Environmental Expenditures. by the U.S. Oil and Natural Gas Industry

Transcription

1 Environmental Expenditures by the U.S. Oil and Natural Gas Industry

2 The industry has spent $,045 on the environment for every man, woman and child in the United States. About This Report Expenditures covered in this report are those related to the prevention, control, abatement, or elimination of environmental pollution by the U.S. oil and natural gas industry in the United States and its territories. API sends questionnaires to a sample of companies that are representative of the industry. To ensure accurate and comparable responses, API includes detailed guidelines and definitions for completing the survey. After checking for consistency, API uses this sample to estimate the industry s overall environmental expenditures. Figure U.S. Environmental Expenditures by (by sector ) $35 $30 $25 Billions $20 $5 $0 R&D and Corporate Programs Exploration and Production $5 $ Remediation & Spills expenditures are included in the sector numbers and are reported data only. 200 data is unusually high due to an outlier event. The remaining sector expenditures are estimated for the entire industry. 2 Based on 206 U.S. population estimate of 324 million by U.S. Census Bureau. Environmental Expenditures The U.S. oil and natural gas industry has invested an estimated $356 billion since 990 toward improving the environmental performance of its products, facilities and operations $,088 for every man, woman and child in the United States. 2 In 207 alone, API estimates that approximately $7. billion was spent on the environment; $5.9 billion was spent implementing new technologies, creating cleaner fuels and funding ongoing environmental initiatives. An additional $.2 billion went toward research and development, corporate environmental programs and spill remediation efforts. 32% of the industry s environmental expenditures in 207 targeted air pollution abatement; meeting or surpassing the requirements of the 990 Clean Air Act. Refineries across the nation implemented new processes designed to dramatically reduce the presence of sulfur in gasoline and diesel years ahead of federal requirement to do so. Copyright 209 API, all rights reserved.

3 Investment Priorities by Industry Sector The U.S. oil and natural gas industry s business operations are divided into four major sectors: exploration and production, refining, transportation, and marketing. Following is a brief overview of how environmental expenditures have been allocated across these sectors: Exploration and Production: The U.S. is the number one producer of oil and natural gas in the world, with approximately 847,589 3 producing oil and natural gas wells operating onshore and approximately 3,488 4 oil and natural gas platforms operating offshore in U.S. state and federal waters. These wells produce approximately 3.4 billion 5 barrels of oil and almost 33.4 trillion 6 cubic feet of natural gas annually. : The nation s 35 refineries, which process more than 8 million 7 barrels of crude oil every day, are constantly upgrading their operations to produce ever-cleaner fuels and meet the growing variety of state and local mandates for fuel formulation. : Petroleum products move from well to refinery to market through a network of tanker ships, pipelines, barges, and tanker trucks. Among the industry s key environmental investments in this segment: Currently, all tankers and barges operating in U.S. waters will feature double hulls, which help to contain cargo and prevent spills in the event of a collision or grounding. : According to the National Association of Convenience Stores (NACS), there are more than 22 8 thousand convenience stores selling motor fuels across the United States. In recent years, the petroleum industry has made a major investment to upgrade underground storage tanks and install leak detection devices, helping to protect communities and groundwater supplies. : Non-sector specific corporate programs such as planting trees or junking old cars. Also includes Research & Development expenditures to reduce pollution and emissions. 3 Website link: 4 Bureau of Ocean Management U.S. EIA, Monthly Energy Review October 208, Table 3. 6 U.S. EIA, Monthly Energy Review October 208, Table 4. 7 U.S. EIA, Number and Capacity of Petroleum Refineries Website link: Copyright 209 API, all rights reserved. 2

