caltex Pacific would gain major additional production from the Duri Field, which was discovered in 1941 and developed during the early 1950s.
In the decade following the war, Socal’s major U.S. discoveries included the Kelly-Snyder Field in West Texas; the Main Pass, Bay Marchand and Romere Pass fields in the offshore waters of the Gulf of Mexico, where the company became the largest oil producer as of 1949; and the Rangely Field in the Rockies of Colorado.
Internationally, Standard had major successes at the Acheson Field near Edmonton, Canada, and the Boscan Field in Venezuela. And in Saudi Arabia, when drilling resumed in 1947, the company learned that its concession area in the Enala Anticline contained the largest oil pool in the world—105 miles of productive sands.
Socal engineers achieved a major feat in building a pipeline over the highest pass any line had ever crossed. The pipeline brought oil from the Rangely Field to a newly constructed refinery in Salt Lake City.
And in Saudi Arabia, construction of the 1,068-mile Trans-Arabian Pipeline entailed use of a sky hook to move the 325,000 tons of steel pipe from a wharf in the Persian Gulf to a yard three miles away. From there, the steel was transported across the desert to the fields, where the pipeline was finally completed in September 1950.
pioneering in petrochemicals
In the postwar period, the company built on its position as a major supplier of petrochemicals by developing a wide array of new products.
After the U.S. government gave Socal special priority to build the nation's first synthetic detergent plant in 1945, the company had a solid footing to produce a wide array of industrial chemicals such as detergents, plastics and synthetic fabrics.
In 1951, the company created the Oronite Chemical Co. to market a growing output of petrochemicals. Three years later, the Richmond Refinery completed the nation’s first unit to manufacture paraxylene, a basic material for making Dacron and other synthetic fibers.
an era of growth
Reflecting Socal’s growth in these postwar years, revenues surpassed $1 billion for the first time in 1951. This growth continued, initially topping $2 billion in 1961, and climbing to almost $6 billion by 1969. The keystones of Socal’s success were its product sales, production increases and strong record of replacing reserves.
Throughout this period, Socal developed a wide range of new products, including Chevron and Chevron Supreme Gasoline, introduced in 1945; RPM motor oils in 1950; “Skypower” gasolines in 1956; new Chevron Supreme Gasoline and new RPM Supreme Motor Oil in 1957; and Chevron Custom Supreme, the first three grade gasoline in the West, in 1959.
extending the market
Socal’s marketing reach now extended far beyond the original five-state base in the Western United States. After acquiring the Perth Amboy Refinery in 1945, the company used it as a manufacturing base a couple of years later when it launched an expanded marketing network in 12 Eastern states through its subsidiary, California Oil Co.
U.S. expansion continued in 1961 when the company merged with Standard Oil Co. (Kentucky), the market leader in petroleum products in five Southeastern states. To serve this market with crude oil from fields in the Gulf of Mexico, the company constructed the 100,000-barrel-a-day refinery at Pascagoula, Mississippi, in 1963.
Other Western Hemisphere marketing operations included service station networks in Guatemala, El Salvador, Honduras and Costa Rica, designed to keep pace with the expanding economies of Central America.
a new presence in europe
In Western Europe, Socal agreed to dissolve the Caltex structure in that area and split its operations between the two parent companies, Socal and Texaco. To manage a share of the divided operations, the company created Chevron Oil Europe in 1967.
Paralleling the growth in marketing and producing operations, the company enlarged and diversified its manufacturing capabilities in the Eastern and Western Hemispheres. At the Richmond Refinery in 1965, the company launched the world’s largest Isomax hydrocracking complex, which converted heavy petroleum oils to light stocks used to make gasoline and other products.
In 1969, Standard completed a 150,000-barrel-a-day expansion of its refinery at Pernis in the Netherlands, and a year later brought onstream a new 250,000-barrel-a-day refinery at Freeport in the Bahamas. Many of the expansions and modernizations focused on enabling plants to convert greater quantities of high-sulfur crude into products that met environmental specifications.
in marine, bigger is better
Standard expanded its fleet in 1970 by adding six new very large crude carriers (VLCCs), supertankers of 250,000 or more tons. The VLCCs allowed the company to move bulk oil around the southern tip of Africa, avoiding any supply disruptions such as occurred in 1967 with the closing of the Suez Canal.
overcoming political disruptions
During the 1970s, the petroleum industry was confronted by many political issues – from the 1973 oil embargo to the nationalization of company assets by Libya, Venezuela and other oil producers.
