Chevron News - 2009

News summaries from Chevron company press releases and from unaffiliated news agencies are provided below. The summaries are sorted by month and are further categorized as upstream news, downstream news, and business/finance news.

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January

• Upstream news:

- Chevron Corporation (NYSE: CVX) announced a $22.8 billion capital and exploratory spending program for 2009, unchanged from the level of expenditures in 2008. Included in the 2009 program are $1.8 billion of expenditures by affiliates, which do not require cash outlays by Chevron's consolidated companies. O'Reilly said about 75 percent of the 2009 spending program is for upstream oil and gas exploration and production projects worldwide. Another 20 percent is associated with the company's downstream businesses that manufacture, transport and sell gasoline, diesel fuel and other refined products.

• Downstream news:

• Business/Finance news:

- Chevron Corporation (NYSE:CVX) reported in its interim update that earnings for the fourth quarter 2008 are expected to be significantly lower than in the 2008 third quarter. The company indicated that most of the decline is associated with lower prices for crude oil and natural gas that negatively affect earnings for the upstream business.

- Chevron Corporation (NYSE: CVX) announced a $2.5 million endowment for a permanent chair to head the Energy Efficiency Center (EEC) at the University of California, Davis (UC Davis). The Chevron Chair in Energy Efficiency will direct the world's first university center of excellence in energy efficiency, created at UC Davis in 2006. The center is focused on developing and commercializing advanced technologies to enable energy efficiency in buildings, agriculture and transportation.

- Jeet Bindra, president of Chevron Global Manufacturing, was recently appointed Distinguished Honorary Professor at the Rajiv Gandhi Institute of Petroleum Technology (RGIPT), at Jais, Dist. Rae Bareli. RGIPT was established in 2007 by India's Ministry of Petroleum & Natural Gas to produce high quality professionals and provide practical solutions to a variety of energy-related challenges. An Act of Parliament of India has recognized RGIPT as an Institute of National Importance.

- The Board of Directors of Chevron Corporation (NYSE: CVX) declared a quarterly dividend of sixty-five cents ($0.65) per share. The dividend is payable March 10, 2009, to holders of common stock as shown by the transfer records of the Corporation at the close of business February 17, 2009.

- Chevron Corporation (NYSE: CVX) reported net income of $4.90 billion ($2.44 per share - diluted) for the fourth quarter 2008, up from $4.88 billion ($2.32 per share - diluted) in the year-ago period. Results for the 2008 fourth quarter included a gain of approximately $600 million on an upstream asset-exchange transaction. Foreign-currency effects benefited net income by $478 million in the period, compared with a reduction to earnings of $2 million in the 2007 fourth quarter. Full-year 2008 net income was $23.93 billion ($11.67 per share - diluted), up 28 percent from $18.69 billion ($8.77 per share - diluted) in 2007. Sales and other operating revenues in the fourth quarter 2008 were $43 billion, compared with $60 billion a year earlier. For the year 2008, sales and other operating revenues were $265 billion, versus $214 billion in 2007.

- Despite an unprecedented collapse in world energy markets, Exxon Mobil Corp. and Chevron Corp. performed better than expected in the fourth quarter and rode the wave of record-high oil prices long enough to post their biggest annual profits ever, the companies said. But it was the oil-price plunge, which accelerated in the fourth quarter that set the stage for the rest of 2009, and perhaps beyond, energy experts said. The oil industry could be rocked by consolidations and outright failures as debt-laden companies find credit too expensive to obtain. The industry could face a prolonged period of relatively cheap oil in which demand continues to trail supply, in part because of the continuing global recession. Fadel Gheit, senior energy analyst for Oppenheimer & Co., described Exxon as a company with "unparalleled financial flexibility." Exxon, with a huge cash hoard, has "legacy assets and economies of scale that put them head and shoulders above their peers," he said. Gheit said that Chevron fared even better, and that the San Ramon, Calif., company would be well positioned to build strength once the global economy recovers. "In the next five years, they have several oil projects coming online that will make them even more of a powerhouse," Gheit said. Exxon's fourth-quarter net income fell 33% to $7.8 billion, or $1.55 a share, from $11.7 billion, or $2.13, in the year-earlier quarter. Revenue for the Irving, Texas, company fell 27% to $84.7 billion. Chevron earned $4.9 billion, or $2.44 a share, in the quarter, up from $4.88 billion, or $2.32, a year earlier. But revenue fell 26% to $45.2 billion. Both companies exceeded analysts' expectations with a boost from refining profits that helped soften the drop in oil prices. Consumer activists accused the oil giants of making the recession worse. For the full year, Exxon netted $45.2 billion, ranking it higher in terms of gross domestic product than all but about 75 of the world's nations. It also broke the $40.6-billion standard that it set for U.S. company earnings in 2007. Chevron's $23.9-billion profit for 2008 was also a company record. And at a time when some energy firms are cutting 2009 capital spending by as much as 50%, Chevron says it will maintain its spending at 2008 levels. Exxon Chairman Rex W. Tillerson has said that his company may increase capital spending in 2009 by more than 20% over 2008 levels. This comes despite a slump in oil prices that some experts see lasting awhile. Others see new pressures that could drive oil sharply higher in a hurry. For example, a recent agreement by the 168-member International Maritime Organization to limit pollution from the world's oceangoing vessels would end the use of bunker fuel, a sludgy substance that is the dirtiest of transportation fuels, in favor of cleaner-burning diesel alternatives. Although no clear timetable for the switch has been set, oil companies may be unable to meet demand because they have slashed spending. Exxon shares fell 52 cents to close at $76.48. Chevron slipped 10 cents to $70.52

- Despite collapsing oil prices in recent months, Exxon Mobil, the world’s largest publicly traded oil company, still managed to set a record for last year as the most profitable American corporation ever. Exxon earned $45.2 billion in 2008, beating the record it set in 2007 for most profitable corporation, at $40.6 billion. That came despite a fourth quarter in which income fell 33 percent, owing to the steepest drop ever in oil prices, as the economy went into a tailspin. After riding a tide of swelling earnings in recent years, the once high-flying oil sector is scrambling to adjust to a sharp downturn. Oil consumption is falling in all major developed nations as economies shrink and consumers cut back on spending. As a result, oil prices have dropped more than 70 percent since peaking above $145 a barrel in July. On Friday, they traded at about $42 a barrel. Because of its close attention to cost reduction and efficiency, Exxon is weathering the drop in oil prices better than most rivals. As most companies trim spending and scale back some operations, Exxon signaled it would stick with its strategy. More than any other oil company, managers at Exxon emphasize a strict attention to containing costs, and are disciplined about their investments. As a result, the company manages to extract more dollars than its rivals out of each barrel that it pumps or refines. The method has served the company well when times were good, and is likely to provide some shelter in a long downturn, analysts said. The company has more than $30 billion in cash that could provide it with a strategic war chest to make acquisitions, according to analysts. Many have forecast a wave of buyouts in the sector as companies struggle to finance their projects or even to survive. At a conference last month, Exxon’s chairman and chief executive, Rex W. Tillerson, also signaled the company would increase its capital spending program by 20 percent this year. Exxon spent $26 billion in 2008 to increase production and develop new projects, 25 percent more than in 2007. It has outlined plans to spend an average of $25 billion a year through 2012. Earlier this week both Royal Dutch Shell and ConocoPhillips reported large quarterly losses as asset values dropped because of the fall in oil prices. Chevron, the second-largest American oil company, said Friday that its net income rose 1 percent, to $4.9 billion, in the fourth quarter. For the year, Chevron’s earnings rose 28 percent, to $24 billion. Shares of Exxon closed at $76.48, down 52 cents, on Friday, and Chevron fell 10 cents, to $70.52 a share. Exxon said that it gave back $40.1 billion to its shareholders in 2008, 12 percent more than in 2007, through either dividends or share buybacks. On Friday, the company signaled that its share buyback program, which totaled $8 billion in the fourth quarter, would be trimmed slightly to $7 billion in the first quarter of 2009. Exxon pumped about 2.47 million barrels of oil a day in the fourth quarter and produced 9.8 billion cubic feet of natural gas a day. Over all, oil and gas production decreased 3 percent in the fourth quarter, compared with the year-earlier period. (In some countries, Exxon is entitled to fewer barrels of oil when prices rise.) The company started eight major projects last year, including Thunder Horse, a huge offshore platform in the Gulf of Mexico. In recent months, projects have been canceled or deferred in Australia, Canada and Saudi Arabia. In the United States, several oil and refinery companies in recent days have told investors that they intended to respond to the falling oil and natural gas prices by laying off workers, writing down asset values and reducing capital spending. With gasoline demand down, refineries have been particularly squeezed. As a sign that the days of extraordinary profit growth are over, Baker Hughes, a Houston oil service company, announced that it would cut 1,500 of its 40,000 employees. Schlumberger, another service company, reported a nearly 17 percent drop in fourth-quarter earnings. The company said it would reduce its 19,000 North American employees by almost 5 percent. Refining margins have been so weak that Valero announced this week it would close its Texas City refinery while it underwent maintenance for the next six weeks. As it has been many times in the past, Exxon was the exception to the sudden turn of fortune in the oil patch.

February

• Upstream news:

- Chevron Corporation (NYSE: CVX) announced a new deepwater oil discovery at the Buckskin prospect located in the deepwater U.S. Gulf of Mexico. The block is approximately 190 miles southeast of Houston, Texas, and 44 miles west of Chevron's 2004 Jack discovery, which is also in the Lower Tertiary. The Buckskin No. 1 discovery well encountered more than 300 feet of net pay. The well is located in approximately 6,920 feet of water and was drilled to a depth of 29,404 feet. More tests are being conducted on data gathered from the discovery well, and additional work at the prospect, located in Keathley Canyon Block 872, will be needed to determine the extent and commercial viability of the discovery. Repsol, with a 12.5 percent working interest in the prospect, was the operator of the Buckskin discovery well. Chevron, with a 55 percent working interest, will become operator and conduct all future work. Other Buckskin co-owners are Maersk Oil America, with 20 percent, and Samson Offshore Company, with a 12.5 percent working interest.

- Chevron Corp. said it made an oil discovery in the Gulf of Mexico that may rival the 500-million-barrel Jack prospect found in 2004. The Buckskin find is 190 miles southeast of Houston in waters 6,920 feet deep, the company said. Chevron, which is based in San Ramon, Calif., and its partners discovered a 300-foot column of oil-soaked rocks in a 24-million- to 65-million-year-old formation known as the Lower Tertiary. The find appears to be similar to the Jack discovery, which is 44 miles to the east and part of the same geological trend, Chevron said.

- Chevron Corporation (NYSE: CVX) announced the successful results of a seven-well exploration and appraisal program for the Wheatstone and Iago fields in northwest Australia. Following the completion and analysis of the appraisal program, the fields are estimated to hold enough natural gas resources to support a two-train Wheatstone liquefied natural gas (LNG) and domestic gas project. Chevron announced plans to locate the Wheatstone project at Ashburton North near Onslow in late 2008 and expects to enter front-end engineering and design in the second half of 2009. Discovered in 2004, the wholly owned Wheatstone Field is located in the WA-253-P and WA-17-R permit areas. The field is 125 miles (200 kilometers) north of Onslow in water depths of around 650 feet (200 meters). The adjacent Iago Field was discovered in 2000 and spans two retention permits, WA-17-R, which is wholly owned by Chevron Australia, and WA-16-R, in which Shell Development (Australia) Pty Ltd. has a one-third share, with Chevron holding the remainder. The offshore northwest shelf of Australia is one of four exploration focus areas for Chevron. During 2009, Chevron plans to conduct a large drilling program with two rigs scheduled to drill multiple exploration and appraisal wells in its operated acreage.

• Downstream news:

- Chevron Corporation (NYSE:CVX) announced plans to commit $20 million over five years to form a partnership with the Qatar Science & Technology Park (QSTP) in Doha and establish a center of excellence in renewable power and energy efficiency. The partnership with QSTP will create The Center for Sustainable Energy Efficiency, which intends to focus on developing technologies in lighting and cooling that work effectively in the Middle East climate. The center, expected to open in late 2009, also anticipates conducting research in the development and application of renewable power, such as solar, and developing and training Qatari engineers, scientists and students to build expertise and capabilities within the country.

- California's average gasoline price jumped more than a dime a gallon over the last week, leading another week of price increases in most of the nation, the Energy Department said. The average price of a gallon of self-serve regular gas in California rose to $2.215, up 10.2 cents, according to the department's weekly survey of filling stations. That was still 89.3 cents lower than the year-earlier price. By contrast, most of the rest of the U.S. was still enjoying prices of less than $2 a gallon. Nationally, the Energy Department said, a gallon of gasoline was averaging $1.926, up 3.4 cents over the previous week and $1.034 below the price at this time last year. Analysts said the West Coast had the dubious distinction of being the nation's strongest market for refiners, which are struggling to make their usual profits in many other parts of the U.S. Brockwell said that unfinished California-grade gasoline had been trading at the rough equivalent of $71 a barrel. One of the reasons has been refinery production cuts and downtime. California refineries run by Exxon Mobil Corp. and Chevron Corp. were expected to restart this week but haven't, analysts said.

- The EPA must close a 29-year loophole that made it possible for polluting industries to avoid paying for hazardous-waste cleanups by declaring bankruptcy, a federal judge ruled. The mining industry, which generates more than 2 billion pounds of toxic waste each year — and is among the EPA's list of top polluters — may be the most affected by the decision. In New Mexico, conservationists tried for years to get the Molycorp/Chevron molybdenum mine near Questa to clean up toxins released into the Red River and ground water. In 2002, Molycorp set aside $152 million for a cleanup job that could cost up to $400 million. Environmentalists argued that the company would have been more careful if it had known it would be held responsible for cleanup costs. The loophole has existed since 1980, when the Superfund law was passed with the understanding that lawmakers would put financial assurance regulations in place within three years. Those regulations were never enacted. U.S. District Judge William Alsup ruled that the EPA has until May 4 to identify the industries that will be subject to the regulations. Environmental advocates hope the decision will help pave the way for federal laws requiring industries to post bonds to cover the cost of potential future cleanups. "New standards will push companies that deal with toxic substances towards more responsible practices," said Jan Hasselman, an Earthjustice attorney who argued the case on behalf of the environmental groups.

• Business/Finance news:

- Chevron Corporation (NYSE: CVX) has asked an Ecuador judge to discard a court-requested assessment of current environmental conditions in Ecuador's Amazon, as a result of fraud, gross errors and conflict of interest. In its filing with the court, Chevron documents a litany of fundamental flaws within the assessment demonstrating that the objectivity and independence of the report's author have been fully compromised, rendering the report inadmissible. The report, filed in November 2008 with the Provincial Court of Sucumbios, recommends that the judge presiding in the ongoing environmental lawsuit assess damages of more than $27 billion, augmenting an earlier report in which $8 to $16 billion in damages was suggested. Prepared by a court appointee, Richard Cabrera, the report was intended to respond to the parties' criticism of his earlier report. Instead, Cabrera's updated filing presents no new facts or data; rather, he simply adopts the demands of plaintiffs' counsel — in some instances, word for word — to substantiate more than $11 billion in newly alleged damages.

- Chevron Corp., which prevailed in a human-rights lawsuit seeking to hold it responsible for the shooting of Nigerian protesters at an oil platform, is seeking nearly $500,000 in legal costs from the villagers who brought the suit. Chevron's claim for reimbursement, filed in federal court, includes $190,000 in copying charges. The San Ramon-based company, which posted a record $23.8-billion profit for 2008, says it is entitled to the money because a nine-member jury decided in the company’s favor in December. Lawyers for the villagers had sought to hold the oil giant responsible for the 1998 shooting and mistreatment of protesters by Nigerian soldiers at the Parabe oil rig off the coast of Nigeria. They have filed an appeal in the case, which is scheduled to be heard next month. Advocates and lawyers for the Nigerians said they were outraged by Chevron's attempt to seek money from the plaintiffs, including one who was shot and wounded, another who was arrested and tortured and others whose husbands or fathers were killed. Laura Livoti, founder of Bay Area-based Justice in Nigeria Now, said the $485,000 sought by Chevron, California's largest company, would constitute a fortune for the Nigerians. That sum would be enough to sustain at least four villages in the Niger Delta for a year, she said. In its claim, Chevron is seeking reimbursement from 19 plaintiffs and 30 former plaintiffs who dropped out of the case before it went to trial. At least a dozen of those named are children, Livoti said. Morgan Crinklaw, a spokesman for Chevron, said the company had spent a significant amount of money on the lawsuit and was entitled to reimbursement. Bert Voorhees, who represented the Nigerians at trial, said Chevron's goal was not necessarily to collect money from the plaintiffs but to deter others from pursuing similar suits. The lawsuit was brought under the 1789 Alien Tort Statute, which was signed by President Washington. Rarely used, the law increasingly has become a vehicle for activists attempting to hold U.S. corporations accountable for their actions overseas. Survivors of the 1998 incident at the Parabe rig argued that Chevron was responsible because it paid the police and soldiers and flew them by helicopter to the platform, where they shot and killed two unarmed protesters and wounded two others. Chevron countered during the trial that the villagers were holding its workers hostage and that the company acted responsibly by calling in the authorities. The Nigerians and their lawyers say that Chevron's oil operations caused extensive environmental harm in much of the delta, ruining farmland and the fishery. They argued in court that the villagers who went to the oil platform staged a peaceful protest in an attempt to win jobs and compensation for the damage.

- Chevron Corporation (NYSE:CVX) announced that Chevron Vice Chairman Peter J. Robertson will retire from the company and its board after more than 35 years of distinguished company service. Robertson will be succeeded by John S. Watson, currently executive vice president of Strategy and Development. The company also named Charles A. James , currently vice president and general counsel, executive vice president of Chevron Corporation. These executive changes are effective April 1.

March

• Upstream news:

• Downstream news:

- Chevron Corporation (NYSE: CVX) announced that two of its subsidiaries completed the sale and transfer of their fuels marketing business in Brazil to a subsidiary of Ultrapar Participações S.A. (Ultrapar). Chevron announced the initial sales agreement on August 14, 2008. Under the terms of the agreement, Ultrapar acquired a network of approximately 2,000 service stations operating under the Texaco brand, an equity interest in associated terminal operations, and Chevron's commercial and industrial fuels business. Other terms of the agreement were not disclosed.

• Business/Finance news:

- Today's bear-market milestone: With Wells Fargo & Co.'s long-expected decision to slash its dividend, the wipeout of dividend income by companies in the Standard & Poor’s 500 index this year already has surpassed what was eliminated in all of 2008. Forty-one companies in the S&P 500 have cut their dividend payouts this year, with the total reduction equivalent to $40.8 billion a year in cash lost to shareholders, according to Howard Silverblatt, senior analyst at S&P in New York. In all of 2008, there were 61 cuts by S&P 500 companies totaling $40.6 billion in lost dividend income. Dividend cuts make investors that much poorer, compounding the decline in their stocks’ value and adding to the "reverse wealth effect" in the economy: The poorer you feel, the less you’re likely to spend. Unfortunately for weary shareholders, more cuts are coming, Silverblatt said. In the banking sector, Wells was the last of the Mohicans: With its cut, not a single financial company remains in the S&P 500 list of the top 25 dividend payers, in terms of total dollars paid out annually. The largest single dividend payer is AT&T. Its $1.64-a-share annual dividend (a current yield of 7.4%) is worth a total of $9.6 billion a year to shareholders. No. 2 on the list: Exxon Mobil Corp., which pays out $8.1 billion a year. The company’s annual dividend rate is $1.60 a share, for a 2.6% current yield. No. 3 is Chevron Corp., with an annual dividend per share of $2.60 and a total annual payout of $5.3 billion. The stock’s dividend yield is 4.5% at the current price. As I wrote in my weekly column in The Times last week, companies that preserve their dividend payments, and commit to continue raising them, could become the market standouts of the next few years if battered investors put more emphasis on income and less on capital gains.

