Unocal Legacy, Inc. was formed to create this web site celebrating the Legacy of Union76/Unocal.
Big Oil versus Medium-sized Oil,
1999 versus 2014
One of the challenges of operating an oil company is maintaining or increasing production. In a resource business like oil & gas, production is the source of revenue, and keeping it up is how you maintain your income.
The enemy of sustaining a level of production is the decline curve. On the average, the ability of a hydrocarbon well to produce declines a few percentage points for every year of production. There are ways to combat that (stimulation treatments, for example) but they are not inexpensive.
Another challenge is replacing that production with new reserves. If a company is to survive in the long run, current production needs to be replaced with new reserves which will be the source of future production.
If we look back in time to the Unocal website early in the year 2000 [link: https://web.archive.org/web/20000914205531/http://www.unocal.com/uclnews/2000news/020700.htm ] we see a press release bragging that Unocal replaced 159% of its production for 1999. Checking the details, we see that 1999 production totaled 181 million barrels of oil equivalent (more natural gas than crude oil.) That’s equivalent to 496,000 barrels per day.
Zooming forward in time to early 2013, we see a press release from Chevron [http://www.chevron.com/chevron/pressreleases/article/03122013_chevronreaffirms2017productiontargethighlightsfuturegrowth.news ]establishing a goal to increase production to 3.3 million barrels of oil equivalent per day by 2017. By March of 2014 [ http://www.chevron.com/chevron/pressreleases/article/03112014_chevronreaffirmsstrategieshighlightsperformanceportfolioandfuturegrowth.news ] they had backed off that ambitious goal a little, to only 3.1 million barrels equivalent per day, as shown in the following graphic:
So, Chevron’s 2014 goal is to increase production by 500,000 barrels equivalent per day, or as much as Unocal’s entire 1999 production, and to accomplish that in 4 or 5 years. (Even if they achieved it for one day on 31 December 2017, we’d still say they made the goal, right?)
From 2.5 million to 3.1 million in 5 years is 3.6% per year increase, in addition to overcoming the natural decline curve of the existing reservoirs. Of course, new projects such as St. Malo / Jack in the Gulf of Mexico will contribute to the total. Still it seems a very ambitious goal. Let’s wish Chevron well with it.
What was happening with Unocal 10 years ago? Well lots of things, no doubt. One big thing was deepwater exploration drilling in the Gulf of Mexico.
If you poke around the July 14, 2004 version of the Unocal website, you may find other things of interest, too.
In a development related to St. Malo, Chevron announced a new discovery in September of 2004, Jack, located about 25 miles away. About 3 years later, Chevron announced that they had “…sanctioned development of the Jack/St. Malo project, its first operated project located in the Lower Tertiary trend in the deepwater U.S. Gulf of Mexico.”
"Jack/St. Malo is the latest example of Chevron advancing its industry-leading queue of major capital projects," said George Kirkland, vice chairman, Chevron Corporation. "The Lower Tertiary is recognized as a huge resource with the potential for long life projects of up to 30 to 40 years and the opportunity to enhance recoveries through technology."
In March of 2014, Forbes magazine described the development: “The Jack and St Malo oilfields are situated in Walker Ridge blocks 758, 759 and 678 of the U.S. Gulf of Mexico. The fields are located 40km away from each other and are being jointly developed with a floating production unit located between them. “
Forbes also said, “. The Jack/St. Malo project is being developed at a cost of over $7.5 billion. First production from the project … is expected later this year. It was around 74% complete at the end of 2013.”
So – a lot was going on 10 years ago, but deepwater offshore developments take a lot of time – and cost a lot of money.
SEE the old "Murph" commercials - links on our "Links" page - click here!
See our article on the 1984 struggle between CEO Fred Hartley and T. Boone Pickens for the future of Unocal.
As we go forward we hope others who were part of or interested in the Unocal Era will visit and contribute to preserving the history, accomplishments and effort that made Unocal a historic California and international petroleum producing and refining corporation.
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