Nevertheless, the decade was marked by numerous milestones, including major discoveries ranging from the West Pembina Field in Alberta, Canada, to the Ninian Field in the United Kingdom North Sea, and from the Middleton and North Apoi oil fields in Nigeria in 1972 to the giant Hibernia Field offshore Newfoundland in 1979. With these discoveries, Socal achieved a production record of more than 3.5 million barrels of oil equivalent in 1976, a year in which the world rebounded from an economic recession.
what’s in a name
In 1977, the company made a major organizational change when it formed Chevron U.S.A. Inc., merging six domestic oil and gas operations into one. This change was driven by the need to establish a nationwide identity and a consolidated organization.
The company naturally chose “Chevron,” a name that had first appeared on its products in the 1930s and had become its most recognizable mark of identification among consumers around the world.
As Chevron marked its centennial in 1979, Chairman of the Board Harold J. “Bill” Haynes saluted “all those people whose ideas and hard work caused our company to grow and prosper over the past 100 years” and encouraged everyone in the current organization to summon up the “vigor and creativity” that would help us to flourish in future years.
a new blueprint
As Standard Oil Co. of California (Socal) began its second century, it had become a major company in the United States and the Chevron brand was becoming familiar around the world. The company had ownership in 50 refineries, with a production capacity of almost 3 million barrels per day and featured the third-largest fleet among oil companies worldwide.
The company experienced strong results during the early 1980s, such as major discoveries and large acquisitions of offshore acreage in the U.S. Gulf of Mexico, a $1 billion modernization of its Pascagoula Refinery and the introduction of new Chevron Supreme Unleaded Gasoline with Techroline.
And yet the larger picture was unsettling, prompting the company to conclude that its normal business strategies simply wouldn’t be enough. Chairman of the Board George Keller expressed this view when he said, “Over the next decade, the oil business will become increasingly competitive.” He added, “Flexibility in swiftly adapting to change will be mandatory for success—and possibly survival.”
merging with gulf
The company’s chance came virtually overnight. Gulf Oil Corp., the nation’s fifth-largest petroleum company, had been under siege from an investor group seeking to gain control of the company and sell it piecemeal for a quick profit. After warding off a takeover bid, Gulf’s board of directors chose to offer the company up for sale.
On March 5, 1984, Keller made a bid of $80 per share, roughly $13.3 billion, and hours later received a phone call from Gulf Chairman James Lee, telling him that Socal had won the bidding.
With a price tag of $13.3 billion, it was the largest merger in corporate history at the time – and a strong marriage of assets, corporate philosophy and the varied talents of two organizations’ employees. By acquiring Gulf, Socal nearly doubled its worldwide proved oil and gas reserves overnight.
Through the merger, Socal added major exploration and production operations in areas where it was already strong, such as the U.S. Gulf of Mexico, Canada, and the North Sea. In West Africa, Gulf’s foreign reserves suddenly lifted the company to a leading position.
Gulf’s assets included a solid marketing and refining system, the Pittsburg & Midway Coal Mining Co. and Warren Petroleum, a successful manufacturer and seller of natural gas liquids.
With the merger came a new name for the company: Chevron Corporation – the name by which gasoline and other products had been known for decades in the United States and under which the company operated in many non-U.S. locations.
a smooth integration
The melding of Chevron and Gulf was impressively quick and smooth. Assets of both companies were sold or streamlined. By late 1985, the merger was complete.
Signifying the integration of the two companies, some 3,000 Gulf stations in Arkansas, Louisiana and Texas adopted Chevron’s name and products beginning in 1988. Concurrently, Chevron continued its long-term program to build or modernize stations at key locations and sell less-competitive facilities.
Chevron also modernized the Richmond and El Segundo refineries to enable them to convert more low-value fuel oils into high-value gasoline and other products, while streamlining the newly acquired Port Arthur plant to reduce operating costs.