- Chevron Corporation (NYSE: CVX) is well positioned to deal with difficult market conditions given its strong balance sheet, numerous new growth projects coming onstream and a disciplined approach to cost management, executives said at the company's annual meeting with financial analysts in New York. O'Reilly said the company is well positioned for these challenging market conditions because of its strong balance sheet. He reaffirmed the company's long-held strategies and emphasized the advantages the company earned through consistent execution. George Kirkland, executive vice president of Upstream and Gas, outlined the strong 2008 performance of the upstream and natural gas business, with record earnings, nine major capital projects completed and strong competitive performance in the key areas of earnings per barrel, cost structure and return on capital employed. Kirkland also provided details on how the industry-leading queue of Chevron's major capital projects will deliver significant growth and provide flexibility in the current economic environment. In discussing future growth, Kirkland focused on Chevron's liquefied natural gas (LNG) portfolio, particularly Gorgon and Wheatstone in Australia, as well as the crude oil opportunities in the Lower Tertiary trend in the deepwater U.S. Gulf of Mexico. Kirkland also revealed new details about development plans for Chevron's high profile Jack and St. Malo discoveries in the Lower Tertiary trend. He said the company has begun front-end engineering and design for a production facility that will have a capacity of between 120,000 and 150,000 barrels of oil-equivalent per day. The facility will co-develop the Jack Field and the nearby St. Malo Field, which have combined recoverable resources in excess of 500 million barrels.

- Crude oil on reached its highest closing price since January on concern that oil producers might agree to hold back more production when they meet in Vienna this weekend. But the cost of a gas tank fill-up still provided a measure of relief in the midst of otherwise gloomy economic news. The average U.S. price of a gallon of self-serve regular gasoline climbed to $1.941, according to the Energy Department's weekly survey of filling stations. A year earlier, that same gallon of gasoline would have cost $3.225. California's average rose by 0.7 of a cent to $2.196 a gallon, far below the year-earlier price of $3.537. Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, said that motorists could expect to see a steady rise in gasoline prices to $2 to $2.20 a gallon nationally over the next few months and to $2.25 to $2.50 a gallon in California because of rising demand and the added expense of producing summer-blend gasolines. In New York futures trading, crude oil for April delivery finished up $1.55 at $47.07 a barrel, the highest close since Jan. 6. The Organization of the Petroleum Exporting Countries was giving out mixed signals during the day, said Phil Flynn, senior market analyst for Alaron Trading Corp. in Chicago, but the gist of the message was less oil production for world markets. Flynn said that probably would come from new reductions or better compliance with the cuts that OPEC announced last year. Upward pressure on the commodity also was coming from two other sources, Flynn said. Nigeria reported that another recent militant attack on a Shell Oil Co. oil pipeline had forced it to halt deliveries to several customers. Nigeria's military also claimed Monday to have thwarted a plot to attack a Chevron Corp. facility and its pipelines in the oil-rich Niger Delta. Nigeria is an important U.S. supplier of light, sweet crude that has already seen its daily production slashed by 600,000 to 2 million barrels a day. In addition, traders were nervous about escalating tensions between U.S. and Chinese ships in the South China Sea, he said. The Defense Department said that five Chinese vessels "shadowed and aggressively maneuvered close" to an unarmed U.S. reconnaissance ship Sunday in the South China Sea, closing to within 25 feet.

- Amid allegations of conflict of interest, the five members of the California Energy Commission voted unanimously to tell lawmakers there was no benefit to fixing service station pumps to end an inequity that may be costing Californians millions of dollars a year. The commission's report on the so-called hot-fuel phenomenon concludes that the "societal" cost of forcing all gas stations to upgrade their pumps outweighs the benefits to drivers of compensating for fuel expansion as temperatures rise. Consumer advocates and attorneys argue that motorists are being shortchanged every time they buy gas or diesel that's hotter than 60 degrees and expands in volume when purchased. They want pumps to be equipped with automatic temperature controls that would provide buyers with the same amount of fuel whether the gasoline or diesel in the underground tank is hot or cold. Activists also charge that the vote was tainted because the lead commissioner on the case, James Boyd, is married to an executive vice president of the Western States Petroleum Assn., an oil industry group in Sacramento. Santa Monica-based Consumer Watchdog says documents it recently obtained under the California Public Records Act suggest that Boyd used his influence to manipulate findings in a staff draft report so they might favor some oil companies. Three prominent Western States members -- Chevron Corp., BP America Inc. and Valero Energy Corp. -- operate stations, but the overwhelming bulk of retail gasoline sales are made by convenience stores or independent owners. A spokesman for Western States declined to comment on the hot-fuel issue or the vote. "The conflict is plain," said Judy Dugan, research director for Consumer Watchdog. The group is asking the Legislature and the office of Gov. Arnold Schwarzenegger to look into the circumstances surrounding the vote. Boyd and his fellow commissioners rejected the accusations. Boyd, who has been on the commission for seven years and spent 15 years as chief executive of the California Air Resources Board, "has been a dogged advocate of reducing our use of oil in the state of California," said commission Chairwoman Linda Douglas, a leading California environmentalist. Additionally, an energy commission lawyer cited a letter from the state ethics monitor, the Fair Political Practices Commission, concluding that Boyd didn't have a conflict and didn't need to recuse himself from voting on the hot-fuel report. The commission's study is the first comprehensive look at the hot-fuel controversy in the country. Currently, only Hawaii requires service stations to install automatic temperature compensation devices on pumps, while Canadian retailers voluntarily use the equipment to make sure they don't provide extra energy to customers when the fuel contracts in the 90% of the country that has long and frigid winters. Allowing purchasers to get a temperature-adjusted gallon of fuel could bring them a financial windfall, at least in theory, commission staff reported. The extra gasoline and diesel could be worth an estimated $437 million a year, Project Manager Gordon Schremp said. But motorists are unlikely to pocket the money because nearly all retailers would be expected to protect their profit by raising prices, he cautioned. Others dispute that contention. Nevertheless, installing the temperature compensation devices could create a small benefit to motorists, about $258,000 a year, by creating more price transparency that would allow consumers to better compare prices among competing retailers, Schremp said. That would be more than offset by up to $127 million to upgrade pumps as well as continuing maintenance costs. "The cost-benefit analysis concludes that the results are negative or a net cost to society under all the options examined," Schremp's report said. Consumers might pay less than a quarter of a cent more per gallon if the costs of the pump retrofits are passed through by retailers. Any action to require new pumps would fall to the Legislature and Schwarzenegger.

- Alaska's Mt. Redoubt erupted at least twice as officials from a pipeline company assessed conditions at a nearby oil storage facility to determine whether to remove its contents. The Cook Inlet Pipeline Co., which is partly owned by Chevron Corp., was planning to look at whether a pumping system could be used to offload 6.2 million gallons of oil stored in two tanks, if Chevron decided to remove it. Pipeline contractor Lana Johnson said that Chevron had made no decision and that an airplane runway next to the facility was covered with debris and was unusable until cleared. The small eruptions were picked up by seismic monitors, which showed that a 10-minute blast occurred after 5 a.m. local time. That eruption emitted an ash plume about 15,000 feet high that drifted to sparsely populated areas to the north and northwest, the same direction as drifts from earlier blasts since Mt. Redoubt began erupting. A second eruption by the 10,200-foot volcano, about 100 miles southwest of Anchorage, about five hours later did not emit an ash cloud detected by radar, which meant ash did not rise above 12,000 feet. Geologists said volcano-caused mudflows and flooding would remain a hazard in the Drift River valley, where the Cook Inlet oil facility is located. Johnson said an assessment found no damage to the oil tanks or a cement dike around the farms but that the terminal building was flooded. The facility had evacuated all 11 people from the site.

April

• Upstream news:

- Chevron Corporation (NYSE:CVX) welcomes a recommendation by the Western Australian Environmental Protection Authority's (EPA) that the revised and expanded Chevron-operated Gorgon Project could meet the EPA's environmental objectives. The revised and expanded proposal adds a third 5 million metric-tons-per-year (MTPY) liquefied natural gas (LNG) train to the original two-train proposal already approved for Barrow Island. The EPA's decision is an important step in the regulatory process. Chevron can now continue to assess the conditions as it works toward a final investment decision in the second half of this year. Gorgon is Australia's single largest resource project and is set to deliver significant economic benefits and create thousands of jobs. Chevron is currently reviewing and assessing the EPA's proposed conditions. The company acknowledges that under the state's process the government provides final approval for the project. The Joint Venture participants — Chevron (operator), Shell and ExxonMobil — are committed to moving the project forward on Barrow Island and believe the environmental impacts of the project can be minimized and effectively managed in accordance with environmental best practices.

• Downstream news:

• Business/Finance news:

- Chevron Corporation (NYSE:CVX) reported in its interim update that earnings for the first quarter 2009 are expected to be sharply lower than in the fourth quarter 2008. Upstream earnings are expected to decline substantially, in part due to lower prices for crude oil and natural gas. Downstream earnings are also anticipated to be much lower than in the previous period, with average margins on the sale of refined products off significantly.

- In his largely panned response to President Obama’s speech to Congress in February, Louisiana Gov. Bobby Jindal complained about government spending and had this to say about volcanic activity: While some of the projects in the bill make sense, their legislation is larded with wasteful spending. It includes $300 million to buy new cars for the government, $8 billion for high-speed rail projects, such as a "magnetic levitation" line from Las Vegas to Disneyland, and $140 million for something called "volcano monitoring." Instead of monitoring volcanoes, what Congress should be monitoring is the eruption of spending in Washington, D.C. Among the comments aired after Jindal’s speech — along with “stale” and “disappointing” — was the observation that the governor should have a greater appreciation for the dangers of natural disasters. His state, after all, experienced Hurricane Katrina. As if to prove the point, Mt. Redoubt in Alaska has been rumbling and sending plumes of ash into the air for days. The Anchorage Daily News reported the latest problems unleashed by the volcano: Chevron suspended its oil production in Cook Inlet on Sunday because eruptions from Redoubt volcano are threatening the Drift River tank farm that the company needs to store its oil. “It means that we can’t produce oil because we have nowhere to ship it to," said Chevron spokeswoman Roxanne Sinz. The dominoes began to fall Saturday when an eruption by the volcano prevented the transfer of oil from the Drift River terminal to a tanker and forced workers to seek emergency shelter. Floodwaters caused by rapid melting of the Drift Glacier covered the airstrip at the terminal, though tanks there holding 6 million gallons of oil stayed dry and undamaged. Hmm. So maybe that’s why the government spends money monitoring volcanos. For more on the volcano — and how Alaskans are fuming over all that ash — check out the Daily News. And be sure to look at the photo galleries of shots submitted by presumably dusty Alaskans.

- The Obama administration wants to reduce oil consumption, increase renewable energy supplies and cut carbon dioxide emissions in the most ambitious transformation of energy policy in a generation. But the world’s oil giants are not convinced that it will work. Even as Washington goes into a frenzy over energy, many of the oil companies are staying on the sidelines, balking at investing in new technologies favored by the president, or even straying from commitments they had already made. Royal Dutch Shell said last month that it would freeze its research and investments in wind, solar and hydrogen power, and focus its alternative energy efforts on biofuels. The company had already sold much of its solar business and pulled out of a project last year to build the largest offshore wind farm, near London. BP, a company that has spent nine years saying it was moving “beyond petroleum,” has been getting back to petroleum since 2007, paring back its renewable program. And American oil companies, which all along have been more skeptical of alternative energy than their European counterparts, are studiously ignoring the new messages coming from Washington. “In my view, nothing has really changed,” Rex W. Tillerson, the chief executive of Exxon Mobil, said after the election of President Obama. “We don’t oppose alternative energy sources and the development of those. But to hang the future of the country’s energy on those alternatives alone belies reality of their size and scale.” The administration wants to spend $150 billion over the next decade to create what it calls “a clean energy future.” Its plan would aim to diversify the nation’s energy sources by encouraging more renewables, and it would reduce oil consumption and cut carbon emissions from fossil fuels. The oil companies have frequently run advertisements expressing their interest in new forms of energy, but their actual investments have belied the marketing claims. The great bulk of their investments goes to traditional petroleum resources, including carbon-intensive energy sources like tar sands and natural gas from shale, while alternative investments account for a tiny fraction of their spending. So far, that has changed little under the Obama administration. “The scale of their alternative investments is so mind-numbingly small that it’s hard to find them,” said Nathanael Greene, a senior policy analyst at the Natural Resources Defense Council. “These companies don’t feel they have to be on the leading edge of this stuff.” Perhaps not surprisingly, most investments in alternative sources of energy are coming from pockets other than those of the oil companies. In the last 15 years, the top five oil companies have spent around $5 billion to develop sources of renewable energy, according to Michael Eckhart, president of the American Council on Renewable Energy, an industry trade group. This represents only 10 percent of the roughly $50 billion funneled into the clean-energy sector by venture capital funds and corporate investors during that period, he said. “Big Oil does not consider renewable energy to be a mainstream business,” Mr. Eckhart said. “It’s a side business for them.” Shell, for example, said it spent $1.7 billion since 2004 on alternative projects. That amount is dwarfed by the $87 billion it spent over the same period on its oil and gas projects around the world. This year, the company’s overall capital spending is set at $31 billion, most of it for the development of fossil fuels. Industry executives contend that comparing investments in oil and gas projects with their research efforts in the renewable field is misleading. They say that while renewable fuels are needed, they are still at an early stage of development, and petroleum will remain the dominant source of energy for decades. In its long-term forecast, Exxon says that by 2050, hydrocarbons — including oil, gas, and coal — will account for 80 percent of the world’s energy supplies, about the same as today. “Renewable energy is very real,” David J. O’Reilly, the chief executive of Chevron, said in a speech in New York last November. “We need it. It will be an essential part of the future I envision. But it’s not realistic to suppose we can replace conventional energy in a timeframe that some suggest.” Chevron has spent about $3.2 billion since 2002 on “renewable and alternative energy and energy efficiency services,” according to Alexander Yelland, a spokesman. It plans to spend $2.7 billion in the three years through 2011 on a variety of projects, including a business that helps improve energy efficiency for companies and government agencies, he said.

- Operators balk at having to comply with a California requirement to install costly nozzles and hoses to capture fumes. The governor calls on the Legislature to delay enforcement by a year. James Hosmanek, an ex-Marine, has operated his San Bernardino Chevron station for 21 years, patiently installing equipment to control gasoline emissions, even as the region's air grew smoggier. Now he says he can't, and won't, obey the latest mandate: a state order to buy sophisticated nozzles and hoses to capture more of the vapors that cause respiratory disease and cancer. "It may be necessary to protect public health," he says. "But it's unaffordable." Today is the deadline for California's 11,000 gasoline stations to comply with the nation's most stringent controls on the fumes that seep from refueling cars. And Hosmanek is among the estimated one of five station owners who have joined an open rebellion against air pollution authorities. Last week, spurred by a high-decibel campaign by gasoline trade associations, Gov. Arnold Schwarzenegger called on the Legislature to delay enforcement by a year. "Improving California's air is of the utmost importance," he wrote legislators. But "enforcement flexibility is an absolute necessity to ensure against the job and financial losses that could come from stations being shut down or fined for non-compliance." If the Legislature agrees, it would be the second time in the last two months that business interests have succeeded in rolling back a major pollution regulation. In February, a measure was added to the state's budget package allowing construction firms to delay retrofitting diesel bulldozers and other equipment. Ten public health and environmental groups have vowed to fight the vapor rule rollback. A campaign against the measure in recent weeks was laced with misleading information, according to officials with the California Air Resources Board. One alert mailed by the Responsible Clean Air Coalition, a group led by a former John McCain campaign staffer, Tom Kise, charged that, "On April 1st, more than 6,000 gas stations statewide are going to shut their doors because of zealous Sacramento bureaucrats." But in a letter to legislative leaders Friday, local air pollution districts charged with enforcing the rule said, "Air districts do not intend to shut down any stations on April 1." Station owners have known about the deadline for four years, the letter said. Owners who have applied for permits and made arrangements to install equipment will not be cited, the letter said. Some fines will be levied, but, "only the most recalcitrant operators who absolutely refuse to comply could be subject to significant penalties." That reassurance does not comfort Hosmanek. Battered by competition from cheaper chains such as Thrifty and Arco, the 51-year-old businessman said he was refused credit by banks and equipment lenders. Refitting his eight nozzles and hoses would cost more than $60,000, he said. "Even if I could get the funding, I couldn't make the payments." With fewer customers, Hosmanek has laid off eight of his 18 employees. Down the road, he said, a Shell station began installing the equipment Friday. "I asked the guy how he did it, and he said he put it all on credit cards," Hosmanek said. "That's financial suicide." Single-station owners like Hosmanek aren't the only ones hurting. David Berri, an Irvine businessman whose family owns 22 stations in Orange, San Diego and Los Angeles counties, said he put a 25% deposit on vapor equipment last year. But his bank has since canceled his credit line. His family has put seven stations up for sale, but so far, there are no buyers. "The economy snuck up on us," he said. "If I complied, I'm at the point this could bankrupt me, and I have a family to take care of." State officials say they have little choice when it comes to imposing pollution rules. Federal law requires states to clean their air. The rule, they note, would prevent 10 tons a day of vapor emissions. "That's a big deal in a state where nearly three-quarters of our residents breathe air that still fails to meet federal health standards for ozone," said the air board's Tom Cackette. Board officials also note that letting laggard station owners off the hook would be unfair to the three-quarters of stations that have ordered equipment. Fewer than 5% of pumps, many of them in carwashes, convenience stores or car dealers, have indicated that they would voluntarily shut down, officials said. In the Legislature, Assemblyman Martin Garrick (R-Solana Beach) and Sen. Dave Cox (R-Fair Oaks) are leading the charge to delay enforcement. On Monday, Cox called for the resignation of state Air Resources Board Chairwoman Mary D. Nichols for being "recalcitrant" in refusing Schwarzenegger's request for a delay. But a compromise may be in the works. A bill sponsored by Assemblyman Ira Ruskin (D-Redwood City) would provide $8 million in grants to stations for the equipment. That could help owners like Hosmanek, who shows no sign of backing down. "I'm not going to shut down," he said, despite facing what he contends could be thousands of dollars in fines. "I'm going to stand up and fight."

- The Board of Directors of Chevron Corporation (NYSE: CVX) declared a quarterly dividend of sixty-five cents ($0.65) per share. The dividend is payable June 10, 2009, to holders of common stock as shown by the transfer records of the Corporation at the close of business May 19, 2009.

May

• Upstream news:

- Chevron Corporation (NYSE: CVX) has announced that it has started crude oil production from its Tahiti Field, the deepest producing field in the Gulf of Mexico. First oil from Tahiti was achieved on May 5, 2009. Daily production is expected to ramp up to approximately 125,000 barrels of crude oil and 70 million cubic feet of natural gas before the end of the year. The Tahiti Field is one of the largest in the Gulf of Mexico. It was discovered in 2002 and is estimated to contain total recoverable resources of 400 to 500 million oil-equivalent barrels. The total cost for the first phase of the project is $2.7 billion and represents one of 40 projects in which Chevron's share of the investment is over $1 billion.

