Chevron 2004 Annual Report Download - page 79
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Please find page 79 of the 2004 Chevron annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report. CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT 77 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT 77
ofoperationsintheperiodinwhichtheyarerecognized.The
companydoesnotexpectthesecostswillhaveamaterialeffect
onitsconsolidatedfinancialpositionorliquidity.Also,thecom-
panydoesnotbelieveitsobligationstomakesuchexpenditures
havehadorwillhaveanysignificantimpactonthecompany’s
competitivepositionrelativetootherU.S.orinternationalpetro-
leumorchemicalcompanies.
ChevronTexaco’senvironmentalreserveasofDecember
31,2004,was$1,047.Thecompanymanagesenvironmental
liabilitiesunderspecificsetsofregulatoryrequirements,which
intheUnitedStatesincludetheResourceConservationand
RecoveryActandvariousstateandlocalregulations.Nosingle
remediationsiteatyear-end2004hadarecordedliabilitythatwas
materialtothecompany’sfinancialposition,resultsofoperations
orliquidity.
Includedintheyear-end2004balancewas$107relatedto
sitesforwhichChevronTexacohadbeenidentifiedbytheU.S.
EnvironmentalProtectionAgencyorotherregulatoryagencies
undertheprovisionsofthefederalSuperfundlaworanalo-
gousstatelawsasa“potentiallyresponsibleparty”orotherwise
involvedintheremediation.
Oftheremainingyear-end2004environmentalreserves
balanceof$940,$712relatedtomorethan2,000sitesforthe
company’sU.S.downstreamoperations,includingrefineriesand
otherplants,marketinglocations(i.e.,servicestationsandter-
minals)andpipelines.Theremaining$228wasassociatedwith
varioussitesintheinternationaldownstream($111),upstream
($69)andchemicals($48).Liabilitiesatallsites,whetheroper-
ating,closedordivested,wereprimarilyassociatedwiththe
company’splansandactivitiestoremediatesoilorgroundwater
contaminationorboth.Theseandotheractivitiesincludeoneor
moreofthefollowing:siteassessment;soilexcavation;offsitedis-
posalofcontaminants;onsitecontainment,remediationand/or
extractionofpetroleumhydrocarbonliquidandvaporfromsoil;
groundwaterextractionandtreatment;andmonitoringofthe
naturalattenuationofthecontaminants.
GlobalOperations ChevronTexacoanditsaffiliatesconductbusi-
nessactivitiesinapproximately180countries.Areasinwhich
thecompanyanditsaffiliateshavesignificantoperationsinclude
theUnitedStates,Canada,Australia,theUnitedKingdom,Nor-
way,Denmark,France,thePartitionedNeutralZonebetween
KuwaitandSaudiArabia,RepublicofCongo,Angola,Nigeria,
Chad,SouthAfrica,Indonesia,thePhilippines,Singapore,China,
Thailand,Venezuela,Argentina,Brazil,Colombia,Trinidad
andTobago,andSouthKorea.Thecompany’sCPCaffili-
ateoperatesinRussiaandKazakhstan.Thecompany’sTCO
affiliateoperatesinKazakhstan.Thecompany’sCPChemaffiliate
manufacturesandmarketsawiderangeofpetrochemicalson
aworldwidebasis,withmanufacturingfacilitiesintheUnited
States,PuertoRico,Singapore,China,SouthKorea,SaudiArabia,
Qatar,MexicoandBelgium.
Thecompany’soperations,particularlyexplorationand
production,canbeaffectedbychangingeconomic,regulatory
andpoliticalenvironmentsinthevariouscountriesinwhichit
operates,includingtheUnitedStates.Ashasoccurredinthepast,
actionscouldbetakenbyhostgovernmentstoincreasepublic
ownershipofthecompany’spartiallyorwhollyownedbusinesses
OTHER CONTINGENCIES AND COMMITMENTS – Continued orassetsortoimposeadditionaltaxesorroyaltiesonthecompa-
ny’soperationsorboth.
Incertainlocations,hostgovernmentshaveimposedrestric-
tions,controlsandtaxes,andinothers,politicalconditions
haveexistedthatmaythreatenthesafetyofemployeesandthe
company’scontinuedpresenceinthosecountries.Internalunrest,
actsofviolenceorstrainedrelationsbetweenahostgovernment
andthecompanyorothergovernmentsmayaffectthecompany’s
operations.Thosedevelopmentshaveattimessignificantly
affectedthecompany’srelatedoperationsandresultsandare
carefullyconsideredbymanagementwhenevaluatingthelevel
ofcurrentandfutureactivityinsuchcountries.
EquityRedetermination Foroilandgasproducingoperations,
ownershipagreementsmayprovideforperiodicreassessmentsof
equityinterestsinestimatedcrudeoilandnaturalgasreserves.
Theseactivities,individuallyortogether,mayresultingains
orlossesthatcouldbematerialtoearningsinanygiven
period.Onesuchequityredeterminationprocesshasbeen
underwaysince1996forChevronTexaco’sinterestsinfour
producingzonesattheNavalPetroleumReserveatElkHills,
California,forthetimewhentheremaininginterestsinthese
zoneswereownedbytheU.S.DepartmentofEnergy.Awide
rangeremainsforapossiblenetsettlementamountforthefour
zones.ChevronTexacocurrentlyestimatesitsmaximumpos-
siblenetbefore-taxliabilityatapproximately$200.Atthesame
time,apossiblemaximumnetamountthatcouldbeowedto
ChevronTexacoisestimatedatabout$50.Thetimingofthe
settlementandtheexactamountwithinthisrangeofestimates
wereuncertain.
OtherContingencies ChevronTexacoreceivesclaimsfromand
submitsclaimstocustomers,tradingpartners,U.S.federal,state
andlocalregulatorybodies,hostgovernments,contractors,
insurers,andsuppliers.Theamountsoftheseclaims,individu-
allyandintheaggregate,maybesignificantandtakelengthy
periodstoresolve.
Thecompanyanditsaffiliatesalsocontinuetoreviewand
analyzetheiroperationsandmayclose,abandon,sell,exchange,
acquireorrestructureassetstoachieveoperationalorstrategic
benefitsandtoimprovecompetitivenessandprofitability.These
activities,individuallyortogether,mayresultingainsorlosses
infutureperiods.
ThecompanyadoptedFinancialAccountingStandardsBoard
StatementNo.143,“AccountingforAssetRetirementObliga-
tions”(FAS143),effectiveJanuary1,2003.Thisaccounting
standardappliestothefairvalueofaliabilityforanassetretire-
mentobligationthatisrecordedwhenthereisalegalobligation
associatedwiththeretirementofatangiblelong-livedassetand
theliabilitycanbereasonablyestimated.Obligationsassociated
withtheretirementoftheseassetsrequirerecognitionincertain
circumstances:(1)thepresentvalueofaliabilityandoffsetting
assetforanARO,(2)thesubsequentaccretionofthatliability
anddepreciationoftheasset,and(3)theperiodicreviewofthe
AROliabilityestimatesanddiscountrates.FAS143primarily
affectsthecompany’saccountingforcrudeoilandnaturalgas
producingassetsanddiffersinseveralrespectsfromprevious
accountingunderFAS19,“FinancialAccountingandReportingby
OilandGasProducingCompanies.”