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Unocal Corporation

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Union Oil Company of California and Unocal Corporation
Company typemerged into Chevron Corporation,
IndustryOil and Gas
FoundedOctober 17, 1890; 134 years ago (1890-10-17)
FounderThomas Bard
Lyman Stewart
Wallace Hardison
FateAugust 10, 2005 (2005-08-10) (Now a subsidiary of Chevron Corporation)
HeadquartersEl Segundo, California, U.S.
Key people
Charles R. Williamson
(Chairman) & (CEO)
John F. Imle Jr. (Vice Chairman)
Timothy H. Ling
(President) & (COO)
ServicesPetroleum explorer and marketer
RevenueIncrease $ 8.204 billion (2004)
Increase $ 1.145 billion (2004)
Increase $ 1.208 billion (2004)
Total assetsIncrease $ 13.101 billion (2004)
Total equityIncrease $ 5.217 billion (2004)
Number of employees
6,400 (2005)
Websitewww.unocal.com

Union Oil Company of California and Unocal Corporation, dba Unocal /ˈjuːnoʊkæl/ was a company that was a major petroleum explorer and marketer in the late 19th century, through the 20th century, and into the early 21st century. It was headquartered in El Segundo, California, United States.[1][2]

Unocal was involved in domestic and global energy projects. Unocal was one of the key players in the CentGas consortium, which attempted to build the Trans-Afghanistan Pipeline to run from the Caspian area, through Afghanistan, to the Indian Ocean, at a time after the recent Taliban siege of Kabul in 1996.

On August 10, 2005, Unocal merged its entire upstream petroleum business with Chevron Corporation and became a wholly owned subsidiary. Unocal has now ceased operations as an independent company, but continues to conduct many operations as Union Oil Company of California, a Chevron company.

History

Original headquarters in Santa Paula, California.
Cracking plant in Orange County, California, 1961.
Research facility in Brea, California, circa 1965.
See also: Union 76

The Union Oil Company of California was founded on October 17, 1890, in Santa Paula, California, by Lyman Stewart, Thomas Bard, and Wallace Hardison. It was a merger of three Southern Californian oil companies: the Sespe Oil Company and the Torrey Canyon Oil Company (both owned by Bard) and the Hardison and Stewart Oil Company.[3] All three were notable as being completely unaffiliated with Standard Oil. Union Oil moved its headquarters to Los Angeles in 1901. The original headquarters in Santa Paula is a California Historical Landmark and museum.

About 1910, Union Oil made a strategic alliance with the Independent Producers Agency, a group of small oil producers, to build pipelines from the Kern County oil fields to Union Oil facilities on the Pacific coast. This gave the independent producers an alternative to what they perceived as the low prices paid by Standard Oil and the high freight rates charged by the railroads to move crude oil.[4] It gave Union access to a large volume of crude oil. The situation was later fictionalized in the 2007 film There Will Be Blood.

In 1919, the Union Oil Company of Delaware was incorporated as a holding company for the Union Oil Company of California.[5] In 1920, Union Oil purchased the Central Petroleum Company from the Texas Company.[5] In 1922, the Union Oil Associates, Inc. was incorporated in California as a holding company to prevent control of the Union Oil Company of California passing to foreign interests after the merger of the Union Oil Company of Delaware with Royal Dutch Company.[6]

In 1961 Union entered into the Indonesian oil market. Henry L. Brandon, Union's Vice President of International Development wrote a "contract of work" arrangement, which was a first for Indonesia. In a speech on Indonesian Independence Day in August, 1961, then President Sukarno talked at some length about "production sharing", which included language written into the contract by Union executives.

The company expanded to national status in 1965, when Union Oil merged with the Pure Oil Company, headquartered in what was then Palatine, Illinois, and now Schaumburg, Illinois. Over the next two decades, Union became the major oil producer in southern Alaska and a major natural gas producer in the Gulf of Mexico. The company was reorganized in 1983, and Union Oil Company of California became an operating subsidiary of a new Delaware-based holding company, Unocal Corporation. In 1985, Mesa Petroleum, controlled by billionaire T. Boone Pickens, attempted a takeover of Unocal Corp.[7] that resulted in the Delaware Supreme Court landmark decision Unocal v. Mesa Petroleum, which upheld Unocal's takeover defense. Virtually all operations are conducted by Union Oil Company of California (Union Oil).

