Chevron under siege at shareholder meeting in San Ramon

By George Avalos
Contra Costa Times
Posted: 05/25/2011 03:51:13 PM PDT
Updated: 05/25/2011 05:44:13 PM PDT

SAN RAMON -- Activists besieged Chevron at its shareholders meeting here Wednesday, in a gathering punctuated by shouts from attendees, warnings the event would be terminated early and interventions by security guards.
The acrimony at the annual meeting nearly obscured the company's discussion of a performance in 2010 that produced a gusher of profits and a jump in the oil giant's stock price.
"We had a tremendous year," Chevron's chief executive officer, John Watson, told the shareholders.
During 2010, Chevron earned $19.02 billion, the company's second-best annual profit. And profit has strengthened lately: Over the 12 months that ended in March, Chevron earned $20.68 billion. During the one-year period that ended Wednesday, Chevron's shares have jumped 43 percent, nearly twice as robust as the S&P 500 gain of 23 percent over the same stretch.
Yet those very profits have helped make Chevron a target of activists who peppered Watson with questions, statements and demands about the company's environmental and human rights record.
"The enormous profits at a time when the public at large labors under $4 gasoline has created a way for activists to express their discontent about oil companies in general," said Robbert Van Batenburg, head of equity research for Louis Capital Markets.
Chevron has been forced to confront a lawsuit that alleges the company is liable for an array of pollution woes linked to Texaco's operations in the Amazon rain forest. Chevron bought Texaco for $45.83 billion in October 2001.
"Chevron versus a local Amazon tribe doesn't read well, regardless of the case's merits," Van Batenburg said. "It doesn't look good at all."
In response, Chevron has stated that Ecuador's government-owned oil company, Petroecuador, bears primary responsibility for the oil spills and other pollution in the jungle. Watson told the shareholders that Texaco cleaned up any contamination it caused.
"Texaco lived up to its obligations," Watson said. "Petroecuador has not lived up to its responsibilities."
The activists claimed that Chevron has failed to live up to its responsibilities in an array of locations in addition to Ecuador. The protesters stated Chevron has failed to be a good steward in locations such as Angola, the Niger Delta, Canada, the Philippines, Myanmar, Kazakhstan and Alberta, Canada.
Chevron employs 6,500 people in the East Bay, said spokesman Kurt Glaubitz.
Complaints also surfaced about the Richmond refinery. Kenneth Davis, a Richmond resident, said Chevron's actions have united protesters.
"People are dying," Davis said. "That's the reason we all are here. You are a bunch of liars and thieves. You steal from all over the Earth, then you process what you have taken in Richmond."
When Davis had finished speaking, he attempted to hand-deliver a document to Watson. Before Davis could stride more than a few feet, multiple security guards blocked his path.
"I don't have no guns and no weapons," Davis said.
Davis said he had been jailed after his actions at a Chevron shareholders meeting in Houston and had been thrown out of another meeting in San Ramon. Davis continued to stand and shout disagreements with the company's presentation.
"Mr. Davis, we have heard enough from you today," Watson said in response to the interruptions. "If you don't sit down, we will terminate this meeting."
Davis relented, but vowed to return in 2012 for the next annual meeting.
"We'll love to see you then," Watson replied.
Outside the meeting, 150 activists protested peacefully on Bollinger Canyon Way.
Several other activists shouted questions or statements when others were speaking. Audience members shouted "shut up" at others.
Antonia Juhas, director of the energy program at Global Exchange, a San Francisco nonprofit, said the Chevron CEO provided answers that were largely spin control.
"They were not substantive, and it was very frustrating," Juhas said. "There were no concessions to any of the points that were made."
After the meeting, Ginger Cassady, a campaign director with the Rainforest Action Network, said a concerted effort has been launched to intensify pressure on Chevron.
"Our goal at these meetings is to put the spotlight on Chevron's environmental crimes," Cassady said.
Were Chevron to halt production at the seven or so locations that the protesters specifically cited Wednesday, the company's production of crude oil would plunge. The company now produces 2.76 million barrels a day and the sites account for 833,000 barrels a day, or 30 percent of production.
Tens of thousands of jobs would be erased by such a halt. Chevron's employs 17,000 company workers at the locations. And thousands more temporary jobs would be imperiled, including 6,000 in the Niger Delta in a project to curb pollution there.
"We want to be a force for good everywhere we operate," Watson said.
Staff writer Suzanne Bohan contributed to this report. Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos.