4 Figure Environmental Expenditures by Sector 9 (in billions of dollars) Total Expenditures = $7. billion : 3% $0.43 : 2% $0.39 : 37% $6.30 Exploration and Production: 44% $7.60 : 4% $ Remediation & Spills expenditures are included in the sector numbers and are reported data only. The remaining sector expenditures are estimated for the entire industry. Figure 3 Spending on the Environment per Business Sector since990 0 (in billions of dollars) : Total Expenditures = $355.9 billion : 6% $22.0 R&D and Corporate Programs: 3% $.0 Exploration and Production: 3% $0. : 49% $72.4 : % $ Remediation & Spills expenditures are included in the sector numbers and are reported data only. The remaining sector expenditures are estimated for the entire industry. Copyright 209 API, all rights reserved. 3

5 Historically, a majority of the investments have focused on achieving reductions in airborne emissions. Investment Priorities by Emissions Medium The following charts illustrate how the U.S. oil and natural gas industry s environmental expenditures have been targeted toward reducing emissions by air, water, and land. Historically, a majority of the investments have focused on achieving reductions in airborne emissions. The emphasis on air pollution control is driven by the requirements of the 990 Clean Air Act Amendments and subsequent regulations to reduce emissions from so-called stationary sources (industrial facilities such as refineries) and mobile sources (cars, trucks, etc.). Federal and state environmental programs aimed at reducing carbon monoxide, smog, and air toxics require the sale of oxygenated, reformulated, and lowvolatility (evaporates more slowly) gasolines in certain parts of the country. The exact formulations required vary from one jurisdiction to the next, so the petroleum industry must modify its processes accordingly. These reformulated fuels often cost more to produce than conventional gasoline. Figure Environmental Expenditures by Medium (in billions of dollars) Total Expenditures = $7. billion : 28% $4.7 Water: 24% $4. Wastes: % $.9 Remediation and Spills: 5% $0.9 Air: 32% $5.6 Remediation & Spills expenditures are included in the sector numbers and are reported data only. The remaining sector expenditures are estimated for the entire industry. Copyright 209 API, all rights reserved. 4

6 Figure Environmental Expenditures by Medium 2 (in billions of dollars) Total Expenditures = $355.9 billion : 7% $62.2 Wastes: 8% $27.4 Remediation and Spills: 3% $45.2 Water: 22% $76.8 Air: 40% $ Remediation & Spills expenditures are included in the sector numbers and are reported data only. The remaining sector expenditures are estimated for the entire industry. Figure 6 U.S. Gasoline Requirements Note: This map is not intended to provide legal advice or to be used as guidance for state and/or federal fuel requirements, including but not limited to oxy fuel or RFG compliance requirements. API makes no representations or warranties, express or otherwise, as to the accuracy or completeness of this map. Copyright 209 API, all rights reserved. 5

7 Table Total U.S. Environmental Expenditures: * (in millions of dollars) Year Ongoing Activities Research and Development Corporate Programs Subtotal Remediation and Spills Total , ,882,490 9, , ,922,670 4, , ,89 4,634 30,525 20, ,487,427 2, , ,464,483 4, ** 4, ,926,372 6, , ,553,379 7, , ,408,288 9, , ,034,025 7, , , ,32 0-Year Total 49,228,832 2,74 53,80 26,666 80,467 * All expenditures are estimated except for remediation and spills. In 200, Remediation and spills are unusually high because of an outlier event. * * Pre 203 Exploration and Production expenditures were partly estimated using the annual NGL wellhead price. Effective January 203 the wellhead price was discontinued. Post 202 Exploration and Production expenditures were partly estimated using the Henry Hub spot price. Copyright 209 API, all rights reserved. 6

