2013 hse annual report web final

8/10/2019 2013 HSE Annual Report Web FINAL

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Health, Safety,

Environment


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32013 HSE Annual Report

At Baker Hughes, our goal is to make today, and every day, a

Perfect HSE Day. Simply put, this means no injuries, no accidents,

and no harm to the environment. We work to achieve this one

day at a time, by taking care of each other. And that means our

employees are looking out for their teammates at Baker Hughes,

our industry partners at jobsites and members of our communities.


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4 Baker Hughes Incorporated

Executive Summary

Our goal is to make today, and every day,

a Perfect HSE Day, one without recordable

injury or illness, serious spill or release, and

serious motor vehicle accident across the

company. During 2013, we improved our

HSE performance in many areas, achieving

fewer employee injuries and vehicle

accidents, minimizing spill volumes, and

advancing our conservation of energy and

water. Our accomplishments were, however,

overshadowed by the loss of six of our

colleagues, which emphasizes that we cannot

lose our focus on mitigating life-critical risks.

HSE goal performance

We strive for flawless execution in our

operations and believe that we can achieve

365 perfect HSE days in a year. Our performance

metrics highlight that we are progressing, but

we still have more to do.

Table 1 Summary of results of 2013 HSE goals

Goal Target Result

Zero fatalities 0 6 work-related employee fatalities

10% Reduction in Total Recordable

Incident Rate (TRIR)


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This report provides an overview of Baker Hughes health, safety,environmental and social responsibility performance for 2013.

In each section, we provide an overview of the goals, associated

activities and achievements, and future direction to bring

continual improvement.


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During 2013, we emphasized our mission to

Make Everyday a Perfect HSE Day, along with

the following key HSE focus areas:

n

Continue culture shift balancing personaland process safety

n Use work activity analysis for

injury prevention

n Promote healthy and fit behaviors

n Learn from high potential incidents,

near misses, and observations

n Mitigate transportation safety risks

n Enhance resource conservation

n Promote customer and

community engagement

Corporate Social Responsibility

Our efforts in Corporate Social Responsibility

continue to be recognized. We achieved

top tier ranking in our industry sector in thefollowing sustainability performance indices:

n Dow Jones Sustainability Ranking Leader

in the Energy Equipment and Services

sector of the World and North America

Sustainability Indices

n Carbon Disclosure Project (CDP) Leader in

the Energy Equipment and Services sector

n CR Magazines Best Corporate Citizens

Highest-ranked oilfield service company in

the energy industry sector

n Bloomberg Environment, Social and

Governance Disclosure Index Leader in

the energy sector

Executive Summary


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We achieved these accolades through our

efforts to engage our employees, achieve

a culture of diversity and inclusion, and be

recognized as a great place to work. Our

employees around the world enjoy supporting

our communities in a range of social activities,

often in collaboration with our customers.

Health and wellness

Our long term health goal is to optimize the

health of our employees for a positive impact

to our business and the individual. Our healthprogram involves protecting worker health and

influencing our employees to manage their

personal health. With a robust occupational

health and hygiene program and informative

wellness communications, this years health

activities included exposure monitoring for

validation of engineering controls; increased

awareness of breast cancer with our pink drill

bits campaign; and supporting community

emergency response team learning centers.

Our efforts continue to elevate the

H in HSE.

Personal and process safety

In many areas of the world, Baker Hughes

teams were individually successful in achieving

365 Perfect HSE Days. Regrettably, we

experienced six work-related fatalities within

the first four months of 2013. To help eliminate

serious injuries and fatalities in the workplace,our new Life Rules! program was developed.

Employees performed nearly 43,000 Stop Work

actions in 2013, a notable 60% increase from

the previous year. Safety performance improved

with a 14% reduction in Total Recordable

Incident Rate and an 18% reduction in Days

Away From Work Case Rate. Hand and back

Our award-winning facility in Shafter, California built to our sustainable building standards


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injuries continue to be the most frequent

body parts affected, making up 44% of the

recordable injuries.

Transportation performance improved

with a 4% reduction in our Motor Vehicle

Accident Rate. We achieved a 9% reduction

in the overall accident frequency (all severity

classifications) and a 5% decrease in

preventable accidents. The majority of our

vehicle accidents were due to excessive speed

for conditions, improper following distance,

poor driver awareness of surroundings and

inconsistent Journey Management practices.

These causes reflect the need for continued

training and strong oversight programs.

With a helicopter crash resulting in the loss

of two employees, we conducted a thoroughair-safety audit on helicopter providers under

direct contract and initiated the assessment

of more than one hundred helicopter service

operators used by our clients to transport our

employees to offshore or remote land locations.

We also began working with an international

aviation safety consultant to develop stronger

operational controls and tools to help us

mitigate the hazards of helicopter operations

for our employees.

Environmental performance

We continue to focus on energy efficiency

and water conservation to align with our

sustainability strategy and commitment to

manage the risks associated with climate

change. We achieved a 13% reduction in

our resource use, as measured by our use of

electricity, natural gas and water. Greenhouse

gas emissions from our activities were also

reduced, eliminating approximately 53,500

metric tons of CO2e. This success is the result

of integrating energy management standards

into our HSE management system and the

continued commitment of our employees to

protect the environment and the communities

where we work and live.

Spill performance improved from 2012,

with a 6% decrease in spill volume. With

proper chemical management practices and

effective spill response planning, most spills

are contained and all are cleaned up quickly,

with minimal and temporary environmental

impacts. Weve directed our efforts on the

The Navigation team holds the record for the most Chairmans HSE Excellence awards with 12 wins

Executive Summary


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process-related causes of spills, enhancing

these elements in our reporting system and

emphasizing spill prevention practices.

Sustainability improvements in our products

and services continue with the expansion of our

Bifuel (dual fuel) fleets of hydraulic fracturing

units. These bifuel units can replace up to 70%

of the diesel fuel with natural gas, reducing

greenhouse gas emissions. At year end, we had

converted nearly 100 pumps in our hydraulic

fracturing fleet. Other advances include the

further development of environmentally

preferred chemicals and new technologies that

reduce the amount of freshwater required.

In 2013, environmental compliance costs were

USD 85 million, essentially flat year on year. We

spent about USD 7 million in capital projects to

improve energy efficiency and reserved

USD 34 million to address environmental

liabilities at 72 sites worldwide.

Driving flawless execution

We collaborate with our customers and industry

groups to address the HSE challenges presented

in our operations and align our internal

standards to reflect best practice. In 2013,

we obtained full global IADC accreditation

for our Competence Assurance Program. To

further drive consistency and conformance, we

migrated our HSES MS into the Baker Hughes

Operating System (BHOS) in order to provideemployees a centralized location for all HSE and

technical procedures. Bureau Veritas conducted

our first global headquarter ISO 14001 and

OHSAS 18001 audit, as part of our multisite

certification effort. During 2013, we had 70

facilities certified to ISO 14001 and 22 facilities

also certified to OHSAS 18001.

Recognition

In our annual HSE recognition program, we

presented top-performing teams with the

Chairmans HSE Excellence Award. This year, wealso introduced two new awardsthe Presidents

Perfect HSE Day award, and the Presidents

HSE Performance awardto recognize teams

that achieved 365 Perfect HSE Days. Entries

for these awards were received from across

the enterprise with winners coming from all of

our major business sectors. The 500-member

team at the Navigation Manufacturing facility

in Houston, Texas won the Chairmans HSE

Excellence award for the twelfth time and has

achieved more than 12 million man-hours

without a Days Away From Work case. Our

employees have also been recognized externally

by our customers and industry groups for their

stellar HSE accomplishments.