In 1977, Unocal acquired The Molybdenum Corporation of America (now Molycorp).[8] Among the assets acquired was Mountain Pass rare earth mine, then the world's largest producer of rare earth elements.

In 1989, Unocal placed its midwest refining and marketing assets, including Union's 150,000-barrel-per-day (24,000 m3/d) refinery in Lemont, Illinois, into a 50/50 joint venture with Petróleos de Venezuela, S.A. (P.D.V.S.A.). The joint venture, known as the Uno-Ven Company, was headquartered in Arlington Heights, Illinois, and primarily comprising employees from Union Oil's then Schaumburg, Illinois, division headquarters and Lemont, Illinois, refinery. The joint venture was dissolved in 1997, with P.D.V.S.A. receiving full ownership. During the life of the joint venture, the familiar Union 76 brand name continued in full force. At the termination of the joint venture, most stations were converted to Citgo, which is controlled by P.D.V.S.A.

In 1997, Unocal sold its western United States refining and marketing operations to Tosco Corporation, including the rights to the Union 76 brand for refining and marketing (except in states where Uno-Ven operated). Tosco was later acquired by Phillips Petroleum, which later merged with Conoco to form ConocoPhillips.

Acquisition

In April 2005, the United States oil company Chevron made an offer to acquire Unocal for US$16.6 billion, which was followed, after the companies had agreed to the transaction, by a competing unsolicited bid from the Chinese firm CNOOC Limited of US$18.5 billion on June 22.[9] The final Chevron offer of $17.9 billion was approved by Unocal shareholders August 10.[10] The final CNOOC bid was nearly 5% greater than that of Chevron, but faced significant political opposition from the United States Congress and was finally withdrawn by CNOOC August 2 citing the associated political uncertainty.[11][12] Following a vote in the United States House of Representatives, the CNOOC bid was referred to President George W. Bush, on the grounds that its implications for national security needed to be reviewed.[13]

Operations

Central Asia

Unocal was one of the key players in the CentGas consortium, an attempt to build the Trans-Afghanistan Pipeline to run from the Caspian area, through Afghanistan and probably Pakistan, to the Indian Ocean. One of the consultants to Unocal at that time was Zalmay Khalilzad, former US ambassador to Afghanistan, Iraq, and the United Nations.

In the 1980s, CIA chief Bill Casey had revived the agency's practice of gaining intelligence from traveling businessmen. Marty Miller, one of Unocal's top executives, conducted negotiations in several Central Asian countries from 1995, and voluntarily provided information gained on these trips to the CIA's Houston station.[14]

In 1996, Unocal opened an office in Kandahar, Afghanistan, while the Taliban were in the process of taking control of the country.

Unocal rented a house in central Kandahar directly across the street from one of [Osama] bin Laden's new compounds. They did not choose this location deliberately. Most of the decent houses in town straddled the Herat Bazaar Road. Also near was the Pakistani consulate, which housed officers from [the Pakistani military Inter-Services Intelligence, the] ISI.

— Steve Coll, Ghost Wars[15]

In 1997,

Robert Oakley [ex-US ambassador to Pakistan, now on Unocal's ad hoc advisory board] advised Miller to reach the Taliban by working through Pakistan's government [then led by Benazir Bhutto]. He also suggested that Unocal hire Thomas Gouttiere, an Afghan specialist at the University of Nebraska at Omaha, to develop a job training program in Kandahar that would teach Pashtuns the technical skills needed to build a pipeline. ... Unocal agreed to pay $900,000 via the University of Nebraska to set up a Unocal training facility on a fifty-six acre site in Kandahar, not far from bin Laden's compounds. ... Gouttiere traveled in and out of Afghanistan and met with Taliban leaders. ... In December 1997 Gouttiere worked with Miller to arrange for another Taliban delegation to visit the United States. ...

