Baker Hughes 2007 Annual Report Download - page 93

10 Baker Hughes Incorporated
(a) In 1999, Baker Oil Tools, Baker Petrolite and predecessor
entities of Baker Petrolite were named as PRPs by the State
of California’s Department of Toxic Substances Control for
the Gibson site in Bakersfield, California. Remediation con-
sisting of extensive soil excavation and removal is now com-
plete at a cost of approximately $5 million, with remaining
costs estimated at less than $1 million. Our combined vol-
ume allocation is 1.6% for liquids and 0.4% for solids.
(b) In 2001, a Hughes Christensen predecessor, Baker Oil Tools,
INTEQ and one of our former subsidiaries were named
as PRPs in the Force Road State Superfund site located in
Brazoria County, Texas. The Texas Commission on Environ-
mental Quality (“TCEQ”) is overseeing the investigation and
remediation at the Force Road site. We participate as a mem-
ber of the steering and technical committees to effectively
manage the project because our volumetric contribution is
currently estimated at approximately 76%. The investigation
phase of the project is essentially complete and the results
indicate that the extent of the groundwater contamination
is less than originally estimated. These results along with
new surveys indicate little to no offsite impact. We believe
that after the most effective remedial alternatives are iden-
tified, the remedial costs could be less than $10 million.
An accurate calculation of site remediation costs will be
available once the Remedial Action Plan is developed, which
will occur during early 2008. $1.8 million was raised from
the de minimis settlement process, which is now complete.
(c) In 2002, Baker Petrolite predecessors, Hughes Christensen
predecessors and several of our former subsidiaries were
identified as PRPs for the Malone site located on Campbell
Bayou Road in Texas City, Texas. The EPA oversees the
investigation and remediation of the Malone site and has
engaged in emergency removal actions. The investigation
is complete and remedial alternatives have been developed
and submitted to the EPA for evaluation. The EPA has con-
cluded that the remaining costs for the remedial action are
$52.8 million. Along with the EPA oversight costs, project
management fees and other expenses, the total outstand-
ing project costs are not expected to exceed $72 million.
Our contribution was recently adjusted downward and is
now 1.26%. A lawsuit filed by the current owners of the
site and a related entity against the PRP Group (Malone
Cooperating Parties) seeking recovery of certain alleged
damages was settled at a cost of $1.2 million, and included
arrangements for the eventual transfer of the property to
a conservation organization or other non-profit entity.
(d) In 2003, we were identified as a de minimis PRP by the
EPA for the Operating Industries, Inc. Superfund site in
Monterrey Park, California. A settlement offer to all remain-
ing de minimis parties has been repeatedly delayed. The
EPA and Steering Committee have incurred approximately
$345 million and expect an additional $367 million in
cleanup costs. Information provided by the EPA in 2007
indicates that our contribution is 0.092%, although our
ultimate liability has yet to be negotiated and may include
a premium for early settlement.
(e) In 2003, Baker Petrolite was notified by the EPA of their
potential involvement at the Cooper Drum Superfund site
located in South Gate, California. We responded to an
additional inquiry from the EPA in 2005. At this time, the
estimate for comprehensive cleanup costs is approximately
$20 million but the extent of our responsibility for these
costs is not yet known.
(f) In 2006, we were one of five PRPs to receive an information
request from the EPA regarding the Washington County
Lead District Superfund site, a federal Superfund located
in Washington County, Missouri. We have responded to the
EPA regarding our involvement with two of the six mines
listed in the information request. A preliminary screening
and removal action has been completed by the EPA to
evaluate the impacts of lead and other heavy metals on
the soil and groundwater in the area. In late 2007, the site
was proposed for inclusion on the National Priorities list.
There has been no formal assignment of responsibility and
an estimate of potential cleanup costs has not been devel-
oped; therefore, we are unable to estimate the potential
cost to the Company.
(g) In 2006, Baker Petrolite received a General Notice of Poten-
tial Liability letter from the EPA concerning the RRG/Clayton
Chemical Superfund site in Sauget, Illinois and its impact
on the adjacent Sauget Area 2 Groundwater Superfund site.
We have participated in cleanup activities at the Clayton site
as a small party with an allocation just over the de minimis
level. Our known costs are approximately 0.78% of the
estimated remedy cost of $5.2 million. However, our ulti-
mate liability may now include some responsibility for the
downgradient groundwater cleanup at the Sauget Area 2
Groundwater Superfund site; however, sufficient informa-
tion is not available to estimate the additional potential
cost to the Company.
(h) In 2006, a settlement demand was received from the
PRP Group for the Pulvair Superfund site located in Milling-
ton, Tennessee for waste sent to the site by Milchem, a
predecessor to Baker Hughes Drilling Fluids. The matter has
not yet been resolved; however, it is expected to be settled
at a cost of less than $0.2 million.
In addition to the sites mentioned above, there are six
Superfund sites where we have ongoing obligations. The emer-
gency removal actions and subsequent remedial work at most
of these sites has been completed and remaining operations
are limited to groundwater recovery and/or monitoring. The
monitoring phase can continue for up to 30 years. Our aggre-
gate cost for these sites is estimated to be $0.3 million over
this period of time.
While PRPs in Superfund actions have joint and several lia-
bility for all costs of remediation, it is not possible at this time
to quantify our ultimate exposure because some of the proj-
ects are either in the investigative or early remediation stage,
or allocation information is not yet available. However, based
upon current information, we do not believe that probable or
reasonably possible expenditures in connection with the sites
described above are likely to have a material adverse effect on
our consolidated financial statements because we have recorded
adequate reserves to cover the estimate we presently believe