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

Environmental Expenditures by the U.S. Oil and Natural Gas Industry 990 206

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 2007-206 by (by sector *) $35 $30 $25 Billions $20 $5 $0 R&D and Corporate Programs Exploration and Production $5 $0 2007 2008 2009 200 20 202 203 204 205 206 * 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. 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 $339 billion since 990 toward improving the environmental performance of its products, facilities and operations $,045 for every man, woman and child in the United States. In 206 alone, API estimates that approximately $7. billion was spent on the environment; $5.3 billion was spent implementing new technologies, creating cleaner fuels and funding ongoing environmental initiatives. An additional $.7 billion went toward research and development, corporate environmental programs and spill remediation efforts. 30% of the industry s environmental expenditures in 206 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 208 API, all rights reserved.

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 888,752 2 producing oil and natural gas wells operating onshore and approximately 3,67 3 oil and natural gas platforms operating offshore in U.S. state and federal waters. These wells produce approximately 2.4 billion 4 barrels of oil and almost 32.6 trillion 5 cubic feet of natural gas annually. : The nation s 4 refineries, which process more than 8 million 6 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: By 206, 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 20 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. 2 Website link: http://info.drillinginfo.com 3 Bureau of Ocean Management - https://www.data.boem.gov/leasing/offshorestatsbywd/default.aspx 4 U.S. EIA, Monthly Energy Review October 207, Table 3. 5 U.S. EIA, Monthly Energy Review October 207, Table 4. 6 U.S. EIA, Number and Capacity of Petroleum Refineries - https://www.eia.gov/dnav/pet/pet_pnp_cap_a_(na)_8d0_bpcd_a.htm Copyright 208 API, all rights reserved. 2

Figure 2 206 Environmental Expenditures by Sector 7 (in billions of dollars) Total Expenditures = $7. billion : 3% $0.43 : 4% $0.74 : 35% $5.97 Exploration and Production: 40% $6.9 : 8% $3.0 7 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 8 (in billions of dollars) 990-206: Total Expenditures = $338.8 billion : 7% $2.6 R&D and Corporate Programs: 3% $0.6 Exploration and Production: 30% $02.5 : 49% $66. : % $37.9 8 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 208 API, all rights reserved. 3

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 4 206 Environmental Expenditures by Medium 9 (in billions of dollars) Total Expenditures = $7. billion : 28% $4.8 Water: 26% $4.5 Remediation and Spills: 6% $.0 Wastes: 0% $.6 Air: 30% $5. 9 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 208 API, all rights reserved. 4

Figure 5 990-206 Environmental Expenditures by Medium 0 (in billions of dollars) Total Expenditures = $338.8 billion : 7% $57.5 Wastes: 8% $25.5 Water: 2% $72.8 Remediation and Spills: 3% $44.3 Air: 4% $38.7 0 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 ExxonMobil As of June 205 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 208 API, all rights reserved. 5

Table Total U.S. Environmental Expenditures: 2007-206 * (in millions of dollars) Year Ongoing Activities Research and Development Corporate Programs Subtotal Remediation and Spills Total 2007,988 78 267 2,333,623 3,956 2008 7,383 5 385 7,882,490 9,372 2009 2,42 45 365 2,922,670 4,592 200 5,454 35 302 5,89 4,634 30,525 20,037 4 337,487,427 2,94 202 3,52 94 28 3,464,483 4,947 203** 4,622 6 242 4,926,372 6,298 204 6,06 204 243 6,553,379 7,93 205 7,879 326 204 8,408,288 9,696 206 5,320 509 206 6,034,025 7,060 0-Year Total 45,353,780 2,768 49,900 27,392 77,292 * 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 208 API, all rights reserved. 6