8 Table 2 Summary of U.S. Environmental Expenditures by Medium: (in millions of dollars) Year Air Water Wastes Subtotal Remediation 2 Spills 2 Total ,7 3,033,288 2,849 7,882, , ,526 2, , 2,922, , ,699 2, ,573 5,89,906 2,728 30, ,522 2,6,08 3,336,487, , ,766 3,763,94 3,740 3,464, , * 4,623 4,054,547 4,702 4,926, , ,36 4,655,77 5,044 6, , ,929 5,098 2,044 6,337 8, , ,094 4,53,642 4,786 6, , ,554 4,070,883 4,728 6, ,32 0-Year Total 69,580 39,027 5,32 42,394 66,34 3,034 5,255 94,424 Includes expenditures for ongoing activities, research & development, and corporate programs 2 Aggregate of amounts reported by participants in API s survey. In 200, remediation & rpills are unusually high because of an outlier event * Pre 203 Exploration and Production expenditures were partly estimated using the annual NGL wellhead price. Effective January 203 the wellhead price was discontinued. Post 202 Exploration and Production expenditures were partly estimated using the Henry Hub spot price. Table 3 Summary of Estimated U.S. Environmental Expenditures: (in millions of dollars) Sector * Year Exploration and production: Capital,904,222,068,276 2,820 3,063 4,583 3,95 2,642 2,787 24,560 O & M 2,5,642 2,086 2,597 2,269 3,40 3,64 6,087 3,989 4,604 32,828 Subtotal 4,45 2,864 3,54 3,873 5,089 6,464 8,224 9,282 6,63 7,39 57,388 : Capital ,046,565,27, ,020 O & M ,45,344,273,424,729,977,350,859 Subtotal, ,48 2,20 2,390 2,839 2,694 2,988 2,796 2,234 20,879 Capital 6,696 4,502 7,385 2,06 2,234,546,727,940 2,295 2,06 32,40 O & M 4,884 4,229 3,634 2,98 3,298 3,535 3,282 3,49 3,409 3,996 36,676 Subtotal,580 8,73,09 4,934 5,532 5,08 5,009 5,43 5,704 6,057 69,077 Capital O & M Subtotal ,885 Research and development ,832 Corporate Programs ,74 Grand Total 7,882 2,922 5,89,487 3,464 4,926 6,553 8,408 6,034 6,234 53,80 Operations, maintenance, and administration. * In 200, Remediation and Spills are unusually high because of an outlier event. Copyright 209 API, all rights reserved. 7

9 Table 4 Summary of Reported U.S. Environmental Expenditures on Remediation and Spills by Sector: (in millions of dollars) Sector * * Year Exploration and Production: Remediation , ,695 Spills , ,905 Subtotal , ,600 Remediation ,88 Spills Subtotal ,937 Remediation ,942 Spills Subtotal ,34 Remediation ,37 Spills Subtotal ,347 Research and Development Remediation Spills Subtotal Grand Total,490,670 4,634,427,483,372,379,288, ,666 * In 200, Remediation and Spills are unusually high because of an outlier event * Pre 203 Exploration and Production expenditures were partly estimated using the annual NGL wellhead price. Effective January 203 the wellhead price was discontinued. Post 202 Exploration and Production expenditures were partly estimated using the Henry Hub spot price. Copyright 209 API, all rights reserved. 8

10 Table 4(i) Summary of Reported U.S. Environmental Expenditures on Remediation by Sector: (in millions of dollars) Sector * Year Exploration and Production: Capital O&M , ,598 Subtotal , ,695 Capital O&M ,48 Subtotal ,88 Capital O&M ,909 Subtotal ,942 Capital O&M ,33 Subtotal ,37 Research and Development Capital O&M Subtotal Grand Total,32,342,906,8,97, ,553 Operations, maintenance, and administration. * In 200, Remediation and Spills are unusually high because of an outlier event * Pre 203 Exploration and Production expenditures were partly estimated using the annual NGL wellhead price. Effective January 203 the wellhead price was discontinued. Post 202 Exploration and Production expenditures were partly estimated using the Henry Hub spot price. Copyright 209 API, all rights reserved. 9

11 Table 4(ii) Summary of Reported U.S. Environmental Expenditures on Spills by Sector: (in millions of dollars) Sector * Year Exploration and Production: Capital O&M , ,45 Subtotal , ,905 Capital O&M Subtotal Capital O&M Subtotal Capital O&M Subtotal Research and Development Capital O&M Subtotal Grand Total , ,3 Operations, maintenance, and administration. * In 200, Remediation and Spills are unusually high because of an outlier event * Pre 203 Exploration and Production expenditures were partly estimated using the annual NGL wellhead price. Effective January 203 the wellhead price was discontinued. Post 202 Exploration and Production expenditures were partly estimated using the Henry Hub spot price. Copyright 209 API, all rights reserved. 0

