Chevron plans a major expansion of its ExtraMile gas stations in the Bay Area and along the West Coast, the San Ramon-based energy titan said Wednesday.
"We are trying to grow a critical mass of these ExtraMile stations so they become a well-known retail offering," said Dale Walsh, president of Americas Products for Chevron.
At present, Chevron has 80 ExtraMile sites in the Bay Area and 502 overall in the country. The company, however, plans a much larger number in the coming few years -- an expansion that could double the current number of them.
"We will end up in the 800- to 1,000-store range over the next three to four years," Walsh said. "It depends on the economic climate and other things."
In 2011, Chevron intends to add 100 ExtraMile stores to existing gasoline station sites.
"At least three-quarters of them will be in California," Walsh said. The next ExtraMile stations that Chevron will launch in the Bay Area will be in Alameda, Brentwood, Castro Valley and Pleasanton.
Chevron aims to cluster the ExtraMile expansion in territories near its oil refineries. Much of the growth will occur in the Bay Area, where Chevron has a big refinery in Richmond, and Southern California, location of Chevron's El Segundo refinery.
"We have a strong retail presence in the Bay Area, as well as manufacturing operations in both the Bay Area and Southern California," said Sean Comey, a Chevron spokesman.
Chevron officials think the addition of ExtraMile stores will help existing gas stations survive in an already competitive arena that's burdened by skyrocketing fuel prices.
"A retail site, selling fuel alone, will have a hard time competing," Walsh said. "An additional profit center like a convenience store is an absolute necessity for the fuel business."
The company and the independent owners who operate under the Chevron or ExtraMile brands will be able to attract a wider mix of customers by offering fuel adjacent to a minimarket.
"You have some customers who come in for gasoline only, some for convenience store items only, and some will buy both," Walsh said.
The roughly 500 ExtraMile stores break down to about 270 owned and operated by Chevron and 230 franchise locations operated and owned by independent entrepreneurs, company officials said.
Chevron expects that its expansion will significantly shift the mix of the ExtraMile stations.
"We will soon have more franchise sites than company-owned sites," Comey said.
By expanding its retail network, Chevron has embraced a strategy that runs counter to the approach of its major oil company rivals.
"The general trend has been for major oil companies to do the exact opposite," said Robbert Van Batenburg, head of research with Louis Capital Markets. "They are selling the retail business."
Chevron's retail expansion comes on the heels of its wide-ranging job cuts in the downstream -- or refinery and retail operations. Chevron sought to eliminate 2,000 downstream jobs in its restructuring of 2010.
"Their downstream business is still shrinking, deliberately," said Pavel Molchanov, an analyst with Raymond James & Associates. "But it's more than just a matter of sell, sell, sell. It's a matter of selling some assets and tactically adding others in certain locations."
The Golden State will be the key to Chevron's ExtraMile strategy, the company said.
"California is a key growth market, it is a core market," Walsh said. "We have been doing business here for 130 years."
Contact George Avalos at 925-977-8477.