Chevron's CEO: Affordable energy is crucial
BY JONATHAN FAHEY Associated Press
Tuesday, January 01, 2013
1/01/13 at 6:58 AM
NEW YORK - Chevron CEO John Watson notices something important as he visits his company's operations around the globe: Governments everywhere find high energy prices much scarier than the threat of global warming.
And that means the world will need a lot more oil and gas in the years to come.
To meet that demand, Chevron is in the midst of an enormous cycle of investment aimed at extracting oil and gas from wherever it hides in the earth's crust.
Chevron Corp., based in San Ramon, Calif., is the second largest investor-owned oil and gas company in the world. Over the last year, Chevron has earned $24 billion on revenue of $231 billion.
Every day, the company produces the equivalent of 2.7 million barrels of oil and gas, mostly outside the U.S.
This year Chevron will invest $33 billion - more than it ever has - to drill wells, erect platforms, build refineries and scan for undiscovered deposits of oil and gas. Among its biggest projects: a natural gas operation in Australia that will ultimately cost Chevron and its partners $65 billion to build. Also planned are three deep-water drilling and production projects in the Gulf of Mexico that will cost $16 billion.
Watson, 55, has helped shape Chevron into the best performing major oil company in the world by several financial benchmarks, including the profit it makes for each barrel of oil it sells.
In an interview at The Associated Press headquarters in New York, Watson discussed world energy dynamics, U.S. energy policy, hydraulic fracturing, and working abroad. Below are excerpts.
AP: Why do people and politicians dislike big oil companies that deliver the energy they rely on and benefit from?
Watson: They don't feel like they have the choices. Most products that you consume every day, you have a choice. In energy you have less choice. And as costs rise, it hits the family budget. It's a convenience that we like, but we'd rather pay less for it.
AP: Is there anything you can do about that?
Watson: Invest in good projects around the world. Every drop of oil that we produce anywhere in the world hits world markets and, other things being equal, brings prices down.
AP: Energy companies complain that the U.S. is over-regulated, but at the same time they are expanding here and cite its many advantages. Which is it?
Watson: On balance it's a good place to do business. We always have to be aware of what other governments are doing, and we have to be sure that we stay competitive. When I met with the president with some of my colleagues a couple weeks ago, that was the first thing that people talked about. It wasn't about taxes per se, it was about staying competitive.
AP: Will fracking be curtailed in this country?
Watson: I see very little obstacle to it, notwithstanding all the rhetoric. Now it's being done in some different areas. People aren't used to it, and there have been legitimate concerns expressed, like truck traffic at a simple level, but also concerns about water supplies. They're understandable anxieties. And so we have to work through those with the governments.
AP: Will natural gas become a bigger part of the energy mix?
Watson: Natural gas will displace coal in power generation. Getting natural gas into the transportation fleet is harder. It works best for vehicles that work from centralized fueling facilities like trucking fleets or buses and cabs. That is happening. Before it can make big inroads beyond that, infrastructure is going to need to be developed. It will take some time.
Original Print Headline: Chevron's CEO says investment key