12 Table 5 U.S. Market Share of Survey Participants: Sector Year Exploration and Production Upstream Revenues (dollars) 2 Trunkline Miles (barrel miles) 3 Refinery Capacity (b/cd) 4 Gasoline Sales Volumes (gallons) % 23% 58% 5% % 44% 57% 45% % 55% 6% 60% 20 36% 50% 66% 55% % 49% 54% 5% % 44% 56% 57% % 48% 57% 59% % 44% 53% 6% % 67% 53% 63% % 63% 58% 69% Estimate based on API surveys and U.S. Department of Energy, Energy Information Administration, Petroleum Supply Annual. 2 Oil and Gas Journal, Pipeline Economics. 3 U.S. Department of Energy, Energy Information Administration, Petroleum Supply Annual. 4 U.S. Department of, Federal Highway Administration, Monthly Motor Fuel Reported by States. Copyright 209 API, all rights reserved.

13 Table 6 Margins of Error in API Estimates: (estimates in millions of dollars) Year Exploration and Production R&D and Corporate Programs 2008: Estimate 4,45,002, ,882 Margin of error ± 2.9% ± 32.6% ± 9.% ± 7.3% ±.0% ± 8.2% 2009: Estimate 2, , ,922 Margin of error ± 4.9% ± 2.6% ± 3.0% ±.7% ±.0% ± 2.6% 200: Estimate 3,54,48, ,89 Margin of error ± 4.% ± 0.0% ± 3.8% ± 3.5% ±.0% ± 2.9% 20: Estimate 3,873 2,20 4, ,487 Margin of error ± 3.4% ± 4.8% ± 3.3% ± 7.3% ±.0% ± 7.8% 202: Estimate 5,089 2,390 5, ,464 Margin of error ± 7.3% ± 4.% ± 6.6% ± 5.6% ±.0% ± 4.6% 203: Estimate 6,464 2,839 5, ,926 Margin of error ± 5.6% ± 23.0% ± 0.4% ± 2.4% ±.0% ± 6.% 204: Estimate 8,224 2,694 5, ,553 Margin of error ± 7.8% ± 23.3% ±.% ± 7.7% ±.0% ± 6.4% 205: Estimate 9,282 2,988 5, ,408 Margin of error ± 3.0% ± 23.7% ± 9.5% ± 8.8% ±.0% ± 8.% 206: Estimate 6,63 2,796 5, ,034 Margin of error ± 8.2% ± 23.9% ± 9.6% ± 6.9% ±.0% ± 9.2% 207: Estimate 7,39 2,234 6, ,234 Margin of error ±.6% ± 9.7% ± 8.3% ± 4.8% ±.0% ± 6.3% Total Copyright 209 API, all rights reserved. 2

14 Table 7 Estimated U.S. Environmental Expenditures by Medium: 990 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,525 Capital O&M Subtotal Capital ,286 O&M, ,424 Subtotal,88, ,70 Capital O&M Subtotal R&D Corporate Programs Grand Total 2,274 2, ,663 Table 8 Estimated U.S. Environmental Expenditures by Medium: 99 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,553 Capital O&M Subtotal Capital, ,809 O&M, ,309 Subtotal 2,242, ,8 Capital O&M Subtotal R&D Corporate Programs Grand Total 2,962 2,62 785,043 7,402 Copyright 209 API, all rights reserved. 3

