ChevronTexaco R&D

Addresses Upstream
Technology Challenges

FORCE Seminar
Stavanger, Norway
April 9, 2002



Trond Unneland
Vice President ,
Exploration and Production
Technology Company
San Ramon, California
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ChevronTexaco 2001
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Outline
ChevronTexaco post merger - a portfolio overview
Upstream Technology Challenges
Some Key R&D Focus Areas - The Game
Changers
Long term recruitment needs
International
Domestic Norway
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Combined Global Upstream
Joins Super Major League
Chevron
Texaco
Conoco
Phillips
Marathon
Oxy
Hess
ENI
Repsol
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ChevronTexaco
RD Shell
Exxon Mobil
BP
TotalFinaElf
1999 data with pro forma adjustments for significant 2000 acquisitions and divestitures
The new company is substantially stronger in research and
development as well as relevant worldwide experience
The recent ChevronTexaco merger allows leveraging
the experience base from two technology focused companies
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3
Segment Updates - UpstreamBusiness
Unit
Upstream Portfolio Is Diversified and Global
Norway
Draugen

UK
Captain
Alba
Britannia
Clair
Congo
Moho Bilondo
Chad/Cameroon
Kazakhstan
Tengiz
CPC
Karachaganak
Papua
New
Guinea
Nigeria
Escravos Gas Plant 3
Escravos GTL
Agbami
Angola
Blocks 0 & 14
Angola LNG
Australia
Northwest Shelf
Gorgon
Indonesia
Minas/Duri
Thailand
China
Philippines
Malampaya
Brazil
9 offshore blocks
Argentina
Neuquen and Austral Basins
Venezuela
Boscan
Hamaca
U.S.
Gulf of Mexico
San Joaquin Valley
Permian Basin
Alaska
Canada
Hibernia
Athabasca
Colombia
PNZ
Denmark
Bangladesh
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The Oil Industry - Challenges
Operate in increasingly
extreme conditions
Reduced efforts in R&D
among operators
Less creative talent
Aging of technical talent pool -
The Big Crew Change

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From Spindletop to Deepwater . . .
At Constant Price
1997 constant $ / bbl
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10
20
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1900 1910 1920 1930 1940 1950 1960 1990 2000 1970 1980
$20
Technology got us here
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Finding & Development Costs $ / BBL (1999 constant)
0
2
4
6
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10
12
14
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1982 1984 1986 1988 1990 1992 1994 1996 1998
Radical innovation has dramatically improved the
efficiency of exploration & development
Cost of 3D Seismic / Km2 reduced by
two-thirds since 1990
Exploration success rate up from
10% in 1990 to 25% in 2000
Sources:
SPE European Petroleum Conference, Paris 2000
BP Economist
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ChevronTexaco and peers have all successfully
cut operating costs - What Next?
What about other opportunities to improve performance?
How do we continue to manage costs and improve value?
How can we drastically increase recovery factors?

New
ChevronTexaco
Target?
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1998 2010
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Segment Updates - TechnologyBusiness
Unit
Core Business Technology
Capabilities Are Deeper and Broader
Deepwater E&P
Heavy oil recovery
and upgrading
Gas-to-liquids
Major Technology
Programs
Shallow water
operations
Next-generation global
IT infrastructure
Gasification
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Key Business Drivers
Upstream Research & Development Strategy
Improved capital efficiency
Drilling technology & processes
More accurate delineation of sub-surface
Faster characterization of Reservoir Producibility
Greater operating efficiency
Faster cycle time & better decisions through Integrated Imaging-Modeling-
Characterization-Simulation
Monitoring-Analysis-Simulation systematically linked to support Asset Teams,
and enable improved operating efficiency


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Major ChevronTexaco Upstream Technology
Initiatives - The Game Changers
Deep water production technology
Commercializing stranded gas (LNG, GTL)
Increase recovery by implementing new sensors, tools and
work processes for subsurface
Key projects include:
Seafloor Processing
Dual Gradient Drilling and Intelligent Well Technology
INTERSECT- The Next Generation Reservoir Simulation
Model
The Oil Field of the Future Project; Real Time Reservoir
Management
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2002 E&P Strategic Research Portfolio
Overview
Seafloor Processing
Flow Assurance Systems
Gas Hydrate Safety & As a Resource
In-Situ Heavy Oil Upgrading And Recovery
Lost Hills Diatomite IOR
New and Emerging Well Technologies
Bright Water - Managing the Water Drive
Shale Characterization
Next Gen Stratigraphic Characterization
Next Gen Seismic Imaging
Composite Risers
Next Gen Sparse 3D Petrophysics
Development of Reservoir Connectivity Mapping
Framework for Integrated Drilling and Earth Model
Applications
Rapid Well Construction, Design, and Simulation
New Reservoir Simulation Technologies
Oilfield of the Future
Subsurface Uncertainty
ChevronTexaco 2001
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Some Key R&D Focus Areas -
The Game Changers