Table 2 Summary of U.S. Environmental Expenditures by Medium: 2007-206 (in millions of dollars) Year Air Water Wastes Subtotal Remediation 2 Spills 2 Total 2007 7,09 2,77 947 2,89 2,333,48 42 3,956 2008 0,7 3,033,288 2,849 7,882,32 70 9,372 2009 7,526 2,380 905 2, 2,922,342 328 4,592 200 9,699 2,672 948 2,573 5,89,906 2,728 30,525 20 4,522 2,6,08 3,336,487,8 309 2,94 202 4,766 3,763,94 3,740 3,464,97 286 4,947 203* 4,623 4,054,547 4,702 4,926,079 294 6,298 204 5,36 4,655,77 5,044 6,553 999 379 7,93 205 4,929 5,098 2,044 6,337 8,408 96 326 9,696 206 5,094 4,53,642 4,786 6,034 852 73 7,060 0-Year Total 64,026 34,957 3,250 37,666 49,900 2,257 5,35 77,292 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: 2007-206 (in millions of dollars) Sector 2007 2008 2009 200 20 202 203* 204 205 206 0-Year Exploration and production: Capital,252,904,222,068,276 2,820 3,063 4,583 3,95 2,642 23,025 O & M,962 2,5,642 2,086 2,597 2,269 3,40 3,64 6,087 3,989 30,86 Subtotal 3,24 4,45 2,864 3,54 3,873 5,089 6,464 8,224 9,282 6,63 53,20 : Capital 327 30 44 450 975,046,565,27,259 88 8,462 O & M 348 69 228 698,45,344,273,424,729,977 0,857 Subtotal 675,002 669,48 2,20 2,390 2,839 2,694 2,988 2,796 9,320 Capital 3,529 6,696 4,502 7,385 2,06 2,234,546,727,940 2,295 33,869 O & M 4,373 4,884 4,229 3,634 2,98 3,298 3,535 3,282 3,49 3,409 37,053 Subtotal 7,902,580 8,73,09 4,934 5,532 5,08 5,009 5,43 5,704 70,922 Capital 6 284 83 35 5 45 5 84 83 78 975 O & M 8 02 65 98 58 96 24 95 96 926 Subtotal 97 386 49 33 09 4 239 79 79 90,90 Research and development 78 5 45 35 4 94 6 204 326 509,780 Corporate Programs 267 385 365 302 337 28 242 243 204 206 2,768 Grand Total 2,333 7,882 2,922 5,89,487 3,464 4,926 6,553 8,408 6,034 49,900 Operations, maintenance, and administration. * In 200, Remediation and Spills are unusually high because of an outlier event. Copyright 208 API, all rights reserved. 7

Table 4 Summary of Reported U.S. Environmental Expenditures on Remediation and Spills by Sector: 2007-206 (in millions of dollars) Sector 2007 2008 2009 200* 20 202 203* 204 205 206 0-Year Exploration and Production: Remediation 646 48 566,096 223 273 276 246 22 69 4,88 Spills 63 75 87 2,64 99 50 299 8 07 3,94 Subtotal 70 556 653 3,737 334 472 425 545 393 277 8,0 Remediation 50 67 68 0 66 4 53 28 62 70,06 Spills 22 42 56 5 64 53 54 23 47 72 Subtotal 72 09 24 53 229 94 264 82 284 27,827 Remediation 34 283 23 279 278 46 359 326 304 253 3,025 Spills 49 43 77 32 23 29 28 22 8 4 436 Subtotal 363 326 390 3 30 446 387 348 322 267 3,462 Remediation 422 430 43 363 472 333 278 282 258 240 3,49 Spills 6 8 2 2 3 4 4 3 33 Subtotal 428 437 45 365 473 333 28 287 262 243 3,524 Research and Development Remediation 50 60 82 67 79 34 3 7 25 20 447 Spills 2 2 6 2 0 4 3 3 Subtotal 52 62 88 68 89 38 6 8 26 2 477 Grand Total,623,490,670 4,634,427,483,372,379,288,025 27,392 * 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 208 API, all rights reserved. 8

