A trio of Richmond City Council members is urging Chevron to restart its nearly $1 billion Hydrogen and Energy Renewal project that has been stalled for nearly two years by litigation successfully challenging the content of the environmental impact report. In December 2010, a final push to settle the litigation failed, and the California Court of Appeal will soon issue a final order closing the case and granting a victory to plaintiffs Communities for a Better Environment (CBE), Asian Pacific Environmental Network (APEN) and West County Toxics Coalition (WCTC).
Mayor Gayle McLaughlin, Vice-mayor Tom Butt and Council member Jeff Ritterman along with City Manager Bill Lindsay have been meeting with Chevron executive this week to convey their commitment to push diligently toward a new permit based on an amended or supplemental EIR that repairs those elements found lacking or defective by the Court. No one on the City Council ever opposed this project on principle, but the Council split in 2008 over the adequacy of the EIR and mitigations to impacts, some of which it turned out were not identified or misidentified.
If Chevron is willing to restart the permitting process and it is successfully concluded this time, the project will create over 1,000 construction jobs and result in a more energy efficient refinery operation. Councilmember Jeff Ritterman, who along with Mayor McLaughlin and former Councilmember Maria Viramontes, previously served on the litigation settlement committee for the City said, “I personally felt that we made a lot of progress at the final negotiating session and feel optimistic that a settlement can be reached. I certainly would be very willing to work hard to find common ground.”
It is now up to Chevron to decide if they want to partner with the City to redefine the project and submit a new application, which could be approved in as little as three to six months.
Unlike a year ago, Chevron’s refinery profits are on the upswing, according to the Contra Costa Times, earning “…$475 million, compared with a year ago loss of $333 million. These domestic downstream operations include Chevron's refinery in Richmond.”
Chevron gushes $5.3 billion in profit on rising oil prices and asset sales
By George Avalos
Contra Costa Times
Posted: 01/28/2011 06:05:01 AM PST
Updated: 01/28/2011 10:47:12 PM PST
A sign advertises gasoline prices at a Chevron gas station in Mountain View, Calif., Friday,...
Chevron Corp. spouted $5.3 billion in fourth-quarter earnings that were propelled by rising oil prices, asset sales and improved refinery margins, the San Ramon energy giant said Friday.
During a conference call with analysts to discuss the earnings, the oil company criticized White House actions that have stalled the resumption of drilling in the Gulf of Mexico. Chevron Chief Executive Officer John Watson said thousands of jobs have been erased by the drilling curbs that were triggered by the BP oil disaster.
"The administration wants to create jobs," Watson told the analysts. "We can create thousands of them" with the resumption of permits and drilling.
Chevron's results topped Wall Street's expectations. Chevron earned $2.64 a share in the October-December quarter. Analysts had anticipated a profit of $2.35.
Compared with the year-ago quarter, when Chevron posted a profit of $3.1 billion, earnings soared 71 percent higher. For the full year, Chevron earned $19.02 billion, an 81 percent increase compared with 2009.
"Financially and operationally, 2010 was an outstanding year," said Watson.
"Earnings and cash flow increased significantly in 2010 as a result of higher prices for crude oil, higher oil production and improved refined product sales margins," Watson said.
The fourth-quarter earnings were also bolstered by a $400 million gain from the sale of Chevron's stake in a pipeline company in the United States.
Despite beating the estimates from prognosticators, Chevron's shares tumbled Friday. The stock fell 1.5 percent, or $1.37 a share, and closed at $93.38. Chevron's peer group fell an average 0.2 percent.
Investors appears to be concerned about Chevron's sluggish pace of replacement of its energy reserves. During 2010, Chevron replaced 24 percent of its existing reserves of oil and natural gas. Analysts would like to see a replacement of 100 percent of oil and gas reserves.
"Typically you want to grow reserves," said Alex Morris, an analyst with investment firm Raymond James & Associates in Houston. "To put it nicely, 24 percent is not ideal."
The analysts, though, noted that the reserve replacement trend isn't a major issue so long as Chevron resumes the more robust rates of oil and gas production that typify the company's activities.
"Reserve replacements are typically 'lumpy' due to the timing of major capital projects," Jacques Rousseau, an analyst with the New York office of RBC Capital Markets, an investment firm. "Chevron has reported solid results in the past, with an annual average reserve replacement of 120 percent."
Over the long run, the powerful earnings results were a far bigger plus than negatives due to reserve replacement rates that tend to gyrate, analysts said.
"It was a good quarter that ended a very good year," said Brian Youngberg, an analyst with investment firm Edward Jones & Co.
The company said that its exploration, development and production operations -- called the upstream business -- earned $4.85 billion in the fourth quarter, up 16 percent from the year-ago quarter.
Chevron's refining, marketing and transportation business -- downstream -- earned $742 million in the fourth quarter. That was a sharp improvement from the year-ago loss of $673 million.
The U.S. refinery and retail operations earned $475 million, compared with a year ago loss of $333 million. These domestic downstream operations include Chevron's refinery in Richmond.
"Looking at our downstream business, we made truly great progress in the first year of a three-year plan to improve returns," company CEO Watson said. "A new (downstream) organization is now in place and focused on tactical plans to improve performance."
Overall, compared with its peers, Chevron stacks up very well, Youngberg, the analyst, said.
"Chevron is still the most profitable oil company on a per-barrel basis," Youngberg said. "Chevron is generating very strong cash flow and I see that continuing."
Contact George Avalos at 925-977-8477.
chevron 4TH quarter
Company Chevron Corp.
HQ San Ramon
CEO John Watson
Revenue $54.03 billion
Profit $5.3 billion
Revenue %change +11.0%
Net Income % change +71.5%
Market value $187.9 billion
Stock price - 1 year % change +27.5%