1. William Simpson Atlanta, GA May 3, 2010
CMAA Owners Forum
William Simpson
Atlanta, GA
May 3, 2010
First let me thank Wayne and CII for the opportunity to address this forum.
Chevron was a founding member of CII and has participated with the organization for over 25 years.
Chevron values the training, forum, committees and extensive work products produced by CII. Many Chevron employees are members and we look forward to a continued relationship with CII.
Wayne asked me to address this group about how Chevron is integrating the New Generation of employees. I have about 20 slides that talks about why the integration is critical to our business success at Chevron, who the New Generation is in our view, and then illustrate how we are doing the integration.
The objective of my presentation is also to have you reflect about each of your roles in making the New Generation effective. See if in your experience the attributes of the generations ring true. Relate the discussion to your children and grandchildren.

2. Chevron’s History— Multiple Generations and Integrations
1879
Pacific Coast Oil Company was founded in the San Joaquin Valley of California.
The company was founded 130 years ago in the San Joaquin Valley of California and called The Pacific Coast Oil Company.
Pacific Coast Oil was the earliest ancestor of The Standard Oil Company of California – and later Chevron.
Chevron today is the result of merging together many of the brands you can see highlighted here as well. Each of these mergers required the integration of cultures and employees, and has been successful in building Chevron into the 3rd largest corporation in the United States.
Chevron in the last 130 years has also been faced with integrating New Generations of workers several times.
The common theme throughout these mergers and integrations is that it takes focused systems, processes, and technologies to make the integration occur quickly with a positive impact to the business.
Let me briefly also discuss Project Resources Co, which is the division I lead within Chevron… 2 2

3. Chevron by the Numbers 2.74 million BOE daily net production
2.1 million BPD refining capacity
18 refineries
3 popular consumer brands: Chevron, Texaco and Caltex
25,000+ service stations
Let’s start with a snapshot of the company – by the numbers:
We have approximately 59,000 employees, operating worldwide.
We’re one of the world’s leading energy companies.
Our headquarters are in San Ramon, California.
In 2007, we produced more than 2.6 million barrels of oil equivalent (BOE) per day.
We measure oil and natural gas in “barrels of oil equivalent” though we don’t put oil in barrels anymore.
A “barrel” of oil is 42 gallons or 159 liters (about how much would fit in an average bathtub).
We have 18 refineries that process 2.1 million barrels of oil per day (BPD) into fuel, lubricants and other products.
We sell motor fuels worldwide through more than 25,000 service stations under 3 popular consumer brands:
Chevron in the U.S.
Texaco in the U.S., Europe and Latin America
Caltex in Asia and Africa 3 3

4. A Leading Portfolio of Projects40
>
$1B
Projects
Net Chevron share
Project > $1B net Chevron share
And here is the motivation and prize. We have an extremely important role.
Organic growth driven by new projects will continue to be a big part of Chevron’s success and will remains a focus point among those that judge Chevron’s stock attractiveness versus our competitors.
Expectations are going to be only higher for even better performance on future projects.
These are projects current in Phase 3 or 4 that will likely achieve a milestone during the B. Plan period. 93
>
$200MM
Projects
Net Chevron share

5. Project Resources Company
Globally Located Employees
Project Professionals
35% Project Managers
20% Business Managers
25% Engineering Managers
20% Construction Managers
Consultants
Procurement
Contracting
Project Controls
HES Technical
Support
65 Upstream Projects
15 Downstream Projects 5

6. Project Resources— Global Project Management
Project Resources Co is a division of Chevron tasked with the planning and execution of the Major Capital Projects portion of Chevron’s Capital portfolio.
Chevron will spend about $ 22 Billion in 2010 exploring and producing oil around the world.
The projects we complete span refinery upgrades to deepwater oil production systems.
Project Resources Co. employees are around the globe managing the planning and execution of projects. Our employees average about 16 years of service, and must be very mobile. The roles we fill are the leadership roles on projects, such as Project Manager, Engineering Manager, Construction Manager etc.
I think that you now have a view of Chevron and Project Resources so let’s talk about a few of the challenges we have in front of us…

7. Safety—TRIR and DAFWR

8. The Challenge Facing Chevron and the Industry
Aging Workforce
Globalization of the Workforce
Increasing Complexity of Projects
I have broken our challenge into 3 key areas which I will discuss briefly. I think these challenges are similar to those that many of you face as well in your industries…
Our workforce is aging…both the Chevron Workforce and the Industry Workforce have generations close to retirement…
Our workforce is more globalized…this has been a benefit to Chevron in managing the impacts of the aging workforce…
The skill levels required today are higher as our projects grow more complex…let’s look at each of these challenges in a bit more detail…

