health, safety, 2013 hse annual report - amazon...

2013

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Health, Safety, Environment

2 Baker Hughes Incorporated

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 1: Corporate Social Responsibility . . . . . . . . 10

Section 2: Health and Wellness . . . . . . . . . . . . . . . . . 18

Section 3: Personal and Process Safety . . . . . . . . . . . 24

Section 4: Environmental Performance . . . . . . . . . . 34

Section 5: Driving Flawless Execution . . . . . . . . . . . . 50

Section 6: Recognition . . . . . . . . . . . . . . . . . . . . . . . . 60

Section 7: Looking Forward . . . . . . . . . . . . . . . . . . . . 66

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

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 .


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)

<0.68 0.65 (14% reduction)

10% Reduction in Days Away from Work Case Rate (DAFWCR)

<0.19 0.17 (18% reduction)

15% Reduction in Short Service Employee (SSE) TRIR

<0.95 1.03 (8% reduction)

10% Reduction in Motor Vehicle Accident Rate (MVAR)

<0.32 0.34 (4% reduction)

Reduce resource use by 10%, targeting water, energy and associated greenhouse gas emissions

10% reduction 13% reduction

15% Reduction in spill volume 15% reduction 6% reduction


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.


During 2013, we emphasized our mission to

“Make Everyday a Perfect HSE Day”, along with

the following key HSE focus areas: nn Continue culture shift balancing personal

and process safetynn Use work activity analysis for

injury preventionnn Promote healthy and fit behaviorsnn Learn from high potential incidents,

near misses, and observationsnn Mitigate transportation safety risksnn Enhance resource conservationnn 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 the

following sustainability performance indices:nn Dow Jones Sustainability Ranking – Leader

in the Energy Equipment and Services

sector of the World and North America

Sustainability Indicesnn Carbon Disclosure Project (CDP) – Leader in

the Energy Equipment and Services sectornn CR Magazine’s Best Corporate Citizens –

Highest-ranked oilfield service company in

the energy industry sectornn Bloomberg Environment, Social and

Governance Disclosure Index – Leader in

the energy sector

Executive Summary


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 health

program 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 year’s 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


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 thorough

air-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. We’ve directed our efforts on the

The Navigation team holds the record for the most Chairman’s HSE Excellence awards with 12 wins

Executive Summary


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 provide

employees 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

Chairman’s HSE Excellence Award. This year, we

also introduced two new awards–the President’s

Perfect HSE Day award, and the President’s

HSE Performance award—to 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 Chairman’s 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

Chairman’s HSE Excellence Award to Jeff Merritt, Plant

Director and Susan Bell, HSE Manager at Navigation

Manufacturing Facility, Houston, USA


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:nn 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.nn 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


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 being

responsible 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.


nn CR Magazine’s Best Corporate Citizens .

In their 2013 “Industry Sector Best

Corporate Citizens,” CR Magazine listed

Baker Hughes as the highest-ranking

service 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.nn 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 to

the 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 Women’s

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



our commitment to our diversity and

inclusion initiatives through networking and

panel discussions on topics to facilitate the

recruitment, development, and retention of

women 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 understanding

expectations. 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:nn 92% of employees agreed “Every day, my

work group strives to create the Perfect

HSE Day with no injuries, spills or

driving accidents”nn 95% of employees agreed “Everyone in

this Company is responsible for reaching

our HSE goals”nn 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 .


Employee Ombuds . Baker Hughes ombuds

(o3) office is a progressive initiative that

was voluntarily established by executive

leadership and follows the ethical principles

established 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 Company’s 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.

Veteran’s 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 .



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 Program

United Way

Health

Children / youth

Culture / museums

Other grants

Figure 1. Baker Hughes Foundation charitable contributions 2013


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 Ghana’s 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 school’s 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



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 awarding

scholarships 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 city’s 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


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 of

our 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 an

informative 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 Health and 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 and Assignment

Employee Health and Wellness

Section 2


We believe that encouraging our employees to adopt healthy

behaviors 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.


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:nn 62 issued in 2013nn 36 different countriesnn 21 different endemic diseases

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

Health and Wellness


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 held

a 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 customer’s 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 data

on 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


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, and

Yellow 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 of

participating in engineering/industrial hygiene

projects. As one of ten interns hosted over the

past five years, Jay actively participated in this

year’s 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


Emergency response

Emergency response planning continues to

play a critical role in our Employee Health

and Wellness program across our operations

globally, 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:

nn Have “walking” conversations versus sittingnn Take family walks after dinnernn Track your steps and aim for 10,000 steps a daynn 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


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 fatal

helicopter 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 2011 20132012

Section 3


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.