Table 4(i) Summary of Reported U.S. Environmental Expenditures on Remediation by Sector: 2007-206 (in millions of dollars) Sector 2007 2008 2009 200* 20 202 203 204 205 206 0-Year Exploration and Production: Capital 5 9 4 9 0 3 9 5 05 O&M 63 470 556,092 204 263 262 235 203 64 4,082 Subtotal 646 48 566,096 223 273 276 246 22 69 4,88 Capital 5 2 5 2 5 2 3 4 5 43 O&M 45 65 67 87 64 36 5 26 58 64,062 Subtotal 50 67 68 0 66 4 53 28 62 70,06 Capital 7 5 4 2 2 2 6 2 32 O&M 33 276 22 274 274 44 357 324 298 25 2,993 Subtotal 34 283 23 279 278 46 359 326 304 253 3,025 Capital 0-0 0 0 0 0 0 4 O&M 42 430 43 363 472 333 278 282 258 239 3,488 Subtotal 422 430 43 363 472 333 278 282 258 240 3,49 Research and Development Capital 50 60 82 67 79 34 3 7 25 20 447 O&M - - - - - - - - - - - Subtotal 50 60 82 67 79 34 3 7 25 20 447 Grand Total,48,32,342,906,8,97,079 999 96 852 2,257 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 208 API, all rights reserved. 9

Table 4(ii) Summary of Reported U.S. Environmental Expenditures on Spills by Sector: 2007-206 (in millions of dollars) Sector 2007 2008 2009 200* 20 202 203 204 205 206 0-Year Exploration and Production: Capital 6 9 39 3 54 42 99 22 92 62 747 O&M 57 56 49 2,628 58 57 5 78 89 45 3,67 Subtotal 63 75 87 2,64 99 50 299 8 07 3,94 Capital 2 3 7 7 6 5 5 3 62 O&M 20 29 55 44 52 45 05 49 7 44 660 Subtotal 22 42 56 5 64 53 54 23 47 72 Capital 6 25 2 7 2 5 0 0 5 3 O&M 44 33 52 2 7 7 2 2 9 9 324 Subtotal 49 43 77 32 23 29 28 22 8 4 436 Capital 0 0 0 0 0 0 2 2 6 O&M 6 7 2 3 2 3 26 Subtotal 6 8 2 2 3 4 4 3 33 Research and Development Capital 2 2 6 2 0 4 3 3 O&M - - - - - - - - - - - Subtotal 2 2 6 2 0 4 3 3 Grand Total 42 70 328 2,728 309 286 294 379 326 73 5,35 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 208 API, all rights reserved. 0

Table 5 U.S. Market Share of Survey Participants: 2007-206 Sector Year Exploration and Production Upstream Revenues (dollars) 2 Trunkline Miles (barrel miles) 3 Refinery Capacity (b/cd) 4 Gasoline Sales Volumes (gallons) 2007 46% 3% 56% 5% 2008 37% 23% 58% 5% 2009 52% 44% 57% 45% 200 37% 55% 6% 60% 20 36% 50% 66% 55% 202 29% 49% 54% 5% 203 35% 44% 56% 57% 204 27% 48% 57% 59% 205 34% 44% 53% 6% 206 35% 67% 53% 63% 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 208 API, all rights reserved.

Table 6 Margins of Error in API Estimates: 2007-206 (estimates in millions of dollars) Year Exploration and Production R&D and Corporate Programs 2007: Estimate 3,24 675 7,902 97 345 2,333 Margin of error ± 39.2% ± 3.% ± 4.2% ± 2.9% ± 53.3% ± 0.7% 2008: Estimate 4,45,002,580 386 499 7,882 Margin of error ± 2.9% ± 32.6% ± 9.% ± 7.3% ±.0% ± 8.2% 2009: Estimate 2,864 669 8,73 49 50 2,922 Margin of error ± 4.9% ± 2.6% ± 3.0% ±.7% ±.0% ± 2.6% 200: Estimate 3,54,48,09 33 437 5,89 Margin of error ± 4.% ± 0.0% ± 3.8% ± 3.5% ±.0% ± 2.9% 20: Estimate 3,873 2,20 4,934 09 450,487 Margin of error ± 3.4% ± 4.8% ± 3.3% ± 7.3% ±.0% ± 7.8% 202: Estimate 5,089 2,390 5,532 4 32 3,464 Margin of error ± 7.3% ± 4.% ± 6.6% ± 5.6% ±.0% ± 4.6% 203: Estimate 6,464 2,839 5,08 239 304 4,926 Margin of error ± 5.6% ± 23.0% ± 0.4% ± 2.4% ±.0% ± 6.% 204: Estimate 8,224 2,694 5,009 79 447 6,553 Margin of error ± 7.8% ± 23.3% ±.% ± 7.7% ±.0% ± 6.4% 205: Estimate 9,282 2,988 5,43 79 529 8,408 Margin of error ± 3.0% ± 23.7% ± 9.5% ± 8.8% ±.0% ± 8.% 206: Estimate 6,63 2,796 5,704 90 75 6,034 Margin of error ± 8.2% ± 23.9% ± 9.6% ± 6.9% ±.0% ± 9.2% Total Copyright 208 API, all rights reserved. 2