Chairman and CEO, Martin Craighead presents the

Chairmans HSE Excellence Award to Jeff Merritt, Plant

Director and Susan Bell, HSE Manager at Navigation

Manufacturing Facility, Houston, USA


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Corporate Social

ResponsibilityIn 2013, Baker Hughes employees continued

efforts to ensure we provide a preferred

workplace, and to foster a culture of openness

and trust. In addition, employees supported

community improvement projects, and also

collaborated on HSE challenges with our

customers. As a result of our efforts, we were

recognized as leaders in the energy sector in a

number of investor rankings.

Investor corporate social

responsibility rankings

Baker Hughes participates in a number of

investor sustainability assessments as a way of

benchmarking our global citizenship. Most of

the surveys evaluate a broad range of business

areas such as energy and the environment,

governance and compliance, risk management,

employee relations, and human rights.

Our corporate social responsibility (CSR) efforts

were recognized by the following investment

and media institutions:

n Dow Jones Sustainability Index.For the

second year in a row, Baker Hughes was

announced as a world sustainability leader

on the 2013 Dow Jones Sustainability (DJSI)

World Index. And for the first time, we

were also listed on the DJSI North America

Index. Baker Hughes was named as the

industry leader in the Energy Equipment

and Services sector.

n Carbon Disclosure Project (CDP).In

the area of energy efficiency and climate

change, we were the highest-ranked

oilfield service company in the Energy

Equipment and Services sector. CDP

performance results are used in many

investor sustainability analyses.

DID YOU KNOW?

The rise of investor-led initiatives such as CDP reflects

the growing interest in socially responsible investment.

CDP has 722 institutional investors representing

USD 87 trillion in assets.

Section 1


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Our commitment to being good corporate citizens is reflected in

the decisions and actions of our employees in the work we do

every day. We realize that we earn our license to operate by beingresponsible members of the communities in which we live and

work. This involves considering not only the economic impacts of

our decisions, but also the environmental and social impacts, and

finding the right balance between people, planet, and profit.


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n CRMagazines Best Corporate Citizens.

In their 2013 Industry Sector Best

Corporate Citizens, CR Magazine listed

Baker Hughes as the highest-rankingservice company in the Energy sector at

seventh place overall. The list is compiled

from publicly available data covering

seven categories: environment, climate

change, employee relations, human rights,

governance, finance, and philanthropy.

n Bloomberg Environment, Social and

Governance (ESG) Disclosure Index.

Over the last three years, our company has

consistently achieved significantly higher

Bloomberg ESG performance disclosure

scores as compared with other companies,

including oilfield service companies.

Our employees

At Baker Hughes, we rely on the knowledge

and commitment of our diverse workforce at all

levels of our organization to meet our business

goals and achieve profitable growth. We foster

a culture of proactive engagement where

employees are involved and enthusiastic about

their work and feel a strong connection tothe Company.

Diversity and Inclusion.We recognize that

by attracting, developing, and retaining a

diverse talent pool, our employees will make

better business decisions and the Company

will be a better partner with our stakeholders.

In addition, we believe in an inclusive culture

where everyone can excel regardless of gender,

age, nationality, or religion.

In early 2013, the North America Womens

Resource Group (NA WRG) hosted its second

annual two-day summit. Nearly 450 employees

participated, including 100 executives and

managers and 175 WRG team members

connected remotely from 8 locations across

North America. The summit demonstrates

Baker Hughes gives students first-hand look at oil and gas careers



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our commitment to our diversity and

inclusion initiatives through networking and

panel discussions on topics to facilitate the

recruitment, development, and retention ofwomen employees.

In August, the NA WRG sponsored a visit of

22 Houston-area high school students to our

drill bits facility in The Woodlands, Texas. The

students spent the day learning about careers in

the oil and gas industry. This event was part of

the Science, Technology, Engineering and Math

(STEM) program which encourages students to

pursue careers in these disciplines. Through its

support of STEM, Baker Hughes helps promote

technology degrees and a career in the oilfield

service industry.

Employee engagement.Each year, Baker

Hughes measures employee engagement,

job satisfaction, and commitment to the

Company and colleagues. Seventy-two percent

of our employees completed the confidential

survey in 2013 to relay what is working, and

where we can improve. Overall, employee

engagement levels remained positive and

higher than an external company benchmark

at an enterprise level. Areas of strength include

feeling a sense of accomplishment, teamwork

and positive environment, and understandingexpectations. Areas for further improvement

include development and career opportunities,

employee recognition, and actions taken to

effectively compete in a global market. Survey

results enabled group managers to establish

and implement 2014 action plans around these

strengths and vulnerabilities.

Three questions related to HSE were included in

the employee engagement survey. These were

among the top positive responses as follows:

n 92% of employees agreed Every day, my

work group strives to create the Perfect

HSE Day with no injuries, spills or

driving accidents

n 95% of employees agreed Everyone in

this Company is responsible for reaching

our HSE goals

n 89% of employees agreed When an HSE

incident occurs, we determine the root

cause and implement solutions to

prevent reoccurrence

DID YOU KNOW?

In the employee engagement survey, 74% of employees

agreed Baker Hughes is a good place to work.


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Employee Ombuds.Baker Hughes ombuds

(o3) office is a progressive initiative that

was voluntarily established by executive

leadership and follows the ethical principlesestablished by the International Ombuds

Association. It provides employees a safe

and confidential place to obtain information,

discuss their concerns, and evaluate options.

The ombudsmen work with employees through

any job-related issue, from a minor annoyance

to a serious concern on policy or law. The o3

complements, but does not replace or compete

with, any other resource in the Company, such

as line management, human resources, HSE,

legal, or our ethics and compliance helpline.

The existence and use of the o3 further assures

that the Companys core values are not merely

philosophical, but an integral part of how

we work. The o3 completed the first full year

of operation in 2013. Initially, the office was

established to serve employees in the U.S.,

and Trinidad and Tobago, and in October, was

expanded to support our employees in Canada.

Military Recruitment.In February, Martin

S. Craighead, President and Chief Executive

Officer, signed into effect a new military

recruitment program. This program allows us to

tap into a diverse, dedicated, and highly skilled

group of individuals that are transitioning from

military service to civilian life. Veterans bring

leadership, drive, dedication, discipline, and

loyalty to Baker Hughes. The goal is to fill 15%

of available positions in the U.S. with veterans.

Veterans resource groups will be an employee-

run resource open to all employees that are

passionate about advocating for veterans.

Resource group members will volunteer their

time supporting our veteran employees.

Martin Craighead states his commitment to the military

recruitment program at the Veterans Resource

Group (VRG) meeting

DID YOU KNOW?

More than 550 employees have reached out to the

o3. These employees represented all levels of the

organization, all groups and product lines, and range

from the newly hired to our long-tenured employees.



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Supporting our communities

Baker Hughes strives to make a positive

community impact with charitable contributions

at corporate, region and geomarket levels. In

2013, Baker Hughes operating regions made

contributions of more than USD 8 million to

charities around the world. In addition, the

Baker Hughes Foundation contributed around

USD 3 million, primarily to organizations

that target improvements in social sectors

supporting education, health, youth, and

culture (Fig. 1).

Employees in Ghana renovate a local school for deaf children

Education / scholarships

Matching Gifts ProgramUnited Way

Health

Children / youth

Culture / museums

Other grants

Figure 1. Baker Hughes Foundation charitable

contributions 2013


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Baker Hughes employees have been active

in a wide range of social initiatives, such as

charitable events that promote sustainable

benefits to the enterprise.

For example, Baker Hughes won an award

from Ghanas Western Region Chamber of

Commerce and Industry for active involvement

in the community. Projects include the

renovation of a local school for the deaf in

which employees repaired the schools ceiling,

roof, and concrete floor, and painted several

classroom areas. Baker Hughes donated more

than 20 computers as well as equipment for

the sewing and woodworking classrooms.

The project gave employees the opportunity

DID YOU KNOW?

