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  Chevron - Wounded or Rebounding? Take Your Pick.
January 27, 2010
 

While Contra Costa Times Business Editor Drew Voros continues to erroneously skewer Richmond for Chevron’s expansion woes and laments the decline of refineries in the U.S., Financial Times writer Sheila McNulty reported that 2009 was a turnaround year for Chevron, having gone from having the lowest margins of the three US supermajors in 1999 to the largest margins in 2008. “After years of lacklustre production, which fell from 2.6m barrels per day of oil-equivalent production in the fourth quarter of 2007, to 2.5m in the same quarter in 2008, analysts are expecting the fourth quarter of 2009 to be a turning point for the second-biggest oil company [Chevron] in the US.”
Like many misinformed critics, Voros makes the mistake of blaming Richmond for halting the project (“… a court ruling backed by the Richmond city officials and environmentalists halted the $1 billion project.”)

The City of Richmond is, like Chevron, a defendant in the lawsuit brought by CBE, APEN and others. The only mistake the City Council made was being too eager to support Chevron by approving a flawed EIR.

For more, see http://www.ft.com/cms/s/0/e6b74b50-0945-11df-ba88-00144feabdc0.html.

Incidentally, both the plaintiffs and the defendants in the Chevron lawsuit spent this morning in Sacramento in a command performance before the president of the California Senate and the speaker of the house, both present and former, in an attempt to get settlement talks back on track.

Voros: No political will to keep oil refineries in America

Drew Voros, Contra Costa Times Business Editor
Posted: 01/26/2010 01:10:44 PM PST
Updated: 01/26/2010 06:10:16 PM PST

You probably haven't noticed, but during the past 30 years, America has seen more than half of its oil refineries shut down. It's OK. Our political leaders haven't noticed either. In 1981, there were 324 operable refineries. Today, there are fewer than 140 refineries, with three new closures in 2009.
Unlike the auto industry, where there is an obvious and taxpayer-funded will to keep factories in this country open, we are allowing oil refineries to close without a fight. A few decades down the road, most of our oil will be refined in foreign countries, similar to the way steel factories were sent overseas.
As drivers in the Bay Area, we must purchase gasoline blended to meet California's strict environmental standards. That's also the reason we pay more for gas than anywhere else in the country, plain and simple.
For the most part, that gasoline is produced by five local refineries: Chevron's 108-year-old Richmond refinery, Shell's Golden Eagle and Tesoro refineries in Martinez, the ConocoPhillips refinery in Rodeo, and Valero's Benicia refinery.
Wholesale prices for this fuel are set on the New York Mercantile Exchange, and those prices are influenced by international, national and, more important, regional conditions.
Now imagine taking out one of those five refineries and lowering the supply by roughly 20 percent permanently. Simple economics would say that prices would rise 20 percent, at least, in a

best-case scenario. Spread a 20 percent increase in Bay Area gas prices around and see how much that sucks out of the local economy. And don't figure it annually — that would minimize the impact of Chevron closing down its Richmond refinery.
Last week, Chevron announced plans to downsize its refinery operations worldwide by laying off employees and even exiting some markets. Details are coming in March.
While I do not have inside information that the San Ramon oil giant has concrete plans to close Richmond, simple extrapolation of the facts would tell you it's a matter of time. If not in March, certainly in the coming years. Obsolete facilities have no place in an efficient, profitable oil company.
Last summer, Chevron embarked on a reported $1 billion retrofit project of the 1,250-worker Richmond facility, which — oh, by the way — contracted out an army of 1,000 local ironworkers. Just as the welding torches got hot, a court ruling backed by the Richmond city officials and environmentalists halted the $1 billion project.
The goal was to make the antiquated facility a state-of-the art refinery capable of processing nearly all blends of crude oil. Today, the Richmond refinery is restricted to processing light crude, the staple of Middle East oil markets, which also contributes to our high price of gas.
There's not a single political leader talking about the evaporation of refineries in America. Richmond is a microcosm, where political forces are trying to remove a source of pollution that also is responsible for 30 percent of the city's budget.
Refineries are treated as pariahs rather than important economic engines. By erecting environmental barriers to making facilities more efficient and competitive, we have opened the door for their departure without thinking about the consequences to consumers and tax bases.
Drew Voros is the business editor. His column runs on Wednesdays. He can be reached at avoros@bayareanewsgroup.com. Follow him at www.twitter.com/bizeditor.

