Baker Hughes 2013 Annual Report Download - page 44

2013 Annual Report 14
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Compliance with, and rulings and litigation in connection with, environmental regulations and the environmental
impacts of our or our customers’ operations may adversely affect our business and operating results.
Our business is impacted by material changes in environmental laws, rulings and litigation. Our expectations
regarding our compliance with environmental laws and our expenditures to comply with environmental laws,
including (without limitation) our capital expenditures for environmental control equipment, are only our forecasts
regarding these matters. These forecasts may be substantially different from actual results, which may be affected
by factors such as: changes in law that impose new restrictions on air emissions, wastewater management, waste
disposal, hydraulic fracturing, or wetland and land use practices; more stringent enforcement of existing
environmental regulations; a change in our allocation or other unexpected, adverse outcomes with respect to sites
where we have been named as a PRP, including (without limitation) Superfund sites; the discovery of other sites
where additional expenditures may be required to comply with environmental legal obligations; and the accidental
discharge of hazardous materials.
International, national, and state governments and agencies continue to evaluate and promulgate legislation
and regulations that are focused on restricting emissions commonly referred to as greenhouse gas (“GHG”)
emissions. In the U.S., the EPA has taken steps to regulate GHGs as pollutants under the Clean Air Act. The EPA’s
“Mandatory Reporting of Greenhouse Gases” rule established in 2010 provided a comprehensive scheme of
regulations that require monitoring and reporting of GHG emissions. Furthermore, the EPA has issued additional
GHG reporting rules specifically for the oil and natural gas industry, which now include mobile as well as stationary
GHG emission sources. These rules apply to our customers and may apply to some of our wellsite equipment and
operations in the future.
International developments focused on restricting the emission of carbon dioxide and other gases include the
United Nations Framework Convention on Climate Change, also known as the “Kyoto Protocol” (an internationally
applied protocol) and the European Union’s Emission Trading System. The Carbon Reduction Commitment in the
United Kingdom (“U.K.”) is the first cap and trade scheme to affect Baker Hughes’ facilities. Domestic cap and trade
programs include the Regional Greenhouse Gas Initiative in the northeastern U.S. and the Western Regional
Climate Action Initiative in the western U.S.
Current or future legislation, regulations and developments may curtail production and demand for
hydrocarbons such as oil and natural gas in areas of the world where our customers operate and thus adversely
affect future demand for our services, which may in turn adversely affect future results of operations.
Demand for pressure pumping services could be reduced or eliminated by governmental regulation or a change in
the law.
Some federal, state and foreign governmental bodies have adopted laws and regulations or are considering
legislative and regulatory proposals that, if signed into law, would among other things require the public disclosure
of chemicals used in hydraulic fracturing operations and would subject hydraulic fracturing to more stringent
regulation with respect to, for example, construction standards for wells intended for hydraulic fracturing,
certifications concerning the conduct of hydraulic fracturing operations, management of flowback waters from
hydraulic fracturing operations, or other measures intended to prevent operational hazards. Such federal, state or
foreign legislation and/or regulations could impair our operations, increase our operating costs, and/or greatly
reduce or eliminate demand for the Company’s hydraulic fracturing services. The EPA and other governmental
bodies are studying hydraulic fracturing operations. Government actions relating to the development of
unconventional oil and natural gas resources may impede the development of these resources by our customers,
delaying or reducing the demand for our services. We are unable to predict whether the proposed changes in laws
or regulations or any other governmental proposals or responses will ultimately occur, and accordingly, we are
unable to assess the potential financial or operational impact they may have on our business.
Uninsured claims and litigation against us could adversely impact our operating results.
We could be impacted by the outcome of pending litigation as well as unexpected litigation or proceedings. We
have insurance coverage against operating hazards, including product liability claims and personal injury claims
related to our products, to the extent deemed prudent by our management and to the extent insurance is available;
however, no assurance can be given that the nature and amount of that insurance will be sufficient to fully indemnify