© 2014 Chevron Corporation. All Rights Reserved. Company Confidential.

Climate Change Science,

Global Negotiations, and

Chevron’s Actions

Energy Summit, Kern County

12 November 2014

Arthur Lee - Chevron Fellow and Principal Advisor

Corporate Health Environment and Safety

. ©2014 Chevron

Outline

What is climate science telling

us?

What are the U.N. climate

change negotiations?

What are Chevron’s actions on

managing greenhouse gas

(GHG) emissions?

Chevron’s action in Kern County

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Source: U.S. National Climate Assessment

. ©2014 Chevron

Arthur Lee

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Intergovernmental Panel on Climate

Change (IPCC):

Review Editor, Special Report on

Carbon Dioxide Capture and

Storage (2004 to 2005)

Expert reviewer, Fourth

Assessment (2004 to 2007)

Contributing Author, Special Report

on Renewable Energy (2008 to

2011)

Photo by Arthur Lee of his Nobel Peace Prize recognition by the IPCC

. ©2014 Chevron

Upstream and Gas Operating in 40 Countries Across 6 Continents

4

Asia-Pacific

Africa and

Latin America

North America Europe, Eurasia and Middle East

Areas of Operation

. ©2014 Chevron

Downstream & Chemicals

5

Manufacturing 14 fuel refineries

Lubricants and chemicals Techron® fuel additive

Supply and marketing 16,000+ branded outlets

© 2014 Arthur Lee

Climate Science Assessments: IPCC Fifth Assessment Report, AR5, WG1 (2008 to 2014)

“Warming of the climate system is

unequivocal, and since the

1950s, many of the observed

changes are unprecedented over

decades to millennia.

The atmosphere and ocean have

warmed, the amounts of snow

and ice have diminished, sea

level has risen, and the

concentrations of greenhouse

gases have increased.”

6

© 2014 Arthur Lee

Climate Science Assessments: IPCC Fifth Assessment Report, AR5, WG1 (2008 to 2014)

“For the longest period when calculation of regional trends is

sufficiently complete (1901–2012), almost the entire globe has

experienced surface warming.”

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© 2014 Arthur Lee

Climate Science Assessments: IPCC Fifth Assessment Report, AR5, WG1 (2008 to 2014)

The atmospheric concentrations

of the greenhouse gases carbon

dioxide (CO2), methane (CH4),

and nitrous oxide (N2O) have all

increased since 1750 due to

human activity.

In 2011 the concentrations of

these greenhouse gases were

391 ppm, 1803 ppb, 324 ppb and

exceeded the pre-industrial

levels by about 40%, 150%, and

20%, respectively…

8

Note: Fossil fuel has a low carbon-13 to carbon-12 ratio. Therefore, man-made emissions of carbon are detectable

because the ratio of isotope of carbon-13 to carbon-12 in the atmosphere declines as more fossil fuel is burned.

© 2014 Arthur Lee

U.S. National Climate Assessment

(May 2014)

“Is the climate

changing?

How do we

know?”

“Climate

change is

already

affecting the

American

people in far-

reaching

ways. …”

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. ©2014 Chevron

Climate Negotiations:

Setting the Table for 2015 COP21 Paris

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On-screen, a draft of CCS in CDM negotiated in the late night/all night negotiating sessions of COP17. Photo by Arthur Lee

. ©2014 Chevron

Major Economies Agree to No More Than 2°C Rise

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Photo: G8 2009 L’Aquila Summit (Source: GB).

Inset: Recent E.U.-U.S., and E.U.- China Announcements, March 2014 (Source: European Parliament).

. ©2014 Chevron

Climate Negotiations and Actions (?)

12

Photo coverage by Earth Negotiations Bulletin, a reporting service for the UNFCCC. Use permitted with citation.

. ©2014 Chevron

Chevron’s Actions

Four-fold Action Plan on Climate Change

– Reducing emissions and increasing energy efficiency

– Investing in research & development and improving technologies

– Pursuing business opportunities

– Supporting economically sound policies that protect the

environment

Principles on Climate Change Public Policy

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. ©2014 Chevron

Carbon Regulations:

Impacts on Chevron Operations

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Alberta

Status: Baseline and credit system

since 2008

Goal: Intensity target of 12% below

2003–2005 in Alberta

European Union

Status: C&T since 2005

Cap: 21% below 2005 levels by 2020

2050 Goal: 60% below 1990 levels

New Zealand

Status: ETS since 2010

Cap: 10–20% below 2000

levels by 2020

Australia

Status: July 2012 fixed carbon price now in

effect, program in transition

Cap: At least 5% below 2000 levels by 2020

California and Quebec

Status: C&T since 2013 and 2014

Cap: Reduce emissions to 1990

levels by 2020 (economywide)

