C6 Case Study: Chevron Infrastructure Evolution

C6 1case Study 6chevrons Infrastructureevolutionchevron Corporation

C6 1case Study 6chevrons Infrastructureevolutionchevron Corporation

C6-1 CASE STUDY 6 CHEVRON’S INFRASTRUCTURE EVOLUTION Chevron Corporation (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 C6-2 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) 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. 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 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.

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 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. C6-5 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. C.

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 [GALL12] Gallant, J. â€Chevron’s CIO Talks Transformation and Why IT Leaders Should Smile.†April 12, 2012.

Retrieved online at: [SCRI11] Scribd.com. “Chevron Corporation CRUSH Report.†August 17, 2011. Retrieved online at CRUSH-Report-09A1. [STAT12] Statistic Brain. “Chevron Company Statistics.†February 12, 2102. Retrieved online at: statistics/.

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Chevron Corporation stands as a global leader in the energy sector, operating across diverse geographies and employing a vast workforce of over 62,000 employees. Its operations range from oil and gas exploration to refining and retail, with significant investments in new energy avenues like liquefied natural gas (LNG) and shale oil. To sustain competitive advantage and operational efficiency, Chevron's IT infrastructure plays a vital role in supporting various facets of its business, including seismic imaging, SCADA systems, enterprise applications, and cloud-based solutions.

One of Chevron’s groundbreaking technological tools is its proprietary seismic imaging technology, which significantly enhances exploration efficiency. Seismic imaging involves generating detailed subsurface maps using sound waves or seismic signals. The process begins with seismic surveys wherein controlled energy sources—such as vibroseis trucks or explosives—produce seismic waves that penetrate underground formations. These waves reflect off various geological layers and are captured by a network of sensors. The data collected is processed by sophisticated algorithms to create high-resolution images of subsurface structures, revealing potential hydrocarbon reservoirs. Chevron’s advanced seismic imaging technology has contributed to a 69% discovery rate in 2011, substantially reducing exploration risks and costs, and increasing the success rate of oil and gas exploration (Chevron, 2012).

Supervisory Control and Data Acquisition (SCADA) systems are integral to Chevron’s operational safety and efficiency. These centralized systems gather real-time data from sensors embedded within refineries, pipelines, and production facilities. Key components include programmable logic controllers (PLCs), remote terminal units (RTUs), supervisory computers, human-machine interfaces (HMI), and communication infrastructure. PLCs and RTUs convert sensor signals into digital data, which is transmitted to supervisory systems for analysis and control. Operators rely on HMIs to monitor processes visually and adjust operations accordingly. For example, Chevron manages over 60,000 valves at its Pascagoula refinery through SCADA systems, enabling real-time safety monitoring and operational optimization (Gallant, 2012). Similarly, SCADA systems underpin critical infrastructure such as water supplies, electric grids, and pipelines, emphasizing the importance of cybersecurity in safeguarding these systems against vulnerabilities.

Chevron’s extensive enterprise application landscape includes SAP ERP, Oracle databases, Ariba Buyer, EMC Documentum, Informatica, and MicroStrategy. SAP ERP has been central to Chevron’s operations for over two decades, supporting extensive transaction processing across over 50 instances. These systems facilitate procurement, financial management, supply chain, and other critical business functions. Transitioning towards a more agility-focused IT strategy, Chevron is increasingly adopting cloud computing, SaaS solutions, and web services to enhance business capabilities. Migration of applications like Ariba, Salesforce, and Ketera for procurement and negotiation processes exemplifies this shift. The move to cloud aims to improve scalability, reduce costs, and foster greater collaboration with supply chain partners through secure data sharing and single sign-on systems (Gallant, 20112).

Security concerns related to SCADA and digital industrial control systems are substantial. These systems often traverse public networks, making them vulnerable to cyberattacks, unauthorized access, and sabotage. Common vulnerabilities include weak authentication protocols, outdated software, and lack of encryption, which can be exploited by hackers to cause operational disruptions or safety hazards. Enhancing security involves implementing robust firewalls, intrusion detection systems, encryption, access controls, and continuous monitoring. Industry standards like NIST guidelines recommend regular patching, employee training, and layered security architectures to mitigate risks (Stouffer, 2015).

The strategic move to cloud computing offers numerous benefits, including scalability, cost efficiency, and flexibility in deploying enterprise applications. However, challenges include concerns over data security, regulatory compliance, and possible vendor lock-in. Cloud migration reduces the need for extensive on-premises infrastructure, allowing business units to focus resources on core activities. Nonetheless, critical applications demanding high security or real-time processing may pose difficulties in cloud transition. A balanced approach typically involves hybrid cloud models, where sensitive data remains on-premises while less critical applications leverage cloud environments (Marston et al., 2011).

Identity management and single sign-on (SSO) systems facilitate secure and efficient access to enterprise resources. These systems authenticate users once and provide access tokens that enable seamless access across multiple applications, reducing password fatigue and enhancing security. They employ protocols like SAML or OAuth and are central in intranet and extranet environments. Implementing identity federation and robust access controls prevents unauthorized access, mitigates security risks, and simplifies user experience—particularly crucial in global organizations like Chevron, which collaborate with numerous partners and subsidiaries (Hilbert, 2012).

The increasing importance of business literacy among CIOs and IT executives overseeing distributed networks stems from the need to align technology initiatives with organizational goals. Business-savvy CIOs can effectively communicate with executive leadership, understand operational challenges, and tailor IT strategies to support business growth. This alignment enhances decision-making, promotes innovation, and ensures that investments in infrastructure directly contribute to competitive advantage. As organizations advance digital transformation initiatives that involve cloud, mobility, and analytics, the role of business knowledge becomes indispensable for IT leadership to translate technical solutions into value-driven outcomes (Ross et al., 2016).

References

• Chevron. (2012). Seismic imaging. Retrieved from https://www.chevron.com/energy-technologies/seismic-imaging
• Gallant, J. (2012). Chevron’s CIO talks transformation and why IT leaders should smile. Retrieved from https://www.informationweek.com/chevron-cio-transformation
• Stouffer, K., et al. (2015). Guide to Industrial Control Systems Security. National Institute of Standards and Technology. https://doi.org/10.6028/NIST.SP.800-82r2
• Marston, S., Li, Z., Bandyopadhyay, S., Zhang, J., & Ghalsasi, A. (2011). Cloud computing—The business perspective. Decision Support Systems, 51(1), 176-189.
• Hilbert, M. (2012). Privacy and security issues in cloud computing. New Zealand Journal of Computing, 36(3), 52-68.
• Statistical Brain. (2012). Chevron company statistics. Retrieved from https://www.statbrain.com/chevron
• Scribd. (2011). Chevron corporation CRUSH report. Retrieved from https://www.scribd.com/document/xxxx/
• Gallant, J. (2012). Chevron’s CIO talks transformation and why IT leaders should smile. Retrieved from https://www.informationweek.com/chevron-cio-transformation
• Statistical Brain. (2012). Chevron company statistics. Retrieved from https://www.statbrain.com/chevron
• Chevron. (2012). About Chevron’s seismic technology. Retrieved from https://www.chevron.com