CHEVRON’S INFRASTRUCTURE EVOLUTION-Information Systems Infrastructure

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CASE STUDY 6

CHEVRON’S INFRASTRUCTURE

EVOLUTION

Chevron Corporation (www.chevron.com) is one of the world’s leading

energy companies. Chevron’s headquarters are in San Ramon, California.

The company has more than 62,000 employees and produces more than

700,000 barrels of oil per day. It has 19,500 retail sites in 84 countries. In

2012, Chevron was number three on the Fortune 500 list and had more than

$244 billion in revenue in 2011 [STAT12].

IT infrastructure is very important to Chevron and to better support all

facets of its global operations, the company is always focused on improving

its infrastructure [GALL12]. Chevron faces new challenges from increased

global demand for its traditional hydrocarbon products and the need to

develop IT support for new value chains for liquid natural gas (LNG) and the

extraction of gas and oil from shale. Huge investments are being made

around the world, particularly in Australia and Angola on massive projects of

unprecedented scale. Modeling and analytics are more important than ever

to help Chevron exploit deep water drilling and hydrocarbon extraction in

areas with challenging geographies. For example, advanced seismic imaging

tools are used by Chevron to reveal possible oil or natural gas reservoirs

beneath the earth’s surface. Chevron’s proprietary seismic imaging

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technology contributed to it achieving a 69% discovery rate in

2011[CHEV12].

Supervisory Control and Data Acquisition (SCADA)

Systems

Chevron refineries are continually collecting data from sensors spread

throughout the facilities to maintain safe operations and to alert operators to

potential safety issues before they ever become safety issues. Data from the

sensors is also used to optimize the way the refineries work and to identify

opportunities of greater efficiency. IT controls 60,000 valves at Chevron’s

Pascagoula, Mississippi refinery; the efficiency and safety of its end-to-end

operations are dependent on advanced sensors, supervisory control and data

acquisition (SCADA) systems, and other digital industrial control systems

[GALL12].

SCADA systems are typically centralized systems that monitor and

control entire sites and/or complexes of systems that are spread out over

large areas such as an entire manufacturing, fabrication, power generation,

or refining facility. The key components of SCADA systems include:

 Programmable logic units (PLCs) that and remote terminal units (RTUs)

connected to sensors that convert sensor signals to digital data and

send it to the supervisory system

 A supervisory computer system that acquires data about the process

and sends control commands to the process

 A human-machine interface (HMI) that presents process to the human

operators that monitor and control the process.

 Process meters and process analysis instruments

 Communication infrastructure connecting the supervisory system and

RTUs and PLCs.

These are illustrated in Figure C6.1.

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Data acquisition occurs at the PLC or RTU level. This includes meter

readings and equipment status reports that are sent to the supervisory

system. The collected data is compiled and formatted by the HMI to enable

the operator to make determine whether adjustments to normal PLC or RTU

settings are needed. Current data may also be compared to historical data in

a SCADA database to assess trends or perform analytical auditing.

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In addition to Chevron refineries, SCADA are extremely important in

national infrastructures such as water supplies, pipelines, and electric grids.

Because attacks or damage to SCADA systems can affect large numbers of

people, ensuring adequate security is important.

Business Infrastructure Transformation

Because of the complexity of its operational processes and the IT that is

needed to support them, Chevron has traditionally been more infrastructure

than business focused. SCADA systems and digital industrial control systems

are critical IT infrastructure at Chevron’s refineries and will always play an

important role in monitoring and managing facility-based processes. These

also are among the first IT systems needed to support Chevron’s new value

chains for LNG and shale oil extraction. However, like any large corporation,

Chevron relies on a wide variety of business applications to run its

businesses.

As it is for most global businesses, SAP ERP is a key transaction

processing system at Chevron. Chevron has been using SAP for more than

two decades and it has played an important role in the development of SAP’s

vertical solutions for the hydrocarbon industry. There are more than 50

instances of SAP used by Chevron [SCRI11]. Most of these run on Oracle

databases. Some other key enterprise applications at Chevron include Ariba

Buyer, EMC Documentum, Informatica, MicroStrategy, multiple Oracle

applications [SCRI11].

Going forward, IT executives at Chevron would like to flip the company’s

traditional IT priorities so that the majority of the IT staff’s time and

attention is focused on improving business capabilities [GALL12]. To do this,

Chevron’s IT leaders have increasingly turned their attention to Web

services, software as a service (SaaS), and cloud computing to help it run its

business. Chevron considers mobility to be a game changer in how it

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delivers information and provides solutions and it is convinced that it can do

both without sacrificing security or reliability.

IT infrastructure at Chevron pervades every facet of its operations.

However, Chevron’s executives have not lost sight of the fact that IT is not

the company’s core competency. By moving business solutions to the cloud,

Chevron executives hope to help the company maintain its focus on its core

competencies.

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Chevron has used business-oriented Web services for several years.

Ariba Buyer, Salesforce.com, and Ketera’s price negotiation system are just

a few of the SaaS solutions that Chevron has woven into its IT architecture.

Chevron is interested in developing an integrated information network

that includes all of its major supply chain partners, both upstream and

downstream. Identify management has emerged as a priority at Chevron to

ensure secure data transfer among its business partners. A generic example

of an identify management system is illustrated in Figure C6.2. When users

at Chevron partners need to access Chevron’s intranet and/or SaaS data or

solutions, they are first cleared by an identity broker. The identity broker

authenticates the user and transparently provides a single sign on (SSO)

token that enables the partner to access Chevron’s intranet (2) or the

company’s SaaS solution providers (3).

Chevron hopes to better align its operations with those of its business

partners via its migration of business applications to the cloud. It hopes that

the business infrastructure transformation that is currently underway will

also lead to better IT and business alignment. As a global company, the

cloud may be an ideal platform for running the business.

In the years ahead, Chevron’s IT leaders expect mobility, analytics and

visualization, and social media to become critical aspects of its business

infrastructure. At the facilities level, advanced sensors and deeper

embedding of RTUs and PLCs within operations are foreseen [GALL12].

Technical appreciation of convergence network infrastructure will continue to

be important, but business literacy/savvy will be most important to the long-

term success of Chevron’s IT leaders.

Discussion Points

1. Do some Internet research on Chevron’s use of seismic imaging

technology. Briefly explain how it works and how it has helped

Chevron discover new oil and gas reservoirs.

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2. Do some Internet research on security vulnerabilities associated with SCADA and digital industrial control systems. Summarize the major

security concerns associated with these systems and steps than can be taken to enhance their security.

3. Discuss the pros and cons of moving enterprise-wide applications that

have traditionally been supported on premises to the cloud.

4. Do some Internet research on identify management and single sign on systems. Briefly explain how these work and why they are important in

business intranets and extranets.

5. Why is it increasing most important for a CIO or IT executive who oversees geographically distributed enterprise networks to be business

literate?

Sources

[CHEV12] Chevron.com “Seismic Imaging.” Retrieved online: at http://www.chevron.com/deliveringenegy/oil/seismicimaging.

[GALL12] Gallant, J. ”Chevron’s CIO Talks Transformation and Why IT

Leaders Should Smile.” April 12, 2012. Retrieved online at: http://www.cio.com/article/print/704095.

[SCRI11] Scribd.com. “Chevron Corporation CRUSH Report.” August 17,

2011. Retrieved online at http://www.scribd.com/doc/62481977/Chevron- CRUSH-Report-09A1.

[STAT12] Statistic Brain. “Chevron Company Statistics.” February 12, 2102.

Retrieved online at: http://www.statisticbrain.com/chevron-company- statistics/.