15 Table 9 Estimated U.S. Environmental Expenditures by Medium: 992 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,566 Capital O&M Subtotal Capital 2, ,282 O&M, ,526 Subtotal 3,620, ,808 Capital O&M Subtotal R&D Corporate Programs Grand Total 4,285 2,83 952,223 9,273 Table 0 Estimated U.S. Environmental Expenditures by Medium: 993 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,563 Capital O&M Subtotal Capital 2, ,25 O&M, ,483 Subtotal 3,72, ,698 Capital O&M Subtotal R&D Corporate Programs Grand Total 4,539 2, ,385 9,448 Copyright 209 API, all rights reserved. 4

16 Table Estimated U.S. Environmental Expenditures by Medium: 994 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,559 Capital O&M Subtotal Capital 2, ,8 O&M, ,85 Subtotal 4,045, ,933 Capital O&M Subtotal R&D Corporate Programs Grand Total 4,868 2, ,320 9,465 Table 2 Estimated U.S. Environmental Expenditures by Medium: 995 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,322 Capital O&M Subtotal Capital, ,58 O&M 2, ,35 Subtotal 3, ,509 Capital O&M Subtotal R&D Corporate Programs Grand Total 4,564,95 720,245 8,445 Copyright 209 API, all rights reserved. 5

17 Table 3 Estimated U.S. Environmental Expenditures by Medium: 996 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,582 Capital O&M Subtotal ,03 Capital O&M 2, ,32 Subtotal 3, ,958 Capital O&M Subtotal R&D Corporate Programs Grand Total 3,628, ,086 7,276 Table 4 Estimated U.S. Environmental Expenditures by Medium: 997 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,705 Capital O&M Subtotal Capital O&M 2, ,637 Subtotal 3, ,56 Capital O&M Subtotal R&D Corporate Programs Grand Total 3,628 2, ,324 Copyright 209 API, all rights reserved. 6

18 Table 5 Estimated U.S. Environmental Expenditures by Medium: 998 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,577 Capital O&M Subtotal Capital ,078 O&M 2, ,36 Subtotal 3, ,439 Capital O&M Subtotal R&D Corporate Programs Grand Total 3,573 2, ,59 7,743 Table 6 Estimated U.S. Environmental Expenditures by Medium: 999 (in millions of dollars) Sector Air Water Wastes Total Capital O&M ,35 Subtotal ,793 Capital O&M Subtotal Capital O&M 2, ,970 Subtotal 2, ,567 Capital O&M Subtotal R&D Corporate Programs Grand Total 3,085 2, ,00 6,846 Copyright 209 API, all rights reserved. 7

19 Table 7 Estimated U.S. Environmental Expenditures by Medium: 2000 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,728 Capital O&M Subtotal ,22 Capital O&M 2, ,077 Subtotal 2, ,94 Capital O&M Subtotal R&D Corporate Programs Grand Total 3,474 2, ,205 Table 8 Estimated U.S. Environmental Expenditures by Medium: 200 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,776 Capital O&M Subtotal Capital ,56 O&M 2, ,430 Subtotal 3, ,586 Capital O&M Subtotal R&D Corporate Programs Grand Total 4,054 2, ,875 Copyright 209 API, all rights reserved. 8

20 Table 9 Estimated U.S. Environmental Expenditures by Medium: 2002 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,287 Capital O&M Subtotal ,00 Capital 2, ,376 O&M, ,838 Subtotal 3, ,24 Capital O&M Subtotal R&D Corporate Programs Grand Total 4,570,886 56,290 8,308 Table 20 Estimated U.S. Environmental Expenditures by Medium: 2003 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,580 Capital O&M Subtotal Capital 3, ,243 O&M, ,824 Subtotal 5, ,068 Capital O&M Subtotal R&D Corporate Programs Grand Total 5,595,97 667,020 9,99 Copyright 209 API, all rights reserved. 9

