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2002 ChevronTexaco Corporate Responsibility Report Environmental IssuesDecommissioning & Remediation (Continued)Performance: Managing Our Liabilities ResponsiblyLike many other large energy companies operating in the United States,ChevronTexaco is cleaning up a number of sites where it has current orpast operations. We currently are cleaning up more than 3,000 suchsites in the United States. These are primarily current or former servicestations, refineries, oil and gas fields, and chemical facilities, as well aswaste sites covered under the U.S. Environmental Protection Agency’sSuperfund program. We are addressing potential risks associated withreleases to soil and groundwater resulting from historical operationsthat, in some cases, go back nearly 100 years. ChevronTexaco has spentmore than US$3 billion on such cleanups since 1980. Much of this workhas been undertaken voluntarily in cooperation with regulatory agencies.Internationally, ChevronTexaco uses the same risk managementphilosophy in its approach to site cleanups.Particularly in our upstream operations, we also are engaged in multipleefforts to decommission our facilities, including closing oil and gas wellsthat are no longer productive, dismantling surface equipment andpipelines, and removing offshore platforms at the end of their servicelife. Annually, we plug more than a thousand wells and remove severaloffshore platforms.The following are examples of ChevronTexaco’s successful decommissioningor cleaning up of company sites:> In Fullerton, California, ChevronTexaco is turning a former oil productionproperty into a 760-unit housing facility, including singleandmultiple-family residences. The plan includes a neighborhoodcommercial center, open space with native habitat conservation areas,a public use site with parks and schools, private recreational amenities,bikeways, and eight miles of recreational trails.ChevronTexaco’s U.S. Decommissioning and Cleanup Activities and ExpendituresYear1999U.S. Expenditures$298 millionU.S. Service StationCleanups Completed191Platforms Removed(Gulf of Mexico)7> In 2002, the U.S. EPA recognized ChevronTexaco for its innovative handlingof the environmental – as well as community – issues surroundingthe cleanup of its former Cincinnati Refinery. The Cincinnati facilityand its employees also received certification from the Wildlife HabitatCouncil for the development of a successful wildlife managementprogram, including habitat restoration, wetlands creation, and a jointproject with EPA and the University of Cincinnati, that uses plants tohelp accelerate the cleanup.> In the U.S. Gulf of Mexico, ChevronTexaco’s upstream company hasremoved approximately 230 platforms since 1986. Approximately 40of these platforms were used as artificial reefs to provide enhancedmarine habitats as part of government-sponsored Rigs to Reefs programs.The remainder of the platforms were either recycled at steelmills or reused as platforms elsewhere in the Gulf of Mexico.> In 2003, the U.S. EPA gave national recognition to ChevronTexaco asone of only a handful of companies committed to key cleanup objectivesat former refineries and chemical facilities under the ResourceConservation and Recovery Act by 2005. We are well on our way tomeeting this commitment.> In the Partitioned Neutral Zone between Saudi Arabia and Kuwait,Saudi Arabian Texaco, Inc., is undertaking an extensive cleanup ofoily pits caused by historic operating practices. This multiyear projectwill address 65 separate pits comprising more than 3 million squaremeters of impacted land area.> In Indonesia, prior to turning the lease for a major production blockover to a new operator, ChevronTexaco undertook an extensive reviewand cleanup effort to help ensure the facilities were transferred in a safeand environmentally sound condition. All of these activities were documentedto communicate the condition of the production facilities to thenew operator and to the Indonesian government. The operating blockalso received ISO 14001 certification as further demonstration of theenvironmental processes and practices in place prior to ChevronTexaco’srelinquishing control.2000$280 million293132001$284 million26402002$327 million2224© 2003 ChevronTexaco Corporation. All Rights Reserved.49
2002 ChevronTexaco Corporate Responsibility Report Environmental IssuesCase Study >Legacy in EcuadorFrom 1964 to 1992, Texaco Petroleum Company (Texpet) was a minoritypartner in an oil exploration and production consortium in an environmentallysensitive rain forest region in Ecuador. For most of that period,Texpet was the operator of the field and associated pipeline, whilePetroEcuador, the state oil company, was the majority partner.Although 95 percent of the total earnings that the consortium producedwent to PetroEcuador and contributed to Ecuador’s economy, questionshave been raised about the possible environmental and health consequencesfor the region and the indigenous people who live there.Consistent with company practice, at the time of Texpet’s departure fromthe consortium, it undertook environmental audits to determine whetherthere were any concerns that needed to be addressed. The company subsequentlyentered into an agreement with PetroEcuador, the Ecuadoriannational government, and representatives of indigenous groups and localmunicipalities to manage and fund a US$40 million remediation program.This included closure and remediation of well sites, soils remediation, andinstallation of produced water treatment and reinjection systems.In addition, the company created a US$1 million fund for socioeconomicprojects by nongovernmental organizations and a second US$1 millionfund for the construction of four schools and adjacent medical clinics andvehicles for transportation.The company received certification and approval from governmentinspectors on a site-by-site basis made through several phases of theproject. In 1998, the government of Ecuador and the local municipalitiesprovided a final certification for the program, releasing the company fromfurther claims or obligations.Notwithstanding these efforts, in 1993 lawyers representing a group ofindigenous Ecuadorian Indians brought suit against Texaco Inc. in theUnited States, charging that the company was responsible for allegedhealth problems and environmental damage caused by the oil-producingactivities. On four separate occasions, U.S. courts dismissed the lawsuitbecause they determined that the United States was not the proper jurisdiction.Ultimately, the plaintiffs’ lawyers accepted these rulings and inMay 2003 filed a suit against ChevronTexaco Corporation in anEcuadorian court. ChevronTexaco Corporation and Texaco Inc. maintainthere has yet to be presented any scientific evidence to substantiate theallegations, and there is no basis for this lawsuit.This case has received widespread publicity over the years. It illustratesthe complex issues associated with oil-producing activities, including theresponsibilities of minority and majority partners, the accountability ofstate oil companies and governments, the differing expectations of variousstakeholders, and the ability of court systems to adjudicate complexaffairs where the issue of jurisdiction is not always clear.BiodiversityBackground: Preserving aCritical Natural ResourceBiodiversity refers to the entirevariety of life on earth. It encompassesgenes, species and ecosystems,and the processes thatsupport them. Biodiversity supportshuman life on the planetand, in addition to its intrinsicvalue, provides essential servicesand products we all depend on,including food, clothing, shelter,fuel and medicines. In recentA Bee Orchid grows near our operationsin Wales. The petals of theyears, there has been growingrecognition that preservation offlower resemble bees trying to getbiodiversity is not only an environmentalissue, but also onethe pollen, thus attracting real bees.with important social and economicimplications. The public has become increasingly concernedabout the loss of biodiversity in key regions of the world and the roleindustry has played in that loss.Energy companies such as ChevronTexaco can affect biodiversity in avariety of ways, ranging from direct or primary impacts such as landclearance, to indirect or secondary impacts, like road building, whichcan invite population migration into remote, environmentally sensitiveareas, as well as introduce nonnative invasive species through movementof equipment and materials.Approach: Integrating Biodiversity Considerations into OperationsChevronTexaco is participating in the Energy & Biodiversity Initiative(EBI), a collaboration started in 2001 among industry and internationalenvironmental conservation organizations working to integratebiodiversity conservation into oil and gas exploration and development.EBI participants include ChevronTexaco, BP, Shell and Statoil,together with Conservation International, Fauna and Flora Interna-© 2003 ChevronTexaco Corporation. All Rights Reserved.50
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