Table 7 Estimated U.S. Environmental Expenditures by Medium: 990 (in millions of dollars) Sector Air Water Wastes Total Capital 09 424 74 46 653 O&M 0 540 92 39 872 Subtotal 20 964 66 85,525 Capital 46 49 8 74 277 O&M 43 8 5 50 389 Subtotal 89 330 23 224 666 Capital 60 569 00 6,286 O&M,27 620 279 308 2,424 Subtotal,88,89 379 324 3,70 Capital 27 63 7 22 229 O&M 26 76 80 29 2 Subtotal 53 239 97 5 440 R&D 02 39 26 8 75 Corporate Programs 2 3 4 47 Grand Total 2,274 2,764 692 933 6,663 Table 8 Estimated U.S. Environmental Expenditures by Medium: 99 (in millions of dollars) Sector Air Water Wastes Total Capital 76 425 76 52 729 O&M 06 380 2 27 824 Subtotal 282 805 97 269,553 Capital 59 79 4 49 29 O&M 79 25 32 20 446 Subtotal 38 394 36 69 737 Capital,240 467 65 37,809 O&M,002 60 335 37 2,309 Subtotal 2,242,068 400 408 4,8 Capital 66 89 28 46 329 O&M 28 0 92 96 37 Subtotal 94 290 20 42 646 R&D 57 37 27 6 227 Corporate Programs 49 8 5 49 2 Grand Total 2,962 2,62 785,043 7,402 Copyright 208 API, all rights reserved. 3

Table 9 Estimated U.S. Environmental Expenditures by Medium: 992 (in millions of dollars) Sector Air Water Wastes Total Capital 73 430 99 4 743 O&M 70 393 75 85 823 Subtotal 243 823 274 226,566 Capital 8 232 5 47 365 O&M 84 294 25 98 60 Subtotal 65 526 30 245 966 Capital 2,533 573 53 23 3,282 O&M,087 528 333 578 2,526 Subtotal 3,620,0 486 60 5,808 Capital 77 232 45 2 366 O&M 35 92 85 63 275 Subtotal 2 324 30 75 64 R&D 37 26 24 27 24 Corporate Programs 8 3 8 49 78 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 74 496 4 75 859 O&M 86 288 8 22 704 Subtotal 259 785 232 287,563 Capital 06 228 0 30 374 O&M 7 267 28 232 598 Subtotal 77 496 38 26 972 Capital 2,500 567 30 9 3,25 O&M,22 457 279 536 2,483 Subtotal 3,72,023 409 554 5,698 Capital 67 6 46 2 395 O&M 65 79 00 04 347 Subtotal 232 239 46 25 742 R&D 27 30 25 46 227 Corporate Programs 3 49 53 3 246 Grand Total 4,539 2,622 902,385 9,448 Copyright 208 API, all rights reserved. 4