- Chevron Corporation (NYSE:CVX) confirmed a discovery within the Moho-Bilondo license in the Republic of the Congo. The Moho Nord Marine-4 well, in which Chevron Overseas (Congo) Limited holds a 31.5 percent interest, is located approximately 46 miles (75 kilometers) offshore of the Republic of the Congo, in 3,537 feet (1,078 meters) of water in the northern part of the Moho-Bilondo license. Moho Nord Marine-4 was drilled to a total depth of 13,907 feet (4,239 meters) and proved a 535 foot (163 meter) column of high-quality oil flowing at 8,100 barrels per day.

- Record performance in 2008 helped enable Chevron Corporation (NYSE: CVX) to reward its investors, fund a robust capital program and position the company to capitalize on the increase in demand for energy that will come with the global economic recovery, attendees were told at the company's 2009 Annual Meeting of Stockholders. John Watson, vice chairman of the board, discussed Chevron's strong 2008 financial performance, which produced earnings of $23.9 billion and a return on capital employed of nearly 27 percent. The company acquired $8 billion of its common shares and increased the quarterly dividend by 12 percent, marking 21 consecutive years of annual dividend rate increases. Watson recognized that 2008 was a difficult year for all equities, but said Chevron's total stockholder returns averaged nearly 15 percent over the five-year period ending Dec. 31, 2008, and bested the S&P 500 by 17 percentage points over the same period. Watson highlighted that 2008 was the safest year in the company's history and one of the best among the industry. He noted that Lloyds Register, an independent auditor, confirmed that Chevron's environmental management systems meet all international standards. Chevron has met its greenhouse gas emission goals every year since 2004, and is ranked No. 1 among U.S.-based oil and gas companies and No. 2 worldwide in the 2008 Carbon Disclosure Leadership Index. The Index lists companies taking best-in-class actions to measure and report carbon emissions. Watson stated that Chevron's $22.8 billion capital and exploratory expenditure program for 2009 will fund large, multi-year projects with about 75 percent of program dollars marked for worldwide crude oil and natural gas exploration and production projects and 20 percent dedicated to the company's downstream business. George Kirkland, executive vice president, Global Upstream and Gas, noted that the company's upstream position is strong with operations in nearly all of the world's key hydrocarbon basins, and a portfolio that is deep and diverse with 11.2 billion barrels of proved reserves and 2.7 million barrels per day of production capacity. As of 2008, the company had the most competitive cost structure in the industry. Kirkland noted that in 2008 Chevron added more than 1.7 billion barrels and, since 2002, more than 8.5 billion barrels of oil-equivalent resources to its portfolio through exploration efforts. Nine major capital projects started up in 2008, demonstrating Chevron's ability to execute complex projects. The projects are expected to contribute 350,000 barrels per day in 2009. Kirkland also spoke about Chevron's full queue of 40 major capital projects, each of which represents a Chevron investment of more than $1 billion. Chevron's full inventory includes 93 projects each representing an investment of over $200 million. Mike Wirth, executive vice president, Global Downstream, said important achievements in 2008 included record safety performance, continued investment in the flexibility of the company's refining system, and best-ever reliability - exceeding the company's commitment to improve utilization of operated refineries by six percent versus 2005. He also noted a continued commitment to improve returns, including exiting markets that do not align with strategy and selling less profitable assets. In 2008, the company exited more than 20 fuels markets and continued to rationalize its service station network. It also reduced its lubricant product line by over 40 percent versus 2005 - a move that has helped reduce complexity and costs and more than triple the profitability of this business.

- Chevron Corporation (NYSE:CVX) confirmed a discovery within the Moho-Bilondo license in the Republic of the Congo. The Moho Nord Marine-4 well, in which Chevron Overseas (Congo) Limited holds a 31.5 percent interest, is located approximately 46 miles (75 kilometers) offshore of the Republic of the Congo, in 3,537 feet (1,078 meters) of water in the northern part of the Moho-Bilondo license. Moho Nord Marine-4 was drilled to a total depth of 13,907 feet (4,239 meters) and proved a 535 foot (163 meter) column of high-quality oil flowing at 8,100 barrels per day. The discovery follows two previous successful exploration wells, Moho Nord Marine-1 and 2, drilled in the permit area in 2007, and the positive appraisal well Moho Nord Marine-3 in 2008. The permit area's deepwater Moho-Bilondo project, which began production April 2008, consists of subsea well clusters that flow into a floating processing unit. Maximum total daily production of 90,000 barrels of crude oil is expected in 2010.

• Downstream news:

• Business/Finance news:

- Chevron Corporation (NYSE: CVX) reported earnings of $1.84 billion ($0.92 per share – diluted) for the first quarter 2009, compared with $5.17 billion ($2.48 per share – diluted) in the 2008 first quarter. Earnings in the 2009 period included gains of approximately $400 million ($0.20 per share) on downstream asset sales. Sales and other operating revenues in the first quarter 2009 were $35 billion, down from $65 billion in the year-ago period due mainly to lower prices for refined products and crude oil.

- The late John Kenneth Galbraith might have had next week's statewide special election in mind when he described politics as "choosing between the disastrous and the unpalatable." According to the most reliable California polls, the state's voters already have chosen the former. All of the budget-balancing propositions that Gov. Arnold Schwarzenegger and the Legislature placed on the May 19 ballot appear headed for resounding defeat -- except the one allowing temporary cuts in lawmakers' salaries. The solid majority of voters is leaning this way even though it's clear that rejection will set in motion a historic fiscal bloodletting with wholesale cuts in popular programs and vital services. To understand why so much of the electorate prefers this clear disaster, you have to understand just how unpalatable Californians find not only the budget initiatives but also the politicians who produced them. The most recent survey by the nonpartisan Public Policy Institute of California found that Schwarzenegger's approval rating among likely voters is at a low of 34%. More than half of all Republicans, Democrats and independents disapprove of the job the governor is doing. The Legislature fares even worse: 80% of likely voters disapprove of the job it's doing, while just 12% approve. There's an even more corrosive finding in the poll. For the last five years, its survey has asked this question: "Would you say that state government is pretty much run by a few big interests looking out for themselves, or is it run for the benefit of all the people?" This time, 76% of the respondents who are likely voters said they believe that special interests call the tune in Sacramento. And the truth is, they're right. Corporate income taxes contribute just 11% of the state's annual revenues. Sales and use levies generate 35%. One of the reasons California's revenue picture is so catastrophic is that Sacramento now depends on the personal income tax for more than 50% of its annual income. Personal income is extraordinarily vulnerable to the vagaries of the business cycle because recessions increase unemployment, and downturns squeeze the high-income earners, who pay a disproportionate share of the income tax. Last year, collections on capital gains fell 55%, and probably will decline 10% more this year. The governor's budget people project that sales taxes will fall 15%, while property taxes will decline 4%. What's most distasteful about the package of budget compromises is that Schwarzenegger and the legislators spared many of the most powerful special interests any responsibility for helping Californians cope with this crisis. The major financial backers of the budget initiatives are the interests that got their way in the negotiations -- Indian casinos and a major teachers union, and businesses that blocked any new taxes on their operations. Major oil companies are among the measures' biggest backers -- Chevron has given $500,000 and Occidental $250,000 -- as are liquor and beer distributors and vintners, such as E&J Gallo ($100,000), and pro sports franchises, which killed a proposed ticket tax. (Anschutz Entertainment Group, which owns Staples Center and is developing LA Live, has given $125,000 and the Lakers and Clippers $25,000 each.) The obvious cynicism of this quid pro quo is not lost on voters, an overwhelming majority of whom told the Public Policy Institute that they are pessimistic about the California economy. In fact, just 16% of likely voters told the pollsters they trust Sacramento to do the right thing most of the time. The problem here is that even though voters are drawing rational conclusions about Sacramento's incompetence and malfeasance, the reaction they're choosing is self-destructive. After these measures fail and Schwarzenegger and the Legislature begin to hysterically close a looming shortfall of more than $20 billion, they won't eliminate the obscure board that regulates Shasta County beekeepers and provides comfortable incomes for their old political cronies. They'll go after the programs that fund local government services, because what Sacramento does best is pass the pain. Thus, Mayor Antonio Villaraigosa -- who on Tuesday asked the L.A. City Council to declare a fiscal emergency to cope with a budget shortfall that may exceed $1 billion next year -- has been told by his staff that the ballot measures' failure may lead Sacramento to withhold as much as $76 million in sales tax revenues. L.A. County Supervisor Zev Yaroslavsky says rejection of the measures may cost the county, which provides most essential human services, several hundred million dollars. "Children, the poor, the elderly and the sick are the most politically marginalized members of our society. They don't vote and they don't make the contributions the special interests do." The paradox, Yaroslavsky points out, is that the need for services is rising dramatically, while Sacramento seems likely to make draconian cuts in funding. The number of county residents receiving general relief, for example, has risen 1.5% in each of the last 18 months. The question for voters, then, is this: Is it worth "sending Sacramento a message" when the people who ultimately are on the receiving end are our neediest and most vulnerable neighbors?

- These are the 10 largest claims pending for the California Underground Storage Tank Cleanup Fund by big corporations: Union Oil Co.: $262.9 million; BP: $190.9 million; Equilon Enterprises (Shell and Texaco Partnership): $175.1 million; Chevron Corp.: $156.4 million; Exxon Mobil Corp.: $48.5 million; 7-Eleven: $36.6 million; ConocoPhillips: $31.3 million; Ultramar: $20.8 million; Circle K: $13 million; Yosemite Concessions: $8.1 million

- The Chevron Corporation posted its lowest profit in five years after the global recession cut fuel demand, dragging down energy prices. First-quarter net income fell 64 percent to $1.84 billion, or 92 cents a share, from $5.17 billion, or $2.48 a share, a year earlier, Chevron said. Excluding divestiture gains, profit was 72 cents a share, 9 cents below the average of 13 analysts’ estimates compiled by Bloomberg. The company’s earnings from oil and natural-gas wells in the United States fell 99 percent, to $21 million, as crude futures in New York traded 56 percent lower than a year earlier, the biggest decline in more than a quarter century.

- Nigerian security forces said that they had rescued 13 oil workers abducted in the last week, including nine foreigners, and destroyed a key militant camp in the heart of Africa's biggest oil industry region. The Niger delta's main militant group has declared an "all-out war" and warned oil companies to evacuate staffers after three days of heavy clashes with the military. The army said its forces, using gunboats and helicopters, would continue an offensive to drive out militants from the creeks after the hijacking of two oil vessels and attacks on troops in southern Delta state. The fighting in the OPEC member nation so far has had little effect on global crude oil markets. "We will carry on with our operations until we stabilize the situation," said Col. Rabe Abubakar, spokesman for the military task force in the Niger delta. He said two soldiers were wounded in the fighting. Royal Dutch Shell, Chevron and other energy companies working in the area were given until Saturday by the militants to remove their workers. The military freed nine Filipinos and four Nigerians who had been seized two days before when their oil vessel MV Spirit was hijacked by militants near Warri. A total of 20 people were believed to have been on board the ship, chartered by state oil firm NNPC. The rescued crew members told reporters that two Filipinos were killed and at least five were wounded by crossfire. "We thought we were going to die as bombs were coming down," said one.

- What did Chevron do when it learned that “60 Minutes” was preparing a potentially damaging report about oil company contamination of the Amazon rain forest in Ecuador? It hired a former journalist to produce a mirror image of the report, from the corporation’s point of view. As a demonstration of just how far companies will go to counteract negative publicity, the Chevron case is extraordinary. Gene Randall, a former CNN correspondent, spent about five months on the project, which was posted on the Internet in April, three weeks before the “60 Minutes” report was shown on May 3. “Chevron hired me to tell its side of the story,” he said. “That’s what I did.” The two videos — one by CBS, the other by a corporation being scrutinized by CBS — run about 14 minutes long. They each discuss a class-action lawsuit filed by Ecuadoreans who accuse Texaco, a company acquired by Chevron in 2001, of poisoning the rain forest. An Ecuadorean judge is expected to rule soon on whether Chevron owes up to $27 billion in damages, which would make the case “the largest environmental lawsuit in history,” the “60 Minutes” correspondent, Scott Pelley, said. Both videos start with a correspondent appearing on camera and calling it a “bitter” dispute. But from there, they diverge. The “60 Minutes” report visits the rain forest, talks to the Ecuadorean judge and interviews a Chevron manager. The Chevron video interviews the same Chevron manager, as well as five professors who are consultants to the oil company, but none of the plaintiffs. The Chevron video never directly claims to be journalism. But a casual viewer could be swayed by the description — “Gene Randall reporting” — and the journalistic devices used, including file footage of the rain forest and over-the-shoulder interviews with experts. Chevron posted the video on YouTube as well as its own Web site devoted to the lawsuit. Chevron declined to answer questions about the video. But in a statement, it said that “we produced this video in response to a campaign waged by trial lawyers. They’ve turned to Hollywood to tell a fictional story. We’ve turned to an award-winning, former journalist to tell a factual story.” Mr. Randall, who has been a corporate consultant since leaving CNN in 2001, had worked with Chevron once before, as an interviewer of the company’s chief executive for a corporate Web video. When the company approached Mr. Randall late last year, he said he had researched the Ecuador lawsuit and “became convinced that their side had not gotten out there.” The first Google search result for the words “Chevron in Ecuador” shows a Web site created by Amazon Watch, an environmental activist group, that blames “Chevron’s negligence” for injuries and deaths in the country. Chevron has since bought Google ads so that its Web site about the lawsuit, which includes Mr. Randall’s video, appears as a sponsored link. Mitch Anderson, a campaigner for Amazon Watch, said that Chevron had resorted to “embarrassing public relations tactics” because credible news sources had not sufficiently framed the report the way they would like, namely, to “to place all of the blame for Texaco’s environmental disaster in Ecuador on PetroEcuador,” Texaco’s former partner. Mr. Randall’s video acknowledges the claims of the plaintiffs many times, primarily to set up Chevron’s response. “This is not a news report,” he said in an interview. “This is a client hiring a provider to tell its side of the story.” The video ends with a voiceover saying “Gene Randall reporting.” Jeff Fager, the executive producer of “60 Minutes,” said his staff would have liked the same access that Mr. Randall had to Chevron. The oil company’s chief environmental scientist appears in the corporate video, but “they wouldn’t let us interview her,” Mr. Fager said. Mr. Fager emphasized that the “60 Minutes” segment was “well-reported and fair.” “I’m sure that Chevron preferred the story they told to the one we told, but that’s not journalism, that’s advocacy,” he said. Their advocacy may not have had a serious effect. While the “60 Minutes” report reached at least 12 million viewers on television, the Chevron-sponsored effort has received only about 2,000 views on YouTube. Chevron would not say how many views it had counted on its own Web site. “Most companies like their own advertising best, and this is not a whole lot different,” Mr. Fager said.

- Mention to Anita Ruíz the name of the giant oil company Chevron, and she trembles with rage. At her wooden hut here in the Amazon forest, where oil-project flares illuminate the night sky, she points to a portrait of her youngest son, who died seven years ago of leukemia at age 16. “We believe the American oilmen created the pollution that killed my son,” said Ms. Ruíz, 58, who lives in a clearing where Texaco, the American oil company that Chevron acquired in 2001, once poured oil waste into pits used decades ago for drilling wells. Texaco’s roughnecks are long gone, but black gunk from the pits seeps to the topsoil here and in dozens of other spots in Ecuador’s northeastern jungle. These days the only Chevron employees who visit the former oil fields, in a region where resentment against the company runs high, do so escorted by bodyguards toting guns. They represent one side in a bitter fight that is developing into the world’s largest environmental lawsuit, with $27 billion in potential damages. Chevron is preparing for a ruling by a lone judge in a tiny courtroom on the top floor of a shopping center in Lago Agrio, a town rife with slums that Texaco founded in the 1960s as its base camp in the Amazon. Chevron faces claims for an era when oil companies were less purposeful about protecting the environment than they are today. It also faces potentially huge damages in a country where American corporations once wielded strong influence but are now treated with discourtesy, if not contempt. The sympathies of the judge, a former military officer named Juan Nuñez, are not hard to discern, and he appears likely to rule against Chevron this year. “This is a fight between a Goliath and people who cannot even pay their bills,” Mr. Nuñez, 57, said in an interview in his office, where more than 100,000 pages of evidence were stacked to the ceiling. But his ruling is not likely to end the case. Already, the dispute is the subject of intense lobbying in Washington, which could apply pressure to Ecuador on Chevron’s behalf. If the company loses, it is ready to pursue appeals in Ecuador and, if necessary, to seek international arbitration. Texaco laid down stakes here in the 1960s, and began producing oil in the early 1970s when Ecuador was still under military rule. Before the oil began to flow, the region was inhabited by forest tribes, including the Cofán and the Siona-Secoya. Political tension permeated Texaco’s presence in Ecuador much of the time it operated here in a partnership with the government, and by the time it was prepared to leave, in the early 1990s, a cleanup of its operations was needed. So Texaco reached a $40 million agreement with Ecuador to clean a portion of the well sites and waste pits in its concession area, absolving it of future liability. But that cleanup, carried out in the 1990s, was far from the bookend Texaco hoped to achieve. Instead, villagers in Ecuador became convinced they were getting sick from the pollution left behind. They filed suit in 1993 in the United States, and later claimed that their grievances were not covered by Texaco’s settlement agreement. As the case snaked its way through American courts, Ecuador seemed to fall to pieces, going through 10 presidents in a decade by 2006. The American lawsuit was eventually thrown out, on grounds the case should not be tried in the United States, and the plaintiffs reformulated it and filed it here. Today, Chevron has absorbed Texaco, and Ecuador has gone through a metamorphosis under the leftist President Rafael Correa. He has repeatedly sided with the plaintiffs, calling Chevron’s Ecuadorean past “a crime against humanity.” Such sentiment holds strong appeal to those who claim that people here, like Ms. Ruíz’s 16-year-old son, are dying from the pollution that Texaco spawned. Citing scientific studies, the plaintiffs claim that toxic chemicals from Texaco’s waste pits, including benzene, which is known to induce leukemia, have leached for decades into soil, groundwater and streams. A report last year by Richard Cabrera, a geologist and court-appointed expert, estimated that 1,400 people in this jungle region — perhaps more — had died of cancer because of oil contamination. Chevron rejected the claims, contending that Mr. Cabrera had no medical evidence to back up his conclusion that the company should pay $2.9 billion just to compensate for excess cancer deaths. The lawsuit here focuses more on environmental cleanup than cancer deaths, but the issue remains hotly disputed, particularly after a judge in California dismissed a separate claim against Chevron for cancer deaths in 2007, finding that false claims had been put forth by the plaintiffs’ lawyer, Cristobal Bonifaz, who was instrumental in starting the fight against Texaco in the 1990s but is no longer involved in the suit. Nearly every other detail in the case is disputed as well, save one: Chevron and the plaintiffs agree that the expansion of oil exploration in northeastern Ecuador spoiled what had once been a pristine jungle. More than four decades later, evidence of the contamination is unavoidable at well sites near Lago Agrio and other towns in the region. Some pools of waste dug by Texaco combining noxious drilling mud and crude oil still lie exposed under the sun, seeping into nearby water systems. Other pits, ostensibly cleaned up by Texaco after the company handed over operations to the national oil company, Petroecuador, have varying amounts of pollutants near the surface, leading to clashes among scientists for the two sides about the exact levels and their health implications. Petroecuador has a poor environmental record of its own and faces criticism for at least 800 oil spills since 1990. In what may be the most contentious part of the legal battle, Chevron argues that it cannot be held responsible for damage done by Petroecuador after it took over the site, or by the Ecuadorean government’s broader project to colonize its jungle frontier, which brought more than 40,000 settlers to the region by the 1970s using roads that Texaco built. The plaintiffs claim Chevron must be held responsible for the damage where Texaco once operated, up to the present, claiming the systems put in place by Texaco allowed Petroecuador to go on polluting. If Chevron has a problem with that, said Steven Donziger, a lawyer for the plaintiffs, then it should sue Petroecuador. “The damage caused by Texaco is still causing harm more than 18 years after Texaco ceased operating, and will continue to do so for centuries until it is cleaned up,” Mr. Donziger said. Despite the potential size of the damages, Chevron insists its solvency is not at stake. But the legal battle is denting the company’s environmental image. Ecuador’s attorney general last year indicted two of Chevron’s lawyers, accusing them of fraudulently conspiring to prove that Texaco had cleaned up waste pits. That maneuver infuriated Chevron. “In politicizing and corrupting the case as much as they have done, they are signing on to 10 or 20 years more of litigation,” said Silvia Garrigo, a lawyer who is Chevron’s manager of global issues and policy. “Any enforcement action is going to be met with a challenge by us.” Chevron has fought back with trade lawyers and lobbyists, using highly paid talent like the former United States trade representative Mickey Kantor, and the former Clinton White House chief of staff Mack McLarty to push the Obama administration to strip Ecuador of trade preferences, on the grounds that it broke its agreement to absolve the oil company of liability. “I can’t warrant what Texaco did 42 years ago or 40 years ago or 35 years ago,” Mr. Kantor said. “All I know is they spent $40 million to clean it up. They were given a release signed by the government of Ecuador and Petroecuador.” The lobbying effort in Washington appears to be an effort to pressure Ecuador to come to the table and work out a deal. “We want to resolve this in a reasonable fashion,” Mr. Kantor said. Texaco may be gone, but the destiny of people near Lago Agrio is still intertwined with that of the United States, and anger simmers here. Those who claim to have suffered the greatest harm face years of delay, at best, before any payout. Some may not live to see the case resolved. José Guamán, 62, acknowledges that possibility. He lives near a well once operated by Texaco. Guiding a visitor around his property, he pointed to a covered waste pit where his late wife, María, once fell and emerged covered in black ooze. She died at 45, leaving behind their two children. Mr. Guamán said he did not know what had caused her death. “But if I know one thing, it is that petroleum curses anyone who touches it,” Mr. Guamán said. “If that applies to us, then it should apply to the Americans as well.”

