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2002 ChevronTexaco Corporate Responsibility Report Environmental IssuesWaterWasteApproach: Conserving a Natural ResourceAvailability of and access to fresh water is one of the world’s most pressingchallenges. ChevronTexaco and other energy companies use relativelylarge volumes of both fresh water and sea water in their operations suchas for oil and gas drilling and productionas well as in processingand manufacturing operations, forcooling and steam generation. Ouruse of fresh water can affect localecosystems and communities, particularlyin places where it is scarce.ChevronTexaco also dischargesSteven Carter and Mike Carter take water from operating facilities andwater samples at Richmond Refinery from oil and gas production. Waterwetlands in California.sometimes resides in undergroundreservoirs with oil and gas. Whenthe oil and gas are extracted, water also may be extracted. This “producedwater” is either reinjected into the subsurface it came from or istreated and discharged. If the water discharged from our operations isnot adequately treated, it can negatively affect the environment.ChevronTexaco requires its business units to evaluate their use of andimpacts on all natural resources and to identify and implement conservationopportunities. At many of our facilities, we track discharges towater and take steps to minimize the environmental and health risksassociated with those discharges.Some of our facilities have implemented process changes designed tominimize the use of fresh water, particularly where supplies are limited.For instance, our California refineries in Richmond, and El Segundo,use “reclaimed water,” which is treated domestic sewage, instead of freshwater, for cooling in the manufacturing process. Other ChevronTexacorefineries around the world are investigating water reuse opportunities.The company also continually looks for ways to minimize the effects ofdischarged water and, in some cases, put it to beneficial use. For example,in California’s Kern River region, where fresh water is limited, thecompany’s upstream operations provide appropriately treated dischargedwater to a local utility for agricultural irrigation.Future Goals: Developing a Comprehensive StrategyChevronTexaco’s upstream operating companies are developing a comprehensivestrategy to manage produced water. The strategy will addressreinjection of produced water, minimizing the environmental and socialimpacts, as well as the potential beneficial uses of discharged water.47Approach:Waste Management PlanningChevronTexaco requires its businessesto continually improveprocesses to minimize pollutionand waste. Our business unitsdevelop waste management plansAt the Minas Field in Indonesia, that track the wastes they produce,follow a waste minimiza-a tractor ploughs soil to increaseair penetration causing microbes tion hierarchy (reduce/recycle/to digest impurities.treat/dispose), comply with allregulations and, when local regulationsdo not exist, apply appropriate waste management practices.ChevronTexaco’s capital project management process also includes specifictools and activities that integrate pollution prevention and wasteminimization concepts into the designs for its projects so that they generatefewer and less hazardous wastes. We do not track waste volumesor types corporatewide.ChevronTexaco has gained expertise in upgrading and building newwaste facilities, particularly in places where waste management is complicatedby lack of infrastructure. We also participate in a number ofindustry forums, including the International Association of Oil andGas Producers and the Petroleum Environmental Research Forum, todevelop and share improved waste management practices within theindustry. Examples of recent or planned investments in waste managementfacilities include:> Sumatra, Indonesia: ChevronTexaco recently began operating severalmajor facilities to improve management of oily wastes, including aslurry injection facility and a bioremediation unit to treat oily soils andwastes. Since 2000, the company has spent more than US$50 millionon the design, construction and operation of these facilities, and weplan to continue to upgrade waste facilities there in 2003 and 2004.> Kazakhstan: the company’s joint venture Tengizchevroil has initiatedconstruction on a US$16 million integrated waste management facility.The facility will include a recycling area, a landfill and a wastetreatment area.> Venezuela:in 2002, we commissioned a US$1.8 million facility designedto handle a broad spectrum of wastes from the Boscan oil field.© 2003 ChevronTexaco Corporation. All Rights Reserved.
2002 ChevronTexaco Corporate Responsibility Report Environmental IssuesCase Study >Offshore Drilling DischargesDecommissioning & RemediationDrilling oil and gas wells requires the use of drilling fluids to remove rock“cuttings” from the wellbore and to control formation pressure. Drillingfluids are made of various chemical compositions depending on the geologicand reservoir formations being drilled. These fluids are pumped downthe hole and transported back to the surface with the cuttings that are“cut loose” as we drill. The cuttings are then separated from the drillingfluid at the surface. In the offshore environment, depending on the chemicalcomposition used and local conditions, cuttings with residual drillingfluids are often discharged to the sea. This discharge must be carefullymanaged to minimize its impact on the marine environment.In reviewing our worldwide offshore drilling fluid management practices in2002, we identified several opportunities for improvement. As a result,ChevronTexaco is developing a new performance standard that uses ecologicalrisk criteria to define what can and cannot be discharged into waterand establishes buffer zones to help protect biologically sensitive areas. Italso requires new offshore drilling projects to evaluate the technical andeconomic feasibility of reinjecting cuttings back into subsurface formations,instead of discharging them into the sea.Under the standard, all offshore drilling rigs using drilling fluids that arenot water-based will be equipped with advanced cuttings cleaning systems.Such systems reduce the environmental impact of discharging drilled cuttingsinto the sea.The standard also requires all drilling projects to undergo a risk-basedscreening to determine the adequacy of environmental practices. Thescreening considers site-specific factors such as ocean depth and prevailingcurrents, toxicity and biodegradation of drilling fluids, and the volume ofcuttings generated. This information is used to determine whether dischargingis acceptable in a given location and to identify the appropriatecleaning technology to help protect the local marine environment.Approach: Working to PreventProblemsChevronTexaco’s aim is toresponsibly steward its assetsthroughout their lifecycle, fromdesign and construction, throughoperation and, in some cases, saleto another party or decommissioning.Our goal is to preventIn Cincinnati, Ohio, a natural wetlandflourishes where a refinery they happen. When designingenvironmental problems beforeonce stood, following aand building new projects, weChevronTexaco restoration program. include many design elements toprevent impacts to land andgroundwater. Some of our facilities have been in operation for manydecades, over which time practices for facility design, waste managementand spill prevention have evolved. Although they were consistent withstandard industry practices at the time, our past operating practices atsome of these locations resulted in releases of hydrocarbons and otherchemicals to land and groundwater. ChevronTexaco expects its businessesto evaluate potential risks posed by these past releases and to take steps tomitigate them.In the case of asset sales, it is our policy to assess and manage our environmentalliabilities prior to any property transactions. Appropriatecleanup or restoration is conducted as needed to ensure that the propertyis suitable for continued current use or, if the use is changing, forthe intended future use. But at times the new owner may not properlymanage its environmental obligations, or the property may subsequentlychange hands. In some instances, external parties have soughtto make us responsible for remediation of subsequent damage, despiteour view that we had previously met our obligations.Chevron Environmental Management Company (EMC), a whollyowned operating company, focuses primarily on the responsible decommissioningand cleanup of ChevronTexaco sites. EMC uses a rigorousprocess for managing environmental cleanups based on its experiencein managing capital construction projects. Although EMC’s activitiesare focused primarily in the United States, it works collaboratively withChevronTexaco business units worldwide on land and groundwaterassessments, cleanups and decommissioning, as well as helping reducefuture liabilities through technology transfer and best-practice sharing.© 2003 ChevronTexaco Corporation. All Rights Reserved.48
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