Table Estimated U.S. Environmental Expenditures by Medium: 994 (in millions of dollars) Sector Air Water Wastes Total Capital 66 474 29 58 828 O&M 02 289 28 22 73 Subtotal 268 763 257 270,559 Capital 98 2 6 62 288 O&M 65 97 28 294 584 Subtotal 63 38 35 356 872 Capital 2,48 48 43 2 3,8 O&M,564 586 264 402 2,85 Subtotal 4,045,068 407 44 5,933 Capital 87 60 34 3 393 O&M 96 75 90 77 339 Subtotal 283 235 24 90 732 R&D 95 26 20 35 75 Corporate Programs 3 5 2 54 94 Grand Total 4,868 2,423 854,320 9,465 Table 2 Estimated U.S. Environmental Expenditures by Medium: 995 (in millions of dollars) Sector Air Water Wastes Total Capital 73 379 90 54 596 O&M 03 262 28 233 726 Subtotal 76 64 28 287,322 Capital 23 80 3 40 246 O&M 58 95 36 275 563 Subtotal 8 275 38 35 809 Capital,795 27 74 9 2,58 O&M 2,73 543 273 362 3,35 Subtotal 3,968 84 346 38 5,509 Capital 6 08 24 7 2 O&M 73 40 62 22 297 Subtotal 34 48 86 40 508 R&D 8 2 6 38 56 Corporate Programs 24 6 7 84 4 Grand Total 4,564,95 720,245 8,445 Copyright 208 API, all rights reserved. 5

Table 3 Estimated U.S. Environmental Expenditures by Medium: 996 (in millions of dollars) Sector Air Water Wastes Total Capital 8 474 95 74 762 O&M 04 323 3 280 820 Subtotal 222 797 209 354,582 Capital 98 29 2 8 257 O&M 97 23 36 393 757 Subtotal 95 360 48 40,03 Capital 64 59 34 2 826 O&M 2,398 43 207 95 3,32 Subtotal 3,02 590 24 6 3,958 Capital 36 0 2 5 65 O&M 96 48 70 53 267 Subtotal 33 49 83 68 432 R&D 4 7 33 03 Corporate Programs 25 40 7 04 87 Grand Total 3,628,953 608,086 7,276 Table 4 Estimated U.S. Environmental Expenditures by Medium: 997 (in millions of dollars) Sector Air Water Wastes Total Capital 6 557 3 79 928 O&M 07 39 3 29 776 Subtotal 268 876 263 298,705 Capital 62 8 4 258 O&M 37 0 3 20 388 Subtotal 99 29 35 22 645 Capital 342 44 25 8 59 O&M 2,748 530 262 97 3,637 Subtotal 3,090 674 287 05 4,56 Capital 2 74 33 2 249 O&M 00 70 5 76 297 Subtotal 2 244 84 97 545 R&D 27 4 38 90 Corporate Programs 23 24 20 6 83 Grand Total 3,628 2,22 700 875 7,324 Copyright 208 API, all rights reserved. 6

Table 5 Estimated U.S. Environmental Expenditures by Medium: 998 (in millions of dollars) Sector Air Water Wastes Total Capital 64 382 54 72 772 O&M 23 35 26 240 805 Subtotal 287 697 280 33,577 Capital 2 40 5 4 468 O&M 25 22 25 76 347 Subtotal 37 53 30 27 85 Capital 95 2 4 0,078 O&M 2,52 549 297 364 3,36 Subtotal 3,067 66 337 374 4,439 Capital 6 27 6 47 384 O&M 60 96 70 3 256 Subtotal 20 366 76 78 640 R&D 45 6 7 34 02 Corporate Programs 7 5 4 44 70 Grand Total 3,573 2,277 734,59 7,743 Table 6 Estimated U.S. Environmental Expenditures by Medium: 999 (in millions of dollars) Sector Air Water Wastes Total Capital 7 339 45 58 658 O&M 23 385 284 343,35 Subtotal 239 724 430 400,793 Capital 464 8 484 O&M 29 44 9 79 37 Subtotal 40 607 27 8 855 Capital 467 9 32 7 597 O&M 2,30 459 78 202 2,970 Subtotal 2,597 550 20 209 3,567 Capital 9 95 2 3 30 O&M 43 65 23 74 305 Subtotal 62 6 25 87 435 R&D 35 2 3 29 79 Corporate Programs 2 8 4 94 8 Grand Total 3,085 2,062 699,00 6,846 Copyright 208 API, all rights reserved. 7

