Chevron adds 3 more foreign prospects in wake of Gulf of Mexico moratorium.

• Analysis by: Michael Lynch

Summary

Chevron announced that its Chinese subsidiary had received final approval to acquire operating interest in 3 blocks in the South China Sea. CVX now has 100% interests in 53-30 and 64-18 plus a 59.18% interest in 42-05, blocks acquired from Devon Energy China. CVX will be the operator of the 8,100 square mile region under a production sharing contract with China National Offshore Oil Corporation. CVX Vice Chairman George Kirkland said these prospects further the company's strategy.

Analysis

The above is an extract from the Rigzone Newsletter of September 7. Just last week, Chevron announced an agreement with the government of Liberia to explore 3 deepwater prospects. Clearly the Gulf of Mexico moratorium will not interfere with the company's long range plans to not only increase production but to shift investment away from the U.S.A. Rigzone Newsletter noted that Chevron had been active in China for almost 100 years. When I was one of the engineer-trainees with Standard Oil Company of California (now Chevron) in the San Joaquin Valley in California, we heard many stories about veteran Standard Oiler adventures in foreign climes. In those days the company had its own drilling department and used contractors only occasionally in domestic operations. One of the toolpushers who had worked in China in the 1920s, told the tale of boxing up and sending to the China mainland a brand new National rotary rig. It was consigned to newly hired Chinese employees with limited oil field experience. The company calculated that it would take a good 60 days for the crated up rig to arrive in China. Instructions were sent out to uncrate the rig on the first location and await the arrival of the American toolpusher to rig it up. Sixty days later,when the toolpusher arrived, he was astonished to see that the Chinese workers had not only uncrated the rig but that they had rigged it up and were drilling ahead. He was equally astonished to see the Chinese roughnecks ganged up around the rotary table manually turning the bit with chain tongs strapped around the kelly drive. While mechanically inclined, the Chinese crews had not understood the significance of the gasoline engines. It was their turn to stare in amazement as the American toolpusher filled the engine's tanks, started them up, clutched them into the rotary table and began drilling with power where they had left off, about 15 feet below the derrick substructure. Chevron today systematically trains foreign employees to drill and complete oil wells with a minimum of supervision. It is part of an overall program to reduce costs. When I was working for the company in Venezuelan green jungle, training of Venezuelan employees was an imperative. Many of those we trained became Petroleos de Venezuela executives 20 years later. Chevron is not the only company to train foreign employees, of course. Shell, ExxonMobil, BP, Total and ConocoPhillips all have similar programs. But Chevron took the lead in what was often an unpopular business among oil companies. Training of foreign employees was often discouraged on the theory that, once trained, the expatriate job would vanish. Chevron saw it differently. The faster foreign employees could be trained, the faster Chevron could advance to new frontiers. This is exactly what has happened.