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


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 injuries

continue 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 occurred

at 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


Transportation safety

Our transportation safety performance

improved last year. Our recordable Motor

Vehicle Accident frequency improved 4%, and

our 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



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 three

helicopter 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. nn Active leadership engagement in HSE

through hands-on activities such as job site

visits or town hall meetings nn Strong employee participation in our

behavior-based observation program nn Robust reporting of near-miss events with

resolution of issues before a negative

impact or injury occursnn Evaluation of safe driving behaviors

through our in-vehicle monitoring systemsnn 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 .


Process safetyIn order to prevent major accidents arising

in our field, pipeline or chemical processing

operations, 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:nn 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 & Instrument

Diagrams, 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.

nn 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.nn Management of change (MOC) –

the system to address contemplated

changes to a process, evaluate their

impact 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 and Engineering

HumanFactors

MultibarrierPhilosophy

Measurementand Review Competency

Process andProcedures

RiskManagement

Figure 1. Process safety framework



Our employees are trained on their specific

processes and are recertified on a regular

schedule. Our inspection and testing of

equipment for mechanical integrity includes

Recognized 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, causing

harm 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

BARRIERSKnow your equipment, process, and people barriers and confi rmthey are in place and tested.

LOST BARRIERIf a barrier is lost,immediately stopand fi x it.

SUBSURFACEUNCERTAINTIES

Know andcommunicatesubsurfaceuncertainties.

WELL CONTROL EQUIPMENTKnow your wellcontrol equipmentand confi rm it’scertifi ed and tested.

TRAINED PEOPLEConfi rm all peopleare trained andcompetent for the task.

POLICIES &PROCEDURESFollow policiesand proceduresor get approvalto deviate.

HRARISK ASSESSPerform riskassessments duringplanning and forchanges.

WALK THE LINE‘Walk the line’ ontemporary rig-upsand confi rm set-up = layout drawing.

EMERGENCYRESPONSETest your emergencyresponses andconduct regulardrills.

REPORT / LEARNReport ProcessSafety incidents andProcess Safety Near Misses, investigate, share, and learn.


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 visual

representation 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 service

delivery. 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 SHELL’s Process Safety Video Challenge for our musical number

“Think Process Safety!”



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 C1 Equipment

Example:Loss of Primary Containment

Fatality

Loss of Well Control

Spill or Release to

Environment

Follow customer emergency response

procedures


procedures


procedures

Improper Design

PDM Process

Failure Trending Analysis

Pre-job Analysis

Function Testing at Rig Site

Review of Customer/Client Requirements

Equipment Malfunction

Figure 3. Managing risk with bow-tie analysis


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:nn Electricity – 40%nn Natural gas – 40%nn Water – 20%

Resource reduction results

Overall resource reduction: 13%

Electricity: 10%

Natural gas: 13%

Water: 17%

Greenhouse gas emissions: 16%

Section 4


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.


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, we

calculate 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-Road Diesel

Perc

enta

ge

Cha

nge

Year

-on-

Year

Fuel Oil

Goal 10%

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

Environmental Performance


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 and

strategy, 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:nn Redesigning water chiller systemsnn Converting from diesel power generators

to grid-supplied electricitynn Optimizing production scheduling

(minimized equipment shutdown

and startup)nn Retrofitting light fixturesnn 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


Water conservation

Water is critical for the upstream oil and gas

industry, so reducing fresh water use through

proactive water management practices is a

high 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., IPIECA’s 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

Mas

s (T

hous

and

s of

Met

ric

Tons

)

Disposed Wastewater*Water Consumption

2011 Actual

2012 Actual

2013 *Normalized



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 water

management tool was developed to assess and quantify water management components

and identify strategies and technologies for managing a facility’s 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.


Last year, our water conservation projects

included identifying water sources other than

potable water for use in operational processes

and landscape irrigation. An internal water

cycle 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 .



Recycling revenue

We continue to collaborate with vendors

to remarket and recycle obsolete electronic

equipment and to incorporate mixed media

materials 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 about

USD 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


Spill performance

Any spill can pose a risk through potential

harm to the environment, possible community

impacts, worker exposure, and unnecessary

waste 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 decreased

5% 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 barrel

increased 8% from last year, while total volume

decreased 6%. 0

1,000

2,000

3,000

4,000

5,000

2011

Volu

me

in B

BLs

2012 2013

Figure 4. Spill severity by volume

Minor (<1 bbl)

Serious (1 – 10 bbl)

Major (>10 bbl)



Effective response strategies ensure that all

spills are remediated promptly with minimal and

temporary environmental impact. Continued

visibility of all spill incidents, appropriate

corrective 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/major

spills (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

Num

ber

of S

pill

Inci

den

ts

2012 2013

Minor (<1 bbl)

Serious (1 – 10 bbl)

Major (>10 bbl)


Spill costs

While spill incidents are an important indicator

of environmental performance, they also affect

our environmental costs. Total spill costs were

approximately 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 the

U.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

Rese

rve

in M

illio

ns

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

Perc

enta

ge

of R

even

ue

Environmental Cost Type

Superfund Remediation Total Reserves

* Note: Data obtained from publicly available information

(2013 10K filings)

Customer reference

Peer reference

Baker Hughes



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.