- Chevron Corporation (NYSE: CVX) invested $160 million in communities around the world, posted record safety performance and completed major energy efficiency projects, according to the company's 2008 Corporate Responsibility Report. Chevron's seventh annual corporate responsibility report provides descriptions, data and perspectives on key areas such as community engagement, health and safety, energy efficiency, renewable and alternative energy, and environmental performance for 2008.

- Ethanol and oil don’t mix very well. At least that has been the impression left over the years by oil company executives. They have long complained that ethanol is not energy efficient and that its transport is problematic because it corrodes conventional pipelines. But oil companies are beginning to change their tune -– particularly in the wake of federal mandates requiring refiners to blend increasing amounts of the stuff through 2022. The amount of money the companies are investing into the research and development of biofuels is still small, but financing is growing more substantial and oil executives are talking with small biofuel companies about investing in new plants. BP has already teamed with Verenium, based in Cambridge, Mass., for the building of a $250 million commercial plant in Florida that will have the capacity to produce 36 million gallons a year of new biofuels made from grasses in the sugar cane family. Other oil companies have formed new partnerships with a variety of companies and research institutions involved in not only cellulosic ethanol but future generations of biogasoline and biodiesel made from unusual materials like algae — many of which will be more compatible with existing pipelines than ethanol. Shell and Chevron appear particularly active. Skeptics have argued that interest in biofuels among the big oil producers is more a function of public relations than of real concern for the environment. But the companies are investing in biofuels even as they scale back investments in other alternative energy projects, like hydrogen and wind power. And the words of executives may suggest a realization that big oil’s concerns over the political and logistical vagaries of tapping new sources of crude actually dovetail with evolving government fuel policy and widespread concern over climate change. “Sourcing of hydrocarbons in the future is going to be more difficult,” said Graeme Sweeney, Shell’s executive vice president for future fuels and carbon dioxide, “and there will be a need for all these fuels to enter the energy mix.” Jeffrey Jacobs, vice president for biofuels at Chevron’s technology ventures company, said, “We don’t view biofuels as competition. We believe they are a natural extension of our existing business. It represents a significant business opportunity and it is safe to say that we in the industry understand the need to diversify our energy supplies.” The oil company that appears to be the most committed to biofuels -– at least thus far — is BP, which has spent $1.5 billion on a variety of biofuel investments since 2007, including its partnership with Verenium and one with DuPont to make bio-butanol. Phil New, the president of BP’s biofuels unit, predicted that biofuels could represent as much as 19 percent of the world’s fuel mix by 2030. He also said the investment in a commercial cellulosic ethanol plant with Verenium “reflects our belief that cellulosic biofuels are going to represent the best bet for generating low carbon, competitively costed renewable barrels in non-tropical climates.”

June

• Upstream news:

- Chevron Corporation (NYSE:CVX) announced that its subsidiary Chevron Brasil Upstream Frade Ltda. has commenced crude oil production from the Frade Field, the company's first operated deepwater development in Brazil. The estimated $3 billion project, with continuing development drilling, is expected to achieve peak production of 90,000 barrels of crude oil and natural gas liquids per day in 2011. Chevron has a 51.74 percent operating interest in the Frade Field, which contains an estimated 200 million to 300 million barrels of recoverable oil. The field is situated in the Campos Basin in approximately 3,700 feet (1,128 m) of water, approximately 230 miles (370 km) northeast of Rio de Janeiro. Frade is a subsea development with wells tied back to a floating production, storage and offloading vessel. Crude oil production is planned to be exported to world markets, and natural gas production is expected to be provided for domestic use in Brazil. Other partners in the project are Petròleo Brasileiro S.A. – Petrobras, 30 percent; and Frade Japá o Petròleo Ltda., a joint-vehicle company of INPEX, Sojitz and JOGMEC, 18.26 percent.

- Chevron Corporation (NYSE: CVX) announced that its subsidiary, Saudi Arabian Chevron (SAC), has achieved first steam injection at its Large Scale Pilot (LSP) steamflood project at the Wafra Field, an Eocene heavy-oil carbonate reservoir in the onshore Partitioned Neutral Zone (PNZ). The $340 million LSP, which is the final test phase for the steamflood project, is expected to lead to full-field steamflooding of the First Eocene reservoir, marking the first commercial application of a conventional steamflood in a carbonate reservoir anywhere in the world.

• Downstream news:

• Business/Finance news:

- Chevron, giant of the California oil industry, has again dug deep into its pockets to contribute to Gov. Arnold Schwarzenegger’s most recent favorite campaign cause – and consumer advocates are charging that skulduggery is afoot. Just days after the package of ballot measures that Schwarzenegger supported flopped in the May 19 special election, Chevron donated $250,000 to the governor’s California Dream Team political account. The big check came on top of $500,000 the oil company had already contributed to the push for the ballot measures. All that loot prompted Doug Heller, executive director of Consumer Watchdog, to dispatch a letter today to the Legislature’s top Democrats, saying Chevron is “seeking protection” from a potential oil extraction tax that could help California with its cash troubles. Heller noted that California is the only oil-producing state in the nation without an extraction tax, and he asked why lawmakers aren’t putting the idea back on the table. A 10% extraction tax on every barrel of crude pumped from California soil, he said, could raise up to $1 billion – money that would go a long way toward offsetting Schwarzenegger’s proposed deep spending cuts. Folks at Chevron declined to engage in a war of words with Heller. In a statement, the company said all the contributions were properly reported and that Chevron “has long supported improving California’s business climate including many of Governor Schwarzenegger’s programs since he first took office.”

- Luke Cole, a leading theorist and practitioner of environmental justice law, who battled toxic waste facilities, mega-dairies, mining companies and other pollution threats in poor and minority communities in California and Alaska, died Saturday in a car crash in Uganda. He was 46. Cole was traveling with his wife on a rural road in western Uganda when a truck hit their vehicle head-on. He died at a clinic a short time later, according to his father, Herbert Cole. His wife, Nancy Shelby, was flown to a hospital in Amsterdam, where she is recovering from her injuries. A man of many passions, Cole was the executive director of the Center on Race, Poverty and the Environment, a San Francisco-based nonprofit he founded in 1989 to address environmental racism, in which low-income and minority communities are alleged to suffer a disproportionate share of pollution problems. Cole first demonstrated his innovative approach in 1990, when he helped the poor, Latino residents of Kettleman City in the San Joaquin Valley defeat a proposed toxic waste incinerator project by pointing out that the environmental impact report had not been translated into Spanish, the primary language of almost half of the town's residents. In the late 1990s he applied civil rights law to a case in South Camden, N.J., where an impoverished black community opposed the construction of a cement recycling plant. The proposed plant met technical requirements, but Cole, citing Title VI of the Civil Rights Act of 1964, argued that it would worsen the quality of life in a minority community that was already suffering from high levels of exposure to dangerous pollutants. In Kivalina, Alaska, he recently settled a case against a major zinc producer whose mining operations he said were fouling the water supply of a 4,000-year-old Inupiat Eskimo village. He was continuing to represent the Inupiat people in a new lawsuit alleging that Exxon, Chevron and other oil companies were contributing to global warming, which some experts say is causing Kivalina to erode. Born in North Adams, Mass., on July 15, 1962, Cole mainly grew up in New York and Santa Barbara but spent part of his childhood in Nigeria, where his father, a UC Santa Barbara African art historian, went on research trips. In 1989, the graduate of Stanford University and Harvard Law School tried to find a job that would allow him to combine his interests in social justice and the environment with legal action, but such a job didn't seem to exist. When he approached environmental law and poverty law groups, they said, " 'We don't do the kind of work you're describing,' " said Brent Newell, legal director of the Center for Race, Poverty and the Environment. So Cole moved to California, where he met Ralph Abascal, the longtime general counsel for the nonprofit California Rural Legal Assistance. Abascal, who had litigated cases involving farmworkers and pesticide contamination, understood what Cole wanted to do. He gave the young lawyer a desk and a phone and helped him raise money to open a law center that embraced his goals. The center now has a staff of 20 and offices in Delano, Fresno and Madera, as well as San Francisco. From 1996 to 2000 Cole served on the U.S. Environmental Protection Agency's National Environmental Justice Advisory Council. He also taught environmental justice seminars at Stanford Law School, Boalt Hall and Hastings College of the Law. He was often portrayed by opponents as a "fear-mongering" outsider who misrepresented the issues and manipulated his small-town clients. Cole made no secret of the fact that one of his goals was to train people to fight their own battles against large, well-funded corporate interests. An avid birder, connoisseur of root beer and collector of bobbleheads and miniature spy cameras, Cole had taken off in early March on what was to be a four-month sabbatical. He traveled to South America, Antarctica, Madagascar and South Africa. Uganda, where his brother lives, was one of his last stops. In addition to his father and his wife, with whom he would have celebrated a 10th wedding anniversary this month, he is survived by his mother, Alexandra Cole, and stepmother, Shelley Cole, both of Santa Barbara; two brothers, Peter of Brooklyn, N.Y., and Thomas of Kampala, Uganda; a sister, Sarah Cole, of Santa Barbara; a stepbrother, Daryn Kenny of Pleasant Hill, Calif.; and a son, Zane Shelby, of Boston.

- The most persistent misconception about Californians is that we hate to raise taxes. The truth is that we adore raising taxes -- as long as someone else is paying, that is. So nonsmokers vote to raise cigarette taxes, teetotalers to raise liquor taxes. The middle and working classes want to hike taxes on the rich, who are happy to return the favor. Yet this only compounds the mystery of why we're so resistant to raising taxes on perhaps the biggest, fattest target of all: the oil industry. At least twice since 1981 Californians have considered proposals to impose a so-called severance tax on oil -- a levy on every barrel that drillers take out of the California ground. Both times they went down to defeat -- most recently in a $150-million initiative campaign that set a new standard for obscenity in campaign finance, thanks to Chevron and its fellow oil companies. The 2006 defeat of Proposition 87, which would have steered the tax proceeds to alternative fuel programs, preserved California's status as the only one of the 22 major oil states to give the industry a free ride. And we're the third-biggest producer in the country. How embarrassing is it for California to be hanging out there alone? That outstanding anti-tax crusader, Alaska Gov. Sarah Palin, in 2007 raised her state’s tax to 25% of the value of extracted oil and gas. Proposition 87 would have capped California's levy at 6%. So even if it had passed, we'd still be suckers. With the state's fiscal disaster having concentrated the minds of political leaders as never before, the oil severance tax is back on the table in Sacramento. We can expect the oil industry to trot out the same arguments it employed to defeat the tax the last time, so to save time it might be helpful to deflate them now. But first, let's place the proposal in fiscal perspective. According to the state Energy Commission, 240 million barrels of crude were extracted last year from California lands and waters, including federal waters offshore. At the current world benchmark price of about $70, the 6% tax contemplated by Proposition 87 would have generated more than $1 billion a year from that haul. Consider some "what if" scenarios: At last year's peak benchmark price of $130 for California crude, the take would be nearly $2 billion. Palin's tax rate of 25% would generate $4 billion at a $70 price and nearly $8 billion at the top. An important aspect of the severance tax is that we'd better collect it now, while there's still something to tax. California oil production has declined steadily from its 1985 peak of 424 million barrels. Since 2002, according to federal statistics, the state’s known reserves have been depleted to about 3.3 billion barrels from more than 3.6 billion. The severance tax might be offset by reductions in property and corporate income taxes paid by oil companies. But an analysis of Proposition 87 prepared in 2006 by the nonpartisan Legislative Analyst's Office found that such offsets would amount to a mere fraction of the severance tax, so the state would still come out way ahead. Let's be candid about the rationale for the severance tax. States levy it because they can: The oil's not going anywhere. Oil companies can't pack it up and move it to a state where rates are lower. It creates wealth -- enormous wealth at times of elevated market prices, like now -- and any jurisdiction in need of funds to cover services it provides to its residents has a perfect constitutional right to claim a piece of it, as it claims a percentage of the value of real estate and income (earned, unearned and inherited). The virtue of taxing oil is that it's an easy target and really valuable. California's failure to recognize this is just a measure of its economic stupidity. The big question is who pays the tax. The public's main fear about Proposition 87 was that the industry would pass it on to consumers in the form of higher gas prices at the pump. The oil companies played on this fear ruthlessly. The point had a certain shallow logic, since all California crude is refined in-state and almost all the refined output is sold here, too.

- 'If I am not for myself, who shall be for me?" Hillel, the Jewish sage, famously asked. It's a question that needs to be heard in Sacramento, where too many of the state's elected officials seem resigned to denying medical care to 1 million children, cutting college scholarships, shutting the state's parks, throwing welfare recipients into the streets and laying off 60,000 state employees. The foremost dismantler of the state looks to be its own governor, who would terminate the state's health insurance program for working-class kids rather than create an oil-extraction tax on oil companies -- out of fear, we can only presume, that Chevron will pack up its oil fields and haul them to a lower-tax state. In his ideological rigidity, the governor is matched by the Republicans in the Legislature, whose burning desire to smash the state exceeds the most fevered fantasies of '60s Berkeley radicals. Democrats are countering with -- in addition to their oil-tax proposal -- a plan to hike the tobacco tax and reach into the state's rainy-day fund, on the theory that enacting $24 billion in cuts, as the governor proposes, would be the social equivalent of the Flood. But they can't enact these measures without some Republican votes and a governor willing to sign them. Which means they need to do what America's biggest banks and auto companies did -- turn to the feds. To date, a few prominent Sacramento Democrats have reached out politely to the Obama administration, but when the president's people declined their request, they stole quietly back into the night. It's easy enough to understand the White House's reluctance to intervene. If it offers loans to California, what about the other 40-plus states that are confronted with deficits? And it's understandable that Democrats would prefer not to put the president on the spot. But the Flood cometh. The time for cutting your party's leader some slack has passed. After all, the case for the feds loaning money to California is the same as the case that persuaded the government to help out General Motors and Citibank: It's too big to fail. One out of every eight Americans is a Californian. And if California, where the unemployment rate is already higher than in all but four other states, falls deeper into depression, it will substantially retard the nation's recovery -- as a downturn in Nevada, Illinois or even Texas would not. California leads the nation in underwater mortgages, and massive cutbacks in state spending would create a new wave of defaults and foreclosures, swamping the nation's (and the world's) banks with yet another cascade of toxic assets. The feds should approach California as they did General Motors -- demanding a fundamental restructuring of state finances as a condition for loans. In return for proffering, say, $8 billion in loans, the White House should demand $8 billion in tax hikes and $8 billion in cutbacks. It should also demand changes to the state's Constitution that would upend California's dysfunctional system of finances, sweeping away the two-thirds requirement for passing budgets and raising taxes, restoring local governments' ability to fund themselves through property taxes and putting a stop to budgeting by initiative. The feds' loan could be conditional on the state's voters ratifying these changes in November. The only way such a measure could pass, of course, would be if a very popular president named Obama campaigned for it. If that's too much to expect of a president who does have a lot on his plate, there are still other ways the feds could help. As Jean Ross of the California Budget Project has suggested, they could increase the federal contribution to Medi-Cal and the Healthy Families program that the governor is so eager to ax. Alternatively, Obama could ask Congress for a second stimulus that would enable states to maintain their pre-recession levels of services. In a recession, our federal system becomes a marvel of self-negation: While Washington spends to keep the economy from tanking, 50 state capitals cut their spending to match their diminished revenues. If Obama can't help America recover by helping California, he needs to help America recover by helping all 50 states. But where are the demands on Obama? Where are Jerry Brown, Gavin Newsom and Antonio Villaraigosa; Dianne Feinstein and Barbara Boxer; Nancy Pelosi and Henry Waxman? If we are not for ourselves, who shall be for us? And if not now, when?

- Chevron Corporation (NYSE: CVX) will be recognized by the Global Business Coalition on HIV/AIDS, Tuberculosis and Malaria (GBC) for its longstanding commitment to fight the spread of HIV/AIDS, tuberculosis and malaria around the world. Chevron will receive the GBC's prestigious Richard C. Holbrooke Award for Business Leadership in recognition of the company's global public health programs. The award recognizes Chevron's leadership in delivering customized workplace and community-based health education, awareness-building, prevention and treatment programs across the company's worldwide operations. Chevron's global public health programs continue to grow through the development of strategic partnerships and sustainable programs in communities around the world.