Through the Gulf merger, Chevron became the No. 1 U.S. refiner and marketer as well as the nation’s market leader in gas liquids. By 1988, when the company acquired $2.5 billion in properties from Tenneco, Chevron became the leading oil and gas producer in the U.S. Gulf of Mexico.
With these strengths came a companywide enthusiasm to fulfill a corporate mission of being “better than the best.” To achieve this mission, Chevron stressed operational excellence and environmental responsibility.
Chevron’s revised environmental policy added an important new mandate: risk management, which involved identifying potential problems and solving them before they became real problems. It also expanded a far-sighted program, Save Money and Reduce Toxics, which had already cut hazardous waste disposal by 60 percent since 1986.
A key part of Chevron’s mission was to increase worldwide production. Through acquisition of Gulf properties, Chevron made major discoveries from the Alba Field in the North Sea to the Kutubu and Iagifu fields in Papua New Guinea.
In the early 1990s, with the industry confronted by oversupply and a global recession, Chevron achieved major cost savings through the sale of its Philadelphia and Port Arthur refineries, its retail gasoline network in Central America and its Ortho lawn and garden consumer-products business.
As U.S. exploration opportunities shrank, Chevron shifted its emphasis increasingly toward international projects, such as the development of the huge Tengiz Field in Kazakhstan after forming a partnership with that country’s government in 1993.
Other major opportunities included the Escravos natural gas project in Nigeria, the giant Hibernia Field offshore Newfoundland, the Kokongo Field in Angola and the Britannia project in the North Sea.
The company’s strategies clearly were paying off. In 1996, earnings hit an all-time high of $2.6 billion, and production of more than 1 million barrels a day was the highest in 11 years, driven by record volumes in Angola, Kazakhstan and Nigeria.
Chevron’s ability to grow through alliances was an important factor in its success – and an acknowledgement that the industry’s best opportunities often involved mega-projects that required the resources of more than a single corporation. This awareness continued to resonate as the face of the industry changed through mergers and acquisitions, which fundamentally altered the energy business – and the competitive stakes.
a long affiliation
After forming a corporate Mergers and Acquisitions group in January 1998, Chevron began evaluating other companies that might best complement its own. Based on a long affiliation with Texaco dating back to the 1936 formation of a joint-venture company, Caltex, Chevron rated Texaco high as a potential merger partner.
In addition to its world-class assets and strong corporate culture, Texaco had the experience of integrating Getty Oil Co.’s operations and people following the 1984 acquisition of Getty. In 1999, Chevron initiated a series of talks with Texaco, which proved unsuccessful.
The following year, Chevron renewed talks with Texaco. On Oct. 16, 2000, the two companies announced that they had reached an agreement to merge. Nearly one year later, on Oct. 9, 2001, the shareholders of Chevron and Texaco voted to approve the merger, and ChevronTexaco Corp. began doing business that same day.
The company became the second largest U.S.-based energy company, with more than 11 billion barrels of oil and equivalent gas reserves and 2.4 million barrels per day of refining capacity.
the end of easy oil
In the months that followed the creation of ChevronTexaco, the new company found itself looking for resources in ever-more-difficult environments - deeper, more remote and increasingly complex fields, and underground reservoirs with more challenging characteristics.
"The era of easy oil is over," said then Chevron CEO David J. O'Reilly.
From 2002 to 2007, Chevron earned close to $72 billion. During that same period, the company invested roughly the same amount to bring new energy supplies to market.
The company remained a leader among its peers, averaging a 42 percent success rate for exploration wells from 2002 through 2007. Chevron's exploration program added an average of 1 billion barrels to its resource base over that same time period.
In 2005, the company changed its name to Chevron Corp. and then acquired Unocal Corp., further enhancing its position as a leading energy provider. The acquisition was a strong strategic fit, strengthening the company's exploration and production portfolio in the Asia-Pacific region, the U.S. Gulf of Mexico and the Caspian region. The addition of Unocal provided a deep source of talent and leading-edge technology that Chevron quickly integrated throughout its organization.
Technology offered a key advantage in the search for new energy supplies. Chevron's approach to technology is unique in the industry. Fully integrated across the company — from exploration to product delivery — the company's technology success builds upon a combination of proprietary capabilities and strong partnerships.