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



We place a special emphasis on mitigating the

environmental risks associated with fracturing

chemicals. Our SmartCare™ qualified 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

FracFocus™ registry. 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 ClearStar™ fracturing fluid


In 2013, Baker Hughes announced the

introduction of the new ClearStar™ fracturing

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 stimulated

using 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 engine’s 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 America’s abundant natural

gas production supplies. We achieved a 32%

Dry on the Fly™ process reduces transportation



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

H2prO™ water 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 Fly™ hydration

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.


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 industry’s

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 industry’s performance related to

HSE and social responsibility.

Section 5


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.


Along with many companies, Baker Hughes

subscribes to the services of Welling and

Company, an international research and

consulting firm that conducts specialized

market analysis in the energy industry and

related fields. In particular, we analyze

Welling’s 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 / reliability

Trained and capable field personnel

Availability / delivery

Technical support

Responsive to needs

Track record / experience

Handle technical challenges

Price competitiveness

Driving Flawless Execution


During the 2013 exchange forum, participants

addressed one of our industry’s 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: nn Finding more effective/efficient processes

and systems to addressnn HSE culture nn Stop Worknn Risk tolerancenn Upstream process safetynn Competency

nn Finding solutions to eliminate hazards and

risks associated withnn Transportationnn Hand injuriesnn Pressurizationnn Fatiguenn Dropped objects

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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

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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)


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.com and 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 System (BHOS)

Last year, we migrated the entire HSE MS,

including all translated procedures, into BHOS.

This migration strengthened our commitment

to driving consistency and conformance by

DID YOU KNOW?

The HSE MS has more than 1,100 documents translated in Spanish, Portuguese, Russian, German, and Arabic combined!

Upstream Process Safety

Management of Change (MOC)

Life Rules!

Perfect HSE Day



providing employees a centralized location to

access all HSE and technical procedures. User

interface was enhanced by providing

employees visual BHOS icons, to identify

approved procedures.

Competency

Learning is a core value at Baker Hughes

and we believe that our training programs

are critical to our business success. In 2011,

Baker Hughes became the first integrated

oilfield service company to receive the new

accreditation from IADC for our Competence

Management Program for the Gulf of Mexico.

Last year, we made history again by obtaining

full global accreditation from IADC for our

Competence Assurance Program. To date,

more than 2,700 technical assessments have

been conducted to ensure that employees are

competent and have acquired the necessary

skills to perform their jobs safely and advance

their careers. Although the performance criteria

for each assessment are unique, there is one

commonality; the first component of every

assessment is safety. Placing safety first ensures

employees can effectively execute tasks and

mitigate risks to fulfill our HSE commitment and

exceed our customer’s expectations.

Within Baker Hughes, a technical workforce

of 20,000 employees has completed more

than 75,000 technical assessments.

External validation by Bureau Veritas

A number of our facilities obtain external

certification of their HSE management

system to International Organization of

Standardization (ISO) standards. To achieve

greater organizational and cost-efficiency, we

initiated a three-year program to transition all

local HSE certifications to a single enterprise-

wide multisite certificate. During 2013, we

completed the transition of locations in the

U.S., United Kingdom, Norway, Canada, The

Netherlands, and Italy. The remaining sites in

Latin America and Asia Pacific will transition

during 2014.

As part of this multisite certification effort

in 2013, we completed the first global

headquarter audit to ISO 14001, the

environmental management system standard

and OHSAS 18001, the occupational health and

safety management system standard. During

the audit no nonconformities were noted and

the company was commended on the extent

DID YOU KNOW?

The average technical assessment takes one week to complete . To date, the Baker Hughes technical workforce has completed more than 1,438 years of competency assessments . That’s a lot of experience!


of leadership involvement. Additional strengths

mentioned in the final report were:nn Use of bow-tie analysis in the assessment

of hazards, risk, and aspectsnn Proactively calculating and disclosing

carbon footprintsnn Tracking performance and statistics on

meeting goals and objectivesnn Recording and tracking incidents, audit

results and associated corrective actions

At year-end, 70 Baker Hughes facilities were

certified to ISO 14001. Of these, 22 facilities

were also certified to OHSAS 18001. These

certifications represent operations in a

number of regions (Figs. 4 and 5) and include

production and administrative facilities across

all product lines.

HSE auditing

As a critical component of our compliance and

internal assurance system, internal HSE Audits

are used to verify that our HSE performance

is real, and effective. Our audit program

evaluates our operations worldwide, confirming

regulatory compliance and conformance to

our HSE MS. It also attests that our efforts

are consistent with customer requirements

as well as with industry standards and best

practices. The program facilitates continuous

improvement in HSE performance, engaging a

wide range of employees including operations

and HSE personnel to identify hazards,

mitigate risks and implement actions to ensure

compliance and best practice. Our audit

program is benchmarked annually through

our membership in the International Audit

Protocol Consortium (IAPC), a multi-industry

representation of global auditors.