Following the devastation of Typhoon Haiyan in the

Philippines, Baker Hughes employees in Southeast Asia

raised funds that were matched by the Company. A

total of USD 10,000 funded relief aid to those directly

affected, along with 20 boxes of essential items

provided by our employees in Kuala Lumpur.

More than 100 Baker Hughes interns volunteered at the Houston Food Bank



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to socialize with children and teachers, and

better understand the needs of the region.

Other community projects in Ghana included

donating treated mosquito nets and awardingscholarships to six female engineering students.

Each year, Baker Hughes holds a social event

with our Houston-based university interns,

and last summer, 111 interns volunteered at

the Houston Food Bank for a day, packing a

total of 31,928 pounds of food and 26,606

individual meals. We wanted to do something

that would enable our university interns to

experience the community they were working

in, said Cheryl Piccio, University Relations

Intern Program Team Lead. We chose the

Food Bank because Baker Hughes has been a

strong supporter of the charity for many years.

The interns really enjoyed the event and it

made their summer internship more meaningful

because it allowed them to touch the lives of

our citys needy.

Collaborating with our customers

We also support our customer sustainability

objectives. For example, we opened the

Baker Hughes Petroleum Education Centre

at Universiti Teknologi PETRONAS (UTP) in

Malaysia last year. The new center at UTP

offers an interactive, hands-on approach to

education. It is part of our pledge to foster

education in Malaysia, working in partnership

with PETRONAS and three other oil and gas

companies. Baker Hughes also awarded four

scholarships to university students.

PETRONAS official Dato Wee Yiaw Hin (left) at the opening of the new Baker Hughes Education Center


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Health and Wellness

At Baker Hughes, the H in HSE means a

healthy employee. Healthy employees are

productive and make good decisions for our

company and our customers. The objective ofour Employee Health and Wellness program is to

optimize the health of Baker Hughes employees

to generate a positive impact on our business.

The components of the health program protect

worker health through occupational health and

hygiene, ensuring that the job assignment fits

the worker, and promoting personal health with

wellness support.

Wellness communications

Communicating health information continues

to be a vital part of our health program. Each

month, our medical director (MD) provides aninformative bulletin, the Monthly MD Message,

to all employees. The emphasis is on personal

wellness, protection and early detection of

disease. Our 2013 health topics included:

prostate cancer, breast health, back health,

exercise, stress, along with heat induced and

insect borne illnesses.

Occupational Healthand Hygiene

Personal Health and Hygiene

Work related Protect worker health

Medical surveillance Exposure assessment Silica Malaria

Assignment related Ensure worker health

Fit for duty Drugs and alcohol

Person related Influence personal health

MD messages Health advisories Health fairs

Flu shots Community outreach Smoking cessation

Job Placement andAssignment

EmployeeHealthandWellness

Section 2


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We believe that encouraging our employees to adopt healthybehaviors at work and at home improves their quality of life. We

provide programs on occupational health and hygiene, fitness for

assignment and personal wellbeing. Healthy employees are more

productive, which also benefits our company and customers.


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Health advisories remain an important part

of our wellness communications. With topics

ranging from polio to measles and dengue

fever, these disease specific advisories guide our

employees and their families when frequencies

increase in their area, providing information

about symptoms, treatment, travel precautions,

and most importantly, means of protection.

Cultivating healthy employees requires

teamwork. To that end, Human Resources and

HSE partnered to create a stronger, consistent

message on wellness with Wellness 360.

Through this partnership, resources are focused

enterprise-wide on a single topic to enhance

the wellness message and coordinate health

promotion topics.

DID YOU KNOW?

Health advisories by the numbers:

n 62 issued in 2013

n 36 different countries

n 21 different endemic diseases

The pink drill bit arrives for use in Mossell Bay, South Africa

Health and Wellness


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In 2013, Wellness 360 emphasized our

support of breast cancer awareness in both

men and women. On the first day of Breast

Cancer Awareness month, Baker Hughes helda press conference in our booth at the Society

of Petroleum Engineers Annual Technical

Conference and Exhibition (SPE ATCE) in New

Orleans. More than 100 media representatives,

customers, and employees joined in the

celebration that included giveaways and pink-

inspired refreshments.

During the press conference, Derek Mathieson,

Vice President of Strategy and Corporate

Development, announced our USD 100,000

donation to the Susan G. Komen Foundation

and launched the Doing our Bit for the Cure

campaign. This campaign was designed to

spread awareness by painting and distributing

500 pink drill bits to customers around the

world. These drill bits also included the Susan

G. Komen ribbon logo. Everywhere, from the

rig floor to the customers office, operators and

Baker Hughes employees are starting to look

out for these pink bits and send back stories

and photos.

Occupational health and hygiene

Industrial hygiene efforts focus on the

anticipation, recognition, quantification, and

control of occupational exposures to vapors and

dusts. We continue to leverage our industrial

hygiene services by using external resources

while providing a standard data gathering and

reporting protocol, and by having our own

industrial hygienists work closely with our field

HSE representatives to provide expertise and

training. This year, we collected extensive dataon hazards such as chemicals, noise, and dust

particles to assure safe working conditions for

our employees, customers, and contractors.

Engineering controls were developed and

validated to reduce the potential exposure

to respirable crystalline silica on hydraulic

fracturing jobs. Such control measures can

reduce exposures through process changes,

with the goal of reducing personal protective

equipment requirements. Health professionals

worked hand in hand with Pressure Pumping

engineers to validate the effectiveness of

proposed engineering controls through

exposure monitoring. One area receiving special

attention was the equipment used to move sand

during hydraulic fracturing. Improved controls

under evaluation include adding a local exhaust

system to the sand mover; providing automated

control of the equipment, thus removing an

operator from the regulated area; and providing

discharge chutes and covers on the transfer belt

to the blender. All these engineering changes

effectively reduce worker exposure.

Hydraulic fracturing sand mover with internally designed

vacuum system


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Malaria

Our continuing emphasis on malaria reduction

has yielded results. Malaria cases were reduced

85 percent, from 12 cases in 2012 to two

in 2013. When travelling in regions where

malaria is present, our employees consult

with a travel medicine specialist about the

use of antimalarial medication. They also

obtain two kits, a Malaria Personal Protection

Kit and a Malaria Survival Kit from the local

Malaria Control Officer. The Malaria Personal

Protection Kit is effective in preventing bites

from malaria-infected mosquitoes, as well as

from mosquitoes infected with other diseases,

including West Nile Virus, Dengue Fever, andYellow Fever.

Health incidents

Despite best efforts, Baker Hughes experienced

a number of workplace-related illnesses. Of

the 125 health-related incidents reported,

48 percent were related to chemical exposure,

24 percent were from insect bites, and

21 percent were from heat stress. Chemical-

related incidents continue to be a contributor to

worker illness. Our health program emphasizes

the prevention of spills, personal protective

equipment, and awareness to potential

exposures. Prevention of our other top health

risks, such as insect bites and heat stress, are

covered in our monthly health messages.

Industrial hygiene internships

Our industrial hygiene interns such as Joseph Jay

Prescott benefit from the practical experience ofparticipating in engineering/industrial hygiene

projects. As one of ten interns hosted over the

past five years, Jay actively participated in this

years evaluation of engineering controls for

hydraulic fracturing activities. Other projects took

him to a drilling fluids location and several bulk

cement plants in the southwest to evaluate worker

exposure to dust and noise. He also monitored welding fumes, metal working fluids,

paints and biocides at various locations, including well sites. The data he provided on

our acrolein based biocide not only provided information to verify work practices, it also

produced key information for a health hazard profile to share with customers.