July

• Upstream news:

- Chevron Corporation (NYSE:CVX) announced that its subsidiary Cabinda Gulf Oil Company Limited (CABGOC) and its partners commenced crude oil production ahead of schedule from the Mafumeira Norte project located offshore Angola. Located in 160 feet (49 meters) of water about 15 miles (24 km) off the Angolan coastline, the Mafumeira Norte project is the first phase development of the Mafumeira Field located in Area A of Block 0. The project is being commercialized through fourteen wells to the existing Kungulo water injection platform and is expected to reach maximum total production of 30,000 barrels of crude oil and 30 million cubic feet per day of natural gas in 2011.

- Chevron Corporation (NYSE: CVX) announced the award of a major front-end engineering and design (FEED) contract for the first phase of the Wheatstone natural gas development in northwest Australia. Chevron awarded the contract for the first phase of the project — which consists of two liquefied natural gas (LNG) processing trains each with a capacity of about 4.3 million tons per year and a domestic gas plant — to Bechtel Oil, Gas & Chemicals, Inc. The facility will be supplied initially from Chevron's 100 percent interest in the Wheatstone Field and the Chevron-operated Iago Field. The facility will be located at Ashburton North on the mainland of Western Australia.

• Downstream news:

• Business/Finance news:

- David J. O'Reilly, chairman and chief executive officer of Chevron Corporation (NYSE: CVX) commented on the death of Harold J. "Bill" Haynes, the company's former chairman of the board and chief executive officer. "Bill drove tremendous growth in the company and solidified its preeminent position in the industry by the time of his retirement," said O'Reilly. "He left an indelible mark on our company, and our industry, by encouraging open dialogue and challenging conventional thinking. He ushered in a new era of communication between the industry, public and news media on energy issues that was truly trendsetting. I speak for our board of directors and employees in saying we are deeply saddened by his passing."

- The narrow streets leading to Earl Ofari Hutchinson's house are scattered with wind chimes and bird houses and manicured topiaries that look as if they've been lifted from a Dr. Seuss book. The house number is painted on a little sign in the shape of a terrier, his garage is framed by pink roses and his stucco walls have been painted a radiant Tuscan orange. One neighbor grows kumquats; another puts a 10-foot star atop his house every Christmas, so bright you can see it clear over on Slauson Avenue. When Hutchinson, 62, a noted political analyst and author, greets you at the front door, it's hard to tell that anything is amiss. "It's a great neighborhood," he agrees. "It just has a fatal flaw." Hutchinson's house in Windsor Hills, along with nearby Baldwin Hills, Ladera Heights, Culver Crest and View Park, make up a well-heeled, doughnut-shaped community that has had, from its inception, an unusual and awkward centerpiece: a 1,000-acre oil field. The oil field was discovered in 1924 and is operated by the Plains Exploration & Production Co., a Texas firm better known as PXP. The company extracts about 9,000 barrels of oil and natural gas each day. And the arguments for capping production at that level -- much less turning the land into a park, as many have long hoped for -- seem to fray each day as oil prices soar and U.S. supplies tumble. PXP is pushing to add new wells -- potentially, one every week or so for the next 20 years. Indeed, energy companies across Southern California are shaking off the long sleep once brought on by low oil prices. Sometimes it's easy to forget about all the oil down there, easy to forget that before storied gushers like Texas' Spindletop ushered in the petroleum age, prospectors found oil near Chavez Ravine, supposedly by digging with a sharpened eucalyptus log. Today, drilling operations offer more potential return than they have in years, and scores of new wells are on tap, in Long Beach, in the Whittier Hills, in Ventura County. Many will be small-scale operations, some hidden behind trees or fake buildings. You might never know they are there -- unless, of course, you live next door. Hutchinson beckons you into his backyard. Until recently there was a tidy stone patio, surrounded by lemon and orange trees. That's been reduced to hard dirt. An umbrella that once went with a picnic table has been tossed into the shrubbery, where it is fading and cracking in the sunlight. Contractors recently spent two months, and Hutchinson spent $125,000, lifting his home, tearing up the backyard and fixing a gaping crack in an exterior wall. He blames PXP -- specifically the vibrations of the drilling at the bottom of the hill behind his house. With workers clanging away on a nearby well, Hutchinson runs a slender finger along a crack that zigzags up to a second-floor window. The crack isn't as bad as it was before, he says, but it's clearly started again -- three months after the repair job. PXP denies its operation had anything to do with the damage. Regardless, the dispute is a taste of the kind of battle that will almost certainly spider-web across Southern California in coming years: In the Whittier Hills, where oil was first extracted more than a century ago, city officials bought more than 1,200 acres of land in 1995 -- much of it from Chevron Corp. and the now-defunct Unocal -- with the goal of conservation. Today, Whittier is studying whether to reopen the land to oil production, said Assistant City Manager Nancy Mendez. If the city decides that drilling could take place without damaging a wildlife corridor that stretches to Chino Hills, production could begin by 2011. In the Long Beach area, home to a 21-square-mile oil field, 70 new wells were installed last year and another 70 are expected this year. Growth could come faster, but the region is hamstrung by a lack of experienced engineers and geologists, as well as by eager companies fighting over a limited pool of drilling materials. "Your wants and desires are governed by what you can accomplish and what you can get ahold of," said Curtis Henderson, the city's manager of oil operations. Venoco Inc. is looking to increase production at its Southern California sites, said Mike Edwards, a vice president. At the firm's 65-well West Montalvo Field in Ventura County, for instance, production has increased between 20% and 30% in the last year, to about 1,000 barrels a day, he said. "Elevated prices," Edwards said, "definitely make some of the properties that had marginal economics a lot more attractive." More attractive, that is, to oil companies. Gary Gless, 52, a retired Hollywood construction coordinator, bought his Windsor Hills home 12 years ago. The house, with views to the Pacific on a clear day, was more than a half-century old, and Gless and his wife, Leslie, were just the second owners. That's typical in the neighborhood, where few people leave, and when they leave the natural way, homes often stay in the family. All of the communities surrounding the PXP operation are fiercely protective of their neighborhood. "This," Gless said, "was my investment." He dove in, digging terraces into the steep hill behind his home and planting a lovely spread of 40 fruit trees, including dwarf Meyer lemon and guava, interspersed with fish ponds and wisteria vines. The plan was to collect on a reverse mortgage and live off the proceeds -- a plan that Gless believes is now in peril because of PXP's expansion plans. As it is, complaints about noise and fumes are already routine in the neighborhood. "It's scary enough that I might have to move," said Gless, who has become a leader of an effort to stave off the expansion. "Thousands of homes will be affected." Community protests are already having an effect. In Whittier, environmentalists have extracted promises that local officials will apply stringent tests in determining whether drilling would cause lasting damage. And this week, PXP agreed not to submit permit applications for new wells until late October, to allow time for public hearings, though a moratorium on new wells expired in June. "I would like to stay here for the rest of my life -- if we can keep the property values up and the community strong," said Sally Hampton, 49, who has lived in Windsor Hills for 28 years. She said scrambling to jack up domestic oil production is merely a way of "delaying the inevitable" -- moving toward alternative energy sources. "They stand to profit -- tremendously -- at the expense of the community," she said. "And drilling in our neighborhood is not going to solve the oil crisis." A PXP vice president, Steve Rusch, said that not only can the operation be conducted safely, but every drop of oil extracted locally "directly offsets" an equal amount of oil that needs to come into Southern California ports. "If we don't do it, where does the oil come from?" he said. "Where does the check get written to? The Middle East? Venezuela? Every little bit counts." But don't take Rusch's word for it. Many neighbors agree they don't have a leg to stand on. Not only do they face daunting practical obstacles -- starting with the fact that drilling is legal -- they figure they could lose the battle for public opinion, too. "What do you care if I've got a crack in my wall?" Hutchinson said. "What really means something to you is lowering fuel costs. It's a very compelling argument. So I figure they can do whatever they want."

- Chevron Corporation (NYSE:CVX) reported in its interim update that upstream earnings for the second quarter 2009 compared with the first quarter are expected to benefit from an increase in prices for crude oil, largely offset by substantial unfavorable foreign currency effects. Downstream results are projected to be significantly lower than the first quarter.

- Electric utilities boosted lobbying in the second quarter of 2009, narrowing the gap with oil and gas companies that had dominated spending on persuasion by a wide margin earlier this year. An early analysis of a portion of lobbying disclosures shows utilities racked up at least $12 million in expenses, while companies that produce oil and natural gas spent at least $13.9 million. The difference between the two is far smaller than in the first quarter. In January through March, electric utilities spent $35.1 million, while oil and gas doled out $44.5 million. The spending reveals how heavily certain industries worked to influence House climate legislation, analysts said (Greenwire, June 26). Utilities, especially those that use coal, succeeded in winning help in that bill. With the debate now shifted to the Senate, analysts expect heavy persuasion efforts to continue. The numbers reflect partial totals for lobbying spending in April, May and June. E&E, which tracks lobbying by 10 energy and climate sectors, asked the Center for Responsive Politics to analyze second-quarter spending data that had been made public by the Senate. About 60 percent of the total was ready, with complete numbers expected to be computed next week. The nonpartisan research center chooses the industry categories and assigns groups to each category. Within many sectors, there are companies with disparate if not conflicting interests. Companies that produce primarily natural gas, for example, have different legislative priorities than do oil producers. Because the numbers are partial totals, they do not reveal whether sectors spent more this year than in 2008. Electric utilities in 2008 spent $159.7 million on lobbying expenditures. Their first-quarter total of $35 million showed the industry on track to spend less this year. But at the time, analysts said spending could rise in the second quarter as House lawmakers headed toward a vote on climate legislation that would profoundly change energy laws. The House bill sponsored by Democratic Reps. Henry Waxman of California and Ed Markey of Massachusetts would set up a program to cap carbon emissions and require industries to buy pollution permits. The legislation would give away 85 percent of those permits in the early years, and electric utilities would get 35 percent of those free allowances. Utility lobbying efforts were aimed at preventing sharply higher electricity bills, said Jim Owen, spokesman for the Edison Electric Institute, a trade group for utilities. Based on the preliminary numbers, American Electric Power Co. Inc. -- a utility serving Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia -- spent the most in the sector. The company, which uses large amounts of coal to make power, spent at least $2.9 million on lobbying. The oil and gas industry's top spending in the second quarter comes after first-quarter numbers showed the sector on pace to shatter previous spending totals. The industry in the first three months of the year spent $44.5 million on lobbying, compared with $30.1 million in the same period a year earlier. If the pace set by this year's first quarter continued, it would result in a $178 million lobbying total for the year. Oil and gas in 2008 spent $130 million, a record at that time. As they lobby in the Senate, oil and gas companies are focused on climate policies, tax incentives and the ability to drill offshore and on federal land, excluding national parks and protected areas. Oil companies, analysts said, have reason to spend on lobbying. The industry did not fare well in the House bill. Oil refiners would get just 2 percent of those free emission allowances for two years. Some economists believe that could push up fuel prices. Chevron Corp. topped spending in the sector, according to the early projections. The company spent at least $6 million on lobbying. Other sectors with a stake in climate legislation spent far less than oil and gas or electric utilities, the preliminary numbers show. Agricultural services and products spent $5.7 million; chemical companies and related manufacturers, $4.8 million; natural gas transmission and distribution companies, $4.3 million; alternative-energy producers, $4 million; forestry and forest products, $2 million; environmental interests, $1.6 million; mining companies and groups, $1.5 million; and coal mining -- which is also included in the mining total -- about $523,000. Those numbers are expected to be potentially much greater when all the reports are tallied.

- Chevron Corporation (NYSE: CVX) announced the appointment of R. Hewitt Pate as vice president and general counsel. Pate, 47, will succeed and report to Chevron's current general counsel, Charles A. James, who was named executive vice president earlier this year. As Chevron's chief legal officer, Pate will direct the company's worldwide legal affairs and serve on the company's Executive Committee. He will join the company on Aug. 3.

- The Board of Directors of Chevron Corporation (NYSE: CVX) declared a quarterly dividend of $0.68 cents per share, payable September 10, 2009 to holders of common stock as shown by the transfer records of the Corporation at the close of business August 19, 2009. The amount represents a 4.6 percent increase in the company's quarterly dividend and marks the 22nd consecutive year Chevron has increased its annual dividend payment.

- Chevron Corporation (NYSE: CVX) reported earnings of $1.75 billion ($0.87 per share – diluted) for the second quarter 2009, compared with $5.98 billion ($2.90 per share - diluted) in the 2008 second quarter. Foreign-currency effects reduced earnings in the 2009 quarter by $453 million, compared with a benefit to income of $126 million a year earlier. For the first half of 2009, earnings were $3.58 billion ($1.79 per share – diluted), down 68 percent from $11.14 billion ($5.38 per share – diluted) in the first six months of 2008.

August

• Upstream news:

- Chevron Corporation (NYSE:CVX) announced that its affiliate, Cabinda Gulf Oil Company Limited (CABGOC) and its partners, had made a successful discovery in Block 0 located adjacent to the Cabinda coastline in Angola. The 79-3XST1 discovery well, drilled in March 2009 in 397 feet (120 meters) of water to a total vertical depth of 13,000 feet (3965 meters), encountered over 225 feet of net hydrocarbon pay in the Upper Pinda formation. The well was tested from a single 150 ft. perforated interval and flowed at a rate of 11.6 million cubic feet of natural gas and 2,550 barrels of liquid hydrocarbons per day. The discovery extends a trend of undeveloped natural gas condensate and crude oil discoveries in the Greater Vanza Longui Area that are currently undergoing appraisal.

- Chevron U.S.A. Inc., a wholly owned subsidiary of Chevron Corporation (NYSE: CVX), announced that the Discoverer Clear Leader, an ultra-deepwater drillship newly built to Chevron's specifications, has begun work for Chevron in the deepwater U.S. Gulf of Mexico under a five-year contract with Transocean. The state-of-the-art vessel is capable of drilling wells in 12,000 feet (3,650 meters) of water to a total depth of 40,000 feet (12,200 meters), surpassing the limits of previous technology. Chevron is one of the top lease holders and producers in the deepwater Gulf of Mexico. The drillship will begin work for Chevron at several of its deepwater projects, including Tahiti and Jack/St. Malo. The Discoverer Clear Leader is the first of two new drillships to be commissioned for Chevron. The second vessel, the Discoverer Inspiration, is expected to be delivered in early 2010. The drillship features Transocean's patented dual-activity drilling technology designed to enable parallel drilling operations from a single derrick, saving time and money in deepwater well construction compared with conventional rigs.

- Chevron Australia Pty Ltd, a subsidiary of Chevron Corporation (NYSE: CVX), announced two natural gas discoveries in the Carnarvon Basin offshore Western Australia. The discoveries are located in Australia's premier hydrocarbon basin, where Chevron is the leading lease holder. The Clio-2 well, located 90 miles (150 kilometers) off the coast of Western Australia, is situated in 3,200 feet (990 meters) of water and drilled to a total depth of 14,400 feet (4,405 meters). The well discovered 375 feet (115 meters) of net gas pay. The company also made a discovery with the Kentish Knock-1 well. Drilled in approximately 4,000 feet (1,200 meters) of water to a total depth of approximately 8,300 feet (2,500 meters), the well encountered approximately 110 feet (34 meters) of net gas pay. The discovery at the Kentish Knock prospect is located approximately 185 miles (300 kilometers) from the Western Australian coastline.

• Downstream news:

• Business/Finance news:

- Chevron said that its profit fell 71 percent in the second quarter and that it would suspend its entire land-based natural gas drilling operation, citing dismal demand. Chevron said its net income amounted to $1.75 billion, or 87 cents a share, in the quarter. That compared with $5.98 billion, or $2.90 a share, a year earlier. The company said its net income suffered from a weak United States dollar, amounting to $453 million in reduced earnings. That compared with an income benefit of $126 million in the comparable period last year. Chevron said revenue fell 51 percent, to $40.2 billion, from $81 billion. A Raymond James analyst, Pavel Molchanov, said he still considered Chevron stock a strong buy despite the weak earnings report. Like Exxon Mobil, Chevron has spread its refining operations around the world and does not depend on American consumers to make money. The company said a barrel of crude oil and natural gas liquids fetched $53 in the second quarter, compared with $110 in the second quarter of 2008. Chevron’s production numbers, however, stood out when compared with other major oil companies reporting earnings this week. Chevron raised net oil-equivalent production by 5 percent. During the quarter, Chevron’s subsidiaries started drawing crude and natural gas from deepwater production facilities in the Gulf of Mexico and off the coasts of Angola and Brazil.

- Chevron Corporation (NYSE:CVX), the United States Agency for International Development (USAID) and the Cooperative League of the United States of America (CLUSA) announced the basis for a new partnership aimed at supporting Angola's continued focus on developing a diversified and sustainable economy. The Memorandum of Understanding, witnessed by U.S. Secretary of State Hillary Clinton in Luanda, Angola, focuses on supporting financial, educational, technical and training services to help improve the commercial viability of small to medium scale farmers and agricultural enterprises in Angola.

- Chevron Australia Pty Ltd welcomed the timely approval of the Chevron-operated Gorgon Project's revised and expanded scope by the Federal Environment Minister, the Hon. Peter Garrett AM MP. The Gorgon Project is operated by the Australian subsidiary of Chevron (50%) in joint venture with Australian subsidiaries of ExxonMobil (25%) and Shell (25%). The project's scope includes three, five million ton per annum LNG trains; one of the world's largest carbon dioxide injection projects; and a domestic gas plant.

- BrightSource Energy has broken ground on a 29-megawatt solar steam plant at a Chevron oil field in Coalinga, Calif. The 100-acre project’s 7,000 mirrors will focus sunlight on a water-filled boiler that sits atop a 323-foot tower to produce hot, high-pressure steam. In a conventional solar power plant, the steam drives a turbine to generate electricity. In this case, the steam will be injected into oil wells to enhance production by heating thick petroleum so it flows more freely. Oil companies typically rely on steam generated by natural gas or other fossil fuels to maximize oil recovery in places like the oil patch in California’s Fresno and Kern counties, where the petroleum is heavy and gooey. That part of California also has some of the state’s strongest sunshine and several large solar power plants are planned for the region. Chevron is an investor in BrightSource, a solar power plant builder based in Oakland, Calif., and solar-powered oil extraction offers the oil giant an opportunity to reduce its carbon footprint while gaining a hedge against volatile natural gas prices. For BrightSource, which has signed contracts to supply 2,610 megawatts of solar electricity to California utilities, the Chevron deal is a chance to scale up its technology –- the company so far has only built a six-megawatt demonstration power plant in Israel -– and explore new applications for its technology. The solar plant will be built by BrightSource and owned and operated by the oil company and is scheduled to go online by the end of 2010. The project’s existence was first reported by Reuters after Chevron disclosed the BrightSource deal at a city council meeting in Coalinga. Besides Chevron, BrightSource counts the oil giants BP and StatoilHydro of Norway as investors. Two BrightSource competitors, Ausra and eSolar, are also eyeing the oil industry as a potential market for solar steam. Ausra, based in Palo Alto, Calif., last year flipped the switch on a five-megawatt demonstration solar power plant outside Bakersfield, Calif., and the company’s chief executive, Robert Fishman, said he had held discussions with oil producers about deploying the company’s technology. The economics of solar-powered oil extraction depend largely on the price of natural gas, which hit a seven-year low last week when gas futures fell below $3 per million British thermal units. A February 2009 report by New Energy Finance, a London-based market research firm, estimated that that solar steam systems would be competitive with natural gas at $8.50 per million British thermal units. The report noted that natural gas prices in California had swung 300 percent over the last four years, and that beyond California, the Middle East is a prime — and sunny — potential market for solar steam extraction of heavy oil. Solar steam, however, works only when the sun shines, so oil companies will still need to rely on natural gas-fired steam.

