The Story of Chevron From Oil Fields to Energy Leader

Merrill’s treatment of Chevron, its adoption, and subsequent evolution as a doctrine is thorough, accurate, and instructive in showing how law develops over time.

What would be the repercussions if the Supreme Court limits or overturns Chevron? BP and other European energy firms are investing billions into low-carbon technologies; Exxon Mobil and Chevron remain committed to oil and gas while taking some risks with new ideas.

Origins

Chevron’s oldest direct ancestor, Pacific Coast Oil Company, began prospecting for oil in California’s rugged canyons north of Los Angeles in 1879. Their inaugural Pico Well #4 produced 25 barrels per day and signaled a new age of petroleum exploration. Soon afterwards, their operations rapidly expanded into one of California’s major producers before eventually being bought out by Standard Oil Company and integrated with their west coast marketing operations to form Standard Oil Company of California, or Socal.

Chevron-Texaco continued to expand in the 1990s despite struggling financially as oil prices fell and newer energy companies emerged, yet maintained growth through acquisition deals with rival energy firms and divesting mature fields which produced diminishing quantities. Between 1992 and 1995 it reduced its refining capacity by over 407,000 barrels per day. In 1992 it reached an agreement to acquire Texaco for $13.2 billion, creating the world’s largest oil and gas company. Chevron-Texaco sold domestic fields that produced declining quantities as well as cutting its refining capacity by over 407,000 barrels per day between 1992 and 1995 – thus becoming the world’s largest oil and gas company ever.

Chevron began developing natural gas resources in the early 2000s. By 2009, they had completed major expansion of Tengiz field in Kazakhstan as well as increased production at Gorgon and Wheatstone liquefied natural gas projects in Western Australia. Furthermore, Chevron expanded global refinery networks while strengthening their presence across Asia-Pacific region.

Chevron in 2016 purchased Iowa-based Renewable Energy Group as its global headquarters for biodiesel and renewable diesel production, with Kevin Lucke, president of this subsidiary stating that by 2030 Chevron plans on producing approximately 4 million gallons daily of fuel produced through these energy sources.

Early Years

Chevron Archives serves a vital purpose: it preserves and safeguards historical records, photographs and artifacts from across Chevron’s history while making them readily available to business units or corporate departments for use as living institutional memory. Furthermore, Chevron Archives play an essential part in supporting research needs as well as editorial, digital preservation requirements of the company.

Chevron can trace its history back to an amalgam of predecessor companies that together formed one of the world’s largest integrated energy and chemical businesses. Beginning operations in 1879 as the Pacific Coast Oil Company of California began drilling oil wells there, it was purchased by New Jersey-based Standard Oil in 1900 before eventually merging with Iowa Standard to form Standard Oil Company of California or Socal six years later.

As gas prices rose and demand increased, Socal expanded its operations worldwide, earning average returns for stockholders of 15 percent annually for over 10 years.

Socal also gained a sterling reputation as an ethical employer and for its environmental programs, benefiting from increased public pressure for oil companies to adopt better environmental policies. Furthermore, its transportation division boasted the best safety record among major shipping companies.

Chevron set an ambitious goal of producing and transporting its own crude oil by 2010, considering worldwide oil demand was only increasing at 2 percent annually. They achieved this ambitious target through various means including selling non-core assets like refineries and service stations as well as dedicating significant effort towards their Gorgon and Wheatstone LNG projects in Western Australia.

Growth

Chevron experienced steady expansion throughout the 1980s, adding several new projects and entering several new markets while also acquiring numerous smaller firms.

Chevron acquired Gulf Oil Corporation in 1984 to consolidate their businesses under one name while adding Gulf’s global operations.

Chevron invested heavily in its global infrastructure and expanded into new energy sources, diversifying into renewable sources while increasing production in the US, where high gasoline prices had created increased demand.

By the late 1990s, Chevron had established itself as one of the leading and most profitable oil companies. Profits at Chevron surged significantly when crude oil prices hit record levels; its profits also experienced significant increases at that time.

Chevron’s growth was propelled by its extensive investments in natural gas as well as its successful entry into the LPG market through Gorgon and Wheatstone LNG projects, becoming the world’s fourth-largest producer of this form of energy.

Chevron completed its acquisition of Unocal in 2005, significantly expanding their petroleum and natural gas reserves as well as becoming a pioneer in geothermal energy. Unfortunately, however, Chevron did not include Unocal’s retail operations under its Union 76 brand which were sold off to Tosco Corp in 1997.

Chevron made its mark in alternative fuels with two significant purchases: a natural gas conversion facility in the UK and its share in Tengizchevroil LLP’s Tengizchevroil shale project in Kazakhstan. Both acquisitions positioned Chevron for future growth in renewable energy; these purchases helped achieve its goal of an average stockholder return averaging 15 percent by 2020.

Challenges

Chevron has recently experienced numerous obstacles. One major one has been dealing with low oil prices, which have affected numerous companies within its industry. Furthermore, environmental concerns among the general population have grown steadily and led to more regulations and an emphasis on renewable energy sources.

A company must also manage the burden of having several expensive projects looming that will require large sums to complete, which will put undue strain on their finances when operating in a weak market. Furthermore, this company is subject to numerous tax regulations in various countries it operates in which can prove challenging as violating them may incur fines and additional regulatory oversight procedures.

Thirdly, the company must ensure it always abides by environmental laws in effect. This has proven difficult as they have previously violated many environmental statutes resulting in legal proceedings being taken up against them.

As part of its strategy for technological success, companies should constantly work to stay ahead of the competition when it comes to technology. This is essential as industries evolve at an ever-accelerating pace and businesses must remain prepared for whatever comes their way – such as investing in alternative energy sources like wind and solar to become more eco-friendly while saving money over time.

Future

Chevron’s goal is not only to maintain competitive edge through strategic marketing and an innovative R&D department, but also build long-term relationships with both its customers and communities it serves. By taking advantage of digital channels and positioning itself as a reliable energy provider, Chevron successfully resonates with its target market while creating brand loyalty which contributes to its continued expansion.

The company is well equipped to meet future fuel demands with its expansive product portfolio, which spans across more than 160 countries, exploration activities that continue to bear fruit, and an expansive global network of gas stations that provides an ideal basis from which it can expand.

Due to this trend, many analysts consider the stock to be an excellent buy at current levels. Of the 24 analysts that cover it regularly, six rate it as strong buy and 10 recommend holding.

Chevron has invested in various projects over time to increase the value of its assets, such as the Jack/St. Malo project in the Gulf of Mexico and Gorgon and Wheatstone LNG projects in Western Australia, both of which began delivering gas to Japan’s Chubu Electric Power in early 2016.

The company has also taken steps to reduce its environmental footprint by cutting greenhouse gases and investing in low-carbon projects, offering various sustainable energy options for consumers.