Jay Prescott, Industrial Hygiene Intern

2013 Health-related categories

Chemical 48%

Insect bites 24%

Heat stress 21%

Other 7%

Health and Wellness


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Emergency response

Emergency response planning continues to

play a critical role in our Employee Health

and Wellness program across our operationsglobally, as demonstrated in the photograph of

hands-on training in Latin America. In Houston,

Texas, Baker Hughes has partnered with the

Harris County Emergency Corps. to improve

training capabilities for local emergency

response teams. A donation of USD100,000

has enabled the emergency corps to add several

training rooms, a computer laboratory, and two

simulator rooms, and also to add personnel to

train 300 people annually.

We continue to promote wellness, prevent

disease, and evaluate and reduce exposures to

chemical, physical and biological agents that

can affect health. The Wellness objective for

2014 includes promoting health stations to

provide a central facility location for fitness and

nutrition information. These stations will also

allow employees to monitor their own personal

metrics like weight, body mass index and

blood pressure. In 2014, efforts will continue

to reduce exposure and improve engineering

controls to protect worker health.

DID YOU KNOW?

Reducing sedentary behaviors by sitting less and moving

more can improve your health. Active ideas:

n Have walking conversations versus sitting

n Take family walks after dinner

n Track your steps and aim for 10,000 steps a day

n Stand up and move after 30 minutes of sitting

Emergency response training - photo courtesy of Harris

County Emergency Corps

Employees practicing medical emergency procedures in

Santa Cruz de la Sierra, Bolivia


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Personal and

Process SafetyAt Baker Hughes, our goal is to make today,

and every day, a Perfect HSE Day that is,

a day with no injuries, no accidents, and no

harm to the environment worldwide. The

Perfect HSE Day initiative was developed and

launched in 2013 to simplify and personalize

HSE performance for our nearly 60,000

employees. During the year, more than 60

local teams achieved 365 Perfect HSE Days,

comprising nearly 7,500 employees, or 9% of

our workforce. As a company, we achieved one

month of Perfect HSE Days.

However, we tragically lost six of our fellow

employees in the first four months of the

year in work-related accidents. Transportation

accidents resulted in four of the six losses

and remains one of our highest risk activities.

Two losses were the result of a single vehicle

accident and two others were from a fatalhelicopter crash. The final two fatalities were

the result of a dropped-object incident and an

electrocution. To help eliminate serious injuries

and fatalities in the workplace, Baker Hughes

highlights Life Rules! which are a formal set

of rules related to life critical hazards. There are

ten Life Rules, each with a corresponding icon

to help employees quickly identify the hazard.

Stop Work

Stop Work authority is a proactive measure

that employees can deploy to prevent incidents

whenever they have concerns about inadequate

control of HSE risks. In 2013, we elevated

Stop Work beyond an expectation of our

employees; it became a personal obligation

and responsibility. Employees performed nearly

43,000 Stop Work actions, an increase of 60%

from the previous year and more than twice

the number from two years ago (Fig. 1). This

demonstrates that employees are increasingly

using their Stop Work authority, which is

reflected in our mature safety culture and

reduced incident frequency.

DAYS

30

permit

Figure 1. Stop work yearly comparison

0

10,000

20,000

30,000

40,000

50,000

2008 2009 2010 2 011 20132012

Section 3


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We take safety, including process safety very seriously. This means

understanding our risks and ensuring the right controls are in

place throughout our operations. Through the new Life Rules!

Program, we are focusing on the most critical hazards and risks to

protect our colleagues, customers and others that work with us.


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Enterprise employee injury/illness

performance

We achieved a 14% reduction in 2013 Total

Recordable Incident Rate (TRIR), surpassing

our 10% goal for the year. Although 66 fewer

recordable incidents occurred than in the

previous year, 580 employees still suffered a

recordable injury.

In addition to successfully lowering our TRIR,

we achieved an 18% reduction in our Days

Away From Work Case Rate (DAFWCR). Our

key HSE performance metrics continue to

outperform the International Association of

Drilling Contractors benchmark, and are in the

top quartile across the industry (Fig. 2).

Our loss control triangle (Fig. 3) shows that

employees submitted 487,060 observations

in 2013, a 20% increase year-on-year. This

increase correlates directly with our improved

safety and environmental performance.

0.0

0.5

1.0

1.5

2.0

3,000

3,500

4,000

20132011 2012

6

152

422

1,486

487,060

Days Away From Work Cases

Fatalities

Other Recordable Cases

First Aid Cases / Near Misses

Observations

Figure 3. Loss control

Figure 2. Three year injury rates and rig count

TRIR

DAFWCR

IADC TRIR

SSE TRIR

Rig count

Personal and Process Safety


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Injury/illness data analysis

Figs. 4 and 5 illustrate the top five injured body

parts and the six most common types of injuries

sustained in 2013. Hand and back injuriescontinue to be the most frequent body parts

affected. Combined, these injuries constitute

44% of the recordable injuries for the year

(Fig. 4). Although sprains and strains continue

to be the most prevalent type of injury, we

experienced a 14% reduction compared to

2012 and 31% compared to 2011 (Fig. 5).

Recordable injuries predominantly occurredat the wellsite or at a Baker Hughes facility.

Together these locations accounted for 82%

of the recordable injuries (Fig. 6).

Figure 6. Recordable incidents by locale

Client-wellsite

Baker Hughes Service Center / Warehouse

Baker Hughes Manufacturing / Engineering

In-transit

Figure 4. Top five most affected body part recordable incidents

Figure 5. Nature of injury

0

50

100

150

200

Sprain/Strain

Laceration Fracture Contusion Abrasion/Scrapes

Crushing

Hand 27%

Back 17%

Shoulder 10%

Arm 8%

Knee 8%

Other types 30%

2011

2012

2013


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Transportation safety

Our transportation safety performance

improved last year. Our recordable Motor

Vehicle Accident frequency improved 4%, andour overall accident frequency rate (all severity

classifications) decreased by more than 9%.

While these are very encouraging results, we

still have many opportunities for improvement.

As in the past, the majority of our recordable

accidents were due to a combination of factors,

but excessive speed for road and weather

conditions, improper following distance,

poor driver awareness of surroundings and

inconsistent journey management practices

continue to be our most frequent contributors,

reflecting the need for continued training and

strong oversight programs.

To address these issues, we completed a

thorough driving training program strategy

addressing not only the Baker Hughes-

specific driver training components (core

defensive driving), but also driver trainers and

assessors (Transportation Trainer and Assessor

Certification Course). Further support for these

two programs will come with the introduction

of the Transportation Safety Management

Leadership Program in Q1 2014. All three

programs will also be introduced globally. And,

we have initiated plans to pilot a state-of-the-

art driving simulator.

DID YOU KNOW?

With an increased focus on performing tasks correctly,

Baker Hughes achieved a 31% decrease in sprains and

strain-related injuries in the last two years.

5-year motor vehicle accident rates

0.0

0.5

1.0

1.5

2.0

2.5

2009 2010 2011 2012 2013

MVCR

MVAR

LVAR

PVAR



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Air transportation

Following the tragic loss of two employees in

a helicopter crash in April 2013, we conducted

a thorough air safety audit of all threehelicopter providers under direct contract with

Baker Hughes. We also initiated a systematic

worldwide safety assessment of more than

100 helicopter service operators provided by

our customers to transport our employees to

offshore or remote land locations. Additionally,

we have developed stronger helicopter safety

processes and are working closely with an

international aviation safety consultant to

develop stronger operational controls and

tools to help us mitigate these hazards.

In 2014, we will increase our focus on leading

indicators to measure and drive overall HSE

performance. Our key proactive measures will

include the following.n Active leadership engagement in HSE

through hands-on activities such as job site

visits or town hall meetings

n Strong employee participation in our

behavior-based observation program

n Robust reporting of near-miss events with

resolution of issues before a negative

impact or injury occurs

n Evaluation of safe driving behaviors

through our in-vehicle monitoring systems

n Prompt closure of audit findings/

nonconformances

DID YOU KNOW?