Table 7 Estimated U.S. Environmental Expenditures by Medium: 2000 (in millions of dollars) Sector Air Water Wastes Total Capital 48 598 3 08 984 O&M 23 295 94 232 744 Subtotal 270 893 225 339,728 Capital 35 254 9 5 324 O&M 73 336 82 307 798 Subtotal 08 59 0 322,22 Capital 572 82 28 82 864 O&M 2,384 408 202 82 3,077 Subtotal 2,957 590 230 64 3,94 Capital 8 67 0 7 9 O&M 22 56 27 44 48 Subtotal 40 23 27 50 239 R&D 2 9 3 7 9 20 Corporate Programs 9 7 2 36 54 Grand Total 3,474 2,26 593 92 7,205 Table 8 Estimated U.S. Environmental Expenditures by Medium: 200 (in millions of dollars) Sector Air Water Wastes Total Capital 93 508 25 29 855 O&M 57 393 45 225 920 Subtotal 250 90 270 355,776 Capital 3 255 23 2 3 O&M 54 385 56 43 638 Subtotal 85 639 79 45 948 Capital 977 06 24 48,56 O&M 2,576 443 272 39 3,430 Subtotal 3,553 549 296 87 4,586 Capital 25 6 0 4 200 O&M 23 53 37 47 60 Subtotal 48 24 37 62 360 R&D 29 7 5 62 Corporate Programs 7 5 30 43 Grand Total 4,054 2,337 690 794 7,875 Copyright 208 API, all rights reserved. 8

Table 9 Estimated U.S. Environmental Expenditures by Medium: 2002 (in millions of dollars) Sector Air Water Wastes Total Capital 0 369 95 96 670 O&M 74 209 77 257 67 Subtotal 84 578 72 353,287 Capital 83 73 4 33 293 O&M 58 87 60 403 708 Subtotal 4 360 64 436,00 Capital 2,092 57 2 4 2,376 O&M,88 579 279 99 2,838 Subtotal 3,973 736 29 24 5,24 Capital 47 6 6 224 O&M 46 6 28 20 54 Subtotal 93 77 28 8 378 R&D 72 33 6 4 225 Corporate Programs 7 3 93 203 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 96 593 88 89 967 O&M 49 223 69 273 64 Subtotal 45 86 257 362,580 Capital 9 206 27 2 345 O&M 09 203 64 26 637 Subtotal 200 409 9 282 982 Capital 3,00 03 6 24 3,243 O&M,978 458 273 5 2,824 Subtotal 5,078 56 289 40 6,068 Capital 4 58 0 O&M 34 50 24 45 53 Subtotal 45 9 24 03 263 R&D 2 38 6 8 84 Corporate Programs 6 0 5 22 Grand Total 5,595,97 667,020 9,99 Copyright 208 API, all rights reserved. 9

Table 2 Estimated U.S. Environmental Expenditures by Medium: 2004 (in millions of dollars) Sector Air Water Wastes Total Capital 74 407 40 76 696 O&M 83 297 98 43 909 Subtotal 57 704 238 507,605 Capital 7 50 2 30 253 O&M 52 23 55 302 640 Subtotal 23 38 57 332 893 Capital 3,70 2 70 3,363 O&M,985 499 279 06 2,869 Subtotal 5,55 60 29 76 6,232 Capital 37 50 0 48 35 O&M 26 44 22 46 38 Subtotal 63 94 22 94 273 R&D 60 24 4 24 Corporate Programs 3 0 224 228 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 329 443 94 54,020 O&M 6 243 26 403 889 Subtotal 445 686 320 457,909 Capital 90 38 3 20 25 O&M 7 204 75 238 587 Subtotal 6 34 78 258 838 Capital 4,03 283 5 87 4,398 O&M 2,354 539 289 94 3,376 Subtotal 6,368 822 304 28 7,774 Capital 33 4 55 32 33 O&M 9 28 2 3 90 Subtotal 5 42 67 63 223 R&D 69 5 5 43 3 Corporate Programs 24 6 3 92 225 Grand Total 7,8,93 776,293,0 Copyright 208 API, all rights reserved. 20