21 Table 2 Estimated U.S. Environmental Expenditures by Medium: 2004 (in millions of dollars) Sector Air Water Wastes Total Capital O&M Subtotal ,605 Capital O&M Subtotal Capital 3, ,363 O&M, ,869 Subtotal 5, ,232 Capital O&M Subtotal R&D Corporate Programs Grand Total 5,560,84 62,357 9,343 Table 22 Estimated U.S. Environmental Expenditures by Medium: 2005 (in millions of dollars) Sector Air Water Wastes Total Capital ,020 O&M Subtotal ,909 Capital O&M Subtotal Capital 4, ,398 O&M 2, ,376 Subtotal 6, ,774 Capital O&M Subtotal R&D Corporate Programs Grand Total 7,8,93 776,293,0 Copyright 209 API, all rights reserved. 20

22 Table 23 Estimated U.S. Environmental Expenditures by Medium: 2006 (in millions of dollars) Sector Air Water Wastes Total Capital ,298 O&M ,276 Subtotal ,574 Capital O&M Subtotal ,055 Capital 3, ,5 O&M 2, ,02 Subtotal 6, ,524 Capital O&M Subtotal R&D Corporate Programs Grand Total 6,92 2,68 685,897,67 Table 24 Estimated U.S. Environmental Expenditures by Medium: 2007 (in millions of dollars) Sector Air Water Wastes Total Capital ,252 O&M ,350,962 Subtotal ,45 3,24 Capital O&M Subtotal Capital 3, ,529 O&M 3, ,373 Subtotal 6,22, ,902 Capital O&M Subtotal R&D Corporate Programs Grand Total 7,09 2, ,89 2,333 Copyright 209 API, all rights reserved. 2

23 Table 25 Estimated U.S. Environmental Expenditures by Medium: 2008 (in millions of dollars) Sector Air Water Wastes Total Capital ,904 O&M ,65 2,5 Subtotal 656,78 765,86 4,45 Capital O&M Subtotal ,002 Capital 6, ,696 O&M 3, ,884 Subtotal 9,69, ,580 Capital O&M Subtotal R&D Corporate Programs Grand Total 0,7 3,033,288 2,849 7,882 Table 26 Estimated U.S. Environmental Expenditures by Medium: 2009 (in millions of dollars) Sector Air Water Wastes Total Capital ,222 O&M ,32,642 Subtotal ,268 2,864 Capital O&M Subtotal Capital 3, ,502 O&M 2, ,229 Subtotal 6,796, ,73 Capital O&M Subtotal R&D Corporate Programs Grand Total 7,526 2, , 2,922 Copyright 209 API, all rights reserved. 22

24 Table 27 Estimated U.S. Environmental Expenditures by Medium: 200 (in millions of dollars) Sector Air Water Wastes Total Capital ,068 O&M ,354 2,086 Subtotal ,460 3,54 Capital O&M Subtotal ,48 Capital 6, ,385 O&M 2, ,634 Subtotal 9,04, ,09 Capital O&M Subtotal R&D Corporate Programs Grand Total 9,699 2, ,573 5,89 Table 28 Estimated U.S. Environmental Expenditures by Medium: 20 (in millions of dollars) Sector Air Water Wastes Total Capital ,276 O&M ,629 2,597 Subtotal ,833 3,873 Capital O&M ,45 Subtotal ,20 Capital, ,06 O&M 2, ,98 Subtotal 3, ,934 Capital O&M Subtotal R&D Corporate Programs Grand Total 4,522 2,6,08 3,336,487 Copyright 209 API, all rights reserved. 23

25 Table 29 Estimated U.S. Environmental Expenditures by Medium: 202 (in millions of dollars) Sector Air Water Wastes Total Capital 56, ,820 O&M ,383 2,269 Subtotal 669, ,8 5,089 Capital ,046 O&M ,344 Subtotal ,25 2,390 Capital, ,234 O&M 2, ,298 Subtotal 3, ,532 Capital O&M Subtotal R&D Corporate Programs Grand Total 4,766 3,763,94 3,740 3,464 Table 30 Estimated U.S. Environmental Expenditures by Medium: 203 (in millions of dollars) Sector Air Water Wastes Total Capital 52, ,063 O&M ,939 3,40 Subtotal 869 2,009,064 2,522 6,464 Capital ,565 O&M ,273 Subtotal 276,046 08,409 2,839 Capital, ,546 O&M 2, ,535 Subtotal 3, ,08 Capital O&M Subtotal R&D Corporate Programs Grand Total 4,623 4,054,547 4,702 4,926 * Pre 203 Exploration and Production expenditures were partly estimated using the annual NGL wellhead price. Effective January 203 the wellhead price was discontinued. 203 Exploration and Production expenditures were partly estimated using the Henry Hub spot price. Copyright 209 API, all rights reserved. 24