Managing the HSE audit program

Three specific audit types address specialized

aspects of HSE and frame the program: process

safety management (PSM); environmental

emphasis; and HSE MS.nn Process Safety Management (PSM) .

In 2013, 11 PSM audits were conducted at

chemical plants. These audits are used

to reconfirm that our chemical plants

worldwide are in compliance with

regulatory requirements and meet industry

best practice to mitigate process safety

Europe, Africa, Russia, Caspian 38%

Latin America 30%

Global Products and Services 26%

Middle East / Asia Pacific 5%

North America 1%

Figure 4. ISO 14001 certifications by region Figure 5. OHSAS 18001 certifications by region


Latin America 75%




related risk. This multiyear program is on

track with 69% of the facilities assessed,

and 98% of the findings closed (Fig. 6). No

major findings have been identified.nn Environmental emphasis . Environmental

assessments were conducted at 31 facilities

in 2013 and 45 in 2012. These audits

were designed to reconfirm environmental

compliance with U.S. Environmental

Protection Agency requirements for the

upstream chemical business segment.

This program was also used to identify

opportunities to enhance chemical storage

and management practices and evaluate

related investment needs at each facility.

Last year, the program identified efficiencies

that resulted in a 30% reduction in

external compliance costs related to

stormwater pollution prevention and oil

spill prevention. This multiyear program is

on track with 97% of the facilities assessed

and 100% closure for compliance related

findings (Fig. 7). No major findings have

been identified.

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40%

60%

80%

100%

Q1 Q2 Q3 Q4

2012

Q1 Q2 Q3 Q4

2013

0

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30

40

50

20132012

DID YOU KNOW?

More than 300 noteworthy efforts of proactive HSE actions were identified across Baker Hughes in 2013 .

Figure 6. PSM audit findings status Figure 7. Environmental emphasis audit status

Scheduled

Completed

Total findings

Findings closed

Percent closed


nn HSE management system . HSE MS

audits were conducted at 97 operations

worldwide in 2013, representing all

regions and product lines, and about

10% of our applicable locations. In

keeping with International Audit Protocol

Consortium standards, our audit selection

criteria were risk-based, with input from

business segment HSE directors and

senior operations leadership. Each audit

report undergoes a thorough quality

review, offers important feedback to local

operations on the areas where they are

doing well, and provides a roadmap for

further improvement.

Audit findings are classified as either “major,”

“finding,” or “observation.” Noteworthy efforts

including best practices are also identified and

communicated across the enterprise. These

noteworthy efforts represent proactive HSE

initiatives, and in 2013 were identified for

areas such as air quality, waste management,

waste minimization, chemical management, fall

protection, transportation safety, equipment

safety, and facility improvements.

In 2013, nearly 2,500 opportunities for

improvement were identified as findings. Of

these, six were classified as major (Fig. 8),

representing less than 1% of the total findings

and a 73% reduction from two years ago.

Our major finding closure rate improved 37%

over the last two years, with the time to closure

averaging 72 days in 2013 (Fig. 9). The major

finding closure status is reviewed quarterly as

part of the executive compliance and internal

controls process. The overall finding closure rate

for all audit findings across the enterprise was

excellent, at 86%.

Figure 8. Total number of audits and major findings

Figure 9. Average days to closure for major findings

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Number of audits

Number of major findings

Major finding closure rate (days)



Engaging our leaders

Business leaders participated as team auditors

during 2013, in a new effort to enhance our

interdependent HSE culture, embed HSE within

operations, and accelerate joint ownership

and understanding of HSE audit findings.

Since the new process was introduced in May,

75% of our audits included participation

by a business leader. Their visible and vocal

leadership connected with frontline employees,

demonstrating their personal ownership of

HSE and serving to further accelerate our

interdependent HSE culture across

Baker Hughes.

One key aspect of our business leader

involvement was their independent role as they

audited facilities outside of their own remit.

Beyond auditing, this provided an opportunity

for learning and sharing of best practices across

other business segments.

The path forward

To continue our drive for efficiency, HSE

and quality will be conducting cooperative

audits in 2014. These audits will strengthen

cross-function collaboration and minimize

disruption to operations. Self-assessments,

which provide an additional level of assurance,

will be expanded in 2014. This will supplement

the formal HSE and special emphasis audits,

providing greater assurance and ownership

with location leaders.

DID YOU KNOW?

Of the business leaders participating in audits during 2013, 85% were presidents, vice presidents, directors, or managers .


