Career development

David J. O’Reilly, Chairman and Chief Executive Officer, Chevron

Davd O'Reilly discusses his career, the challenges that lie ahead for the industry, and advice for today's young professionals.

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The Way Ahead Interview invites senior figures who shape our exploration and production (E&P) industry to share their wisdom, experience, and deep knowledge with the young E&P professional community. It is hoped that these interviews will help young E&P professionals learn how to nurture their own personal skills, understand the nature and challenges of our industry, and grasp the technologies, developments, and issues that are key to creating our industry future. In this issue, we have invited David J. O’Reilly, Chairman and Chief Executive Officer of Chevron, for an open conversation about his career, and to share his advice, and vision. The Way Ahead thanks all of our interviewees for their generosity and candid discussion, and for investing personally in helping to show young professionals that there is a rewarding career ahead in a continuously improving, exciting, challenging, and vital global industry. – Anthony Onukwu, Andrés Zoldi, and James T. Edwards, Editors, TWA Interview

Early in your career, did you ever picture yourself in your present role?

No, absolutely not! I always wanted to be in the oil and gas business. I learned a lot about it, even when I was in high school, but I never pictured myself in this role.

For most people, it must be hard to picture you as a fresh engineer. How did you start out professionally?

I started working as a chemical engineer in our research company in 1968. During my early career, I was doing technical work at our refinery—work that included process operations, catalysis, etc.

Does your technical background help you in your present role?

No question. This is a technology-intensive business, and having engineering or science skills can only help anyone in our industry. But I also encourage young professionals (YPs) to develop their technical expertise for another reason. It turns out that the same kind of discipline you develop as an engineer or scientist helps in making management and business decisions. It has to do with how we think about things and how we approach and solve problems. It’s a big help in the broader business environment.

What advice could you give to YPs shaping their career plans?

First, concentrate on the job you are currently doing; do your very best and get everything you can out of it. This is very important. Employees always are going to be judged—and I’m including myself in this—on how well we perform our current job. We may have great potential, but first we have to prove that we can do our current job well.

Second, we need to learn as much as we can about the bigger picture at the company in which we work. We need to understand where we fit in that picture. Say you are a petroleum engineer in Argentina. You should know what your role is and how that role helps to improve reservoir management, recovery, and production operations in El Trapial, and how that contributes to the success of Chevron Argentina and then how Chevron Argentina fits into the Latin American Business Unit—and how Latin America relates to the company’s overall upstream operations. Understanding your role in the bigger picture is very important when shaping a career.

Is there anything you would have changed about your career path?

Not really. I am not a great believer in looking back and wondering what I would do differently. I would discourage others from looking backwards as well. The past is the past, and you should take every opportunity to learn along the way. But you should always try to look forward.

You must have a really busy life, how do you balance work and leisure? What is your escape?

Well I do have a busy life, but when I need to decompress, the most important thing is family: wife, children, and grandchildren. I like to read and if I find time, maybe play some golf.

What key lessons learned can you share about leadership?

As the leader of Chevron, one of my important roles is to be the steward of our value system. I don’t claim credit for the values we hold today, they were handed down through generations of leaders over many years. But I do consider it my responsibility to maintain and strengthen our value system for the future.

The second issue is related. When you get down to it, companies are really all about people. Yes, we have assets, we have oilfields, refineries, service stations, and so on, but I think the key issue for any successful organization is people. We have to make sure that we create a climate in which those people can make their maximum contribution.

Given your experience, how important is it for YPs to develop commercial and financial acumen to support their technical skills?

As I said earlier, I think technical skills are absolutely essential. In my own case, after being with the company for several years, I made it a point to learn more about the commercial and financial side of the business—through reading and tutoring. So the technical grounding was absolutely essential as a starting point, but the commercial and financial knowledge helped me as well.

What is the importance of mentoring in the oil and gas industry?

It’s very important. I had two informal mentors along the way. Now in my current job, I am formally mentoring somebody. We meet every three months or so. I am a firm believer that the catalyst has to be that the mentee takes the initiative. He or she has to say “I want a mentor.” They need to seek the person out and then make sure they define the questions that they have, the issues they want to discuss, and schedule the time to do it.

What benefits do you see from professional organizations like SPE?

SPE offers a great opportunity to learn more about the practical applications in your field of specialty. You see a much broader picture than you can by just doing your day-to-day job. So it adds a lot of breadth to your professional and technology knowledge, whether you are fresh out of college or you already have accumulated work experience.

Chevron has a long history of financial success. How has the company achieved that great competitive record?

You need a long-term strategy, you need to execute well against that plan, and you must stick to it. For example, our upstream strategy is to grow profitably in core areas and build new legacy positions. It has been unchanged for many years. We also work on enabling strategies in four crucial areas: operational excellence, cost management, capital stewardship, and profitable growth. Ensuring that our organization is world class in those areas is a top priority. So the key is: consistent strategy, consistent execution.