In Thailand, where many of our employees ride scooters

to work, we provided motorcycle helmets to promote a

stronger safety culture on and off the job.

In 2013, Baker Hughes vehicles travelled more than

310 million miles globally. This is roughly equivalent

to 682 round trips to the moon or almost 13,000 times

around the globe.


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Process safetyIn order to prevent major accidents arising

in our field, pipeline or chemical processingoperations, Baker Hughes applies a process

safety framework (Figure 1) that establishes

good design principles, engineering,

construction, operating, and maintenance

practices, while ensuring that products are

structurally and mechanically sound. This

framework includes the application of barriers

(control measures) and safeguards designed to

control risks that could result in a major spill,

release of gases to the air, or harm to people,

including surrounding communities.

Downstream process safety

Our downstream process safety system ensures

safe and reliable operations at our chemical and

industrial services reaction and blend plants. In

addition to compliance with local and country

regulations, all of our plants are governed by

the Baker Hughes process safety management

system. Our efforts over the past two years

have focused on developing and implementing

components of our process safety management

system including:

n Process safety information (PSI)

contains details on the hazardous

chemicals used or produced by the

process, the technology of the process,

and the equipment in the process. PSI for

our plants, including Piping & InstrumentDiagrams, equipment data sheets, process

control data, and related information

was reviewed and verified for accuracy

in 2013. The plants use a combination

of manual and automated controls to

regulate the chemical processes, and

operating procedures are

certified annually.

n Process hazard analysis (PHA)

a systematic engineering approach for

identifying, evaluating, and controlling

potential hazards of processes involving

highly hazardous chemicals. All PHAs are

current including the required five-year

revalidation, and PHA action items are

tracked for completion. Layers of protection

or barriers are analyzed and installed to

mitigate identified risks.

n Management of change (MOC)

the system to address contemplated

changes to a process, evaluate theirimpact on health, safety, and environment

(HSE), and identify necessary changes to

operating procedures. The MOC process

was enhanced in 2012 and our chemical

plants average 100 MOCs each month,

demonstrating their commitment to safely

managing the continued growth and

change in our operations.

Design andEngineering

HumanFactors

MultibarrierPhilosophy

Measurementand Review

Competency

Process andProcedures

RiskManagement

Figure 1. Process safety framework



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Our employees are trained on their specific

processes and are recertified on a regular

schedule. Our inspection and testing of

equipment for mechanical integrity includesRecognized and Generally Accepted Good

Engineering Practices, which include

industry recommended practices, equipment

manufacturer requirements, and general

preventive maintenance recommendations.

Upstream process safety

Our upstream process safety program focuses

on products and services to assure wellbore

integrity. This is accomplished through the

application of barriers (control measures), and

safeguards designed to control risks that could

result in the release of hydrocarbons, causingharm to people or the environment.

Various tools are used to ensure subsurface

threats are understood and controls are in place

to mitigate hazards. In 2013, Baker Hughes

launched our Think Process Safety campaign

along with 10 Critical Requirements of Upstream

Process Safety (Fig. 2).

Figure 2. Ten critical requirements of upstream process safety

BARRIERS

Know your equipment,

process, and people

barriers and confirm

they are in place

and tested.

LOST BARRIER

If a barrier is lost,

immediately stop

and fix it.

SUBSURFACE

UNCERTAINTIES

Know andcommunicatesubsurfaceuncertainties.

WELL CONTROL

EQUIPMENT

Know your wellcontrol equipment

and confirm its

certified and tested.

TRAINED PEOPLE

Confirm all peopleare trained andcompetent forthe task.

POLICIES &PROCEDURES

Follow policies

and procedures

or get approval

to deviate.

HRA

RISK ASSESS

Perform riskassessments during

planning and for

changes.

WALK THE LINE

Walk the line ontemporary rig-ups

and confirm set-up

= layout drawing.

EMERGENCYRESPONSE

Test your emergency

responses and

conduct regular

drills.

REPORT / LEARN

Report Process

Safety incidents and

Process Safety Near

Misses, investigate,

share, and learn.


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As an expansion to our traditional failure,

mode and effects analyses, we overlaid an

additional risk analysis methodology, the bow-

tie analysis (Figure 3), to provide a more visualrepresentation of potential threats and control

measures to ensure jobs are conducted safely.

A series of 22 bow-tie analyses were conducted,

field tested, and published last year for

operations presenting the most critical HSE risks.

In 2013, our competency management

program gained global certification through

the International Association of Drilling

Contractors. Through completing a tailored

learning and development path, with regular

worksite assessments, our workforce develops

competence to perform safety-critical tasks.

To date, more than 75,000 competency

assessments have been completed and are

tracked in our learning management system.

In Q4 2013, an enhanced upstream process

safety awareness training course was launched,

which focused on the 10 critical requirements

and on risk management during servicedelivery. To date, 11,546 employees have

completed this training.

Midstream process safety

Our midstream business helps our customers

assess and maintain the integrity of their

new and existing pipeline systems and

process plants. We use a rigorous protocol

of engineering design, review, and hazard

and operability analysis conducted jointly by

the client and Baker Hughes engineers. In

2013, we conducted more than 3,000 tenders

using this process. Our support occurs during

the precommissioning, commissioning, and

decommissioning phases of projects. For 2014,

the midstream team will expand its assessment

capabilities through the use of bow-tie analysis

which will be included in our competency

assurance program.

Baker Hughes was awarded second place in SHELLs Process Safety Video Challenge for our musical number

Think Process Safety!



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Baker Hughes is committed to working with

industry groups and regulatory agencies

to further strengthen the principles of

process safety in our organization and the

industry. Additionally, we partner with our

industry colleagues on various committees

in organizations such as the Center for

Offshore Safety and the International Oil and

Gas Producers Association to develop new

standards, best practices, and key performance

indicators related to process safety in the oil

and gas industry.

Failure of C1Equipment

Example:Loss of PrimaryContainment

Fatality

Loss of WellControl

Spill orRelease to

Environment

Follow customeremergency response

procedures


procedures


procedures

ImproperDesign

PDM Process

Failure TrendingAnalysis

Pre-jobAnalysis

Function Testingat Rig Site

Review ofCustomer/ClientRequirements

EquipmentMalfunction

Figure 3. Managing risk with bow-tie analysis


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Environmental

PerformanceOur environmental stewardship efforts continue

to focus on resource conservation to reduce

energy use, greenhouse gas emissions, and

water consumption. This focus aligns with

our sustainability strategy, contributing

to the long-term profitable growth of the

company while enhancing the lives of people

and the environment. We achieved a 13%

overall reduction in our resource use in 2013,

exceeding our 10% goal. A critical component

of our success was the collaborative efforts

of our business units with internal and

external partners, and the engagement and

commitment of our employees.

Resource conservation

Our overall resource reduction results were

normalized to revenue and calculated as a

weighted average from our top three resources:

n Electricity 40%

n Natural gas 40%

n Water 20%

Resource reduction results

Overall resource reduction: 13%

Electricity: 10%

Natural gas: 13%

Water: 17%

Greenhouse gas emissions: 16%

Section 4


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Our commitment to protect the environment is anchored in our

HSE and Climate Change Policy Statements. These policies outline

our commitment to promote a culture of continuous improvement

through the development and implementation of operational

standards and best practices that protect the environment and the

communities in which we live and work.


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We achieved a 10% reduction or more in each

resource category: electricity, water, natural gas,

off-road diesel, propane, and fuel oil (Fig. 1).

These results are calculated from resource data

for 221 facilities tracked through GreenLink,

our environmental performance database.

These facilities represent more than two-thirds

of the energy and water used across our global

suite of manufacturing and operations facilities.