Table 23 Estimated U.S. Environmental Expenditures by Medium: 2006 (in millions of dollars) Sector Air Water Wastes Total Capital 4 580 64 43,298 O&M 275 55 736,276 Subtotal 522 854 39 880 2,574 Capital 208 76 2 42 429 O&M 59 226 37 305 626 Subtotal 267 402 39 347,055 Capital 3,42 30 28 3 3,5 O&M 2,89 59 278 324 4,02 Subtotal 6,033 829 306 356 7,524 Capital 3 44 2 43 02 O&M 0 24 2 30 76 Subtotal 23 68 4 73 78 R&D 67 2 6 8 03 Corporate Programs 0 2 224 237 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 336 520 295 0,252 O&M 8 248 82,350,962 Subtotal 58 768 477,45 3,24 Capital 46 45 3 33 327 O&M 35 04 27 82 348 Subtotal 8 249 30 24 675 Capital 3,38 306 33 53 3,529 O&M 3,083 734 390 66 4,373 Subtotal 6,22,040 422 29 7,902 Capital 30 73 0 3 6 O&M 4 32 2 23 8 Subtotal 44 05 2 36 97 R&D 49 3 4 78 Corporate Programs 7 2 257 267 Grand Total 7,09 2,77 947 2,89 2,333 Copyright 208 API, all rights reserved. 2

Table 25 Estimated U.S. Environmental Expenditures by Medium: 2008 (in millions of dollars) Sector Air Water Wastes Total Capital 400 865 475 65,904 O&M 256 33 290,65 2,5 Subtotal 656,78 765,86 4,45 Capital 95 84 4 27 30 O&M 62 26 59 309 69 Subtotal 57 445 64 336,002 Capital 6,038 55 38 70 6,696 O&M 3,58 732 395 76 4,884 Subtotal 9,69,283 432 246,580 Capital 67 88 0 30 284 O&M 20 28 23 3 02 Subtotal 87 6 23 60 386 R&D 85 4 5 5 Corporate Programs 8 0 375 385 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 27 56 254 36,222 O&M 3 20 87,32,642 Subtotal 384 77 44,268 2,864 Capital 72 229 3 37 44 O&M 25 87 8 99 228 Subtotal 97 36 2 36 669 Capital 3,93 467 43 79 4,502 O&M 2,883 747 383 26 4,229 Subtotal 6,796,24 426 296 8,73 Capital 26 4 0 5 83 O&M 2 8 24 65 Subtotal 39 59 39 49 R&D 05 9 5 6 45 Corporate Programs 6 356 365 Grand Total 7,526 2,380 905 2, 2,922 Copyright 208 API, all rights reserved. 22

Table 27 Estimated U.S. Environmental Expenditures by Medium: 200 (in millions of dollars) Sector Air Water Wastes Total Capital 235 52 25 05,068 O&M 87 293 252,354 2,086 Subtotal 423 805 467,460 3,54 Capital 95 59 9 87 450 O&M 36 348 52 262 698 Subtotal 3 507 6 449,48 Capital 6,537 665 56 27 7,385 O&M 2,504 624 337 69 3,634 Subtotal 9,04,289 393 296,09 Capital 0 24 0 35 O&M 3 9 8 47 98 Subtotal 23 43 8 49 33 R&D 76 28 7 24 35 Corporate Programs 5 296 302 Grand Total 9,699 2,672 948 2,573 5,89 Table 28 Estimated U.S. Environmental Expenditures by Medium: 20 (in millions of dollars) Sector Air Water Wastes Total Capital 286 580 206 204,276 O&M 236 336 396,629 2,597 Subtotal 52 96 603,833 3,873 Capital 78 332 8 447 975 O&M 59 547 82 458,45 Subtotal 236 879 00 905 2,20 Capital,666 266 9 65 2,06 O&M 2,025 474 283 37 2,98 Subtotal 3,69 739 302 202 4,934 Capital 8 35-8 5 O&M 6 7 33 58 Subtotal 4 47 7 4 09 R&D 54 26 5 28 4 Corporate Programs 5 3 327 337 Grand Total 4,522 2,6,08 3,336,487 Copyright 208 API, all rights reserved. 23