9. The Challenge—the Loss of Experience
This slide is from the US Dept of Labor and shows the demographics of the US workforce.
Over half of the workforce is eligible to retire in the next 10 years…does not mean they will based on current economic conditions, but we need to be ready to maintain our business momentum if this occurs.
Chevron had a somewhat similar demographic but has been able to change the demographic through a combination of University hiring, Experienced employee hiring, and globalization of the work force.
Currently one third of the workforce at Chevron has under 10 years experience. This presents the challenge of integration…It also illustrates that we have multiple generations all working at the same time, with potentially different views based on their experiences…

10. The Challenge—Today’s Complex Megaproject Environment
Upstream (Gorgon and Jansz)
EV hydrocarbon resource >20TCF.
Water Depth: Gorgon ~200m; Jansz ~1350m.
Sub-sea development.
Raw gas feed (high CO2) from Gorgon via flowline 70km to BWI with continuous MEG injection for hydrate inhibition.
2 pipeline system will facilitate the development of nearby asset base.
LNG Plant and Export
5MTPA LNG processing trains each consisting of an acid gas removal unit (AGRU) and liquefaction train.
Common condensate stabilisation and export.
LNG and condensate loaded on to carriers via jetty.
Reduced greenhouse gas emissions by reinjecting reservoir CO2 into saline aquifer beneath BWI.
North West
Shelf
LNG
Exports
Subsea
to Barrtie-backsow Island
3 x 5mtpa LNG trains
& CO2 Injection on
Barrow Island
Future Domestic Gas
Connection to the mainland
Existing Domestic
Pipeline
Jansz
Field
Karratha
Onslow
AUSTRALIA
PERTH
Gorgon Field
Kilometers 50 N
Today’s project type is more complex on all fronts…
I have a representation of the Gorgon project shown here to show the complexity of the projects today.
The increasing complexity requires a high degree of skill, and experience is critical
Integrating the New Generation at Chevron means we must build mega project organization capability very quickly…
So let’s look at the different Generations next, their assets and liabilities, some myths, and their view of the world…
You might want to mention that the project is so big it has its own website… for anyone who wants to visit
Get more facts and figures at

11. Above all Our Actions are guided by the “Chevron Way”

12. Skill Building Techniques
The Horizons Program is designed to build skills and integrate all University recruits at Chevron. The essential elements of the program are shown here.
Covers all degreed employees including Construction Management
About 4500 employees in the program so far…
The Horizons Modules explain to Employees about the Petroleum business, Chevron organizations, and how to work within the Chevron Organization.
The employees receive technical training on aspects of the Petroleum Business such as facility design for FE’s, etc.
The program provides 3 assignments over the first 5 years of employment and is designed to show the employee different organizations and types of assignments.
Mentors are officially assigned for the first two years, and then informal mentoring and networking is available after that time. Mentors can not be the employees Supervisor to ensure a “safe” environment is established where the employee can ask questions and receive feedback constructively.

13. Skills Building Technique— Pathways Program (years 6-20)
Employee creates Skills Assessment Profile
Employee and Supervisor discuss Profile and gaps
Employee and Supervisor Identify
Activities to close gaps
Employee creates Professional Development Plan
Employee updates Skills Profile
and Development Plan as
activities are completed
Employee executes Development Plan
Courses
Work Experience
Job Assignments
The Pathways Program follows the Horizons program to ensure continued skill building, and is applicable up to about 20 years of service. The program is a continuous cycle that moves the employee towards a high skill level of proficiency.
The program starts with each employee assessing themselves against a Competency Map which is linked to Learning and Development Activities. The Competency Map is a list of skill areas with increasing level of skill knowledge requirements as one progresses from awareness to mastery of the skill. I will show you an example in a moment…
Employees work with their Supervisors to obtain the required training to build their skills in areas shown as deficient in the competency assessment.
Additionally Career Development Plans are developed that allow a systematic analysis of assignments that can lead the employee to their professional development goal.
For our Construction Management oriented employees, these assignments for instance could be a Construction Engineer or Representative which would be followed by an assignment as an Area Construction Manager, etc.
The next slide shows a typical Competency Assessment Tool to give you an idea of how the system works.

14. Chevron’s Corporate Strategic Initiatives
“Four Plus One”
Slide 6B
Our corporation is striving to implement what we call our “4+1” strategy. Under this strategy we are driving to become world class in four key areas:
profitable growth
operational excellence
cost reduction and
capital stewardship
All of this is being built on a common organizational capability model.
CSOC = Capital Stewardship Organizational Capability

15. Our Project Process is CPDEP—Decision Driven, Decision Quality Focused

16. PRC Craft Productivity Initiative Productivity Benchmarks
Typical Craft Breakdown II
Based on Hewage and Ruwanpua (2006) and Choy and Ruwanpura (2006) work
Typical Craft Breakdown I
PRODUCTIVITY IMPROVEMENTS ON ALBERTA MAJOR CONSTRUCTION PROJECTS: PHASE I– BACK TO BASICS Bob McTague and George Jergeas

17. Typical Productivity Impacts