Recognition

Baker Hughes HSE recognition

The Baker Hughes Chairman’s HSE Excellence

Award and the President’s HSE Recognition

Awards recognize teams that have achieved

excellent health, safety, and environmental

(HSE) performance. The Chairman’s HSE

Excellence Award is presented to the five

applicant teams that have best demonstrated

sustained HSE excellence over a three-year

period and is awarded by Martin Craighead,

Baker Hughes President and Chief Executive

Officer. The President’s HSE Recognition Awards

recognize excellence over the past year and are

bestowed by business segment presidents.

Chairman’s HSE Excellence Award

To be eligible for the Chairman’s HSE Excellence

Award, teams must have met the enterprise

HSE goals for the last three years, have taken

action to advance the HSE culture, and have

accomplished a significant HSE achievement.

The five teams selected to win the Chairman’s

award receive a USD 10,000 prize to spend

on a reward of the team’s choice. In 2014,

for the first time, select employees from each

winning team will participate in a special

celebration dinner with Martin Craighead. Local

celebrations will also be held for the winning

team from each region and business segment.

Europe / Africa / Russia, Caspian Region Sakhalin Island, Russia – Completions Systems

Global Products and ServicesNavigation Manufacturing Facility, Houston, Texas, U.S.

Latin America Region Lagomar Base, Macaé, Brazil

Middle East / Asia Pacific Region Pakistan

North America Region Trinidad

Nineteen teams applied for the 2013 Chairman’s HSE Excellence Award. The five winning teams are as follows.

Section 6


Baker Hughes employees continue to garner HSE recognition

from customers and industry groups. Within the company, we

encourage stellar HSE performance through recognition programs

such as the annual Chairman’s HSE Excellence and the President’s

HSE Recognition award programs.


Examples of selected team accomplishments are

highlighted below.nn The Navigation manufacturing facility, with

more than 500 employees, has accrued

more than 12 million man-hours – 8 years –

without a Days Away From Work case and

more than 1.5 million man-hours since the

last recordable injury.nn Two new pressure test bays installed at the

Pine Island, Texas ballistics manufacturing

facility enable test fluids to be recycled and

reused, reducing water consumption and

eliminating a hazardous chemical waste.nn The Pakistan team organized a family HSE

excursion to Murree Hills. The journey

presented opportunities for coaching on

driving safety, and increased awareness

about the environment.

New President’s HSE Recognition Awards

In 2013, two new President¹s HSE Recognition

Awards programs were established to recognize

and celebrate teams of 50 or more employees

that achieved 365 Perfect HSE Days. nn 2013 President’s Perfect HSE Day Awards.

Teams that achieved 365 Perfect HSE Days

in 2013 were recognized with this award. nn 2013 President’s HSE Performance Awards.

This award is presented to teams that

achieved 365 Perfect HSE Days in 2013,

demonstrated HSE excellence according

to a number of leading indicators, and

accomplished a significant achievement.

Up to five of the top performing teams are

recognized in each region.

More than sixty teams applied for the

President’s Perfect HSE Day Awards, and

38 teams applied for the President’s HSE

Performance Awards. Fig. 1 shows the regional

distribution of teams that achieved 365 Perfect

HSE Days.

Figure 1. Regional distribution of teams that achieved 365 Perfect HSE Days


Global Products and Services 30%

North America 15%

Latin America 13%


Malissa Boudreaux, Country Director Qatar accepts

the 2013 Chairman’s HSE Excellence Award from

Dmitry Kuzovenkov, Vice President HSE on behalf of

Baker Hughes Qatar

Recognition


Customer recognition

During 2013, our customers recognized Baker

Hughes employees for HSE excellence.

In June, our steadily maturing safety culture was

recognized by TOTAL at their HSE Forum 2013

in Paris. In the HSE Commitment category, Baker

Hughes received an award for our Organizational

Ownership of HSE Interdependency program.

Our Africa region was specifically cited for the

HSE Leadership Academy series, which reduced

injury rates 49 percent and vehicle accident rates

63 percent. Baker Hughes was one of only three

companies presented with an HSE award, and

was recognized from among 75 of TOTAL’s top

suppliers before 250 industry peers.

At the Shell Global Wells Conference in

November, Baker Hughes received a 2013 Best

HSE Performance award for our role in reducing

injuries and our commitment to process

safety. For this award, Shell evaluated key HSE

performance indicators such as total recordable

incidents, dropped objects, and Shell “Life

Saving Rules” violations.

Earlier in the year, Shell challenged all its service

contractors and other groups to develop a

creative, light-hearted video to promote process

safety. Baker Hughes accepted the challenge

and filmed a musical number Think Process

Safety! at our Beta Rig in Tulsa, Oklahoma. A

panel of Shell executives awarded the Baker

Hughes video second place in the contest.

