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2002 ChevronTexaco Corporate Responsibility Report Environmental IssuesProduct Stewardship, (Continued)Case Study >MTBE Phaseout & CleanupFuture Goals: Implementing Processes GloballyAlthough product stewardship processes are well developed in severaloperating companies, particularly in North America, ChevronTexacofaces a challenge in implementing equivalent systems across all its operations.Toward that goal, in 2003 we created a central technology groupresponsible for coordinating product stewardship issues for our globalnonfuels businesses, including lubricants, chemical additives, andmarine fuels and lubricants.Case Study >Driving Safety Program in ThailandIn an effort to raise public awareness around the issues of safe driving, fuelefficiency and environment protection, ChevronTexaco’s subsidiary, CaltexOil (Thailand) Ltd., has teamed up with Thailand’s Land TransportationDepartment, part of the Thai Ministry of Transport and Communications, tosponsor a program called Save & Safe. The program also is supported by 10automobile and motorcycle manufacturers.The program, which began in 2000,focuses on promoting safe and fuelefficientdriving techniques. Drivertraining is coupled with free enginecheckups and aimed at minimizingair and noise pollution. In manylocations in Thailand, training isThe company’s Save & Safeprovided for professional driversprogram promotes public(such as school bus drivers) andawareness of safe driving andordinary drivers.environmental conservationin Thailand.The free vehicle checkups, emissionstesting and tune-ups help driversbetter understand how to keep their vehicles maintained to reduce emissionsand save fuel. Nearly 300 school buses were checked recently at aSave and Safe event at the Department of Land Transport in Bangkok. Atotal of 8,539 vehicles were tested in four provinces in Thailand in 2002.The program also has provided an opportunity for dozens of aspiringmechanics from Thai technical institutions to acquire valuable training andexperience by conducting the engine inspections and tune-ups. An estimated30,000 autos and motorcycles have been inspected in the nineprovinces and major metropolitan areas in the roughly three years in whichSave and Safe has been operational.MTBE, or methyl tertiary butylether, has been used as a blendingcomponent in gasoline since 1979.ChevronTexaco first used MTBE inthe late 1980s to increase octane.MTBE came into widespread use inthe United States after 1990, whenthe Clean Air Act was amended torequire much of the nation’s gasolineto contain oxygen, which was use of MTBE in gasoline in Califor-Chevron Texaco is eliminating ourthought to reduce air emissions. nia. We have replaced MTBE withThis oxygen requirement is met by ethanol in our gasoline in southernincluding an “oxygenate,” usually California, and will complete theeither MTBE or ethanol, an alcohol conversion to ethanol in northernderived from corn or other agriculturalcrops.December 2003 deadline.California in advance of the state’sBut in attempting to solve an airquality problem, the widespread use of MTBE has created a differentproblem. MTBE is significantly more soluble in water and persistent in theenvironment than other gasoline components. As a result, leaks and spillsof gasoline that contains MTBE can be difficult to clean up, particularlywhen they reach groundwater. Some drinking-water supplies that havebeen contaminated by MTBE have been shut down pending remediation.Consumers and government agencies in many parts of the United Statesnow oppose the use of MTBE in gasoline. Many state governments haveenacted or are considering mandatory phaseouts. These actions are basednot on health concerns, but on the fact that, in even very small amounts,MTBE can make water taste and smell unpleasant. ChevronTexaco isresponding to MTBE concerns in several ways:> We are assessing and cleaning up as appropriate our current and formerservice stations sites that have been affected by leaks or spills of gasolinecontaining MTBE.> We no longer produce MTBE in North America. We have closed the MTBEproduction facilities at our refineries in Richmond, California; El Segundo,California; and Pascagoula, Mississippi. Our joint venture with a companythat once produced MTBE in Canada has switched its production to isooctane,a clean-burning gasoline blending component that does not havethe same water quality concerns.© 2003 ChevronTexaco Corporation. All Rights Reserved.55
2002 ChevronTexaco Corporate Responsibility Report Environmental IssuesCase Study >MTBE Phaseout & Cleanup(Continued)> We are eliminating our use of MTBE in California. Where the law requiresus to use an oxygenate, we are converting from MTBE to ethanol. Wehave replaced MTBE with ethanol in our gasoline in Southern Californiaand will complete the conversion to ethanol in Northern California inadvance of the state’s December 2003 deadline.> We have worked hard to improve groundwater cleanup processes andtechnology. ChevronTexaco Energy Technology Company has joined witha number of government and private organizations to manage researchon how to better clean up groundwater affected by oxygenates. Ourtechnical experts also have taught courses for the California State WaterResources Board and EPA on this subject.Additionally, ChevronTexaco is pursuing government action to requirethe phaseout of MTBE in gasoline in the United States. We also continueto pursue alternatives to government oxygenate mandates since we haveshown that it is possible to make gasolines that achieve the air qualitybenefits without adding any oxygenate.The experience with MTBE illustrates the importance of looking at allaspects of a product’s potential impacts. It has provided our company,the petroleum industry and government agencies with useful lessons,which ChevronTexaco already has begun integrating into its approachto other product stewardship issues.Environmental Expenditures and FinesEnvironmental ExpendituresUsing definitions and guidelines established by the American PetroleumInstitute, ChevronTexaco estimates its worldwide environmentalspending in 2002 at US$1.3 billion for its consolidated companies.Included in these expenditures are $399 million of environmentalcapital expenditures and $925 million of costs associated with thecontrol and abatement of hazardous substances and pollutants fromour ongoing operations. This spending represents approximately4.3 percent of capital and exploratory expenditures and 11.8 percentof operating expenses in 2002.Health, Environment, andSafety Fines and Settlements*Total paidTotal(MillionsnumberEnvironmental FinesAt times, ChevronTexaco facilitieshave not met all governmentalof $U.S.)5of fines1000 environmental requirements,resulting in fines and penalties4.284 792800by various agencies in additionto ongoing environmental expenditures.3600We regret these lapses519and are committed to learning23884001.44from them to continually2780.94 0.951200 improve our compliance withall applicable requirements. In0099 00 01 022002, ChevronTexaco paid 82environmental fines or settlementsTotal paid in millions of $U.S. (left scale)Total number of fines (right scale)for a total of US$4.3 mil-lion. Although the number of*1999–2000 data are Chevron. 2001–2002 dataare ChevronTexaco.individual fines and settlementsdecreased from 2001, the totaldollar amount paid out increasedsignificantly. This is attributable primarily to settlements in the UnitedStates. Significant fines and settlements in 2002 included: US$1.55 millionfor groundwater contamination near the El Segundo Refinery inCalifornia; US$750,000 for environmental violations at upstream operationsin Rangely, Colorado; US$869,992 for environmental violations inAneth, Utah, upstream operations; and US$250,000 in penalties associatedwith a fire at the Aneth gas plant.In 2002, we also paid 196 fines or settlements for noncompliance withhealth and safety regulations at our facilities. The total dollar amountassociated with these fines or settlements was relatively small.© 2003 ChevronTexaco Corporation. All Rights Reserved.56
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