Schlumberger 2011 Annual Report - page 27

Our offshore oil and gas operations could be adversely impacted by the Deepwater Horizon drilling rig accident
as resulting changes in and compliance with restrictions or regulations on offshore drilling in the US Gulf of
Mexico and in other areas around the world may adversely affect our business and operating results.
On April 20, 2010, a fire and explosion occurred onboard the semisubmersible drilling rig
Deepwater Horizon
, owned
by Transocean Ltd. and under contract to a subsidiary of BP plc. As a result of the incident and related oil spill, the
Secretary of the US Department of the Interior directed the Bureau of Ocean Energy Management, Regulation and
Enforcement (“BOEMRE”) to issue a suspension, of deepwater drilling activities, which was lifted on October 12, 2010.
In October 2010, BOEMRE, now split into the Bureau of Ocean Energy Management and the Bureau of Safety and
Environmental Enforcement, issued new guidelines and regulations regarding safety, environmental matters, drilling
equipment and decommissioning applicable to drilling in the US Gulf of Mexico, and may take other additional steps
that could result in permitting delays, increased costs of exploration and production and reduced areas of operations
which could reduce the demand for our services.
At this time, we cannot predict with any certainty what further impact, if any, the
Deepwater Horizon
incident may
have on the regulation of offshore oil and gas exploration and development activity, or on the cost or availability of
insurance coverage to cover the risks of such operations. The enactment of new or stricter regulations in the United
States and other countries where we operate could adversely affect our financial condition, results of operations and
cash flows.
Environmental compliance costs and liabilities could reduce our earnings and cash available for operations.
We are subject to increasingly stringent laws and regulations relating to importation and use of hazardous materials,
radioactive materials and explosives and to environmental protection, including laws and regulations governing air
emissions, water discharges and waste management. We incur, and expect to continue to incur, capital and operating
costs to comply with environmental laws and regulations. The technical requirements of these laws and regulations are
becoming increasingly complex, stringent and expensive to implement. These laws may provide for “strict liability” for
remediation costs, damages to natural resources or threats to public health and safety. Strict liability can render a
party liable for damages without regard to negligence or fault on the part of the party. Some environmental laws
provide for joint and several strict liability for remediation of spills and releases of hazardous substances.
We use and generate hazardous substances and wastes in our operations. In addition, many of our current and
former properties are, or have been, used for industrial purposes. Accordingly, we could become subject to material
liabilities relating to the investigation and cleanup of potentially contaminated properties, and to claims alleging
personal injury or property damage as the result of exposures to, or releases of, hazardous substances. In addition,
stricter enforcement of existing laws and regulations, new laws and regulations, the discovery of previously unknown
contamination or the imposition of new or increased requirements could require us to incur costs or become the basis
of new or increased liabilities that could reduce our earnings and our cash available for operations. We believe we are
currently in substantial compliance with environmental laws and regulations.
We could be subject to substantial liability claims, which could adversely affect our financial condition, results
of operations and cash flows.
The technical complexities of our operations are such that we are exposed to a wide range of significant health,
safety and environmental risks. Our offerings involve production-related activities, radioactive materials, explosives
and other equipment and services that are deployed in challenging exploration, development and production
environments. An accident involving these services or equipment, or a failure of a product, could cause personal injury,
loss of life, damage to property, equipment or the environment, or suspension of operations. Our insurance may not
protect us against liability for some kinds of events, including events involving pollution, or against losses resulting
from business interruption. Moreover, we may not be able to maintain insurance at levels of risk coverage or policy
limits that we deem adequate. Any damages caused by our services or products that are not covered by insurance, or
are in excess of policy limits or are subject to substantial deductibles, could adversely affect our financial condition,
results of operations and cash flows.
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