“There was a lot of thoughtful work that went

into the Baker Hughes video, and it does a

great job of promoting wellsite process safety

to the viewer in a memorable way,” said

Andy Shaw, Baker Hughes Vice President of

Marketing, Asia Pacific region.

Jack Hinton, Vice President, HSE, (right) accepts the

Organizational Ownership HSE award from Marc Blaizot,

Senior Vice President Exploration, TOTAL

Belgacem Chariag, Baker Hughes President, Global Products

and Services (left), and Sam Zettle, Vice President, Shell

Accounts (right), accept the 2013 Best HSE Performance

award from Gordon Graham, VP HSE, Shell (center)


In, March, Baker Hughes employees in

Mauritania celebrated their contribution to

achieving 2,500 days without a lost time

accident with PETRONAS.

Baker Hughes Service Supervisor Craig Morris

received a Chevron Outstanding Supervisor

award for his work on the Barrow Island

Gorgon project in Australia. Craig was

presented with the award for his continuous

efforts towards an incident- and injury-free

work environment.

In March, our Papua New Guinea Drill Team

was awarded the ExxonMobil First Quarter

2013 Environmental Leadership Award. The

award recognizes drill teams that exhibit

the leadership, actions, and results that

distinguish them as role models in progressing

ExxonMobil’s objective of protecting the

environment. The Baker Hughes team was

presented with the award for their excellent

HSE performance in blending, transporting, and

displacing 7,000 bbls of drilling fluids with no

spills and implementing plans for reducing the

environmental footprint during operations.

Other notable events

In October, Baker Hughes won the Oil and Gas

Awards, West Coast Region Environmental

Initiative of the Year award. The award was

earned for our energy-conservation initiatives,

including the application of an alternative

energy fuel cell at our new 70-acre campus in

Shafter, California. This Baker Hughes facility

is the first industrial site in the country to

incorporate the specific alternative energy fuel

cell technology, which generates electricity from

a chemical reaction rather than combustion

and therefore generates significantly lower

greenhouse gas emissions.

Craig Morris (right), accepts the Outstanding Supervisor

award from Steven Paterson, HSE Advisor at Chevron

(Gorgon Upstream Facility Team)

Aguibou Ba, Baker Hughes Workshop Supervisor, and Tayeb

Jeddou, Baker Hughes Chemicals Operations Coordinator,

proudly pose with the PETRONAS Award

Recognition


The Society of Chemical Manufacturers and

Affiliates (SOCMA) awarded Baker Hughes

ten performance improvement awards in

2013, sponsored by SOCMA’s ChemStewards®

program. This program promotes a

manufacturing facility’s commitment to

continuous improvement, outstanding HSE

and Security performance, and educational

outreach. The following awards were presented

to Baker Hughes locations.

Baker Hughes, Taft Manufacturing

Company, California nn Silver winner – Stakeholder

Communicationsnn Silver winner – Product Stewardship

Baker Hughes, Rayne Blend

Facility, Louisianann Silver winner – Product Stewardshipnn Silver winner – Resource Management and

Waste Minimization

Baker Hughes, Kilgore Blend Plant, Texasnn Silver winner– Environmental, Health,

Safety and Security in Planning

and Operations

Bronze winners: nn Bakersfield Blend Plant, Californiann Barnsdall Manufacturing, Oklahomann Houston Blend Plant, Texasnn Bayport Manufacturing, Texasnn Sand Springs Manufacturing, Oklahoma

Ralph Crabtree, Vice President, Real Estate (2nd from left) and Will Harvey, Manager, Shafter, California (2nd from right)

accept the West Coast Region Oil and Gas Award for Environmental Initiative of the Year from Daniel Creasey and Andrew

Perry of Oil and Gas Awards


Looking Forward

Baker Hughes 2014 expectations

and targets

Each year, we establish our company

improvement goals following a critical evaluation

of our current HSE performance and overall

business strategies. The intent is to focus on

those improvement areas that will provide the

greatest return so we can further safeguard our

employees, communities and the environment.

We continue to embrace the “Perfect HSE Day,”

moving from using the traditional goal approach

to setting expectations.

Our overarching HSE expectation is to “Make

Every Day a Perfect HSE Day” and thus be

recognized as the industry leader in

HSE performance.

This is achieved through the following.nn Zero Serious Injury or Life Rules! Events nn Zero Process Safety Eventsnn Zero Serious Spillsnn Zero Serious Motor Vehicle Accidents

To drive performance and accountability, we

will track nine key HSE performance metrics.

Metric Target

Total recordable incident rate (TRIR)

10% reduction

Days away from work case rate

10% reduction

Short service employee TRIR

10% reduction

Motor vehicle accident rate

10% reduction

Energy/greenhouse gas emissions/water use

10% reduction

Volume of serious spills 10% reduction

HSE observations 20% increase

Reporting of near misses (including process safety)

75% increase

Reporting of all upstream process safety barrier failures

100%

An enterprise dashboard comprised of key

metrics, including HSE leading indicators, now

provides wider visibility to all employees and will

act as a guide to direct local efforts. As these

expectations and metrics show, our heightened

focus on process safety will continue.