How is the current financial situation affecting Chevron and the industry?

It obviously is going to reduce revenues. But keep in mind that we had oil prices at USD 60 per barrel in 2007. We are still in a very good position. We have a very strong balance sheet, we are in the business for the long term, and in no way do we make our investments based on very high oil prices. That is something we will never do because this is a cyclical business.

As regards the rest of the industry, those companies that have been very conservative and have good balance sheets will do well; the ones that are overextended will be challenged. Chevron is not in the last group.

Could you discuss the importance of technology development to the industry’s future?

We are far more technology intensive today than we’ve ever been in our history. That technology is enabling us to find and produce oil and gas in more difficult and challenging environments and, over time, to reduce costs. It is technology that enables us to perform the way we do today.

For example, we are operating in much deeper waters now than ever before. We’re tapping into more complicated reservoirs and understanding them, with better modeling capabilities. We have new drilling techniques. We do lots of things that were impossible in the past. Forty years ago, projections said the world would run out of oil by 2000. Here we are, 2009, and we are not even close to running out. Technology allows us to do more than we could ever dream of doing before, and at affordable prices.

So what are the key technology challenges you see for the E&P industry now and for the next 10 years?

Technology will continue to drive towards reducing the cost of production in these difficult times. We need to continue improving the efficiency of the overall system, from information technology to materials and constructions technology. For example, deep water is very expensive today; in the future, technology will reduce those costs. So technology will help us do the things we do today—deep water, Arctic activities, high-pressure/high-temperature operations, high-sulfur oil and gas production; and all the rest—but better and cheaper.

What about alternative energy? What role is Chevron playing in this area?

A very important one. Our geothermal production in Indonesia and the Philippines make us the biggest renewable energy producer among the super-major oil companies. We’re continuing to expand our geothermal presence, but also working in other areas—for example, nonfood biofuels, particularly nonfood ethanol. We all realize that making ethanol from corn has limitations. Successfully producing biofuel from nonfood resources—in an environmentally efficient way—should be a great contribution to society.

How do you want the public to view your company over the next decade?

I hope that we will continue to build an image that this company is about people, too. It is truly human energy that makes the difference by providing adequate, affordable energy that is environmentally responsible. I would like to think we have a reputation for always working to provide environmentally sound, affordable energy to improve the standard of living and to supply energy to the growing population around the globe.  

What parts of the world do you see emerging as greater leaders because of the geographic shift in oil production and reserves?

Increasingly, of course, if you look where the oil and gas resources are, conventional resources are in the Middle East and the former Soviet Union. However, unconventional reserves are found in North and South America—for example, shale oil in the US, oil sands in Canada, and the Faja [heavy oil] in Venezuela. So the issue is not so much resources as it is the technology that will allow us to produce those resources economically over time. This is the great opportunity for the future.

For young students, how do you see careers in the oil and gas industry developing and why should anyone pursue them?

For the same reason I joined! Energy will always be a very essential component of our economy, for decades, independent of our cyclic economic recessions.

If you want to be part of a technology-intensive industry at the intersection of economics and geopolitics, you couldn’t ask for a more exiting opportunity. It may be 100 years old, but today’s industry is completely different—the way we do things, the opportunities created by technology. It is completely different than it was when I came to work.

David J. O’Reilly is Chairman and Chief Executive Officer of Chevron Corporation. A native of Dublin, Ireland, O’Reilly earned his bachelor’s degree in chemical engineering in 1968 from University College, Dublin, from which he also received an honorary doctor of science degree in June 2002. Upon graduation, he began his career with Chevron Research Company as a process engineer. After serving in positions of increasing responsibility, O’Reilly in 1989 was elected Senior Vice President and Chief Operating Officer, Chevron Chemical Company. Subsequently, he was elected Vice President, Chevron Corporation, responsible for strategic planning and coordinating quality improvement, and then President, Chevron Products Company, responsible for US refining and marketing operations. From November 1998 until January 2000, O’Reilly served as Vice Chairman of the Board, Chevron Corporation, responsible for worldwide exploration and production and corporate human resources. He was elected Chairman and Chief Executive Officer on January 1, 2000.

O’Reilly is a Director and member of the Executive Committee and Policy Committee of the American Petroleum Institute and a Director of the Peterson Institute for International Economics and the Eisenhower Fellowships Board of Trustees. He is a member of the World Economic Forum’s International Business Council, the National Petroleum Council, The Business Council, The Business Roundtable, the JPMorgan International Council, the King Fahd University of Petroleum & Minerals International Advisory Board, and the American Society of Corporate Executives.