- Chevron Corp. (NYSE:CVX) provided authorities in Ecuador and the U.S. with video recordings that reveal a $3 million bribery scheme implicating the judge presiding over the environmental lawsuit currently pending against the company and individuals who identify themselves as representatives of the Ecuadorian government and its ruling party. In the videos, the judge confirms that he will rule against Chevron and that appeals by the energy company will be denied — even though the trial is ongoing and evidence is still being received. A purported party official also states that lawyers from the executive branch have been sent to assist the judge in writing the decision. The recorded meetings also show an individual who claims to be a representative of Ecuador's ruling political party, Alianza PAIS, seeking $3 million in bribes in return for handing out environmental remediation contracts to two businessmen after the verdict is handed down. Of that sum, he said $1 million would go to Judge Juan Núñez, $1 million would go to "the presidency" and $1 million to the plaintiffs. The video-taped meetings occurred in May and June of 2009. Two of the meetings took place at the Quito offices of Alianza PAIS, one meeting took place in the judge's chambers in Lago Agrio, and a second meeting involving the judge took place in a Quito hotel. After referring the evidence of the scheme to authorities, Chevron Executive Vice President Charles James said that company lawyers will seek the disqualification of the judge in the case and annulment of his prior rulings.

September

• Upstream news:

- Chevron Corporation (NYSE:CVX) announced that its subsidiary, Cabinda Gulf Oil Company Ltd. (CABGOC) and its partners, commenced crude oil production at the Tombua-Landana project located 50 miles (80 kilometers) offshore Angola. Located in approximately 1,200 feet (366 meters) of water in Block 14, the $3.8 billion development is expected to achieve peak production of 100,000 barrels of crude oil per day in 2011. Recoverable resources for the two fields are estimated at 350 million barrels. The 46-well project comprises a 1,554 feet (474 meter) compliant piled tower - one of the world's tallest manmade structures. The project is designed for zero discharge of produced water and zero routine gas flaring with associated gas to be commercialized at the Angola Liquefied Natural Gas project currently being constructed in Soyo, Angola.

- Chevron Corporation (NYSE: CVX) announced that its subsidiary, Chevron Australia Pty Ltd, will proceed with the development of the Gorgon natural gas project offshore Western Australia. Development proposals for the project were approved by the Western Australian State Premier the Hon. Colin Barnett, MLA, and production licenses were granted by the Australian Minister for Resources and Energy the Hon. Martin Ferguson AM, MP. The Gorgon Project, operated by the Australian subsidiary of Chevron (50 percent*) in joint venture with Australian subsidiaries of ExxonMobil (25 percent) and Shell (25 percent), is currently estimated to cost AU$43 billion (US$37 billion) for the first phase of development. First gas is planned for 2014. The Greater Gorgon Area's projected natural gas resources are equivalent to 6.7 billion barrels of oil. The project's scope includes a three-train, 15 million-metric-ton-per-year liquefied natural gas (LNG) facility and a domestic gas plant. The project underwent a rigorous and thorough environmental assessment that culminated with some of the most stringent conditions imposed on a major project anywhere in the world. The project is expected to have the world's largest carbon dioxide injection system and be a global leader in underground carbon dioxide injection technology.

• Downstream news:

- Chevron Corporation (NYSE: CVX) announced that Australian subsidiaries of Chevron have signed three binding long-term Sales and Purchase Agreements (SPAs) for Chevron's share of liquefied natural gas (LNG) from the Gorgon project. The agreements are for a total supply of nearly 3 million tons per annum (MTPA) of LNG to Osaka Gas, Tokyo Gas, and GS Caltex. Chevron will supply Osaka Gas 1.375 MTPA of LNG for 25 years. Osaka Gas will also purchase 1.25 percent equity in the Gorgon Project. Tokyo Gas will be supplied 1.1 MTPA over 25 years and will purchase a 1 percent equity stake. Supply from both agreements is expected to commence in the second half of 2014. Chevron Australia Pty Ltd and Chevron International Gas Inc., have also signed separate agreements with GS Caltex Corp. for 0.5 MTPA of LNG for up to 20 years. The LNG to GS Caltex will be supplied from the Gorgon project and other gas within the global Chevron portfolio. GS Caltex is 50 percent owned by Chevron.

- Chevron Corporation (NYSE: CVX) announced that its Australian subsidiaries have signed a Heads of Agreement (HOA) with the Korea Gas Corporation (KOGAS) for 1.5 million metric tons per annum (MTPA) of liquefied natural gas (LNG) from the Gorgon project. As part of the arrangement, Chevron and KOGAS have an option to extend the 15-year agreement for a further five years. The parties are also discussing LNG sales and an equity purchase from Chevron's Wheatstone project, located in northwest Australia. The HOA announcement follows the signing of three Sales and Purchase Agreements on September 10, 2009 for a total supply of approximately 3 MTPA to Osaka Gas, Tokyo Gas, and GS Caltex. Chevron expects additional agreements for the sale of Gorgon LNG to be executed in the coming months.

• Business/Finance news:

- The oil giant Chevron said that it had obtained video recordings of meetings in Ecuador this year that appear to reveal a bribery scheme connected to a $27 billion lawsuit the company faces over environmental damage at oil fields it operated in remote areas of the Amazon forest in Ecuador, The New York Times’s Simon Romero and Clifford Krauss reported. The videos, together with audio recordings obtained by businessmen using watches and pens implanted with bugging devices, appear to implicate Ecuadoran officials and political operatives, including possibly Juan Núñez, the judge overseeing the lawsuit, and Pierina Correa, the sister of Ecuador’s president, Rafael Correa. The recordings indicate that an Ecuadoran political operative was working to obtain $3 million in bribes related to environmental cleanup contracts to be awarded in the event of a ruling against Chevron. It was not clear from the recordings and transcripts provided by Chevron, however, whether any bribes discussed in the recordings were actually paid or whether Judge Núñez was even aware of plans to try to bribe him. The tapes also did not demonstrate whether the president’s sister was aware of the scheme or had participated in it. But in a statement that Chevron says illustrates that the judge’s handling of the case is flawed, Judge Núñez said on one of the video recordings that he planned to rule against Chevron by January and that damages could exceed $27 billion. Judge Núñez, who presides over the case from a cramped office in the town of Lago Agrio in Ecuador, could not be reached for comment. The recordings, which Chevron placed on its Web site, are the latest twist in a 16-year legal battle over oil contamination of jungle areas in northern Ecuador. Mr. Correa, a left-wing economist who rose from obscurity to become Ecuador’s strongest president in recent memory, has repeatedly sided with the plaintiffs in the case, prompting a fierce lobbying effort by Chevron in Washington to strip Ecuador of American trade preferences. That effort failed in June when the Obama administration, seizing a chance to improve ties with Mr. Correa, allowed the preferences to continue. But the release of the recordings will focus more scrutiny on Mr. Correa, who has come under pressure over his clashes with the media and accusations of corruption involving another family member, his brother Patricio Correa, a prominent businessman. Alexis Mera, a legal adviser to the president, dismissed the recordings as “approaching the level of defamatory libel.” He said Chevron was benefiting from the crime of intercepting conversations without authorization, reflecting “a terrible legal strategy.” Steven Donziger, a lawyer representing the group of Ecuadorans who are suing Chevron, contending that they had been harmed by the oil contamination, said: “I suspect this is a Chevron sting operation; there needs to be an investigation into Chevron’s role in this as much as the judge’s. I find it awfully odd that these individuals would secretly film meetings using James Bond devices like a spy watch and a spy pen. Chevron said it had obtained the recordings from Diego Borja, an Ecuadoran who once worked as a logistics contractor for the company. The company said Mr. Borja had been working with an American businessman, Wayne Hansen, to secure water treatment contracts. Chevron said that neither man had been paid for the recordings, but that the company paid for Mr. Borja and his family to leave Ecuador because of concern about his safety. In one of the recordings made in June, the political operative, Patricio García, who identified himself as an official in Mr. Correa’s political party, referred to $3 million in bribes to be split equally among the judge, the presidency and the plaintiffs in the lawsuit. Mr. Correa’s party, Mr. García said, would receive the $1 million payment on behalf of the plaintiffs. In the same meeting, Mr. García told Mr. Borja how to approach Ms. Correa, the president’s sister, about the bribe. The recordings do not indicate whether Ms. Correa was aware of the efforts to include her in a bribery scheme. Nor is there confirmation that Mr. García was in fact in contact with her. Secret recordings of closed-door meetings have become a common feature of Ecuadoran politics. Mr. Correa, furious over the recent airing of a recording of a private conversation in his office with a cabinet minister and a member of congress, said he would request the shutdown of the television network that broadcast the recording. But while Mr. Correa takes such recordings seriously, it is not clear if the people whose conversations about contract bribes were recorded by Mr. Borja grasped the complexity of the Chevron lawsuit. For instance, appeals by Chevron could delay for years the payment of damages that could be used for water cleanup contracts. Still, the recordings offered a glimpse into the murky world of Ecuadoran politics and business.

- The following is a statement by Charles James, executive vice president, Chevron Corp. (NYSE: CVX), regarding the response by the government of Ecuador to evidence filed regarding judicial misconduct by the judge in a lawsuit involving the company in that country and evidence of an apparent bribe scheme associated with the case: "We welcome news of the decision by the Prosecutor General to open a formal investigation into the evidence we presented to his office Monday, August 31. We hope that his investigation will be thorough, independent and transparent, and that he makes his findings public. "We are disappointed, however, that certain government officials, and persons associated with the plaintiffs, have attacked Chevron for bringing evidence of wrongdoing to light. When asked by a local reporter what the Ecuadorian government should do, Alexis Mera, legal advisor to President Correa, stated that the Prosecutor General should begin by investigating Chevron's lawyers. In the same response, Mr. Mera stated that the recordings have 'no legal value.' As legal advisor to President Correa, Mr. Mera must recognize that his statements to the media only raise further concerns of prejudgment and government involvement in the Lago Agrio trial. Chevron has not asserted that Mr. Mera was involved in wrongdoing as indicated in the video. However, Mr. Mera is directly referenced in the transcripts and videos turned over as evidence to the Prosecutor General on Monday (see transcript excerpts included below). Mr. Mera's apparent direct interest in the investigation is difficult to square with the standards of impartiality and transparency we hope will characterize the investigation by the Prosecutor General."

- Chevron Corporation (NYSE: CVX) issued the following media statement by Hewitt Pate, vice president and general counsel, in response to news Judge Juan Núñez has recused himself from the Lago Agrio proceedings in Ecuador: "Judge Núñez has correctly realized that his position has become untenable. No judge who has participated in the type of meetings shown in the video recordings could possibly have rendered a legitimate decision. But two major issues remain: "It is important that prior rulings of the judge be annulled, including numerous improper rulings to facilitate and shield from scrutiny the biased Cabrera process. "We also hope that the removal of Judge Núñez is not an attempt to deflect attention from the serious indications of political interference with the case that appear in the video recordings. Recent statements by government of Ecuador officials indicate an intent to attack Chevron rather than investigate potentially inappropriate actions by party officials such as Patricio Garcia and Alexis Mera. "An independent and honest investigation of the evidence that Chevron brought forward remains just as important following Judge Núñez's removal."

- Lawyers for Chevron Corporation (NYSE: CVX) provided evidence to Ecuador authorities, including video recordings and emails, to assist with the investigation of a $3 million bribe scheme associated with an environmental lawsuit against the company. In a letter to Ecuador authorities, the company asked that several important points be examined by the investigation into the scheme, which implicated the judge hearing the case, as well as ruling party and government officials. The information provided supports last week’s written notification to the government that video recordings existed that show discussions of a prejudged verdict against the company by the judge and details of how the bribe would work. (Videos, letters and emails are available on Chevron.com/ecuador and on youtube.com/texacoecuador.)

- Chevron’s monumental legal battle over oil contamination in Ecuador, which has already dragged on for 16 years, may not be about to conclude anytime soon. Ecuador’s attorney general said that he had requested that the judge in the contamination lawsuit against Chevron recuse himself after Chevron obtained audio and video recordings that appeared to link officials in the party of Ecuador’s president, Rafael Correa, to what Chevron claims was a bribery scheme connected to the case. The judge, Juan Núñez, whose name was mentioned in the recordings as a possible recipient in the bribery scheme, said he had handed the case over to his surrogate judge, Nicolás Zambrano, in the town of Lago Agrio in northern Ecuador. Judge Núñez said he had done nothing improper and described the videos, released by Chevron on Monday, as edited and digitally manipulated. The judge’s recusal is expected to cause delays in reaching a verdict. The recordings, made by a former Ecuadorean contractor for Chevron by using hidden recording devices, do not make clear whether Judge Núñez was involved in a bribery scheme — or even whether he was aware of an attempt to bribe him. The recordings also do not demonstrate whether any bribes were paid. But the recordings do appear to show the judge signaling a possible ruling against Chevron. Washington Pesántez, Ecuador’s attorney general, said he had asked the judge to step aside out of concern that Chevron might refuse to pay damages in the event of a guilty verdict over contamination at oil fields operated by Texaco, which Chevron absorbed in 2001, in remote areas of the Ecuadorean jungle. A ruling by Judge Núñez had been expected by the end of this year or in early 2010. Legal officials have begun investigating the recordings to determine if any laws were violated, either by those who were recorded, or by those who made the recordings. In a statement, Chevron said, “No judge who has participated in the type of meetings shown in the video recordings could possibly have rendered a legitimate decision.” It called for the annulment of all of the judge’s prior rulings in the case. If granted, an annulment would probably delay already protracted proceedings in Ecuador. Steven Donziger, a lawyer for the plaintiffs in areas where Texaco once operated, said the recusal would not necessarily hurt his case.

- Because of concerns about climate change, a lot of current environmentalist advocacy — including movies like “An Inconvenient Truth” — concentrates on the dire results of burning fossil fuels. Joe Berlinger’s “Crude,” a thorough and impassioned new documentary, focuses its gaze on production rather than consumption. The film, which follows the fitful progress of a class-action lawsuit undertaken on behalf of the people of the Ecuadorean Amazon, is not about the unintended consequences of using petroleum. Instead, it examines the terrible, frequently unacknowledged costs of extracting oil from the ground. “Crude,” in other words, investigates the local manifestations — cancer, contaminated water, cultural degradation — of a global problem. It also, more by what it shows than what it says, suggests that such a distinction is no longer tenable. Multinational corporations (like Chevron, this film’s designated villain) move money and commodities from one place to another, often with slight regard for the sovereignty or customs of any place in particular. And so the lawyers and activists who oppose these conglomerates have tried to become equally mobile and adaptable, moving continually in the zigzagging paths traced by transnational capitalism. Even as “Crude” dwells on a single, relatively small slice of territory (about the size of Rhode Island), its action shifts from muddy villages in Amazonia to law offices and shareholders’ meetings in the steel-and-glass cities of North America, drawing into its purview a motley cast of scientists, human rights crusaders, civil servants and international celebrities. Like almost every other recent documentary on a politically charged topic, “Crude” does not pretend to neutrality. Yet while Mr. Berlinger’s sympathies clearly lie with the oddly matched pair of lawyers — Steven Donziger, a big, outgoing American, and Pablo Fajardo, a wiry, diffident Ecuadorean — who are consumed by the now 16-year-old suit against Chevron, he is fair-minded enough to include rebuttals from the company’s executives and in-house environmental scientists. And since this is, in part, a courtroom drama, both sides have a chance to be heard. The Ecuadorean practice of conducting parts of the trial in the field generates some oddly theatrical moments as lawyers deliver florid, impromptu speeches al fresco, in front of huts or at the edges of waste sites. Too many filmmakers seem to think that a noble cause, a good heart and a digital video camera are all that is required for an effective documentary. Luckily, Mr. Berlinger has both a strong narrative instinct and a keen eye for incongruous, evocative and powerful images. His previous work includes the thoughtful true-crime stories “Brother’s Keeper” and “Paradise Lost” and also the superb heavy-metal psychodrama “Metallica: Some Kind of Monster.” What these films have in common with one another, and with “Crude,” which Mr. Berlinger worked on for three years, is a strong sense of character and an openness to the unexpected. Even as this film presses its muckraking agenda, it does so with a welcome sense of human foible and contradiction. Mr. Fajardo, who worked in the oil fields as a young man, blames Chevron (current owner of Texaco, which opened up his home region to drilling) for many of the ills that have befallen his family and his people. In the course of “Crude” he becomes something of a star in the Western news and entertainment media, profiled in Vanity Fair, showered with awards and posing for pictures with Sting after a benefit concert. Meanwhile, Chevron’s Ecuadorean lawyers portray the suit as a money-making scheme bankrolled by a Manhattan law firm, and base their defense simultaneously on appealing to national pride and blaming the state-run petroleum company, which took over from Texaco in the early 1990s. The case takes an interesting swerve when Rafael Correa, a young economist with populist tendencies, is elected Ecuador’s president and publicly supports the plaintiffs’ position. But “Crude” presents no easy resolution, since the legal struggle — and the public relations war between big companies and those who feel preyed upon by them — is unlikely to end soon. Behind that conflict lies a long and complicated history, and ahead of us lie many more documentaries similar in tone and spirit to this one. We can hope that at least a few of them are as intelligently and artfully made.

- Lawyers for Chevron Corp. (NYSE: CVX) have filed a motion with the Provincial Court of Sucumbios in Ecuador to annul all rulings made by the judge who last week stepped down from presiding over an environmental lawsuit against the company in Lago Agrio. Judge Juan Núñez of the Provincial Court of Nueva Loja appeared at meetings arranged by representatives of the government and ruling Alianza PAIS party, who as part of a multi-million bribe scheme, sought to assure prospective environmental remediation contractors that they could get remediation work arising from an adverse judgment against Chevron. In those meetings, Judge Núñez confirmed that he would find Chevron liable and order it to pay money to the government, even though the trial is still ongoing and evidence is still being received. His involvement in the meetings was revealed in video recordings made by the businessmen and released to the public and authorities in Ecuador and the United States by Chevron last week. Following release of the videos, and purportedly at the request of Prosecutor General Washington Pesantez, Judge Núñez asked to be removed from the case. Chevron contends that a number of Judge Núñez's rulings explicitly facilitated and shielded from scrutiny the $27 billion damages report filed in the case by Richard Cabrera, a mining engineer with no relevant experience in either oil field operations or oil field remediation. Cabrera was paid by the plaintiffs and worked closely with them in drafting his report. Chevron lawyers argue that, among other things, Núñez unjustly sided with the plaintiffs by arbitrarily denying Chevron's challenges to the report, preventing a rigorous examination of the numerous fundamental flaws of the work process and research that supported his disputed recommendations. The company asserts that the Cabrera report is not based on valid scientific evidence or law. Lawyers for Chevron filed motions with the court this week to have Judge Núñez's rulings annulled and to formally seek recognition from the court that Núñez should be recused. Chevron's court filing seeking the annulment states: "Judge Núñez is biased and has engaged in improper behavior while presiding over this case … Judge Núñez's acts are expressly prohibited by the Constitution and the law, and therefore, constitute a flagrant violation of Chevron's rights." The filing points out in conclusion that if Judge Núñez's rulings were allowed to stand, "Chevron would be denied the right to impartial justice and due process guaranteed by the Constitution."