Hopes high for Chevron turnround

By Sheila McNulty in Houston
Published: January 25 2010 03:25 | Last updated: January 25 2010 03:25
Analysts will be looking for confirmation of a turnround at Chevron when the big US oil companies report their fourth-quarter 2009 financial results this week.
After years of lacklustre production, which fell from 2.6m barrels per day of oil-equivalent production in the fourth quarter of 2007, to 2.5m in the same quarter in 2008, analysts are expecting the fourth quarter of 2009 to be a turning point for the second-biggest oil company in the US.
James Neale, analyst at Credit Suisse Global Energy, says: “We expect the company to deliver over 9 per cent year-on-year growth in the fourth quarter, which is almost unprecedented for a supermajor.”
However, the production growth may not be reflected in the group’s results, as weak refining and marketing sales are expected to bring down the entire sector. Indeed, warnings from Chevron this month have led Credit Suisse to revise down fourth-quarter 2009 forecasts by 12 per cent, from $1.97 earnings per share to $1.73.
Among the other big US oil groups reporting this week, ConocoPhillips, the US’s third-biggest, will report on Wednesday, Occidental Petroleum on Thursday, Chevron on Friday and Exxon on February 1.
Chevron, nonetheless, has had a good year. It reached peak production at its Agbami project in Nigeria, estimated to hold 1bn recoverable barrels of oil equivalent. In the Gulf of Mexico, its Blind Faith field reached production capacity in March 2009, and its Tahiti project achieved first oil in May 2009.
In Brazil, Chevron’s Frade project achieved first oil in June 2009. In Angola, its Tombua-Landana project achieved first oil in September 2009.
On top of that, Chevron obtained key approvals in 2009 to move forward with its massive Gorgon liquefied natural gas project in Australia, which will provide longer-term growth.
It expects first oil in 2010 from Perdido in the Gulf.
“They are now on track,’’ says Robin West, chairman of PFC Energy, the consultancy. Indeed, PFC notes Chevron has gone from having the lowest margins of the three US supermajors in 1999 to the largest margins in 2008.
“Chevron’s per barrel margin in 2008 was over eight times what it was in 1999,’’ said Antonia Bullard, PFC senior director.
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Hopes high for Chevron turnround

By Sheila McNulty in Houston
Published: January 25 2010 03:25 | Last updated: January 25 2010 03:25
Analysts will be looking for confirmation of a turnround at Chevron when the big US oil companies report their fourth-quarter 2009 financial results this week.
After years of lacklustre production, which fell from 2.6m barrels per day of oil-equivalent production in the fourth quarter of 2007, to 2.5m in the same quarter in 2008, analysts are expecting the fourth quarter of 2009 to be a turning point for the second-biggest oil company in the US.
James Neale, analyst at Credit Suisse Global Energy, says: “We expect the company to deliver over 9 per cent year-on-year growth in the fourth quarter, which is almost unprecedented for a supermajor.”
However, the production growth may not be reflected in the group’s results, as weak refining and marketing sales are expected to bring down the entire sector. Indeed, warnings from Chevron this month have led Credit Suisse to revise down fourth-quarter 2009 forecasts by 12 per cent, from $1.97 earnings per share to $1.73.
Among the other big US oil groups reporting this week, ConocoPhillips, the US’s third-biggest, will report on Wednesday, Occidental Petroleum on Thursday, Chevron on Friday and Exxon on February 1.
Chevron, nonetheless, has had a good year. It reached peak production at its Agbami project in Nigeria, estimated to hold 1bn recoverable barrels of oil equivalent. In the Gulf of Mexico, its Blind Faith field reached production capacity in March 2009, and its Tahiti project achieved first oil in May 2009.
In Brazil, Chevron’s Frade project achieved first oil in June 2009. In Angola, its Tombua-Landana project achieved first oil in September 2009.
On top of that, Chevron obtained key approvals in 2009 to move forward with its massive Gorgon liquefied natural gas project in Australia, which will provide longer-term growth.
It expects first oil in 2010 from Perdido in the Gulf.
“They are now on track,’’ says Robin West, chairman of PFC Energy, the consultancy. Indeed, PFC notes Chevron has gone from having the lowest margins of the three US supermajors in 1999 to the largest margins in 2008.
“Chevron’s per barrel margin in 2008 was over eight times what it was in 1999,’’ said Antonia Bullard, PFC senior director.
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