哈佛商学院案例-Environmental-Risk-Management-at-Chevron-C

HarvardBusinessSchool9-799-062Rev.April1,1999MonicaM.MandelliMBA’98,researchassociateJenniferL.Burns,andProfessorForestL.Reinhardtpreparedthiscasetoserveasthebasisforclassdiscussionratherthantoillustrateeithereffectiveorineffectivehandlingofanadministrativesituation.Copyright©1999bythePresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685,writeHarvardBusinessSchoolPublishing,Boston,MA02163,orgoto—electronic,mechanical,photocopying,recording,orotherwise—withoutthepermissionofHarvardBusinessSchool.1EnvironmentalRiskManagementatChevronCorporationLikeothermajoroilcompanies,ChevronCorporationfacessignificantriskinitsdailyoperations.Mishandlingofoilatanystageofproduction,fromthewelltotheretailgasolinepump,coulddamagethenaturalenvironment,humanhealth,corporateprofitability,orallthree.Butlikeanypubliclytradedcorporationoperatinginacompetitivemarket,Chevronalsohastobeprudentabouttheamountofmoneyitspendsonmeasurestomanagetheserisks.MarkKeller,therecentlypromotedgeneralmanageroftheHealth,SafetyandEnvironment(HSE)GroupatChevron’sheadquartersinSanFrancisco,wasthinkingaboutthetensionsbetweenriskandcostandhowtheyaffectedoperationscompany-wide.Inhisnewposition,hewouldbeabletoinfluencethewaydecisionsaboutenvironmentalriskweremadethroughoutChevron.Hisimmediateconcernwaswiththefutureprospectsofanalyticalriskmanagementtoolsthatcouldhelpmanagersassessthecost-benefitratiosofdifferentenvironmentalinvestmentsandprioritizethemaccordingly.AlthoughKellerandothermanagerswhohadworkedwithsuchtoolsrecognizedthatthequantificationofbenefitscouldnotbeexact,theycouldalsoarguethatbenefitswithoutnumbersattachedcouldslipbetweenthecracksincapitalbudgetingandotherdecisions.Buttheapplicationoftraditionalfinancialriskmanagementformulastothemanagementofenvironmentalriskhadneverbeenestablishedascompanypolicybefore,andKellerwonderedifitwaswisetodoso.PriortohisselectionascorporateHSEheadintheautumnof1997,KellerhadworkedintheChevronResearchandTechnologyCompany(CRTC),agroupofinternalconsultantsandtroubleshooters.Inthatjob,hehadfosteredthedevelopmentofaprocesscalledDEMA(forDecisionMaking)thatwasintendedtomakeenvironmentaldecision-makingmoreanalyticalandsystematic.Kellerandhisco-workersatCRTCbelievedthattheapplicationofDEMAhadresultedinsignificantsavingsatChevron’srefineryinRichmond,California.TheseencouragingresultswerecorroboratedbypositiveexperienceswithsimilartoolsintheChevronoperatingcompanyresponsibleforinternationaloilexplorationandproduction,andintheoperatingcompanythatmanagedChevron’spipelines.Theevidencesuggestedthatitmightbebeneficialtohaveformalenvironmentalriskmanagementtoolsplayanexpandedrolethroughoutthecompany.ButanysuchdecisionwouldhavetobemadeinthecontextofChevron’songoingriskmanagementprogramsanditshighlydecentralizedorganizationalstructure.799-062EnvironmentalRiskManagementatChevronCorporation2AnOverviewoftheChevronCorporationChevronCorporationcouldtraceitsoriginsbacktothePacificCoastOilCompany,establishedinSanFranciscomorethanonehundredyearsago.In1906,JohnD.RockefellercombinedtheWestCoastoperationsofhisStandardOilCompanywiththeassetsofPacificCoastOiltocreatetheStandardOilCompany(California).WhentheU.S.SupremeCourtbrokeupStandardOilinto34independentcompanies,StandardOilCompany(California)becameanautonomousentity.In1926theStandardOilCompany(California)mergedwiththePacificOilCompany,consolidatingitspositionontheWestCoast.StandardofCaliforniainvestedaggressivelyinoverseasanddomesticexplorationandproduction.ThroughAramco,ajointventurewithothermajorU.S.oilcompanies,itgainedaccesstoreservesinSaudiArabia.EvenwiththetransferofAramcooilfieldstotheSaudigovernmentin1980,theAramcopartners,includingStandardofCalifornia,continuedtohaveaccesstoSaudiArabiancrudeoil.ThecompanyalsosoughtreserveswithinNorthAmerica.Inthe1940s,itbegansearchingforoilinLouisiana,andafterthewar,ittookitsexplorationoffshoreintheGulfofMexico.Bythe1990s,thecompany’sonshoreU.S.oilandgasproductionwasconcentratedinTexasandCalifornia.Thecompany’sCanadianoperationsbeganin1941,andincreasedinvaluewithaseriesofdiscoveriesinAlbertaandthe1979HiberniadiscoveryoffthecoastofNewfoundland.1Duringtheearly1980s,StandardofCaliforniachangeditsnametoChevron.In1984,thecompanyacquiredGulfCorporationfor$13.2billioninwhatwasthenthelargestcorporateacquisitioninthehistoryoftheUnitedStates.2AtthetimeoftheacquisitionGulfwasamajorinternationaloilcompanyandtheninthlargestindustrialcompanyintheUnitedStates.Followingtheacquisition,Chevronreorganizedandintegratedthecombinedcompanies’operationstoimproveprofitabilityandefficiency;through1988,itshedabout$6billionofassetsthatdidnotfititslong-termstrategicplans.Asof1998,withoperationsinabout90countries,Chevronwasinvolvedinpetroleumandnaturalgasexplorationandproduction,refiningandmarketing,petrochemicals,logisticsandtrading,andcoalmining.Itwasthelargestcrudeoilandnaturalgas