- "Crude" sounds like the standard "this is an outrage" environmental degradation documentary, the latest in a line that includes "An Inconvenient Truth" and films about the death of the ocean, the evaporation of water, the murder of dolphins, even the disintegration of dirt. "Crude" fits that bill, but it is something considerably more interesting as well. The outrage in question is the subject of a class-action suit filed by 30,000 citizens of Ecuador against Chevron, the world's fifth-largest corporation, alleging that 18 billion gallons of toxic wastewater were dumped into the Amazon between 1972 and 1990, fatally poisoning the land and water and sickening inhabitants. The lawsuit, with a potential cost to Chevron of $27 billion, has been going on for so long, 16 years and counting, that the original American oil company in Ecuador, Texaco, was acquired by Chevron and no longer exists. Director Joe Berlinger ("Brothers Keeper," "Metallica") has been working on "Crude" for three years, and though he feared he was coming too late to the story, a verdict is still not in sight. Having all that time to explore the situation has paid off for Berlinger, enabling him to gain the confidence of his subjects and show us situations that ordinarily would not be open to outsiders. For what "Crude" does best is take us behind the scenes and show in often candid detail how campaigns are waged, tactics decided on and strategies prioritized. For both sides realize that lawsuits like this one are not won or lost in the courtroom alone but in the critical realm of perception and public opinion. "Crude" begins with a typical back-and-forth. In 2008, news clips show Pablo Fajardo, the lead attorney for the plaintiffs, and his associate, Luis Yanza, receiving the prestigious Goldman Environmental Prize. Then comes Chevron's reaction, as a representative says that the men have in effect made up the story for which they're being honored. What's going on here? Next we see the charismatic Fajardo back in Ecuador and visiting a tiny Amazon enclave where the residents discuss, often in an indigenous language, the progress of the lawsuit. Periodically throughout the film we visit places like this and see the pervasive health problems that have resulted from wretched stewardship of the country's oil resources. We also spend a great deal of time with a Spanish-speaking environmental lawyer from New York named Steven Donziger, someone who specializes in class-action suits and is a key legal advisor to Fajardo. We see and hear Donziger in all kinds of privileged situations, even with Joseph Kohn, the Philadelphia attorney whose firm is bankrolling the case and hopes to profit financially if Chevron loses. Donziger not only discusses legal strategy but works hard to get the kind of publicity that will galvanize public opinion. His courtship of the forceful Trudie Styler, the co-founder, along with her husband, Sting, of the Rainforest Foundation, is shown in detail and is a fascinating case study of real-world political action. Chevron, not surprisingly, does not allow Berlinger into similar meetings, but through statements by their attorneys and representatives, we get a clear idea of the shrewd ways the oil giant is fighting back at every turn. The company's strategy is twofold. First is the culture of denial. To see apparently sincere Chevron representatives flat out contradict everything the plaintiffs are claiming shows the power stonewalling has to, at the very least, create doubt in the public mind. Because that strategy doesn't work as well in Ecuador, where the damage is visible and hard to talk away, Chevron is ready with a moving-target series of fallback positions: Nothing was done that wasn't permitted by law, the Ecuadorean government signed off on a cleanup, most of the damage was done by the state-owned Petroecuador. Chevron also likes to claim that the only reason the suit was filed in the first place is because greedy U.S. attorneys are after the company's money. It's true that the plaintiffs wouldn't have a prayer without American money and celebrity involvement, but does that mean their claims are any less just? It's still a David and Goliath story. What's different is that David has gotten his hands on some really choice stones.

- Chevron Corp. (NYSE:CVX) has filed an international arbitration claim against the government of Ecuador citing violations of the country's obligations under the United States-Ecuador Bilateral Investment Treaty, investment agreements, and international law. The complaint stems from the government of Ecuador's exploitation of the ongoing lawsuit against Chevron in Ecuador, as well as the government's failure to uphold its duties under decade-old contracts. The arbitration proceeding has been commenced before the Permanent Court of Arbitration in The Hague under the Rules of the United Nations Commission on International Trade Law. Chevron's claims relate to the lawsuit currently pending against the company in Lago Agrio, Ecuador, where Chevron's subsidiary, Texaco Petroleum Company participated until 1992 as a minority member of a consortium that explored for and produced oil under contracts with Ecuador and Ecuador's government-owned oil company, Petroecuador. Through the filing, Chevron seeks to enforce prior settlement and release agreements that the government of Ecuador entered into with Texaco Petroleum when the consortium was terminated, and to hold Ecuador accountable for its obligations under Ecuadorian law and existing international treaties. After its participation in the consortium ended in 1992, Texaco Petroleum negotiated a settlement agreement with Ecuador and Petroecuador whereby Texaco Petroleum assumed responsibility for specified environmental remediation projects in proportion to its minority ownership interest. In 1998, after the requisite remediation work was performed and independently validated, Ecuador and Petroecuador released Texaco Petroleum and its affiliates from further liability. Ecuador assumed responsibility for any remaining impact caused by the consortium's pre-1992 activities as well as any future impact caused by Petroecuador's own ongoing operations in the former concession area. Since Texaco Petroleum's departure, Petroecuador has drilled over 400 new wells in the concession area, compared to the 321 wells that were drilled during the consortium. Compounding the situation, Petroecuador's environmental record as an operator has been notoriously poor, with more than 1,400 oil spills since 2000 alone. The current Ecuador lawsuit is an effort to force Chevron to pay for Petroecuador's own misdeeds. In collusion with trial lawyers suing Chevron, the government of Ecuador has violated its contracts with Texaco Petroleum as well as protections afforded to investors under the United States-Ecuador Bilateral Investment Treaty.

- The board of directors of Chevron Corporation (NYSE: CVX) elected John S. Watson, 52, chairman of the board and chief executive officer of the company, effective Dec. 31, 2009. Watson, who is currently vice chairman, succeeds David J. O'Reilly, who will retire from the company and its board after a distinguished 41-year career, including 10 years as chairman and CEO. The Chevron board also elected George L. Kirkland, 59, to be vice chairman of the board, succeeding Watson in that capacity. As vice chairman and executive vice president of Upstream and Gas, Kirkland will retain responsibility for overseeing Chevron's global exploration and production activities for crude oil and natural gas.

- Chevron, the nation’s second-largest oil company, said it had picked John S. Watson, 52, as its new chairman and chief executive to succeed David O’Reilly, who retires at the end of the year. Mr. O’Reilly had held the company’s top executive slot for 10 years — the longest reign among the top oil companies. He joined Chevron 41 years ago, and oversaw the acquisition of Texaco in 2001, and the controversial fight to buy Unocal in 2005. The deals have propelled Chevron within the small circle of the super-majors, along with Exxon Mobil, BP, and Royal Dutch Shell. Mr. Watson, a long-time Chevron veteran who joined the company 29 years ago, takes over at a tough time for the oil industry, with lower prices and weak demand, and as Chevron faces a contentious legal battle in Ecuador. But he said that even as governments seek to reduce carbon emissions and diversify supplies, fossil fuels will remain a dominant source of energy for decades to come.

October

• Upstream news:

- Chevron Corporation (NYSE: CVX) announced an additional natural gas discovery in the Greater Gorgon area's Carnarvon Basin, Australia's premier offshore hydrocarbon zone. The Achilles-1 exploration well, located approximately 100 miles (160 kilometers) off the coast of northwest Australia, was drilled to a total depth of 14,800 feet (4,500 meters) and encountered approximately 325 feet (100 meters) of net gas pay. Jim Blackwell, president of Chevron Asia Pacific Exploration and Production, said that offshore northwest Australia remains one of the company's focus areas for global exploration. The Achilles-1 well is located in the WA-374-P permit area in the Greater Gorgon area. Chevron Australia is the operator of WA-374-P with 50 percent interest, while Shell Development (Australia) and ExxonMobil Australia each hold 25 percent. Chevron is currently spudding an additional exploration well (Satyr-1) in the permit area.

• Downstream news:

- Chevron Corporation (NYSE: CVX), through its subsidiaries Chevron Australia Pty Ltd and Chevron (TAPL) Pty Ltd, announced that it signed an agreement with Apache Julimar Pty Ltd, a subsidiary of the Apache Corporation (NYSE: APA), and KUFPEC Australia (Julimar) Pty Ltd, a subsidiary of the Kuwait Foreign Petroleum Exploration Company k.s.c., to bring them into Chevron's Wheatstone liquefied natural gas (LNG) project as natural gas suppliers and 25 percent equity partners in the project facilities. Under the agreement, Apache and KUFPEC will provide natural gas from their Julimar and Brunello fields, located in northwestern Australia, to supply 25 percent of the inlet gas to trains 1 and 2 of the Wheatstone project. Apache will assume a 16.25 percent equity interest and KUFPEC an 8.75 percent equity interest in the project. Chevron will remain the project operator.

• Business/Finance news:

- The Chevron Corporation said that its vice chairman, John S. Watson, would become chairman and chief executive when David J. O’Reilly retires from those positions at the end of this year. Mr. O’Reilly, 62, will retire from the company and its board on Dec. 31 after a 41-year career, including 10 years as chairman and chief executive. Mr. Watson, 52, will be succeeded by George L. Kirkland, 59, as vice chairman, Chevron said. Mr. Kirkland will continue to oversee exploration and production of oil and natural gas. Mr. Watson, a 29-year Chevron veteran, was elevated to second in command in April. As vice chairman, he oversees areas like strategic planning and government affairs. He earned a bachelor’s degree in agricultural economics from the University of California, Davis, and a master’s degree in business administration from the University of Chicago. He has sought to shed unprofitable refineries and focus on oil and gas assets that Mr. O’Reilly amassed through acquisitions and deepwater exploration. Shares of Chevron, which is based in San Ramon, Calif., fell 59 cents, to $70.32 in trading.

- Chevron Corporation (NYSE:CVX) reported in its interim update that earnings for the third quarter 2009 are expected to be higher than in the second quarter 2009. Upstream earnings are projected to increase significantly, reflecting higher prices for crude oil, as well as approximately $400 million of gains related to asset sales and tax items. Downstream results are expected to be relatively flat. Unfavorable foreign currency effects are anticipated in the upstream and downstream business segments though the U.S. dollar weakened less in the third quarter against most major currencies than in the second quarter.

- The multibillion-dollar legal case between Amazon peasants and Chevron over oil pollution in Ecuador’s rain forest keeps unfolding more like a mystery thriller than a battle of briefs. Ever since the oil giant released videos in August that were secretly taped by two businessmen who seemed to have the ambition of feasting off the expected $27 billion in damages sought, Ecuadorean officials and Chevron have accused each other of gross improprieties, including espionage. The Ecuadorean judge hearing the case recused himself after he appeared in the recordings discussing the case and potential damages. He was returned to the case by another judge, but he was then removed again. The two mysterious businessmen, who used watches and pens implanted with bugging devices to make the recordings, have refused to explain their motivations for going to the furtive meetings in Quito and a jungle outpost to discuss a bribery plot. And now, with questions mounting, one of them has enlisted a lawyer who has represented Barry Bonds. In recent days the plot has thickened further. The Ecuadorean political go-between whose taped remarks about apportioning bribes put him in the middle of the scandal, Patricio García, said he was entrapped in a dirty-tricks campaign by Chevron. In an interview, he claimed that Chevron had masterminded an industrial espionage project, with digitally manipulated videos and gangsters disguised as entrepreneurs on the prowl for contracts, intended to smear him and Ecuador’s legal system. “This was all planned from the United States, by Chevron itself,” said Mr. García, 55, a businessman and former car mechanic. He chafed at any suggestion, as laid out in recordings made public by Chevron, that he had discussed a bribery scheme that was to include President Rafael Correa’s sister, Pierina Correa, and Judge Juan Núñez, who was then overseeing the case. It is not clear from the recordings and transcripts provided by Chevron whether any bribes were paid or whether Judge Núñez and Ms. Correa were aware of plans to try to bribe them. Ms. Correa has denied knowing Mr. García, or having anything to do with the plot, and Judge Núñez has also denied any wrongdoing. Meanwhile, governing party and government officials have characterized Mr. García as a man of little influence. Ecuador’s attorney general still somewhat echoes Mr. García’s interpretation of the events caught on the tapes, saying that Chevron’s contacts with the businessmen who discussed bribes mean the company should be investigated in the United States for possible violations of the Foreign Corrupt Practices Act, which outlaws bribery of foreign officials to obtain business. The tapes were the latest turn in a legal marathon over oil contamination left by Texaco years before it was acquired by Chevron. On one tape, Judge Núñez seems to suggest that he plans to rule against Chevron and that damages could exceed $27 billion, making it potentially the biggest environmental suit in history. Whether Chevron avoided such an outcome by releasing the tapes may not become clear for months, or even years. Chevron gambled that the disclosure of the videos would enable it to cast doubt on the integrity of the trial and the honesty of the Ecuadorean legal system. But the tapes have also raised questions about its ties to the men who made the recordings, potentially opening the company to a new legal fight. Taping conversations without everyone’s permission is illegal in Ecuador, and trying to bribe foreign officials is illegal under American law. But shades of gray tinge nearly everything to do with the videos. For instance, Mr. García, the political go-between, said the businessmen who tied him to the bribery plot joked about recording their meetings with a wristwatch, potentially giving them a way out if scrutiny of their tactics intensifies. Chevron says that it neither coached nor paid the businessmen to make the tapes, and that it did not edit the material, though it did give one of the men, Diego Borja, an undisclosed amount for moving and living expenses so he could safely move his family out of Ecuador. Company spokesmen say that when Mr. Borja, an Ecuadorean logistics contractor working with an American businessman, brought tapes of three meetings to Chevron, company officials urged him not to go to more meetings because doing so could be dangerous. Mr. Borja went back for a fourth meeting, taped it, and gave more evidence to the company. But no one has yet explained what motivated him and his partner, Wayne Hansen, an American, to travel around Ecuador meeting officials and collecting evidence of a bribery scheme, especially one in which they stood to gain lucrative contracts. Neither the men nor their lawyers would talk, although Mr. Borja’s lawyer, Cristina C. Arguedas, who has represented Mr. Bonds and other elite athletes in connection with the investigation into performance-enhancing drugs, released a statement: “Diego is an outstanding and proud Ecuadorean who came forward on his own to expose corruption. He will answer all questions in a fair proceeding.” The video and transcripts have been open to interpretation. Still a mystery, for instance, is why supposedly well-connected Ecuadoreans with knowledge of the case would discuss bribes in exchange for government cleanup contracts to come out of a settlement in the Chevron case. Chevron hopes to delay any future payments for many years; since it has no major assets in Ecuador, it would not be easy to get it to pay, even if it lost. Had the Ecuadorean officials checked Mr. Borja’s background, they would have seen that he had been a contractor for Chevron for years.

- Chevron Corporation (NYSE: CVX) announced the California Partnership, an initiative to invest in education and economic development in its home state. Under the new initiative, Chevron will expand and deepen its partnerships with nonprofits focused on supporting underserved communities, including relationships with 18 new nonprofit partners providing programs for education, entrepreneurs and job training. Additional partners will be introduced throughout the remainder of 2009. The California Partnership represents a $7 million enhancement to Chevron's community engagement investments in the state, bringing Chevron's total investments in 2009 to approximately $28 million. Nonprofit partners receiving funds from the California Partnership have demonstrated innovative approaches with proven track records for delivering economic and educational benefits to those in need.

- A Chinese company's gambit to drill for oil in U.S. territory demonstrates China's determination to lock up the raw materials it needs to sustain its rapid growth, wherever those resources lie. The state-owned China National Offshore Oil Corp., or CNOOC, reportedly is negotiating the purchase of leases owned by the Norwegian StatoilHydro in U.S. waters in the Gulf of Mexico, the source of about a quarter of U.S. crude oil production. China's push to enter U.S. turf comes four years after CNOOC's $18.5-billion bid to buy Unocal Corp. was scuttled by Congress on national security grounds. The El Segundo oil firm eventually merged with Chevron Corp. of San Ramon. Whether CNOOC's second attempt to lock up U.S. petroleum assets will trigger a similar political backlash remains to be seen. The sour U.S. economy and the need for Washington and Beijing to cooperate on potentially larger issues could mute any outcry. The U.S. could also find it difficult to rebuff China when it has long welcomed other foreign investment in the gulf. In addition to StatoilHydro, foreign oil companies with stakes in deep-water projects there include Spain's Repsol, France's Total, Brazil's Petrobras, British oil giant BP and the Dutch-British multinational Shell. The U.S. risks undercutting its foreign policy goals as well. Concern is growing over China's aggressive investment in oil-rich nations with anti-U.S. regimes, including Iran and Sudan. Denying China a shot at drilling in U.S. waters would only encourage Beijing to make deals in volatile regions given that new oil reserves in stable, democratic nations are getting harder to find. China, the world's third-largest economy, is the second-largest consumer of oil at 8.2 million barrels a day, behind only the U.S. at 18.4 million barrels a day. The Asian giant's consumption surpassed its domestic production capacity in the early 1990s; it now imports about half of its daily needs. China's consumption is projected to grow 31% between 2008 and 2010, according to the U.S. Energy Information Administration. Beijing has urged the four major state-run oil corporations -- China National Petroleum Corp., Sinopec, CNOOC and Sinochem -- to acquire more international assets. To that end, China has been scouring the globe to slake its thirst for oil. The CNOOC-StatoilHydro deal, which was first reported last week by Dow Jones Newswires, has yet to be confirmed by Chinese officials. But if it comes to pass, it would be just one of a slew of natural resources deals cut by China since the recession began. Armed with record holdings of foreign reserves, the oil-hungry nation has spent billions locking up supplies at a time when crude oil prices are half what they were just over a year ago. At $14.9 billion so far this year, the value of Chinese oil and gas mergers and acquisitions in 2009 is already double last year's figure, according to research firm Dealogic. The largest this year was Sinopec's $8.9-billion purchase of the Swiss oil exploration company Addax Petroleum Corp. The deal, which was announced in June, gave the Chinese access to potentially vast oil deposits off the coast of West Africa and in northern Iraq. China has also extended huge sums of credit, including a $25-billion loan to Russian companies Rosneft and Transneft, to pay off debt and develop the East Siberia Pacific Ocean pipeline in exchange for 300,000 barrels a day of oil. The Chinese Development Bank lent Brazil's Petrobras $10 billion to help with its $170-billion, five-year plan to increase its crude output. In exchange, Petrobras agreed to give the Chinese 200,000 barrels a day of oil exports. China extended a $4-billion loan to Venezuela to expand various oil projects, according to the Energy Information Administration. Chinese companies are also reportedly eyeing new oil deals in Nigeria and Ghana. The positive effect of all that investment, some analysts said, is that Beijing is helping expand the world's oil supply at a time when many major oil companies have scaled back. But much of that capital is being funneled to governments with poor human rights records and links to terrorism. China's importing of crude oil from war-torn Sudan increased 13.8% in August from a year earlier, according to Chinese state media. Imports from Iran jumped 14.7% in the same period. Over the last five years, China has signed an estimated $120 billion in oil deals with Tehran -- money some worry will undermine efforts by the U.S. and its allies to tighten economic sanctions against Iran to pressure it to abandon its nuclear ambitions. China has defended its most controversial oil deals, contending that its investments will eventually spur stability in troubled states. China's shopping spree has been aided by the nation's foreign reserves, which recently reached a record $2.3 trillion -- about two-thirds of which is estimated to be in U.S. dollars. Buying natural resources such as oil is a way for China to diversify holdings that have been heavily concentrated in U.S. securities. Despite the recent activity, analysts say, China's oil production overseas will take years of development before it can match long-established companies such as Exxon Mobil Corp. and BP, which are huge players in the gulf.