— Steve Coll, Ghost Wars[16]

Unocal seems to have had a deeper role. Intelligence "whistleblower" Julie Sirrs claimed that anti-Taliban leader Ahmad Shah Massoud told her he had "proof that Unocal had provided money that helped the Taliban take Kabul [in 1996]".[17] And French journalist Richard Labeviere said, referring to the later 1990s, "The CIA and Unocal's security forces ... provided military weapons and instructors to several Taleban militia[s] ..."[18] US State Department officials openly promoted the pipeline, and former Secretary of State Henry Kissinger served as a Unocal consultant.[17]

The Taliban and Unocal were in negotiations in Texas to discuss arrangements for the gas pipeline from Turkmenistan to Pakistan in 1997[19] although it faced competition with from the Argentine Bridas Corporation.[20]

While no deal was ultimately agreed with either company the Taliban were leaning toward making a deal with Unocal as of August 1998.[21] The company suspended work on the project following the U.S. cruise missile strikes on Afghanistan in response to the 1998 U.S. Embassy bombings[22] and completely pulled out in December 1998 citing low oil prices and a need to cut costs in addition to regional instability.[23]

Unocal was also the third largest member of the recently completed and opened Baku-Tbilisi-Ceyhan pipeline from the Caspian Sea to the Mediterranean Sea.

Indonesia

Unocal entered the Indonesian Market in 1961. Under the leadership of Henry L. Brandon (VP of International Development), UNOCAL was the first US Oil Company to sign a production sharing agreement (contract of work) with president Suharto.[24]

Sponsorships

Union Oil was the sponsor of the Major Burnham Bowling Trophy, an annual California bowling event supported by the Boy Scouts of America and named after Major Frederick Russell Burnham.[25][26]

Unocal 76 was the official fuel and motor oil of NASCAR from the sport's inaugural season in 1948 until the end of the 2003 season when Sunoco became the official fuel and Mobil 1 became the official motor oil. The 76 logo is often seen in Major League Baseball and National Football League stadiums on the west coast and a 76 branded gas station is located in the Dodger Stadium parking lot.

Controversy

Domestic US criticism

In 1969, a blowout on the ocean bottom near Union Oil's Platform "A" on the Dos Cuadras field leaked between 80,000 and 100,000 barrels (16,000 m3) of oil into the water of the Santa Barbara Channel, near Santa Barbara, California.[27] The event led to widespread criticism of both Union Oil and the offshore oil drilling industry, and was one of the events leading to the passage of the 1970 National Environmental Policy Act (NEPA).[28]

Oil pipes under Avila Beach, California, leaked from the 1950s until 1996. A real estate firm determined the soil to be contaminated in 1989 and Unocal agreed to clean up the soil they contaminated. To clean up the massive spill, the crew had to excavate enough soil to fill a football field up to 60 feet (18 m) high.[29]

Between the mid 1950s and 1994, Unocal leaked 18 million US gallons (68,000 m3) of diluent—a petroleum derivative pumped into heavy oil fields to make the oil flow freely—under the Guadalupe-Nipomo Dunes and nearby ocean water, the largest oil spill in California's history. The pipelines had leaks in at least 90 places. Locals had noticed a strange sheen on the ocean surface, and dead seals and sea lions began washing up onto the beach. Although Unocal denied having any problems, records discovered by state fish and game officers disclosed that Unocal had long been aware of the leaks. Unocal has been actively cleaning up the site since the mid-90s, receiving praise from the Sierra Club for their habitat restoration work.[30]

Doe v. Unocal

Main article: Doe v. Unocal

In the Doe v. Unocal case, Burmese villagers sued Unocal for complicity in forced labor, rape, torture, and murder. EarthRights International, the Center for Constitutional Rights, Paul Hoffman, Hadsell & Stormer, and Judith Brown Chomsky served as co-counsel to the plaintiffs. In 2005, a settlement agreement was reached to compensate the plaintiffs.[31]