Chevron Restarts Project to Upgrade Equipment at Richmond Refinery

Environmental groups stopped construction in 2009 but City Council says try again

By Christopher Connelly, Richmond Confidential on May 25, 2011 - 12:35 p.m. PDT
start the discussion

Robert Rogers, Richmond Confidential
A view of the Chevron Corp. refinery from atop Nicholl Knob.
Ready to move forward after the first quashed attempt, Chevron’s Richmond refinery began the process to restart its embattled Renewal Project on Monday by filing a new conditional use permit application. This will be the second attempt to complete the project, which was halted by a county appellate court in 2009 after it was narrowly approved by the City Council. The project is meant to upgrade equipment at the refinery and replace aging components.
In 2005, Chevron began the application process for the Richmond Renewal Project. The project intended to upgrade the refinery, replace facility’s the hydrogen plant and build new components to allow the plant to produce purer gasoline, improve energy efficiency and reduce emissions. Three years later, the City Council approved the permit with a slim 5-4 majority. Chevron started work on the project, but environmental groups sued to halt construction on the new equipment in 2009, citing concerns that the project’s environmental impact report was too vague and might allow Chevron to process heavier crude at the refinery, which would increase harmful emissions and greenhouse gasses.
A Contra Costa County Superior Court judge sided with them, ruling that the EIR failed to state whether the refinery would process heavier crude or address specifically how it would mitigate emissions. The court ordered a halt to the work, asking Chevron to clarify information in the EIR related to greenhouse gas emissions mitigation and crude oil processing capability. The court issued a final ruling in late March of this year, concluding the litigation.
Related
In anticipation of the ruling, the Richmond City Council passed a resolution in early March encouraging Chevron to submit a new or revised application to the city that addressed the environmental concerns cited by the court in order to restart the project. At that council meeting, Councilmember Tom Butt, who drafted the resolution, said that it was time to get the ball rolling again. “It will replace old and dangerous equipment that is dangerous and polluting, it will create jobs, and it’s just the right thing to do,” he said at the meeting in March. “Let’s get this project done right.”
Dean O’Hair, a spokesman for Chevron, said the company was given confidence by the resolution, although they had planned to re-apply anyway. “I think there’s a greater understanding with the city now than there was.  There’s a greater level of trust,” he said.  “Not to sound trite, but the resolution was some good encouragement and really some icing on the cake.”
Richmond Mayor Gayle McLaughlin, who voted against the project in 2008, said Chevron’s re-application on Monday was a political triumph. “We have finally gotten Chevron to agree to be transparent in the process,” she wrote in a press statement. “There will surely be issues of concern related to the data, but there will be full transparency, as we move through the EIR review process.”
While Richmond’s City Council officially encouraged Chevron to re-apply for the Renewal Project, the oil giant can expect them to interrogate the plan rigorously.  Most of the current council campaigned on environmental platforms. Two of the five councilmembers who voted to approve the project in 2008, Myrna Lopez and Maria Viramontes, were voted out last fall, replaced by Jovanka Beckles and Corky Boozé, both of whom have criticized Chevron. And last week, the City Council voted to hold themselves to the precautionary principle, urging caution when there is reasonable concern that a new project or policy will negatively impact the environment or residents’ health.
A history of legal troubles
During the initial draft EIR review for Chevron’s proposed project in 2008, environmental and community groups criticized it for lacking transparency. “They wouldn’t tell us exactly what they were going to do,” said Sandy Saeteurn of the Asian Pacific Environmental Network, an activist group that organizes on behalf of the Asian Pacific Islander community.  “They said that they wanted to evaluate the environmental impact after the project was done instead of before.”
Saeteurn said that a major sticking point was a suspicion that the refinery would start processing heavier crude oil, which would be more polluting.  Although Chevron said the company would not process denser oil, Saeteurn said company officials would not commit to that promise in their Environmental Impact Report. “We kept saying ‘Put that on paper, that you’re not going to do heavier, dirtier crude and we’re all for the project,’ but they wouldn’t do that.” The company did later include a note in the report’s comments section saying it would not process heavier crude, but it was not enough for the environmentalists or the court that sided with them.
In a press release issued Monday that announced Chevron’s application to restart the Renewal Project, Mike Coyle, general manager of the Richmond refinery, said the project, “will not change the refinery’s capability to process light-intermediate crude and will eliminate any confusion created by project opponents about the refinery’s ability to process heavy crude oil.”