Section 7


Each year, we assess performance and set new priorities. It is our

vision that 365 Perfect HSE Days in a single year is possible. With

visible leadership and the daily efforts of all our employees, we

have become a sustainable company that protects our people, our

assets, the environment and the communities in which we live

and operate.


Glossary

Baker Hughes Operating System (BHOS)

An enterprise-wide, integrated management

system that drives the consistency of and

conformance to Baker Hughes policies,

processes and procedures to comply with

our established objectives, enable flawless

execution and satisfy customers’ needs.

Bow-Tie Analysis

A risk assessment tool used in process safety

management for communicating risks to

people and the environment by clearly showing

the links between the potential causes of a

major incident, the barriers and controls to

prevent or mitigate such incidents, and possible

consequences.

Days Away From Work Case (DAFWC)

Any occupational injury or illness that renders

the affected person temporarily unable to

return to the workplace in any capacity on one

or more subsequent days after the day of

the injury.

Days Away From Work Case Rate

(DAFWCR)

Number of days away from work cases x 200,000

Total number of man-hours worked

First Aid Case

Any work injury that results in a one-time

treatment and any follow-up visit for the

purpose of observation—such as minor

scratches, cuts, burns, and splinters—that does

not ordinarily require medical treatment. Injuries

requiring only first aid are classified in Odyssey

as nonrecordable occupational injuries.

GreenLink

Software used at Baker Hughes to track

environmental performance indicators since

2008 to assist with measuring our overall

environmental footprint and progress on our

environmental goal.

Hazardous Waste

All waste defined as hazardous, toxic,

dangerous, listed, priority, special, or some

other term defined by an appropriate country,

regulatory agency, or authority. Basically,

hazardous waste means “as defined” by

legislation at the point of origin.

Incident

A negative event that causes or leads to an

operational interruption, disruption, and/or loss.

An incident can be classified as an emergency

or as a crisis.

Section 8


Interdependent HSE Culture

In an interdependent HSE Culture, the

organization “owns” HSE, employees believe

all injuries can be prevented, and zero

incidents are an expectation. This culture is

characterized by: cooperation within and across

teams; organizational pride; employees fully

engaged in goal-setting and improvements;

management comfortable leading or allowing

others to lead; and employees looking after

each other’s safety.

In-Vehicle Monitoring System

An on-board monitoring system that monitors

and records vehicle speed, acceleration, and

deceleration.

Light Vehicle Accident

A light vehicle accident is a vehicle accident

resulting in property damage, vehicle damage

not requiring tow-away, or injuries not beyond

First Aid.

Major Vehicle Accident

A motor vehicle accident resulting in a rollover

or lost work day/employee injury.

Medical Treatment Beyond First Aid

Any work injury (or illness) that requires medical

treatment beyond that considered as first aid

and does not result in days away from work or

a transferred/restricted work case.

Motor Vehicle Accident

A motor vehicle accident is any vehicle

accident that occurs in a company vehicle or

any vehicle (at any time) while conducting

company business. These accidents typically

include: vehicle accidents resulting in third-

party injuries; rollovers; personal injuries

classified as recordable; and vehicles being

towed from the scene.

Motor Vehicle Accident Rate (MVAR)

Number of motor vehicle accidents x 1,000,000

Total number of kilometers driven

Motor Vehicle Crash

A motor vehicle crash is a motor vehicle

accident that occurs while conducting company

business. These accidents typically include:

vehicle accidents resulting in third-party

fatalities; rollovers; personal injuries classified

as recordable; and vehicles being towed from

the scene. Motor vehicle crash is an industry-

wide term established by the International

Association of Oil and Gas Producers.

Motor Vehicle Crash Rate (MVCR)

Number of motor vehicle crashes x 1,000,000

Total number of business kilometers driven

Normalization

The intent of normalization is to give an

accurate determination of intentional vs.

circumstantial reduction by adjusting the actual

quantity to account for changes in economic

activity, which may affect generation (such as

waste) or use of a material (such as energy).

The normalization basis is typically a numerical

value, which is tracked for some measure of

activity, such as revenue, production data

(pounds of material produced), number of

containers cleaned or other factors.

Glossary


Noteworthy Efforts

These are identified during HSE&S MS

audits to highlight and share outstanding

or extraordinary efforts and promote a

positive perception of the audit process. To

be considered noteworthy, HSE efforts must

exceed Baker Hughes requirements or represent

a unique solution to a particular challenge.

Odyssey

Odyssey is an enterprise-wide, web-based

application to record, categorize, and

communicate incident details, investigation

elements, and corrective actions surrounding

work-related HSE&S incidents.

