Sunoco 2006 Annual Report Download - page 27

spectively, and are expected to total $178 million in 2007. Refining and Supply’s capital
program also includes a $50 million project, which is designed to expand the Toledo refin-
ery’s crude unit capacity by 20 thousand barrels per day. Both projects are expected to be
completed in the first half of 2007 and include significant capital for related base infra-
structure and refinery turnarounds, as well as capital required under the 2005 Consent
Decree.
The Refining and Supply capital plan for the 2006-2008 period also includes a project at
the Philadelphia refinery to reconfigure a previously idled hydrocracking unit to enable
desulfurization of diesel fuel. This project, which is scheduled for completion in early 2009
at an estimated cost of $225-$275 million, is designed to increase the facility’s
ultra-low-sulfur diesel fuel production capability by 40-50 thousand barrels per day. In
addition, a hydrocracker conversion project at the Toledo refinery, targeted for completion
by the end of 2008 at an estimated cost of $10-$20 million, is designed to expand hydro-
cracking capacity at this facility by 5-10 thousand barrels per day. Other previously an-
nounced projects to further expand the Toledo refinery’s crude unit and conversion
capacity by 2008 have been deferred.
While a significant change in the overall level of total capital spending in Refining and
Supply during the 2007-2008 period is not expected, the Company currently believes that
the cost of many of these capital projects could be significantly higher than anticipated.
The pressures on project scope, costs and timing as well as labor productivity issues are also
likely to result in the extension of project completion dates and the deferral of some lower-
return projects. The Company may also elect to cancel or reduce the scope of projects
which no longer meet required investment-return criteria.
The following table sets forth Sunoco’s planned and actual capital expenditures for addi-
tions to properties, plants and equipment. Actual capital expenditures are presented in a
manner consistent with the 2007 plan amounts in the table as well as with amounts pre-
sented in Sunoco’s consolidated financial statements. The Company’s significant acquis-
itions (see Note 2 to the consolidated financial statements) are included as footnotes to
the table so that total capital outlays for each business unit can be determined.
(Millions of Dollars) 2007 Plan 2006 2005 2004
Refining and Supply $ 792 $ 712 $687 $463*
Retail Marketing 139 112 117 103**
Chemicals 79 62*** 55 56*
Logistics 125 119†79†† 75*
Coke 209 14††† 32 135
Consolidated capital expenditures $1,344 $1,019 $970 $832
* Excludes $250 million acquisition from El Paso Corporation of the Eagle Point refinery and related chemical and logistics assets,
which includes inventory. The $250 million purchase price is comprised of $190, $40 and $20 million attributable to Refining and
Supply, Chemicals and Logistics, respectively.
** Excludes $181 million acquisition from ConocoPhillips of 340 retail outlets located primarily in Delaware, Maryland, Virginia and
Washington, D.C., which includes inventory.
*** Excludes a $14 million purchase price adjustment to the 2001 Aristech Chemical Corporation acquisition attributable to an earn-out
payment made in 2006. The earn out, which relates to 2005, was due to realized margins for phenol exceeding certain agreed-upon
threshold amounts.
†Excludes the acquisition of two separate crude oil pipeline systems and related storage facilities located in Texas, one from Alon USA
Energy, Inc. for $68 million and the other from Black Hills Energy, Inc. for $41 million.
†† Excludes $100 million acquisition from ExxonMobil of a crude oil pipeline system and related storage facilities located in Texas and $5
million acquisition from Chevron of an ownership interest in the Mesa Pipeline.
††† Excludes $155 million acquisition of the minority interest in the Jewell cokemaking operations.
The Company’s 2007 planned capital expenditures consist of $621 million for income im-
provement projects, as well as $352 million for base infrastructure spending, $114 million
for turnarounds at the Company’s refineries and $257 million for environmental projects.
The $621 million of outlays for income improvement projects consist of $101 million at-
tributable to the Philadelphia Project, $19 million attributable to the crude unit upgrading
project at the Toledo refinery, $66 million relating to the project at the Philadelphia
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