But Greg Karras, a senior scientist with Communities for a Better Environment, said terms like “light” or “heavy” crude were vague.  “It doesn’t really mean that much. There’s no industrywide standard for what that means,” he said.  “What we care about is the potential real environmental impact going forward and what we can do about that.”
Chevron spokesman Dean O’Hair said that regardless of they terms you use, the equipment upgrades called for in the new version of the project would not impact the type of crude the refinery would process.  “The refinery can now process light intermediate crude blends,” he said. “And after the project is complete, the refinery will be able to process light intermediate crude blends.”
O’Hair said the only difference in the type of crude that can be processed is that the project will enhance the refinery’s ability to process oil with a higher sulfur content.  That’s because one of the goals of the Renewal Project is to enhance the facility’s hydrogen production by replacing its 50-year old hydrogen plant with a more efficient plant that can supply hydrogen to other Bay Area refineries.  Hydrogen is used to scrub the crude oil of sulfur and other impurities. The project will include a component that can use hydrogen to more effectively purify crude, allowing the refinery to process oil with up to three percent sulfur content.
Critics of the project, including Saeteurn of APEN, as well as the mayor say that they welcome the efforts to improve the plant’s energy efficiency and reduce greenhouse gas emissions.  But they are eager to see more details in the process of developing a new EIR, which they say will determine whether the feel the project is really a step forward.
Greg Karras recently finished a study that examined the density and sulfur content of oil processed at refineries across the nation and gauged the greenhouse gas emissions.  For the most part, he said that the denser the crude and the higher the sulfur content, the worse the emissions were, but that better technology could make for less-polluting refineries.  “It’s theoretically possible to refine oil that has a little bit more sulfur but end up with less emissions if you’re replacing some really old equipment with stuff that’s much more efficient,” said Karras.  “That’s the kind of stuff that we’re really going to need to look at when the EIR happens, but we don’t have that information yet.”
O’Hair said he expects there will be a detailed description of the specifications on the new equipment and the oil that the refinery will process in the new EIR, as that was one of the issues cited when the court ruled to stop the project.  Chevron will pay for a consultant to draft it over the coming year.
What Chevron would build
The new Renewal Project will be a scaled down version of the original plan, according to O’Hair.  In addition to the new hydrogen plant, Chevron originally wanted to build a new power plant and catalyst reformer that would have allowed the refinery to have a higher percentage of the gasoline they produced meet California’s more restrictive emissions requirements. But the demand for gas peaked in 2005, when the original project was planned, said O’Hair, so the company decided against including the catalyst reformer and power plant in the new project application.
Chevron said it finished about half the project when it was ordered to stop by a Contra Costa County Superior Court judge. The court ruled its environmental permit inadequate, and the refinery cut more than a thousand workers working on the new project. O’Hair said the refinery will hire back those thousand construction workers to complete the project, bringing much-needed jobs.
The refinery processes roughly 240,000 barrels of oil every day.  The Renewal Project would not increase the production, but would allow Chevron to do it more cleanly, said O’Hair.
On Monday, Chevron filed a conditional use permit application as the first step in the process of restarting the project. Under what Bill Lindsay, Richmond’s city manager, called an “aggressive” schedule, it will take nine to ten months to approve it.  In that time, the city will hire a consultant to develop a new draft Environmental Impact Report, which is required by the California Environmental Quality Act.
While CEQA does have some provisions for public input built in, Lindsay said that the city plans to take extra steps to ensure transparency. “Typically, the way the process works is you hire a consultant and then you don’t hear from them for a year or so and then they drop a draft EIR on your desk for the purposes of commenting,” he said.  That process generated a lot of criticism last time around, so the city plans to hold periodic public meetings while the EIR is being prepared. “That way there’s a little better understanding about some of the environmental and mitigation issues there are,” Lindsay said.
Once the EIR is approved and the Bay Area Air Quality Management District, a regulatory agency, signs off, the city will issue the conditional use permit, and Chevron can once again move forward with the project, Lindsay said, barring any legal challenges.
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Source: The Bay Citizen (http://s.tt/12vuJ)
Source: The Bay Citizen (http://s.tt/12vrC)