Our conservation efforts continue to enhance

our financial performance. During 2013, our

total energy savings were estimated at about

USD 10 million.

Energy efficiency and greenhouse

gas emissions

To support our commitment to manage the

risks associated with climate change, wecalculate greenhouse gas emissions from our

global energy use. Three years ago, we began

reporting energy savings achieved through

energy efficiency projects, and in 2013 we

developed a formal energy management

standard for identifying significant energy

sources and implementing measures to

effectively reduce energy use.

-50

-40

-30

-20

-10

0Electricity Natural Gas Water Propane

Off-RoadDiesel

PercentageChangeYear-on-Year

Fuel Oil

Goal 10%

Figure 1. Progress towards 10% reduction goal by resource type

Environmental Performance


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We met our greenhouse gas emissions

reduction target for 2013, eliminating 38,000

metric tons of carbon dioxide equivalent (CO2e)

through heightened employee awareness

of energy conservation and specific energy

reduction projects at our facilities. Through our

continued application of sustainable building

technologies, we saved an additional 8,000

metric tons of CO2e. Emissions from fleet

transportation and rental car mileage decreased

3% from 2012, eliminating an extra 7,500

metric tons of CO2e.

Minimizing our carbon footprint

We remain committed to data quality and

transparency in reporting our carbon footprint.

Last year, we were the highest ranked service

company in the energy sector for the Carbon

Disclosure Project. Our score was a significant

improvement over the previous year, and we

ranked highest in the areas of governance andstrategy, verification, stakeholder engagement,

and opportunities.

We continue to improve energy efficiencies

in our facilities. Our most significant energy

conservation effort last year focused on

building automation systems, including

upgrades or new installations at 51 locations

worldwide. Highlights of additional projects

include the following:

n Redesigning water chiller systems

n Converting from diesel power generators

to grid-supplied electricity

n Optimizing production scheduling

(minimized equipment shutdown

and startup)

n Retrofitting light fixtures

n Replacing equipment with

energy-efficient versions

We will continue to improve energy efficiency in

future years as we implement our new energy

management operational control procedure,

which is aligned with the recent ISO 50001

standard for energy management systems.

DID YOU KNOW?

Our total CO2e savings of 53,500 metric tons was equal

to the annual greenhouse gas emissions from more than

11,000 passenger vehicles.

Emissions reduction and CO2e savings

Energy Resources:38,000 metric tons CO2e

Sustainable Buildings:8,000 metric tons CO2e

Transportation:7,500 metric tons CO2e


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Water conservation

Water is critical for the upstream oil and gas

industry, so reducing fresh water use through

proactive water management practices is ahigh priority. Our efforts focus on developing

technologies and services to promote water

reuse and maximize water recycling. In 2013,

these efforts reduced water use at our facilities

by 17% (normalized).

Fig. 2 illustrates the results of our efforts to

reduce water use and disposal, and

increase recycling.

To further reduce the potential impact on

fresh water sources, we use several water

management tools (e.g., IPIECAs Global Water

Tool for Oil and Gas, GEMI Local Water Tool

and the Maplecroft Global Water Security Risk

Index) to identify operations that are located

in water-stressed areas. Approximately 25%

of the countries we operate are at risk for

water shortages. Knowing which areas have a

higher potential for water scarcity allows us to

better plan water management strategies and

reduce risk.

DID YOU KNOW?

Across the company we conserved 308,000 metric tons

of water, which is enough to fill more than 1.5 million

standard-size bath tubs.

Figure 2. Water profile

0

500

1,000

1,500

2,000

2,500

3,000

Mass(ThousandsofMetricTons)

Disposed Wastewater*Water Consumption

2011 Actual

2012 Actual

2013 *Normalized



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Facility water cycle management in diverse conditions

Managing the challenges of water supply and demand is an expanding concern on a

global basis, especially in regions where water is a scarce resource. Our internal watermanagement tool was developed to assess and quantify water management components

and identify strategies and technologies for managing a facilitys water cycle. This tool was

used for seven facilities in Africa and its use was later expanded globally. As a result, water

management techniques were successfully incorporated at facilities in Iraq and Brazil, as

highlighted below.

Basra Iraq facility

At our base of 600 employees, about 7,500m3 of potable water was consumed per month

with an average of 180m3 disposed every day, representing about 70% of the supplied

water. Optimization efforts included separation of potable and nonpotable (i.e., river) water

sources to reduce the use of potable water, which is in scarce supply in the area. The water

quality required for process water was met by substituting filtered river water. We reduced

potable water use by 5,400m3 per month and reduced costs by 34%. Waste water disposal

was also cut by 16% with the installation of a wastewater recycling system.

Macae, Brazil

A recycling system was installed to treat oily waste water generated from washing

oilfield trucks, skid units, and other equipment. A flocculation system was chosen, with

approximately 143m3/month of wastewater treated and reused, reducing fresh water use

and saving more than USD 19,000 per month for disposal.


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Last year, our water conservation projects

included identifying water sources other than

potable water for use in operational processes

and landscape irrigation. An internal watercycle management tool was developed to

further our understanding of operational

water usage requirements and the associated

environmental aspects so we can effectively

manage water throughout its life cycle. The

development of a strong plan for the water

management cycle reduces costs, ensures a

sustainable supply, and addresses community

needs and concerns. This tool is used when

designing new facilities and when upgrading

existing locations.

Waste minimization and recycling

Our approach to waste minimization

emphasizes source reduction (elimination),

recycling, reuse or reclamation, and proper

disposal of any remaining wastes. Waste

minimization aligns with our sustainability

efforts by conserving natural resources,

preventing pollution, and reducing disposal

and compliance costs.

All operations are required to prepare a waste

management and minimization plan to identify

waste streams and reduction strategies along

with approved waste vendors. In 2013, waste(992,000 metric tons) and recycling (26,000

metric tons) volumes decrease by 1% and

41%, respectively. The decrease in waste

was due largely to the increased efforts of

our Pressure Pumping product line and our

facility consolidations. Wastewater remains

our largest waste stream and comprises

98% of our total waste. Less than 1% of all

waste (approximately 8500 metric tons) was

categorized as hazardous. We believe our

recycling volumes have decreased concurrent

with improved efficiency throughout our

operations, especially in supply chain.

About 70% of our total recycled materials

is comprised of metals (55%) and solvents

(15%). The remaining 30% consists of

wastewater, wood, and empty industrial or

consumer containers.

DID YOU KNOW?

Our employees recycled 120 metric tons of electronics in

2013. This is equal to the weight of 9 Big Ben bells in the

Elizabeth Tower at the Westminster Palace

in London.



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Recycling revenue

We continue to collaborate with vendors

to remarket and recycle obsolete electronic

equipment and to incorporate mixed mediamaterials into existing services. As illustrated in

Fig. 3, USD 18 million in revenue was obtained

from our recycling efforts, with USD 0.5 million

expensed to recycle some materials.

Additionally, we have diverted 9% of our used

materials from landfills by recycling, which

resulted in a disposal offset of aboutUSD 0.4 million in the U.S. alone. The net

gain from recycling is about USD 17.5 million.

DID YOU KNOW?

More than 15,000 metric tons of metal were recycled by

employees last year. This is enough metal to construct

225 Boeing 747 airplanes.

Our estimated total CO2e savings from recycled paper,

cardboard and wood resources is equal to the amount

of carbon sequestered annually by 2,397 acres of forest.

This is equal to nearly 700,000 trees.

Net gain

USD 17.5 million

Disposal offset

USD 0.4 million

Cost

USD 0.5 million

Revenue

USD 18 million

Figure 3. Recycling revenue


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Spill performance

Any spill can pose a risk through potential

harm to the environment, possible community

impacts, worker exposure, and unnecessarywaste and downtime. Our goal is to have a

Perfect HSE Day every day and that means no

harm to the environment. Spill prevention is

critical and benefits everyone.