- The Board of Directors of Chevron Corporation (NYSE: CVX) declared a quarterly dividend of sixty-eight cents ($0.68) per share, payable December 10, 2009 to holders of common stock as shown by the transfer records of the Corporation at the close of business November 18, 2009.

- Chevron Corporation (NYSE: CVX) reported earnings of $3.83 billion ($1.92 per share - diluted) for the third quarter 2009, compared with $7.89 billion ($3.85 per share - diluted) in the 2008 third quarter. Earnings in the 2009 period included gains of approximately $400 million ($0.20 per share) from asset sales and tax items. Foreign-currency effects reduced earnings in the 2009 quarter by $170 million, compared with a benefit to income of $303 million a year earlier. For the first nine months of 2009, earnings were $7.41 billion ($3.71 per share - diluted), down 61 percent from $19.04 billion ($9.23 per share - diluted) in the first nine months of 2008.

- The Chevron Corporation posted a 51 percent decline in quarterly profit, becoming the latest major oil company to be hit by the steep decline in oil and natural gas prices and anemic margins at refineries. Chevron offset part of a sharp drop in energy prices in the last year by increasing its oil output and cutting costs during its third quarter. The chief financial officer, Patricia E. Yarrington, said two-thirds of the cost cuts were permanent and unrelated to fluctuating prices. She said Chevron expected to exceed its recently raised 2009 production target of 2.66 million barrels a day. Chevron’s profit fell to $3.83 billion, or $1.92 a share, from $7.89 billion, or $3.85 a share, a year earlier. Excluding $400 million in gains from asset sales and other items, it earned $1.72 a share, topping the $1.47 a share analysts had forecast. Revenue fell 41 percent, to $46.6 billion, from $78.9 billion, falling short of the $47 billion analysts had forecast. Chevron’s earnings from oil production fell 41 percent, as an increase in output helped reduce the effect of the drop in oil prices, which reached a record in the period a year earlier. Oil and natural gas output rose 11 percent, to 2.70 million oil-equivalent barrels a day. Earnings from refineries fell 90 percent, to $194 million, and were particularly hard-hit in the United States, where the company pulled in a modest $34 million in quarterly profit. The chief executive, David J. O’Reilly, said he expected refining to remain “pretty sloppy” for the next two years as smaller players shut down capacity and demand recovered, adding that he was encouraged by how much stronger Asian demand now looked. Shares of Chevron, which is based in San Ramon, Calif., fell $1.41, or 1.8 percent, to close at $76.54.

- Competing tours offer two very distinct ways to see the industrial city of Richmond in the East Bay. A “Toxic Tour,” led by an environmental justice group, circles Chevron’s Richmond Refinery and passes through what the group’s local members call the city’s “petrochemical corridor.” On Chevron’s newly offered refinery tours, visitors don hard hats and safety glasses and hear of strict emission standards, exemplary safety records and jobs, jobs, jobs. Chevron is the city’s biggest employer and taxpayer, but in recent years its fortunes and the city’s have diverged. The slowing economy trounced Richmond, while the oil price spike helped Chevron turn record profits. The city and the corporation exist on entirely different scales — Richmond, with a population of 102,120 people, is lost among its larger neighbors, Oakland and San Francisco; Chevron is a global corporation with 62,000 employees operating in more than 100 countries. That prosperity gap helped galvanize segments of the population against the company that has dominated the physical, economic and psychic landscape here for more than 100 years. Gayle McLaughlin, rode the anger into City Hall in 2006. Ms. McLaughlin, the city’s first Green mayor, is now Chevron’s avowed antagonist. As Chevron’s profits climbed, it provided more fodder for her attacks. Until recently, Chevron had been doing well. The second-largest oil company in the United States, it earned $23.9 billion last year, topping off five consecutive years of record profits. Though the third quarter earnings report showed profits down 51 percent, Ms. McLaughlin still brandishes Chevron’s financial statements like weapons. They contrast starkly with the poverty in this city, which has an unemployment rate of 18 percent and the third-highest crime rate per capita in the state. A series of lawsuits and a key ballot measure passed since Ms. McLaughlin’s victory show a city torn between the generally liberal, anticorporate politics of the Bay Area and its own history as a loyal company town. Environmental groups have so far been able to block a retrofit of the Chevron refinery while the city has tried to raise the company’s taxes. Chevron, which says the changes to the refinery will reduce pollution, has appealed the ruling. The taxes paid by the Richmond refinery account for 33 percent to 50 percent of the city’s $144 million general budget this year. The refinery employs some 1,300 people, making it unclear what the city would do without Chevron. But between the low profit margins for refineries across the country and the new taxes levied on the refinery, company leaders say they are considering doing without Richmond. While residents might not want anything that drastic, they do seem to want the corporation to do more for the city. Last fall, they passed a ballot initiative, Measure T, whose backers adopted the slogan “A Fair Share for Richmond.” The measure charged businesses an additional tax of a quarter-percent of the value of the raw materials used in manufacturing. For Chevron, that additional tax was $21 million this year. In February the company filed suit in Contra Costa County Superior Court arguing that the measure violated state and federal law. The suit remains unresolved, but Chevron paid the additional $21 million in April. The city kept the money, though it refrained from spending it after the judge in the case warned not to. In February the company also agreed to pay the city $28 million as part of a legal settlement after a city audit concluded that the refinery had underpaid utility taxes. Then, in July, another county judge halted Chevron’s effort to retrofit the refinery, saying the company’s environmental review was unclear on a crucial issue: whether the upgrade was designed to process a heavier grade of crude oil.

November

• Upstream news:

• Downstream news:

• Business/Finance news:

- In her testimony before the House Ways and Means Subcommittee on Trade earlier, Congresswoman Sanchez mischaracterized Chevron's motivation for asking Congress to differentiate Ecuador in any extension of Andean Trade Preferences Act (ATPA) beyond its expiration at year end. Chevron is providing the following statement to be clear on its position on U.S. trade preference programs in general and Ecuador in particular. "Chevron acknowledges that the people of Ecuador's Amazon region confront real hardships, but these hardships are the responsibility of the Ecuadoran Government not Chevron. It's time that Ecuador Government and its national oil company, Petroecuador, step up to their obligations to the people of the Oriente. At the same time, Ecuador's judicial system has come under scrutiny by a number of international agencies, including the United Nations and the International Bar Association, for corruption and its lack of the rule of law. Chevron is a strong supporter of all U.S. trade preference programs that promote trade to help developing counties diversify their economies, and help lift people out of poverty. Experience has shown, however, that U.S. preference policy can be improved to ensure it supports longstanding U.S. goals to promote good governance and does not reward governments that seek to diminish the rule of law. With respect to Ecuador, Chevron believes the government continues to enjoy ATPA trade preferences despite its inappropriate behavior in Chevron's long-standing environmental dispute with Ecuador over responsibility for environmental impact in the country's Amazon region and, more broadly, its efforts to undermine the rule of law and investment protections for U.S. companies. More specifically, Chevron believes there should be some consequence to Ecuador for flouting the standards prescribed in the (ATPA on investment disciplines, intellectual property and investor protections, and that Congress should differentiate Ecuador in any extension of ATPA beyond its expiration at the end of this year.

December

• Upstream news:

- Chevron Corporation (NYSE: CVX), through its subsidiary Chevron Australia Pty Ltd, announced an additional natural gas discovery in the Carnarvon Basin offshore Western Australia. The discovery is located in Australia's premier hydrocarbon basin, where Chevron is the leading leaseholder. The exploration well, Satyr-1, located 100 miles (160 kilometers) offshore in the Greater Gorgon Area in 3,510 feet (1,070 meters) of water, was drilled to a total depth of 14,960 feet (4,560 meters). The well discovered 425 feet (130 meters) of net gas pay.

• Downstream news:

- Chevron Corporation (NYSE: CVX) announced that its subsidiary, Chevron Australia Pty Ltd, has signed a Heads of Agreement (HOA) with the Tokyo Electric Power Company (TEPCO) to deliver 4.1 million tons per annum (MTPA) of liquefied natural gas (LNG) for up to 20 years from the Wheatstone Project in northwestern Australia. Under the agreement, TEPCO also intends to acquire 15 percent of Chevron's equity share in the Wheatstone field licenses and an 11.25 percent interest in the Wheatstone natural gas processing facilities to be developed onshore near Onslow in northwestern Australia. The initial phase of the Wheatstone project will have the capacity to process 8.6 MTPA LNG and will include a domestic gas plant. A final investment decision is expected in 2011. In October, Chevron announced it had signed a binding agreement with Apache Julimar Pty Ltd, a subsidiary of the Apache Corporation, which will assume a 16.25 percent equity interest in the Wheatstone project, and KUFPEC Australia (Julimar) Pty Ltd, a subsidiary of the Kuwait Foreign Petroleum Exploration Company k.s.c., which will assume a 8.75 percent interest in the project.

- Chevron Corporation (NYSE: CVX) announced that its Australian subsidiaries have signed binding long-term Sales and Purchase Agreements (SPAs) with Chubu Electric Power for a portion of Chevron's share of liquefied natural gas (LNG) from the Gorgon Project. Chevron agreed to supply Chubu Electric 1.44 million metric tons per year (MTPY) of LNG for 25 years. Also, Chubu Electric intends to purchase 0.417 percent equity from Chevron's stake in the Gorgon Project. The agreement follows the recent signing of three binding long-term SPAs with Osaka Gas, Tokyo Gas and GS Caltex, a 50 percent-owned Chevron equity affiliate, for delivery of a total of nearly 3 MTPY, as well as a Heads of Agreement with the Korea Gas Corporation (KOGAS) for 1.5 MTPY.

• Business/Finance news:

- Tiger Woods isn't the only top golfer who will miss this year's Chevron World Challenge, a tournament in Thousand Oaks that benefits Woods' charity. Defending tournament winner Vijay Singh, 46, also withdrew from the four-day tournament because of a knee injury. He was replaced in the 18-player field by Justin Leonard. Graeme McDowell was tapped to replace Woods, who canceled plans to play amid a worldwide media frenzy stemming from his car accident outside his Florida home that left him with facial cuts and other minor injuries. The tournament at Sherwood Country Club, also includes the winners of three of golf's four major events this season: U.S. Open winner Lucas Glover, British Open winner Stewart Cink and PGA Championship winner Y.E. Yang. Anthony Kim, Camilo Villegas, Padraig Harrington and Jim Furyk also are in the tournament, whose $5.75-million purse includes $1.35 million to the winner.

- Peasant farmers in the Andean nations of Colombia, Ecuador, Bolivia and Peru often have a choice of growing two crops: flowers for export to the United States or coca for cocaine production. In accordance with U.S. anti-drug policy, Colombia and Peru have stepped up enforcement on coca cultivation, if to little avail. Bolivia doesn't even try: President Evo Morales, who is head of the largest coca growers union, defends it as part of Bolivia's cultural patrimony. But in Ecuador, roses have kept coca at bay. Ecuador's flower industry blossomed after President George H.W. Bush signed a regional trade agreement in 1991, which Congress extended and expanded as the Andean Trade Promotion and Drug Eradication Act of 2002. The agreement allows reduced-duty or duty-free exports to the U.S. of goods such as clothing, tuna and cut flowers, and has created more than 130,000 jobs in Ecuador and an estimated 37,400 in the U.S., according to Ecuadorean trade officials. Although the U.S. approach to combating drug cultivation in Latin America is largely ineffective, this tactic has worked, and it is the primary reason the pact should not be allowed to expire at the end of this month. Whether the trade preferences with Ecuador will be extended, however, is uncertain. If San Ramon, Calif.-based Chevron Corp. has its way, Congress will instead punish Ecuador because its government refuses to halt a private lawsuit against the oil giant. The plaintiffs maintain that the company is responsible for pollution that contaminated their water and land and sickened the indigenous peoples of the Ecuadorean Amazon. Halting the trade agreement at Chevron's behest would harm broader U.S. interests. It would throw farmers out of legitimate business ventures and into the arms of cocaine traffickers. It would create needless ill will in a region where President Obama has promised to end North American bullying and begin a new era of rapprochement. And for the U.S. government to wield its power in an effort to force a favorable outcome in a private claim would justly generate international outrage. Chevron has said that if it loses the case, which could cost it an estimated $27 billion, it will appeal to international courts; that remains the appropriate course of action. There are other factors for Congress to consider in determining whether to extend Ecuador's trade preferences: workers' rights and trade and investment policy also are important. And there are issues that remain to be negotiated between the two countries. But in each of these areas, Ecuador has demonstrated a willingness to work with the U.S. That should be the test for an extension of trade benefits, not the private interests of one corporation.

- Chevron and the non-profit Discovery Channel Global Education Partnership (DCGEP) announced that their collaboration to help educate students around the world has been awarded the 2009 Partnership Award by the U.S. Chamber of Commerce Business Civic Leadership Center. The honor was presented during the 2009 Corporate Citizenship Awards at the U.S. Chamber's headquarters in Washington, D.C. on December 1. Since 2002, Chevron and Discovery Channel Global Education Partnership have been revolutionizing education with 65 Learning Centers in underserved communities across Angola, Nigeria, South Africa, Venezuela and Brazil. Through the initiative, Learning Centers are established at school sites and teachers receive three years of in-depth training and mentoring, along with televisions, DVD players and libraries of high-quality, locally relevant educational videos to complement their lesson plans. To date, the Learning Centers established by Chevron and DCGEP have benefitted over 2,400 teachers, 104,000 students and 312,000 community members and produced astounding results, including increased student enrollment and heightened academic performance.

- The Times' Dec. 3 editorial, "Trading with Ecuador," ignores evidence of Ecuador's hostility to the United States and misleadingly asserted that Chevron is calling for an end to beneficiary status for Ecuador under the Andean Trade Preferences Act. While more than one organization has called for "halting the trade agreement" with Ecuador, Chevron is not. Chevron is arguing that countries should not be unconditionally rewarded with unilateral trade benefits even as they flout commercial obligations with the United States. Because Ecuador has taken a series of actions to undermine trade and investment rules, Chevron is calling for treating Ecuador differently under the Andean Trade Preferences Act than the other two countries included in the bill, Peru and Colombia. Chevron has proposed several ways for Congress and the administration to treat Ecuador differently, including statutory periodic reviews or limiting preferences to private entities and firms in Ecuador, not to government-owned entities such as the state-owned oil company, Petroecuador. The Times' claim that Ecuador has "demonstrated a willingness to work with the U.S." does not reflect what is actually happening with the bilateral relationship. Just in the last year, Ecuador has taken a variety of actions that demonstrate its hostility to U.S. interests. For example, it evicted the United States from an air base from which it ran drug interdiction efforts for more than a decade. It also became only the second country in history (after Bolivia, which subsequently lost its trade preferences) to withdraw from the 156-member-nation International Center for the Settlement of Investment Disputes, after calling the body "an atrocity" that "signifies colonialism" and "slavery . . . to Washington." It also withdrew from investment treaties with the United States and a dozen other countries, and it provided Ecuadorean interests a road map for using U.S. intellectual property rights without permission. The situation in Ecuador has gotten so bad that in November, Transparency International called Ecuador's government one of the most corrupt in the Americas, with a score worse than 27 of the 31 countries tallied in the Western Hemisphere and 146th out of 180 countries total worldwide. Ecuador once was a U.S. ally that respected the rule of law, but that has not been the case in recent years, and its treatment of U.S. investors and its obligations on investment and contractual matters reflect that change. The U.S. government, Transparency International and the World Bank have all noted serious concerns with Ecuador's judicial system and adherence to the rule of law. Chevron is not asking the U.S. to force a favorable outcome in the case. It asks for a fair hearing, a hope that Ecuador will honor its contractual obligations and consideration of Ecuador's actions on well-established trade and investment treaties and guidelines. Chevron has been a long-standing supporter of trade preferences program. However, we believe that extending unilateral trade preferences should carry with it some type of recognition that the recipient countries must adhere to the rule of law and trade and investment obligations. We would hope that U.S. policymakers believe in this same standard. Dave Samson is Chevron's general manager of public affairs.

- Tiger Woods isn't the only one who is going to take a financial hit for his indiscretions. The broadcast and cable networks that count on him and his amazing golf game for big ratings will also feel his pain -- at least in the near term. Woods, who said he's taking a break from golf to focus on his family after revelations about womanizing emerged in the wake of his Thanksgiving weekend car crash, is to golf what Michael Jordan was to basketball: a player bigger than the game. Although hard-core golf fans may not turn away from watching the game just because Tiger isn't playing, the casual fan might. That means smaller audiences, which means less advertising money. The TV industry already got a taste of what life is like without Tiger. Last weekend, he did not play in the Chevron World Challenge, and NBC's broadcast of the event saw its audience shrink by more than 50%. CBS carries the widely popular Masters and PGA Championship. But NBC has the U.S. Open, while ESPN carries the British Open, which is the least popular of golf's four major tournaments. TNT carries some PGA golf, and the Golf Channel has the rights to about 150 events. But the ratings damage to golf could be short-lived. Woods plays in only about 15 of the roughly 50 PGA events a year, in addition to the Masters and U.S. Open. In short, there is still a lot of golf on TV that does not feature Woods. Unlike for other sports, the size of the rights fees networks pay to carry golf tournaments is kept close to the vest. CBS' deal for the Masters is renewed annually, but for the network it is primarily a prestige event. The British Open costs ESPN about $25 million a year. CBS' and NBC's PGA deals don't expire until 2012, and for now it seems unlikely that Woods would be away from the game long enough to have an effect on the renegotiation of those licensing deals. One analyst foresees a financial effect. "With rights fees fixed, an unexpected drop in ratings is clearly negative for everyone broadcasting golf," said Richard Greenfield, an analyst at Pali Research. He also noted that Woods' personal woes mean a drop in value for Comcast's Golf Channel. A Golf Channel spokesman downplayed the risks. Meanwhile, Woods' sponsors were distancing themselves from the golfer. The corporate consulting firm Accenture said it was cutting ties to Woods, stating that he was "no longer the right representative" for the company.

- Chevron Corporation (NYSE: CVX) announced a $21.6 billion capital and exploratory spending program for 2010, a five percent decrease from projected 2009 expenditures. Included in the 2010 program are $1.6 billion of expenditures by affiliates, which do not require cash outlays by Chevron's consolidated companies. O'Reilly said about 80 percent of the 2010 spending program is for upstream oil and gas exploration and production projects worldwide. Another 16 percent is associated with the company's downstream businesses that manufacture, transport and sell gasoline, diesel fuel and other refined products.

- Before seeing the late fall blockbusters, spare some time for an excellent documentary that has surfaced for a return engagement. "Crude" sounds like the standard "This is an outrage" environmental degradation epic, but it is something more interesting as well. The news behind the news about a lawsuit pitting 30,000 Ecuadoreans against Chevron, "Crude" shows in candid detail how campaigns are waged, tactics decided on and strategies prioritized. For both sides realize that lawsuits like this one are not won or lost in the courtroom alone but in the critical realm of perception and public opinion. Director Joe Berlinger shows us situations that ordinarily would not be open to outsiders. At the Beverly Center 13, 8522 Beverly Blvd., L.A.