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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