In keeping with the Perfect HSE Day, we

implemented comprehensive spill prevention

procedures and response plans in 2013, along

with engineered specifications to improve

our chemical storage and handling practices.

We also analyzed spills based on the total

number of spill incidents and total volume,

with an emphasis on spills considered serious

or major (1-10 bbls and >10 bbls, respectively).

Additionally, spills occurring within and outside

containment were given special consideration,

including those released to water or soil.

In 2013, we had 1,129 spill incidents totaling

3,719 barrels, reflective of a 6% normalized

decrease in volume year-on-year. Additionally,

the volume of serious/major spills decreased5% as illustrated in Fig. 4.

Of the spill incidents we classify as serious or

major, 61% occurred at customer sites, 33% at

our facilities, and 6% during transport. While

the number of spills is higher at customer

sites, the overall volumes are greater at our

Baker Hughes facilities. Only 5% of our serious/

major spill incidents occurred offshore, which

represents only 1% of the total volume.

Spill incidents

Most spills reported are relatively low-volume

incidents, with just 6 spills (1%) contributing

50% of the total volume. Of our serious

and major spill incidents, 55% were fully or

partially contained, which accounts for nearly

70% of the total volume (2,408 bbl). These

large spills receive considerable attention,

with executive participation in the incident

review. However, we expect the cause of

all spills to be investigated, so appropriate

corrective actions can be taken to prevent

recurrence and eliminate spill risk factors

throughout our operations. We continue to

improve spill transparency by encouraging

employees to report all spills, large or small,

in our incident reporting system. As illustrated

in Fig. 5, reporting of spills less than 1 barrelincreased 8% from last year, while total volume

decreased 6%.0

1,000

2,000

3,000

4,000

5,000

2011

VolumeinBBLs

2012 2013

Figure 4. Spill severity by volume

Minor (10 bbl)



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Effective response strategies ensure that all

spills are remediated promptly with minimal and

temporary environmental impact. Continued

visibility of all spill incidents, appropriatecorrective action and spill prevention campaigns

will continue to drive improvements.

Spill causes

Identifying the causes of spills enables training

efforts and resources to be targeted to these

risks. The top five causes of serious/majorspills (top 6% with 80% total volume) during

2013 are illustrated in Fig. 6. Valves left open

contributed to about one-third (31%) of these

spills. The second most frequent cause was

listed as Other, which includes factors such

as weather, sabotage, and human error.

DID YOU KNOW?

In 2013, Baker Hughes launched the Greenlink

Dashboard. The Dashboard provides real-time

performance data to show progress on

environmental goals.

Figure 6. Spill causes

Valve left open 35%

Other 30%

Equipment / pump failure 20%

Hose rupture / popped off 8%

Overfill 7%

Figure 5. Number of spill incidents by severity

0

200

400

600

800

1,000

1,200

2011

NumberofSpillIncidents

2012 2013

Minor (10 bbl)


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Spill costs

While spill incidents are an important indicator

of environmental performance, they also affect

our environmental costs. Total spill costs wereapproximately USD 4.1 million in 2013. This

marks a 5% overall decrease year on year, and

a 37% decrease in third-party cleanup costs.

Continued emphasis on inspections, analysis

of risk factors, proper controls, and effective

response have contributed to this success.

Environmental reserves

Environmental remediation is managed

centrally, and accrued reserves are audited

periodically to ensure compliance with theU.S. Sarbanes-Oxley Act and Securities and

Exchange Commission requirements. At year

end, we reserved a total of USD 34 million for

remediation at 72 sites, including USD 4 million

for Superfund Liabilities. Cash spending totaled

about USD 7 million, down 11% from 2012.

The environmental reserve trend for the past

three years is illustrated in Fig. 7.

DID YOU KNOW?

As part of our Perfect HSE Day initiative, a reusable

mug program was launched at 17 offices. More than

8800 employees made the commitment to stop using

Styrofoam in favor of the reusable stainless steel mug.

These efforts reduced the use of Styrofoam cups by

60%. With this success, the reusable mug program will

be expanded globally.

Figure 7. Environmental reserve trend

0

5

10

15

20

25

30

35

40

2009

ReserveinMillions

201220112010 2013

Remediation

Superfund

Figure 8. Benchmark analysis:

Environmental reserves as a percent of revenue

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Percentage

ofRevenue

Environmental Cost Type

Superfund Remediation Tota l Reserves

* Note: Data obtained from publicly available information

(2013 10K filings)

Customer reference

Peer reference

Baker Hughes



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Celebrating Earth Day around the globe

Baker Hughes employees around the world celebrated Earth Day 2013 by participating in

activities that promote environmental awareness and connect employees with the world or

natural environment around them.

For example, the Wireline Services group in Vietnam organized an employee coastal

cleanup event to protect the environment and promote awareness among employees and

the community (pictured, below right).

In India, our employees at the Kakinada base planted trees around their location to

celebrate Earth Day. In a similar effort in Colombia, our employees started a tree planting

initiative in 2012 with 40 employees planting 65 trees in the forest. This event generated

interest and enthusiasm, and in 2013, more than 166 employees planted 285 trees

(pictured, below left).

Benchmark analysis:

Environmental reserves

An evaluation of Baker Hughes environmental

reserves as a percentage of revenue (Fig. 8)indicates our liabilities are lower than our

peer and client references. Our lower ratio

compared with the client references may

reflect some differences in the nature of the

businesses and associated risks. However, our

lower remediation costs also may suggest more

effective due diligence to prevent acquisition of

new cleanup sites along with strategic, cost-

effective management of existing sites.

Environmental investment

In 2013, Baker Hughes incurred an estimated

USD 85 million in costs for environmental

protection and compliance management,including permitting, waste disposal, spill

response, and other environmental activities.

These costs are essentially flat year on year.

Environmental capital costs of about USD

10 million include about USD 7 million to

conserve energy, with the remainder for

secondary containment structures to prevent

environmental impacts from spills and other

protective measures such as emission control

systems to protect air quality.


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Environmental stewardship in

hydraulic fracturing operationsWhile hydraulic fracturing has existed for many

years, it has attracted increased attention

in recent years because of the potential for

social and environmental impacts. We manage

the risks associated with this activity through

continued efforts to reduce environmental

impacts and by engaging with communities and

regulators to understand stakeholder concerns.

In October, Baker Hughes joined eight other

companies that are members of the Petroleum

Services Association of Canada to unveil a

code of conduct related to hydraulic fracturing

operations. Development of the code involved

consultations with community stakeholders over

a six-month period. The code outlines standard

practices for technical and environmental

performance, as well as guidelines companies

should follow when dealing with community

groups and other stakeholders. It is intended

to increase public confidence in hydraulic

fracturing through transparency and consistent

best practices for these activities.

Fracturing pumps converted to run on natural gas



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We place a special emphasis on mitigating the

environmental risks associated with fracturing

chemicals. Our SmartCarequalified systems

and products have been in use since 2009 to

ensure the use of environmentally-preferred

products. SmartCare products are screened

through an advanced proprietary process. Since

2011, the component substances used in our

fracturing fluids have been disclosed in the

FracFocusregistry. The chemical disclosure

registry serves a vital role in communicating

important chemical information to the public.

DID YOU KNOW?

At year-end 2013, our environmental services group

completed 239 product evaluations as part of the

SmartCare program, and developed a library of 251

substance hazard profiles, of which nearly 80% pertain

to hydraulic fracturing fluids.

