Asset Retirement Obligations and Accrued Environmental Costs

12 Months Ended

Dec. 31, 2019

Asset Retirement Obligation and Accrual for Environmental Cost Disclosure [Abstract]

Asset Retirement Obligations and Accrued Environmental Costs

Asset Retirement Obligations and Accrued Environmental Costs

Asset retirement obligations and accrued environmental costs at December 31 were:

	Millions of Dollars
	2019			2018
Asset retirement obligations	$	280		261
Accrued environmental costs	441			447
Total asset retirement obligations and accrued environmental costs	721			708
Asset retirement obligations and accrued environmental costs due within one year*	(83		)	(84	)
Long-term asset retirement obligations and accrued environmental costs	$	638		624

* Classified as a current liability on the consolidated balance sheet, under the caption “Other accruals.”

Asset Retirement Obligations

We have asset retirement obligations that we are required to perform under law or contract once an asset is permanently taken out of service. Most of these obligations are not expected to be paid until many years in the future and are expected to be funded from general company resources at the time of removal. Our largest individual obligations involve asbestos abatement at refineries.

During the years ended December 31, 2019 and 2018, our overall asset retirement obligation changed as follows:

	Millions of Dollars
	2019			2018
Balance at January 1	$	261		268
Accretion of discount	10			10
Changes in estimates of existing obligations	31			3
Spending on existing obligations	(22		)	(15	)
Foreign currency translation	—			(5	)
Balance at December 31	$	280		261

Accrued Environmental Costs

For the year ended December 31, 2019, the $6 million decrease in total accrued environmental costs was due to payments and settlements during the year, which exceeded new accruals, accrual adjustments and accretion.

Of our total accrued environmental costs at December 31, 2019, $240 million was primarily related to cleanup at domestic refineries and underground storage tanks at U.S. service stations; $147 million was associated with nonoperator sites; and $54 million was related to sites at which we have been named a potentially responsible party under federal or state laws. A large portion of our expected environmental expenditures have been discounted as these obligations were acquired in various business combinations. Expected expenditures for acquired environmental obligations were discounted using a weighted-average discount rate of approximately 5%. At December 31, 2019, the accrued balance for acquired environmental liabilities was $246 million. The expected future undiscounted payments related to the portion of the accrued environmental costs that have been discounted are: $26 million in 2020, $24 million in 2021, $23 million in 2022, $19 million in 2023, $16 million in 2024, and $206 million in the aggregate for all years after 2024.