See also

References

Footnotes

  1. ^ ""Unocal World On-Line."". Archived from the original on December 27, 1996. Retrieved 2009-07-07.{{cite web}}: CS1 maint: bot: original URL status unknown (link) Unocal Corporation. December 27, 1996. Retrieved on July 7, 2009.
  2. ^ "Home page". Archived from the original on January 29, 2005. Retrieved 2009-07-07.{{cite web}}: CS1 maint: bot: original URL status unknown (link). Unocal Corporation. January 29, 2005. Retrieved on July 7, 2009.
  3. ^ Marius Vassiliou, Historical Dictionary of the Petroleum Industry (Scarecrow Press, 2009). ISBN 0-8108-5993-9.
  4. ^ Ralph Arnold and V. R. Garfias, "Geology and technology of the California oil fields," Bulletin of the American Institute of Mining Engineers, n.87, March 1914, p.390-392.
  5. ^ a b Poor's and Moodys manual consolidated, Part 2, Moody Manual Co., 1921, pp. 1578-82 (retrieved 2 August 2010 from Google Books)
  6. ^ Moody's manual of railroads and corporation securities, Part 2, Moody Manual Co., 1922, p. 1175 (retrieved 2 August 2010 from Google Books)
  7. ^ https://articles.latimes.com/1985-04-15/business/fi-14102_1_mesa-partners LA Times, Unocal Board Rejects Mesa Takeover Bid, April 15, 1985
  8. ^ David Danelski, Expansion in works for S.B. County mine with troubled environmental past Archived 2011-07-13 at the Wayback Machine, The Biz Press, February 9, 2009.
  9. ^ "Unocal bidding war escalates". Quad City Times. Vol. 149, no. 349. Davenport, Iowa: Lee Enterprises. Associated Press. 23 June 2005. p. A11 – via Newspapers.com.{{cite news}}: CS1 maint: url-status (link)
  10. ^ "Unocal shareholders okay takeover by Chevron". Oil and Gas Journal. Tulsa, OK, United States. August 22, 2005. Retrieved April 10, 2018.
  11. ^ "Why China's Unocal Bid Ran out of Gas". Bloomberg.com. August 3, 2005. Retrieved April 11, 2018.
  12. ^ Blustein, Paul (July 1, 2005). "Many Oil Experts Unconcerned Over China Unocal Bid". The Washington Post.
  13. ^ China Shakes the World - James Kynge, 2006, Phoenix Books, ISBN 978-0-7538-2155-8
  14. ^ Steve Coll, Ghost Wars, Penguin, 2005 edn, p.314.
  15. ^ Steve Coll, Ghost Wars, Penguin, 2005 edn, p.342.
  16. ^ Steve Coll, Ghost Wars, Penguin, 2005 edn, p.364.
  17. ^ a b Gail Sheehy, "Ex-Spook Sirrs: Early Osama Call Got Her Ejected", The New York Observer, March 14, 2004.
  18. ^ Richard Labeviere, Dollars For Terror, Algora Press, 2000, p.272.
  19. ^ BBC,"Taleban in Texas for talks on gas pipeline"
  20. ^ BBC, "Taleban says it's ready to sign Turkmen pipeline deal"
  21. ^ Victorious Taliban reopen bid for recognition, pipeline AFP 11 August 1998
  22. ^ "Unocal puts off gas pipeline project through Afghanistan". afghanistannewscenter.com.
  23. ^ Unocal Withdraws From Pipeline Project New York Times 5 December 1998
  24. ^ Taylor, F. (1976). Unearthing Buried Riches. In Sign of the 76: The fabulous life and times of the Union Oil Company of California. (1st ed., Vol. 1, p. 362). Los Angeles: Union Oil Company of California.
  25. ^ Davis, Clark (2001). Company Men: White-Collar Life and Corporate Cultures in Los Angeles, 1892-1941. Baltimore, MD: Johns Hopkins University Press. pp. 111, 219. ISBN 0-8018-6275-2.
  26. ^ Ehrenclou, V. L. (May–June 1925). "Major Burnham - The Scout". Union Oil Bulletin: 1–11, 19. OCLC 12064434.
  27. ^ Answers.com Unocal Corporation company history. Retrieved on June 14, 2008
  28. ^ "County of Santa Barbara". countyofsb.org. Archived from the original on 2011-05-27.
  29. ^ Le, Phuong (August 10, 1999). "Beach town forced to scrape away oil leak -- and a chunk of its past". Seattle PI. Retrieved 09/12/09. {{cite news}}: Check date values in: |accessdate= (help)
  30. ^ Leavenworth, Stuart (April 27, 2003). "Dunes' spills still focus of cleanup". Sacramento Bee. Archived from the original on May 13, 2007. Retrieved May 4, 2007.
  31. ^ EarthRights Doe v. Unocal. Retrieved on June 16, 2009

Further reading

  • Welty, Earl M, and Frank J Taylor. The 76 bonanza: The fabulous life and times of the Union Oil Company of California (1966) 351pp
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