26 Table 3 Estimated U.S. Environmental Expenditures by Medium: 204 (in millions of dollars) Sector Air Water Wastes Total Capital 930 2, ,583 O&M ,028 3,64 Subtotal,209 2,823,254 2,938 8,224 Capital ,27 O&M ,424 Subtotal 239,00 3,34 2,694 Capital, ,727 O&M 2, ,282 Subtotal 3, ,009 Capital O&M Subtotal R&D Corporate Programs Grand Total 5,36 4,655,77 5,044 6,553 Table 32 Estimated U.S. Environmental Expenditures by Medium: 205 (in millions of dollars) Sector Air Water Wastes Total Capital 572, ,95 O&M 337, ,263 6,087 Subtotal 909 3,009,494 3,869 9,282 Capital ,259 O&M ,729 Subtotal 94,05 4,547 2,988 Capital, ,940 O&M 2, ,49 Subtotal 3, ,43 Capital O&M Subtotal R&D Corporate Programs Grand Total 4,929 5,098 2,044 6,337 8,408 * Pre 203 Exploration and Production expenditures were partly estimated using the annual NGL wellhead price. Effective January 203 the wellhead price was discontinued. 203 Exploration and Production expenditures were partly estimated using the Henry Hub spot price. Copyright 209 API, all rights reserved. 25

27 Table 33 Estimated U.S. Environmental Expenditures by Medium: 206 (in millions of dollars) Sector Air Water Wastes Total Capital 473, ,642 O&M ,39 3,989 Subtotal 694 2,233,064 2,640 6,63 Capital O&M ,977 Subtotal 340,244 36,076 2,796 Capital, ,295 O&M 2, ,409 Subtotal 3, ,704 Capital O&M Subtotal R&D Corporate Programs Grand Total 5,094 4,53,642 4,786 6,034 Table 34 Estimated U.S. Environmental Expenditures by Medium: 207 (in millions of dollars) Sector Air Water Wastes Total Capital 599, ,787 O&M 292,03,079 2,202 4,604 Subtotal 89 2,25,299 3,077 7,39 Capital O&M ,350 Subtotal ,055 2,234 Capital, ,06 O&M 2, ,996 Subtotal 4, ,057 Capital O&M Subtotal R&D Corporate Programs Grand Total 5,554 4,070,883 4,728 6,234 * Pre 203 Exploration and Production expenditures were partly estimated using the annual NGL wellhead price. Effective January 203 the wellhead price was discontinued. 203 Exploration and Production expenditures were partly estimated using the Henry Hub spot price. Copyright 209 API, all rights reserved. 26