Laboratory testing of ClearStarfracturing fluid


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In 2013, Baker Hughes announced the

introduction of the new ClearStarfracturing

fluid system that is an alternative to traditional

guar-based fluids. The supply of guar is highly

subject to the impact of climate change (drought

or flooding) in the areas from which this natural

product is sourced. The ClearStar system uses

a refined cellulose derivative polymer to attain

superior viscosity. In product testing, the

ClearStar fracturing fluid system produced an

average of 11% more cumulative oil over 350

days of production compared to wells stimulatedusing premium, guar-based fluids.

Two years ago, we introduced our first

bifuel (also called dual-fuel) pumps into our

U.S. hydraulic fracturing fleets. The Rhino

Bifuel pumps are able to replace as much as

70% of the engines diesel fuel supply with

natural gas (field gas, liquefied natural gas,

or compressed natural gas) with no loss in

hydraulic horsepower. This not only reduces

the carbon footprint of these jobs, but also

improves operational efficiency, lowers costs,

reduces safety risks, and capitalizes on the

availability of North Americas abundant naturalgas production supplies. We achieved a 32%

Dry on the Flyprocess reduces transportation



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DID YOU KNOW?

Our Baker Hughes Water Management team has treated

and reused more than 50 million barrels of water for

hydraulic fracturing use in the past 18 months. In 2013,

Baker Hughes treated water for use in more than

350 wells in North America. Our operating capacity is

currently 2.5 million barrels of water per day.

reduction in greenhouse gas emissions using

these bifuel pumps, based on calculations

completed for more than 50 wells. At the

end of 2013, we had 80 completed pumps(six fleets) in U.S. land and 19 (one fleet) in

Canada. We are committed to convert all our

pumps to run on natural gas.

Since hydraulic fracturing uses more water

than any other phase of drilling or completing

a well, our Baker Hughes Water Management

team continues to develop technologies and

services that conserve fresh water through

reuse, thereby reducing transportation and

disposal. In November 2013, Baker Hughes

and DuPont Chemical Solutions announced

a strategic arrangement to bring more

sustainable water treatment technology to the

oil and gas industry. Chlorine dioxide will be

used in conjunction with our Baker Hughes

H2prOwater management service so water

used in pressure pumping can be treated

onsite and reused. Chlorine dioxide has been

used for more than 60 years to prevent the

growth of bacteria and corrosion in municipal

drinking water, food processing, and industrial

cooling applications.

Historically, fracturing fluids were manually

premixed and then transported to the wellsite

for application. To prevent the premature

hydration of the gelling agent during

transportation, a large amount of mineral oil-

based material had to be added. The process

of mixing the fluids was labor intensive and

required protection from chemical exposure.

Our Baker Hughes Dry on the Flyhydration

system is a more sustainable solution that

eliminates these HSE issues. The mixing process

is automated at the wellsite, so the need for

mineral oil is eliminated. Since only the dry

powder is transported to the wellsite, the volume

of material transported is reduced by about

60%. In 2013, this resulted in approximately 280

fewer truck trips, with an associated reduction in

fuel consumption and emissions.


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Driving Flawless

ExecutionIn order to minimize HSE risks and prevent

harm to people and the environment, it is

critical to understand the industry trends that

present HSE issues. One of the ways that we

validate our understanding of the trends is

through collaboration with our customers.

Engaging in this way, we share best practices

and identify ways to address the industrys

new challenges through our HSE management

system. We assure our management system

using tools such as the Baker Hughes Operating

System (BHOS), external certification to

international standards; and internally, through

our audit program.

Shaping industry HSE performance

Baker Hughes works collaboratively within the

industry and directly with customers to address

common HSE issues and emerging challenges.

We are an active member of the International

Association of Oil and Gas Producers, serving

on the executive Management Committee

as well as many technical committees and

workgroups. Baker Hughes also is a member

of and volunteers subject matter expertise to

the technical committees and workgroups

of the American Petroleum Institute; and, is

active in committee work within the Society

of Petroleum Engineers, the Society of

Chemical Manufacturers and Affiliates, and the

International Association of Drilling Contractors

(IADC). In addition, we are one of the founding

members of the Center for Offshore Safety.

These contributions and participation all help

advance the industrys performance related to

HSE and social responsibility.

Section 5


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We believe we can improve safety across our industry by

collaborating with our customers and communities. We continue

to enhance our internal standards and practices to ensure our

efforts are focused and on-target. Through our audit program, we

verify that these standards are implemented and effective across

the organization.


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Along with many companies, Baker Hughes

subscribes to the services of Welling and

Company, an international research and

consulting firm that conducts specializedmarket analysis in the energy industry and

related fields. In particular, we analyze

Wellings findings regarding the importance

HSE plays in the buying decisions of our

customers. For the third consecutive year

since 2011, their annual Customer Perception

Survey (Fig. 1) indicated that HSE is the primary

consideration of oil and gas companies when

choosing a contractor as a business partner.

The trend is growing year-on-year, confirming

our own analysis from our direct interaction in

the industry and with our customers.

Concurrent with our annual internal HSE

performance review and development of

next-year objectives, Baker Hughes hosts

an engagement forum to advance the HSE

conversation with and between oil and gas

companies and to provide deeper, collective

insight into factors driving HSE performance

across the industry.

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2009 2010 2010 2011 2011 2012

Figure 1. Most important factors in selecting business partners according to our customers

Baker Hughes HSE Exchange Forum Addressing Industry

HSE Performance

Commitment to HSE

Equipment quality / reliabilityTrained and capable field personnel

Availability / delivery

Technical support

Responsive to needs

Track record / experience

Handle technical challenges

Price competitiveness

Driving Flawless Execution


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During the 2013 exchange forum, participants

addressed one of our industrys most critical

issues, the combination of a rather flat safety

performance (Fig. 2) in recent years and an

upward trend in fatality frequency and

injury severity.

Attendees identified four primary areas of

focus: attrition/turnover; HSE cultures; risk

perception/tolerance; and competence/technical

proficiency (Fig. 3). The candid conversations

during the forum identified the following

challenges to be tackled by our industry:

n Finding more effective/efficient processes

and systems to address

n HSE culture

n Stop Work

n

Risk tolerancen Upstream process safety

n Competency

n Finding solutions to eliminate hazards and

risks associated with

n Transportation

n Hand injuries

n Pressurization

n Fatigue

n Dropped objects

0

5

10

15

20

25

22%

7%

24% 24%

19%

3%

Figure 2. OGP - June 2013 Safety Performance Indicators Report

Figure 3. Key areas of HSE needing focus by

the industry

Risk tolerance

Inherent risk

Culture

Competency

Workforce

Other

0

1

2

3

4

5

6

7

8

2012201120102009200820072006200520042003200220012000199919981997199619951994

Industry TRIR (per 1 million work hours)

Industry Lost Time Incident Rate (per 1 million work hours)Industry Fatal Accident Rate (per 100 million work hours)


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Baker Hughes produced and released four

videos to promote best practice in upstream

process safety; management of change (MOC);

Life Rules!; and, achieving the Perfect HSE Day.The videos are available through

www.BakerHughes.comand YouTube.

HSE management system

Our HSE management system (MS) continues

to provide the foundation of our HSE programs,

and consists of our HSE and Security (HSE&S)policy statement, 16 elements, and a wide

variety of operational control procedures

designed to drive flawless execution. This

HSE MS continues to change and evolve to

meet the HSE needs of the business, which

was restructured to form 24 geomarkets. Last

year, the position of chief security officer and

vice president of HSE was separated and so,

the security team will be developing a new

management system for their procedures, but

will continue to use and reference applicable

procedures covered in the existing HSE MS.

Policy

Our HSE&S policy statement was amended

to further strengthen our commitment to

protecting people and communities, company

assets, and the environment. The emphasis

on Stop Work was enhanced by making it an

individual obligation and company responsibility,

and process safety is now included to reflect our

heightened commitment.

Baker Hughes Operating Sy

2013 hse annual report web final

Documents