Chevron earnings fall 33%

Hit by declines in both oil production and prices, Chevron Corp. said Friday that its third-quarter net income fell 33 percent.

The San Ramon energy giant, the nation's second-largest oil company, earned $5.25 billion ($2.69 per share) in the July-through-September quarter. That compared with net income of $7.83 billion ($3.92) in the same quarter a year ago. Revenue fell to $55.66 billion from $61.26 billion.

The sluggish global economy has cut into worldwide demand for energy products, from gasoline and diesel to jet fuel. Concerns about economic growth have caused oil and natural gas prices to fall, hurting the bottom line for oil producers.

In a bit of good news Friday, Chevron said its Richmond refinery, crippled by a fire since August, should restart in the first quarter of next year.

The fire at the Richmond refinery, one of California's largest, damaged the plant's crude oil unit and cut production by 118,000 barrels per day. It tightened fuel supplies within the state, contributing to an abrupt price spike last month that saw California gasoline prices hit record highs. The state's average price for a gallon of regular peaked at $4.67 on Oct. 9, according to the AAA auto club.

Michael Wirth, who leads Chevron's global refining and marketing operations, said Friday that such price spikes could become more common if the state pushes ahead with regulations to fight global warming.

California, which already uses its own pollution-fighting gasoline blends not found in other states, will soon require refineries to lower the greenhouse gas emissions associated with the fuel they produce.

The easiest way to do so is by blending more advanced biofuels into gasoline and diesel, even though Wirth said those biofuels are in short supply.

"California has embarked on a path of even greater isolation from the world fuel markets with its greenhouse gas regulations," Wirth said Friday during a conference call with Wall Street analysts.

The new requirement "is only likely to further increase the price premium California consumers pay and also the likelihood of price spikes like we've seen this year," he said.

Chevron also reported that disruptions to its Gulf of Mexico operations from Hurricane Isaac and planned maintenance at some international facilities curtailed production. Its operations off the shore of Brazil remain idle pending investigations into two oil spills. Some of the loss was made up by increased production on other properties.

Chevron's net production totaled 2.52 million barrels per day worldwide, a decrease of 3 percent from a year ago. In the United States, Chevron's production fell 4 percent to 637,000 barrels per day, partly because it sold Alaskan assets last year.

The company expects production to increase in the fourth quarter from the third quarter, reflecting completed maintenance and the restoration of Gulf operations.

Chevron sold oil and natural gas liquids for $91 per barrel in the United States. during the quarter, compared with $97 per barrel a year ago. Natural gas prices averaged $2.63 per 1,000 cubic feet compared with $4.14 per 1,000 cubic feet a year ago.

Outside the United States, the average price for oil and natural gas liquids was $98 per barrel, down from $103 per barrel a year ago. Natural gas sold for $6.03 per 1,000 cubic feet compared with $5.50 per 1,000 cubic feet.

Argus Research analyst Phil Weiss said Chevron is still in a good position with a slate of projects in development. "As long as they execute on those projects, they're going to benefit the production and leave the company well-positioned for the future," he said.

Chevron shares fell $2.81, or 2.5 percent, to $108.65 in afternoon trading. In the past 52 weeks, the price has ranged from $92.29 to all-time high of $118.53 per share. Exxon shares dropped $1.01, or 1.1 percent, to $90.59. Oil futures were down nearly 2 percent in trading in New York.

Chronicle staff writer David R. Baker and the Associated Press contributed to this report.