Slugcatcher is confident that this is not true, especially as it comes from a country where an alarming number of people still believe that Elvis is alive and well, and possibly living on the dark side of the moon.
However, believers in the alleged evil aims of ChevronTexaco (probably the same mob who subscribe to Elvis theories) have even gone as far as circulating their arguments via the Ratepayers for Affordable Clean Energy, which represents the standard loonie left view of the world, such as setting a national renewable energy goal of 33% of all energy consumed by 2020.
One of their targets is the LNG import industry, arguing that achieving a high renewables target will eliminate demand for LNG, and environmentally contentious LNG import terminals. Other targets include California governor, Arnold Schwarzenegger, the Federal Government and anyone else who disagrees with their view of the world.
Having studied a few of the arguments from the loonies, Slugcatcher offers two of his own theories as to why ChevronTexaco has suddenly set LNG and the Californian gas-import industry as a prime target for future growth, and why Australia, through the Gorgon project in which ChevronTexaco has a 50% stake, may emerge as a significant beneficiary.
The first reason is that management has suddenly discovered that it needs a “gas leg” to its business formula because being very oil focused is simply not delivering the goods. First quarter profits, reported a week ago, underlined this point when ChevronTexaco said earnings were up 4.5% on a year ago, but analysts quickly noted that this was way below market forecasts.
Upstream oil was the biggest profit contributor, exposing two key weakness in the company, a poorly performing downstream division where marketing and refining earnings dropped by 36% to $US409 million, and a missing gas leg.
What this means, according to experts who operate at a level far beyond the comprehension of The Slug, is that ChevronTexaco desperately needs to grow its LNG-import and gas reticulation business to supplement an oil division which is performing at its peak (and only has one way to go) and a refining division being crushed by competition and old plant.
The second reason, which those young analysts simply don’t understand, is historic, but closely related to the first - the missing gas leg to prop up oil.
Until 2002, when Chevron merged with Texaco, the Chevron part of the business had just one LNG interest, a one/sixth stake in the North West Shelf. Why such a limited exposure from an oil major?
Well, The Slug reckons that this goes back to sometime around 1984 when then Chevron boss, George Keller, told the media (including a young Slug) that “the North West Shelf was marginal at best”. He argued that the go-ahead for the Shelf was a fortunate piece of timing because if it had been delayed, even by a month or so, approval would not have been granted as the oil price at the time was falling.
That famous interview of Keller’s reflected Chevron’s official view of the world at the time, that LNG was too damned hard, too difficult, and unlikely to be profitable – hence, the non-appearance of other LNG investments over the next 20 years while the rest of Big Oil charged ahead.
Right now, and the loonies might not want to hear this, ChevronTexaco is making up for lost time. It was Keller’s view of the LNG world which kept Chevron out of LNG opportunities, and why it is now extremely active in Gorgon, plus pursuing LNG developments in Angola and Nigeria. It’s all about a rush to develop a gas leg to boost a business which is 75% oil.
And, if ChevronTexaco develops its LNG business as planned where will it sell the stuff? In its home state of California, naturally – a point which reflects current market conditions, and the company’s need for a bigger gas (LNG) business which is partly a result of history, and partly the result of a bad business call of more than 20 years ago.