Table 29 Estimated U.S. Environmental Expenditures by Medium: 202 (in millions of dollars) Sector Air Water Wastes Total Capital 56,547 328 429 2,820 O&M 53 37 47,383 2,269 Subtotal 669,864 745,8 5,089 Capital 38 278 9 622,046 O&M 85 666 89 504,344 Subtotal 222 944 98,25 2,390 Capital,667 332 2 25 2,234 O&M 2,63 550 39 266 3,298 Subtotal 3,829 882 340 48 5,532 Capital 7 3-6 45 O&M 8 4 83 96 Subtotal 9 39 4 89 4 R&D 27 28 6 33 94 Corporate Programs 0 6 20 28 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 52,587 372 583 3,063 O&M 348 422 692,939 3,40 Subtotal 869 2,009,064 2,522 6,464 Capital 204 44 6 95,565 O&M 7 606 02 494,273 Subtotal 276,046 08,409 2,839 Capital,072 266 37 70,546 O&M 2,35 66 328 24 3,535 Subtotal 3,422 882 365 42 5,08 Capital 0 87-9 5 O&M 5 9 5 06 24 Subtotal 4 95 5 24 239 R&D 23 4 3 2 6 Corporate Programs 8 9 2 24 242 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 208 API, all rights reserved. 24

Table 3 Estimated U.S. Environmental Expenditures by Medium: 204 (in millions of dollars) Sector Air Water Wastes Total Capital 930 2,230 52 9 4,583 O&M 280 593 74 2,028 3,64 Subtotal,209 2,823,254 2,938 8,224 Capital 59 287 6 89,27 O&M 80 74 08 522,424 Subtotal 239,00 3,34 2,694 Capital,337 58 28 204,727 O&M 2,287 553 307 35 3,282 Subtotal 3,624 7 335 339 5,009 Capital 3 70 0 84 O&M 4 8 5 78 95 Subtotal 6 78 5 89 79 R&D 3 30 7 36 204 Corporate Programs 27 2 3 200 243 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 572,59 498 606 3,95 O&M 337,49 996 3,263 6,087 Subtotal 909 3,009,494 3,869 9,282 Capital 72 226 3 958,259 O&M 22 879 39 589,729 Subtotal 94,05 4,547 2,988 Capital,449 227 7 247,940 O&M 2,38 646 378 50 3,49 Subtotal 3,767 872 395 397 5,43 Capital 4 63 0 6 83 O&M 4 6 4 82 96 Subtotal 8 69 4 98 79 R&D 3 3 7 257 326 Corporate Programs 2 0 3 69 204 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 208 API, all rights reserved. 25

Table 33 Estimated U.S. Environmental Expenditures by Medium: 206 (in millions of dollars) Sector Air Water Wastes Total Capital 473,256 4 50 2,642 O&M 22 977 653 2,39 3,989 Subtotal 694 2,233,064 2,640 6,63 Capital 57 299 3 359 88 O&M 83 945 33 76,977 Subtotal 340,244 36,076 2,796 Capital,722 39 20 234 2,295 O&M 2,260 6 408 30 3,409 Subtotal 3,982 930 428 364 5,704 Capital 7 57 0 5 78 O&M 6 6 4 95 Subtotal 3 63 4 09 90 R&D 42 34 6 427 509 Corporate Programs 22 0 3 70 206 Grand Total 5,094 4,53,642 4,786 6,034 Copyright 208 API, all rights reserved. 26

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 206, the data used to complete the survey represent a large share from 35 percent to 67 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 $6.0 billion in 206 (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 9.2 percent. This means that API estimates with 95-percent certainty that expenditures were between $4.6 billion and $7.5 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 208 API, all rights reserved. 27

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 208 API, all rights reserved. 28

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