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ChevronTexacos Deepwater Presence
Exploration
Appraisal
/Development
Production
Kuito
Agbami
Benguela
Belize
Tomboco
...
Malampaya
Geryon
Orthrus
...
BS-4
Frade
Claire
Norwegian
Sea

Genesis
Gemini
Typhoon
...
Caspian
Sea

The combination of Chevron and Texacos portfolios resulted in a strong
deepwater position in key prospective basins worldwide.
The sharing of best practices and focus on innovative technology and project
management will help the company achieve its profitable growth objectives.
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Seafloor Processing Collaboration
Today
2006
A New Field Development Option For Deep
Water, Long Offsets And Harsh Environments
ChevronTexaco 2001
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Concept: Seafloor Processing
Hydrocarbon / water separation
Solids management
Power distribution
Multiphase Boosting
Produced Water
Reinjection
System Modelling
& Integration
Reliable Monitoring
& Control
Water removal and re-injection in-field
Two phase production boosting to host
Solids removal & management
Options for gas separation
Why Seafloor Processing?
Increase NPV relative to
floating facility alternatives
Improve viability of remote
deepwater developments
Reduce likelihood of
slugging, corrosion, and
hydrate formation
Eliminate risers in
challenging environments
Reduce chemical
requirements
Promote standardization &
modularization to reduce
FEE and allow pre-build of
components
The potential prize:
$1/bbl for HP Oil,
$0.8/bbl for LP Oil
$0.07/MCF gas
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Joint Industry Programs play a key role in developing these types of technologies
for the future.
Seafloor Processing Collaboration (SPC) - Phase 1
Troll Pilot (Norsk Hydro installed 3Q 1999)
60,000 BFPD throughput
2mW Water Injection Pump
Centrifugal Flow Conditioning
Gravity Separation
Multiphpase Gas/Oil Export
Seafloor Processing Collaboration (SPC) - Phase 2
Collaboration of BP, ChevronTexaco, Kvaerner and ABB
Focus on oil-water separation, water reinjection and boosting
Ultimate goal is 100 km offset distances in 1500m water
Conventional and compact process equipment to be incorporated, with
pilots for each category of technology
One year of 5 year development plan completed
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Joint Industry Programs
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Managing the Reservoir Today
Reservoir management is generally episodic and reactive
Management of facilities separate from management of subsurface
SCADA is weakly exploited or integrated
Data is not merged and managed
consistently
No direct link between real
time data and numerical
or geological models


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INTERSECT - The Next generation Reservoir
Simulation Model
ChevronTexaco and Schlumberger are jointly developing a
Next Generation Reservoir Simulator to replace each
companys current generation products (CHEARS and
ECLIPSE).
The research and development project, estimated to last
four years, started July 2000
Located at ChevronTexacos technology center in San
Ramon, CA.

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INTERSECT - The Next Generation Reservoir
Simulation Model
The two companys are recognized leaders in reservoir
modeling and simulation technologies, and this project is
an effort to combine the strengths of the two organizations
Goals are to develop a state of the art simulator using
modern, adaptable object-oriented software architectures
Flexible software architecture should accommodate rapid
modifications to the simulator
At least 100% improvement in computational performance

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INTERSECT - The Next generation Reservoir
Simulation Model
Effectively handle complex, non-regular gridding schemes
required to more accurately represent reservoir and fault
geometries and modern complex horizontal and multi-
lateral wells.
Current emphasis in reservoir modeling work processes on
more directly addressing uncertainty and risk and
optimization of subsurface and surface designs and
operations
ChevronTexaco 2001
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1969: Cross
disciplinary
control rooms
2001: Slow
loop planning
and decision
2005: Slow
and fast loop
optimization
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Oil Field of the Future
Business Driver: Improve Asset
Management through Faster
and Better Decisions
Today: spatial data
Integrated sub-surface
software platform allows
collaboration across G&G
and reservoir disciplines
Future: spatial-temporal data
Integrate work processes
between production and
reservoir engineers
Combine control room and
visualization centers
Future Asset Management will
be continuous and proactive
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Reservoir Management Time Scales -
Today
seconds 1 day 90 day 2 years 10 years
Safety
Control room decisions
Event & fault response
Minimize downtime
System reconfiguration
Export obligations

Choke & sleeve settings
Lift system diagnostics
and optimization
Network optimization
Planning of simultaneous
operations on integrated
offshore platforms