Korea

Status: C&T to

start in 2015

Cap: 30% below

BAU by 2020

South Africa

Status: Carbon tax proposed to

start in 2015

Cap: 34% below BAU level by 2020

China

Status: Launching 8 pilot ETS

Cap: Intensity target of 40–45% below

2005 /unit GDP

Legend

No Information

Emerging Regulations

Countries to Watch

Offsets

Established Regulations

Subnational Regulations

Incre

asin

g R

egula

tio

ns

Oil and Gas

Production

Refineries

British Columbia

Status: Carbon tax since 2008

Goal: 33% below 2007 levels by 2020

Kazakhstan

Status: Pilot C&T in effect since 2013

Cap: 15% below 1992 levels by 2020

Mexico

Status: Carbon tax since 2014

Cap: 30% below BAU level by 2020

. ©2014 Chevron

Carbon Markets

Coordinating our activities

across the enterprise to

achieve to lowest practical

cost of compliance

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. ©2014 Chevron

Four Principles Guideposts for the Development of Policies to Address Climate Change

Global Engagement

Balanced and Measured Approach

Research, Innovation and Application of Technology

Transparency

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. ©2014 Chevron

Carbon Price Forecast Chevron view on future carbon costs

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2013 2018 2023 2028 2033

Price guidance covering all locations where Chevron does business $/ m

etr

ic t

on C

O2

. ©2014 Chevron

Capital Projects Incorporating GHG considerations into capital project decision-making

Consistent approach across Chevron

Suite of tools for project teams and decision-makers

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. ©2014 Chevron

GHG Inventory Understanding and reporting our emissions

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57 60 60

57 57

2009 2010 2011 2012 2013

Greenhouse Gas Emissions (Million Metric Tons CO2e)

Upstream Downstream Other

. ©2014 Chevron

Energy Efficiency Implementing cost-effective projects to conserve energy

20

9

18

22

28

30

33 34 34

1995 1999 2003 2008 2009 2010 2011 2012

% Energy Performance Improvement since 1992

. ©2014 Chevron

Gas Flaring and Venting Reducing the flaring and venting of associated gas

Approximately 60%

reduction since 2003

Multiple benefits – e.g.,

resource utilization, GHG

reduction, stakeholder

concerns, etc.

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. ©2014 Chevron

Chevron’s CO2 Capture & Storage (CCS) Activities

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Why CCS?

Carbon capture and geologic storage is the carbon management

technology with the greatest potential for significant GHG reductions

Chevron’s CCS Projects:

Gorgon

Quest (NOJV)

. ©2014 Chevron

Chevron and Fresh Water Management

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San Joaquin Valley Business Unit Freshwater Position Statement

Chevron recognizes the value of fresh water as a fundamental social,

environmental and economic resource that needs to be managed

responsibly in its operations in the San Joaquin Valley. Chevron’s

freshwater stewardship goals are to:

• Reduce use of fresh water by reusing and exporting water.

• Identify innovative ways to conserve water in our field operations.

• Engage with governments, partners, local communities and other

stakeholders to collaborate on significant fresh water resource issues in

areas where we operate.

. ©2014 Chevron

Chevron Steamflooding Produces Oil and Distributes Water to

Farmers in Kern River Field

Background

Production began in 1899

Kern River Field uses enhanced oil recovery via

steam flood, producing brackish water.

Chevron partnered with the Cawelo Water

District to provide farmers with water.

Actions

Steam is injected as vapor into the ground, where

it heats the oil so it can be more easily extracted.

Oil and produced water are lifted a thousand feet

to the surface, where the water is separated from

the oil and conditioned in giant filters made from

crushed walnut shells, which are gathered from

local farmers.

For every barrel of oil, about ten barrels of water

are also produced, totaling more than 700,000

barrels of water a day. 24

“I've always felt that

we could feed the

world if they allowed

us enough water.” –

Roy Pierucci, Kern

County Farmer

. ©2014 Chevron

Chevron Steamflooding Produces Oil and Distributes Water to

Farmers in Kern River Field

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Results and Business Impact

Chevron reclaims about one third to

generate new steam. Two-thirds go to

Cawelo Water District.

The water is treated and provided to the

Cawelo Water District.

The district supplies 160 farmers and

irrigates 45,000 acres of crops that include

grapes, citrus, almonds and pistachios.

“I've always felt that

we could feed the

world if they allowed

us enough water.” –

Roy Pierucci, Kern

County Farmer

. ©2014 Chevron

Chevron Steamflooding Produces Oil and Distributes Water to

Farmers in Kern River Field

Cawelo Water District

8.5 mile pipeline from Kern River Field to the

Cawelo Water District

Pays approximately $30 per acre-foot, essentially

reimbursing the transportation cost borne by

Chevron, according to Chevron land

representative.

According to article in New York Times, July 2014,

water from the Kern River Field facility would

make up about 25 percent of the CWD’s total

supply. However, in the current climate, that

number is closer to 50 percent as other sources

of water ‘dry up.’

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“Chevron is environmentally

conscious, and this is a

very beneficial program. It

has helped a lot of our

farmers and our district

tremendously.”

- David Ansolabehere,

Cawelo Water District

Manager

. ©2014 Chevron

Climate Change

Chevron Actions

Arthur Lee

2014

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