Chevron demonstrated its expertise in employing deepwater exploration technology in the U.S. Gulf of Mexico. In 2006, the Jack well test set more than half-a-dozen world records for pressure, depth and duration in deep water. Five miles deep, it was the deepest well ever tested in the gulf. And these records were achieved without a single safety or environmental incident.
Also in the U.S. Gulf of Mexico, Chevron achieved first oil from the Tahiti Field in May 2009. In approximately 4,100 feet (1,250 meters) of water, Tahiti featured the deepest producing well in the gulf.
Three-dimensional visualization technology gives geologists a virtual tour through the rock, deep underground, and allows them to "see" potential reservoirs. This technology was employed at the Tahiti Field and at the Tengiz and Karachaganak fields in Kazakhstan.
The company used its expertise in reservoir management to complete a major expansion project that nearly doubled production capacity from the giant Tengiz Field in Kazakhstan. The project — called the Sour Gas Injection/Second Generation Plant — took five years and $7 billion to complete.
The Tengiz expansion and the ramp-up of the deepwater Agbami Field offshore Nigeria were two projects that added significant production volumes in 2009. This trend continued with the start-up of four major capital projects in 2012: the deepwater Usan Field offshore Nigeria, Caesar/Tonga in the U.S. Gulf of Mexico, Agbami 2 and Tahiti 2. Consistent with the company’s record of previous technological firsts, Tahiti 2 set several individual records for water injection in deepwater production.
The development of a significant queue of major capital projects was central to Chevron’s focus on long-term growth and creating significant shareholder value for decades to come. In pursuit of this goal, Chevron continued to advance its two world-class liquefied natural gas (LNG) projects in Western Australia. The Gorgon project achieved key construction milestones – including the design and construction of one of the world’s largest CO² injection facilities – and delivered first gas to a foundation customer in Japan in April 2016. And the achievement of several commercial milestones added impetus to the Wheatstone project, due to start up in mid-2017. The large queue of discoveries in Australia’s Carnarvon Basin contributes to the resources available to extend and expand Chevron’s LNG projects in the region.
In 2015, Chevron continued progress on the company’s development projects to deliver future production growth. Chevron achieved first production at the Lianzi Project in the Angola–Republic of the Congo Joint Development Area, the Moho Bilondo Phase 1b Project in Republic of the Congo and the Agbami 3 Project in Nigeria, and continued to ramp up production at the Jack/St. Malo Project in the U.S. Gulf of Mexico. Jack and St. Malo are two of the largest oil and gas fields ever discovered in the deepwater gulf, with reservoirs more than 26,000 feet deep, under 7,000 feet of water. With a capacity of 177,000 barrels of oil equivalent per day, the Jack/St. Malo floating production unit is the largest that Chevron has in the Gulf of Mexico.
Chevron’s development of oil and natural gas from shale and tight rock formations has intensified since the company entered the Marcellus Shale through its acquisition of Atlas Energy in 2011. By 2016, in addition to the Marcellus, the company was developing tight oil or liquids-rich gas shales in the Permian Basin of the southwestern United States, the Vaca Muerta Shale in Argentina, and the Duvernay Shale in Canada. Chevron already had a strong legacy position in the Permian Basin as one of its largest producers of oil and natural gas. And with approximately 2 million net acres of resources, Chevron is the basin’s largest net acreage holder.
delivering value in the downstream
The global restructuring of the company’s downstream and chemical business has delivered greater value from a more tightly focused portfolio. From 2010 through 2015, Chevron ranked #1 or #2 among its peers in earnings per barrel and return on capital employed. In 2015, Chevron’s downstream segment reported its best year on record, with $7.6 billion in earnings. The company has also become a leading global producer of premium base oil since the 2014 completion of a base oil facility at the Pascagoula, Mississippi, refinery.
what’s next for chevron?
With forecasters predicting that the world's energy demand could increase by about one-third by 2040, the world will need all the energy that can be produced from every available source, including natural gas, crude oil, coal, renewables and nuclear. Chevron is committed to working safely and responsibly to help develop that energy through an unmatched array of major capital projects.
Fundamental to everything Chevron does is a constant focus on achieving increasingly higher levels of safety, operational and environmental excellence. This focus will continue in the years ahead.