Perfect HSE Day

The goal at Baker Hughes is to make today,

and every day, a Perfect HSE Day. We define

a Perfect HSE day as one without a recordable

injury or illness, serious environmental spill or

release, and motor vehicle accident across

the enterprise.

Process Safety

A disciplined framework for managing the

integrity of systems and processes involving

hazardous substances. It is achieved by applying

good design principles along with sound,

engineering, operating and maintenance

practices. Process Safety is intended to prevent

and control events that have the potential

to release hazardous materials including

hydrocarbons, and energy. Such events can

result in toxic exposures, fires or explosions,

and could ultimately result in serious incidents

including fatalities, injuries, property damage,

lost production or environmental damage.

Recordable Incidents

All work-related injuries or illnesses that result

in fatality, days away from work, transferred or

restricted work, medical treatment beyond first

aid, or that involve loss of consciousness. First

aid injuries and near misses are not considered

recordable incidents.

Short-Service Employee (SSE)

For statistical reporting purposes, an SSE is any

Baker Hughes employee with less than one year

of service.

Superfund

The common name for the U.S. environmental

law officially known as the Comprehensive

Environmental Response, Compensation, and

Liability Act (CERCLA), which was created in

response to heavily contaminated toxic waste

sites. Sites listed on the Federal (Environmental

Protection Agency) Superfund National Priority

List or on state lists are generally referred to

as “Superfund sites.” The term superfund is

derived from the trust fund established for

cleanup at sites where no viable responsible

parties could be identified. This trust fund was

made up of several billion dollars from

taxes assessed on the chemical and

petroleum industries.

Total Recordable Incident Rate (TRIR)

Number of recordable incidents x 200,000

Total number of man-hours worked


Baker Hughes Climate ChangePolicy Statement

Baker Hughes is committed to managing the risks associated with climate change. This commitment supports our global Health, Safety, Environment & Security Policy to ensure environmental protection across all company operations. Key elements of this climate change policy are as follows:�� Compliance with all relevant legislation, associated guidance, and international, national, and industry standards

�� Conservation of energy through the use of energy-efficient equipment, implementation of best practices, and increasing the use of alternative and clean energy

�� Minimization of greenhouse gas emissions, including a commitment to support the generation of geothermal energy through technology innovations and our service offerings

�� Setting measurable goals and plans to improve performance and reduce our overall carbon footprint

�� Mitigation of the effects of drought through the conservation of water

�� Collaboration with stakeholders including customers, regulators, contractors, suppliers, and other partners to reduce impacts from climate change

�� Promoting these Climate Change Policy elements with our suppliers/vendors and partners

�� Public reporting of performance information on greenhouse gases and other climate change risks

�� Review and audit of systems and performance data, including the use of third-party audits when necessary

The Vice President of Health, Safety, and Environment is responsible for establishing and implementing this policy. Performance results are reported to the Board of Directors, which provides oversight of the program to reduce HSE risks, including those related to climate change.

This policy is made available to employees, customers, contractors, suppliers, and the public.

Dmitry Kuzovenkov Vice President Health, Safety, and Environment Baker Hughes Incorporated

©2014 Baker Hughes Incorporated. All Rights Reserved. 38368 02/2014

Glossary


Health, Safety, Environment, and Security Policy Statement

Baker Hughes policy is to conduct business in a manner that protects people, assets, intellectual property, and the environment. This commitment is facilitated through a management system for Health, Safety, Environment, and Security that promotes:�� Line management and employee accountability, commitment, and individual contribution

�� Measurable goals and plans for continual improvement aimed at zero incidents; conservation of energy, water and other resources; reduced emissions; and the prevention of pollution

�� Integration of Health, Safety, Environment, and Security matters into all business activities

�� Identification and effective management of Health, Safety, Environment, and Security risk

�� Provision of training, controls, and protective measures based on sound assessment of personal health and safety, equipment and process safety, workforce and asset security, and environmental and social responsibility

�� Collaboration with customers, regulators, contractors, suppliers, and community leaders to improve overall performance

�� Compliance with applicable legislation, regulations, and industry standards

�� A culture where Stop Work is an individual obligation and a company responsibility

�� Asset integrity (traceability and preventative maintenance), equipment design, and lifecycle management

�� Audit and review of systems and communication of performance

�� Understanding of crisis alert levels, response plans, and the crisis management process

�� Protection of all Baker Hughes intellectual property

�� Allocation of appropriate resources to implement this policy�� Baker Hughes is a responsible corporate citizen committed to the protection of people, the environment, and company resources, while supplying products and services in a sustainable manner. This commitment adds value to employees, customers, shareholders, and communities.�� This policy is made available to employees, customers, contractors, suppliers, and the public.

Martin S. Craighead Chairman and Chief Executive Officer

©2013 Baker Hughes Incorporated. All Rights Reserved. 28544 REV 12 07/2013

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