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Chevron 'Restructuring' Appalachian Business Unit

In what it said is an effort to improve regional business performance, Chevron Corp. is restructuring its Appalachian business unit, which oversees the company’s Marcellus and Utica shale assets.

The San Ramon, CA-based oil major issued its quarterly results late last month, noting that its Permian Basin assets helped increase the company's year-over-year North American shale and tight resources production by 23,000 b/d (see Shale Daily, Nov. 3). Chevron's North American upstream operations consist of six business units that extend from the deepwater Gulf of Mexico to Canada. Spokesman Cameron Van Ast said its restructuring efforts are only taking place within its Appalachian unit.

"Chevron's Appalachian-Michigan business Unit is restructuring its organization to become more efficient and effective to support the long-term growth it plans for development of the Marcellus and Utica resources," Van Ast said in an emailed statement attributed to the company. "Chevron maintains its commitment and level of activity in the tri-state region and continues to make significant investments in the development of natural gas from shale in this area."

Van Ast added that Chevron's "efforts to improve business performance are ongoing." North American production has averaged 730,000 boe/d this year, which currently represents about 30% of Chevron's upstream volumes. In the Midland subbasin of West Texas, Chevron has increased its production by 40% through the first nine months of the year, while it has increased production in the Delaware subbasin there by 60% during the same time.

Chevron holds more than one million prospective net acres in the Marcellus and Utica shales. Through the first nine months of the year, those assets have produced 500 MMcfe/d.

"We are anticipating that our 2014 unconventional production will be more than 10% higher than initially forecast and our long-term unconventional production growth continues to steepen," said Jeff Shellebarger, president of the North America exploration and production business, during a recent overview of upstream operations with financial analysts.

When Chevron entered Appalachia four years ago, Shellebarger said "it was primarily dry gas and that's what was driving the business." He noted, however, that the company is now interested in the basin's liquids-rich gas, focusing on southwest Pennsylvania and northern West Virginia.

Last year, the company announced a sizable land purchase that it intended to use for a larger regional headquarters in Moon Township, PA, located about 16 miles east of Pittsburgh. In July, though, the company said it would put those plans on hold indefinitely to focus on other projects in its portfolio.

Chevron currently employs about 700 people at an office in Moon and at another further south in Smithfield, PA. Applications filed with Moon township after the land purchase showed that the company intended to employ about 1,000 people at the larger regional headquarters. It's unclear if the company will cut jobs within the unit. When asked to clarify what exactly its restructuring efforts consist of, the company said it had no further details to provide at this time.  

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