Optimize reservoir
drainage, injection
Infill wells
Remedial well ops
Recompletions
Schedule interventions
Optimize investment
planning
Optimize secondary
recovery
Tie-in marginal fields

Operator
Optimization
Production
Optimization
Field
Optimization
Reservoir
Recovery
Optimization
Future
Passive seismic
monitoring
Near continuous
seismic monitoring

Operator
Optimization
Production
Optimization
Field
Optimization
Reservoir
Recovery
Optimization
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When Technologies Converge, Breakthroughs
Will Occur
Real Time
Reservoir
Management
Visualization,
Computing
and
Database
Management
Intelligent Completions,
4D Seismic, Fibre Optic Sensors


Advanced
Reservoir
Interpretation,
Optimization
Internet, Telecommunication
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The Road Ahead :
2002-2010 Oil Field of the Future
Onshore control centers aiming at
improving the daily reservoir and asset
management of our fields
Continuous data from various sources is
integrated and managed
Early identification of discrepancy
between real and simulated data
Capable staff focus on high-potential
issues and complex problems
Sub-surface model refreshed with new
information and knowledge
Real-time integration of field data into
reservoir and economic models
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Technology Research and Development
Collaboration Model
Our competitiveness comes from applying technology, not
owning technology
Our goal is to support and guide technology development making
it available to our assets as fast and efficiently as possible
Direct support and close collaboration with research institutions,
Universities, NOC, service companies and other major oil
companies - sharing is ok
We are among the most proactive companies in supporting JIPs
for drilling, reservoir and exploration technology.
We are the most active company in the petroleum engineering
society sharing our experience with others
Important part of our R&D program has link to Norwegian entities
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Technology Exchange between Norway and
ChevronTexaco
Norway is in the lead in several areas for offshore
technology
ChevronTexacos focus on improving hydrocarbon
recovery, deep water and gas technology is relevant to the
current NCS challenges
Our technology focus may assist Norwegian Continental
Shelfs competitiveness (KONKRAFT)
Currently active in technology development
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Global Recruitment Needs
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20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-xx
5%
10%
7%
16%
35%
20%
6%
1%
The Bulge gets Older
Retirement
Age gets
Younger
Changing Demographics -
Will we have Skilled Employees in 10 yrs?
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1000
1500
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Total COPI Mobile Global Workforce Total Remaining Mobile Global Workforce
ChevronTexaco International Mobile Global
Workforce Gap
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ChevronTexaco Overseas Technology
Mobile Global Workforce
80%
United States
7%
UK / Europe
3%
Canada
2%
Latin America
5%
Africa
2%
Asia / Indonesia
1%
Eurasia
45%
United States
15%
UK / Europe
10%
Canada
10%
Latin America
10%
Africa
5%
Asia / Indonesia
5%
Eurasia
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Retirement
Vision of Mobile Global Workforce 2010
Percent of Current
Mobile Global
Workforce
Experienced Hires National EEs from
COPI SBUs and
employees from
other OPCOs
New Hires from
Universities - both
US & International
Universities
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Hiring Strategies
Use new technologies and ideas to attract talent
ChevronTexaco website
e-Recruiting (internet, e-mail, etc.)
Employee referral incentive

Target critical skill sets
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Global Employee
Key Attributes
Demonstrated technical ability and education
Desire to work outside their home country - mobile and
flexible
Strong interpersonal and communication skills
Cross cultural perspective
Fluency in a second language or a strong desire to learn a
second language
We will recruit non-US students
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Attributes
Energetic
Productive
Life Long Learners
Flexible/Adaptable
Collaborative
Show Initiative
Take Risks
Networking Capability
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Hiring Strategies-Diversity
Diversity is very important. We have made significant
progress towards hiring diversity candidates. Need to
continue our search for strong visible diversity candidates



CPDN HIRING TREND: ETHNICITY
CPDN TOTAL- REGULAR HIRES
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19% 17%
9%
5% 9%
3%
7%
13%
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Specific Skill Sets

Key areas for specialization include:
Petroleum Engineering:
Reservoir Characterization and Reservoir Simulation
Well Completions
Drilling Engineering
Production Optimization
Facilities Engineering:
Instrumentation and Electrical
Process Engineering
Structural Engineering
Rotating Equipment
Earth Science:
Geophysics
Reservoir Characterization & Reservoir Management
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Hiring in Norway - Domestic Recruitment
Are currently hiring:
One graduate geologist
One graduate geophysicist
One graduate petroleum engineer
For our longer term view, upon success, we will build a
workforce in alignment with our portfolio/business needs,
drawing upon the indigenous talent pool in Norway