28 Technical Notes API s environmental expenditures survey is sent to a stratified sample of the industry: all large and mid-size companies, plus a randomly selected group of smaller companies. Each year since 990, the survey has been mailed to about 800 companies. In 207, the data used to complete the survey represent a large share from 32 percent to 69 percent of the variables used to estimate expenditures for the entire industry (see Table 5). To estimate expenditures for the industry as a whole, API used regression and ratio analysis. Different variables were used for different parts of the industry: upstream revenues for exploration and production, trunkline miles for transportation, refinery capacity for refining, and gasoline sales for marketing. To estimate industry-wide expenditures for research and development and corporate programs, API used a combination of these variables. API s estimates may differ from the results that would have been obtained if the entire industry, or a different group of companies, had participated in the survey. Table 6 gives the margin of error representing the 95-percent confidence interval for API s estimates the range in which the actual value almost certainly lies. Thus, there is a 95 percent probability that the true amount for the industry is within that range. API estimated that -- excluding remediation and spills -- the entire industry s environmental expenditures were $6.2 billion in 207 (the remaining portion of the $7. billion remediation and spills expenditures is not an industry estimate but only the amounts reported by the survey respondents). The margin of error for this estimate is plus or minus 6.3 percent. This means that API estimates with 95-percent certainty that expenditures were between $5.2 billion and $7.2 billion. The model used to estimate these expenditures and margins of error assumes perfect accuracy in company responses. However, as with any survey, practical difficulties can also influence results and introduce errors. Many companies do not track environmental spending separately. s categorize environmental spending differently from the survey. Consequently, some companies are only able to provide a best estimate of what they spend. As a result, although API s estimates are based on imperfect data, they are the most extensive data available to the public. Copyright 209 API, all rights reserved. 27

29 Definitions Air pollution: Substances emitted into open air that are targeted for reduction by the Clean Air Act and other environmental laws for example, carbon monoxide, hydrocarbons, lead, nitrogen oxides, particulates, and sulfur dioxide. Capital expenditures: Costs incurred by ongoing activities to comply with environmental regulations and to minimize or treat output streams. Examples include wastewater treatment plants, stack scrubbers, modifications or additions to plants due to existing or pending laws or regulations, smoke control, groundwater recovery control, dust suppression systems, or other factors that positively influence the environment. Corporate programs: Activities of company environmental departments. Also, voluntary efforts to improve environmental quality such as supporting environmental education programs; collecting used oil; buying and destroying older, high-polluting cars; and providing free engine tune-ups. Environmental expenditures: Costs incurred that relate to the prevention, control, abatement, or elimination of environmental pollution. Expenditures are the incremental costs reported by a unit in a facility that would not have been incurred if environmental issues had not been considered. Low-sulfur gasoline: A specially formulated gasoline that enables the use of advanced catalytic emissions controls on gasoline-powered vehicles, primarily to reduce hydrocarbon, particulate, and nitrogen oxides emissions. Low-sulfur / Ultra-low-sulfur diesel fuel: A specially formulated diesel fuel that enables the use of advanced catalytic emissions controls, primarily to reduce particulate and nitrogen oxides emissions from diesel-powered engines. Ongoing activities: Capital, operating, maintenance, and administrative expenses associated with routine operating practices in each sector (E&P,,, and ) of the industry. media: Recurring activities that are not reported under air, water, or wastes for example, removing abandoned production platforms, and supporting oil spill cooperatives. Reformulated gasoline (RFG): A specially blended, cleaner-burning gasoline designed to improve air quality by reducing urban smog. It reduces carbon monoxide and toxic emissions as well as smog-forming emissions. It has less benzene and no heavy metals. RFG is available in all octane grades, and its use is currently required in about onequarter of the nation (see Figure 8). Remediation: Cleaning up soil and groundwater contamination. Such contamination is caused by leaks from storage tanks, pipelines, pits, settlement ponds, or underground piping. Contamination may also have resulted from practices allowed in the past, but no longer permitted. Remediation costs, because of their unique nature, cannot be extrapolated to the entire industry. Remediation costs shown in this report are only those reported by survey respondents. Research and development: Investigating new technologies to limit or reduce emissions or pollution from products and operations for example, research leading to the development and continuing improvement in reformulated gasoline and diesel fuel. Spills: Sudden releases of crude oil or petroleum products caused by malfunctions or accidents. Spills costs shown in this report are only those reported by survey respondents, do not include fines and penalties, and are not extrapolated to the entire industry. Waste management: Collecting, treating, recycling, and disposing of solid or contained wastes. It includes efforts to prevent pollution by reducing waste at the source. Water pollution: Substances discharged into bodies of water targeted by the Clean Water Act and other environmental laws for example, oils, metals, solids, and toxic chemicals. Copyright 209 API, all rights reserved. 28

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