Occidental Petroleum 2002 Annual Report Download - page 40

OPC or certain of its subsidiaries are currently participating in environmental
assessments and cleanups under these laws at federal Superfund sites, comparable
state sites and other remediation sites, including Occidental facilities and
previously owned sites. Also, OPC and certain of its subsidiaries have been
involved in a substantial number of governmental and private proceedings
involving historical practices at various sites including, in some instances,
having been named in proceedings under CERCLA and similar federal, state and
local environmental laws. These proceedings seek funding or performance of
remediation and, in some cases, compensation for alleged property damage,
punitive damages and civil penalties.
Occidental manages its environmental remediation efforts through a wholly
owned subsidiary, Glenn Springs Holdings, Inc. (GSH), which reports its results
directly to Occidental's corporate management.
The following table presents Occidental's environmental remediation
reserves at December 31, 2002, 2001 and 2000 grouped by three categories of
environmental remediation sites:
($ amounts in millions) 2002 2001 2000
======================= =============== =============== ===============
# of # of # of
Sites Reserve Sites Reserve Sites Reserve
----- ------- ----- ------- ----- -------
CERCLA &
Equivalent Sites 124 $ 284 126 $ 320 127 $ 263
Active Facilities 14 46 14 59 14 66
Closed or Sold
Facilities 44 63 47 75 49 73
----- ------- ----- ------- ----- -------
TOTAL 182 $ 393 187 $ 454 190 $ 402
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In determining the environmental remediation reserves, Occidental refers to
currently available information, including relevant past experience, available
technology, regulations in effect, the timing of remediation and cost-sharing
arrangements. Occidental expects that it will continue to incur additional
liabilities beyond those recorded for environmental remediation at these and
other sites. The range of reasonably possible loss for existing environmental
remediation matters could be up to $400 million beyond the amount accrued. Many
factors could result in changes to Occidental's environmental reserves and
reasonably possible range of loss. The most significant are:
>> The original cost estimate may have been inaccurate.
>> Modified remedial measures might be necessary to achieve the required
remediation results. Occidental generally assumes that the remedial
objective can be achieved using the most cost-effective technology
reasonably expected to achieve that objective. Such technologies may
include air sparging or phyto-remediation of shallow groundwater, or
limited surface soil removal or in-situ treatment producing acceptable risk
assessment results. Should such remedies fail to achieve remedial
objectives, more intensive or costly measures may be required.
>> The remedial measure might take more or less time than originally
anticipated to achieve the required contaminant reduction. Site-specific
time estimates can be affected by factors such as groundwater capture
rates, anomalies in subsurface geology, interactions between or among
water-bearing zones and non-water-bearing zones, or the ability to identify
and control contaminant sources.
>> The regulatory agency might ultimately reject or modify Occidental's
proposed remedial plan and insist upon a different course of action.
Additionally, other events might occur that could affect Occidental's
future remediation costs, such as: