Halliburton Corporate Sustainability Report 2004- · PDF fileTable of Contents Connecting:...
-
Upload
nguyenminh -
Category
Documents
-
view
213 -
download
1
Transcript of Halliburton Corporate Sustainability Report 2004- · PDF fileTable of Contents Connecting:...
Halliburton Corporate Sustainability Report 2004-2005
Table of Contents
Connecting: Letter from the Chairman, President and CEO3
Halliburton at a Glance5
Structuring Our Company for Sustainability9
Globally Connected, Innovative People13
Sustainable Energy Solutions19
Connecting with Communities29
Standing By Our Convictions39
Contact InformationInside Back Cover
Pictured on the cover is a diagram of a scale-free network, which maps the number of connections
between nodes on a network. Scale-free networks provide the most efficient and effective communication system
possible within a given space – all they need is a framework, some basic rules and a desire to connect ... and grow.
We are all connected. We can no longer believe
that different parts of the Earth are separate
from us, or that our actions in one part of the
world do not affect others. Everything that
we do – whether it’s creating technology that
reduces gas flaring, helping nationals
start and grow a business, or donating books and
supplies to local schools – has an impact.
With the introduction of new forms of
communications technology and the Internet,
the world is more interwoven than ever. As people,
and as global corporate citizens, we are conscious
of the role we play in shaping our common destiny.
We must understand our responsibilities not only to
our employees, our customers and our shareholders,
but also to the wider community and the lives that
we touch. And we must strive to determine a course
that honors and supports each place where we work.
2
Letter to Our Stakeholders
To a large extent, the scope, as well as the
boundaries, of our approach to Corporate
Sustainability and Sustainable Development
are defined by who we are and what we do for
our customers.
Halliburton – through its two main business
units, the Energy Services Group and KBR –
currently operates in more than 100 countries
and has a workforce of more than 100,000
people. We provide a comprehensive range
of products and services to the energy
industry and to other industrial and
governmental customers.
We believe that Halliburton has a
considerable part to play in finding
solutions to some of society’s most pressing
concerns. We also believe we can make a
difference in the lives of the people who work
for us, their families and our neighbors, whose
lives we connect with in the communities
where we work. There is much that we have
done of which we can be proud.
We are one of the world’s largest service
companies in the exploration and production
of clean-burning natural gas, which is
emerging as the energy of choice in the first
decade of the 21st century.
We are also a leader in constructing plants
for liquefied natural gas, one of the largest
growth areas in the natural gas market, and in
offering effective methods for accessing the
earth’s largest stranded natural gas resources.
We are enabling the development of
unconventional energy resources, such as
heavy oil, tight gas and geothermal power,
as well as fuel and power from coalbed
methane production and coal gasification.
We continue to invest our research dollars
into developing more environmentally
friendly, higher-performance drilling fluids;
minimizing drill cuttings disposal; and
eliminating flaring.
In today’s global society, the role of a
corporation goes beyond providing returns
to shareholders, wages to employees, and
products and services to its immediate
customers. A corporation must also respond
to the concerns and values of all its neighbors
in a respectful and accepting manner
according to the needs of each country in
which it operates.
Since the publication of our 2003 report,
Halliburton has formally adopted the
principles of Sustainable Development,
outlined a strategy and appointed a director
of Sustainable Development to lead us in
implementing that strategy. But in order to
be truly effective, these principles should be
3
4
supported by metrics that report performance
and facilitate improvement, mitigate risk,
attract and retain talent, and raise our
credibility among all stakeholders. This is
why we added metrics into this report on the
Energy Services Group’s regional revenues
and operating incomes, greenhouse gas
emissions and supplier diversity practices.
By providing an accountability mechanism,
these metrics also assist our customers in
evaluating our performance. We are committed
to further expanding our reporting initiatives
to meet these objectives.
Halliburton is a company of people who,
by their knowledge and their very nature, are
driven to find solutions. Whether it’s creating
technology to lessen our customers’ and our
Company’s environmental impacts on the
planet or designing solutions to health and
safety concerns, we have achieved our greatest
successes through a unique approach that
empowers our regional and local operations
to become incubators for global change.
This approach involves high-level
engagement by Halliburton executives who
set global objectives for health and safety, and
for the environment and service quality – and
then empower each country or region to
develop its own way to meet these objectives.
Combined with progress reviews and sharing
of best practices, this approach has resulted in
innovative, locally driven solutions that meet
the cultural, social and economic needs of
each community. Our stakeholders can and
should expect us to apply the same approach
to our Sustainable Development strategy.
Every day, advanced communications and
a borderless economy are bringing the world
closer together. Our stakeholders not only
expect transparency and accountability, but
they also demand it. At Halliburton, we
understand the power and the opportunity
of this globally connected community, and,
despite challenges that we still need to
address, we are committed to reaching
out and being part of it.
David J. Lesar
Chairman of the Board, President and Chief Executive Officer of Halliburton
5
The majority of Halliburton’s consolidated revenue
is derived from the sale of services and products
to major, national and independent oil and gas
companies from the earliest phases of exploration,
development and production of oil and gas
through refining, processing and marketing, and
to other industrial and governmental customers
around the world.
Halliburton’s two main businesses, the Energy
Services Group and KBR, include six business
segments organized around how our customers do
business and where we can add value. Production
Optimization, Fluid Systems, Drilling and
Formation Evaluation, and Digital and Consulting
Solutions are the four divisions of the Energy
Services Group. Government and Infrastructure,
along with Energy and Chemicals, form KBR.
In 2004, the Energy Services Group contributed
39 percent of revenues; KBR contributed
61 percent of revenues. Halliburton derived
approximately 78 percent of its 2004 revenues from
operations outside the U.S. In 2005, the Energy
Services Group contributed 48 percent of revenues;
KBR contributed 52 percent of revenues.
$10,100
$7,998
$6,995
$10,894
$12,468
$9,276
$20,994
$20,466
$16,271
2005
2004
2003
ESG KBR Total
Revenuesin millions of U.S. dollars
2005
2004
2003
ESG KBR Total
Operating Incomein millions of U.S. dollars
$2,279
$1,266
$826
$498
($342)
($36)
$2,662
$837
$720
GeneralCorporate
($115)
($87)
($70)
ESG Revenue by Regionin millions of U.S. dollars
North America
Latin America
Europe/Africa/CIS
Middle East/Asia
20032004
$3,609
$1,082
$1,924
$1,383
$3,085
$907
$1,442
$1,561
2005
$4,819
$1,344
$2,248
$1,689
ESG Operating Income by Regionin millions of U.S. dollars
North America
Latin America
Europe/Africa/CIS
Middle East/Asia
20032004
$722
$130
$214
$200
2005
$1,376
$192
$387
$324
$306
$165
$147
$208
Halliburton at a Glance
6
Wind Farm Energy
KBR is applying its offshore engineering and construction expertise on
offshore wind farms in the U.K., and has also played a leading role in their development.
7
Halliburton derived approximately 73 percent of its
2005 revenues from operations outside the U.S.
Accomplishments• We resolved our asbestos and silica liability,
achieving a fair solution for those who were
impaired by asbestos exposure and positioning
ourselves for long-term economic sustainability.
• We achieved a 138 percent increase in our
share price from Jan. 1, 2004, to Dec. 31, 2005.
• The Energy Services Group operating margins
were nearly 23 percent for 2005, compared to
just under 16 percent for 2004.
• We restructured KBR to return it to profitability.
KBR closed 2005 with its fourth straight
quarter of profitability.
• We introduced the Zero-D™ application for
hydraulic fracturing, which replaces diesel-
based additives with nondiesel-based products
in order to mitigate the remote risk of
contamination of groundwater sources.
• We executed new agreements to add to the
world’s liquefied natural gas capacity by
building additional trains to existing facilities,
and by designing and building grassroots
facilities in Africa, Asia and the Middle East.
• We’re also helping to pioneer innovative
gas-to-liquids (GTL) technology, which converts
natural gas to ultra-clean GTL diesel. In 2005,
KBR was awarded two major GTL projects,
including the world’s largest GTL facility.
Challenges• We cannot state strongly enough that any loss
of life is a tragedy not only for the families
involved but also for all of us at Halliburton.
In 2004, 50 Halliburton employees and
contractors lost their lives. Forty-one of these
fatalities were related to our work in Iraq.
In 2005, 18 Halliburton employees and
contractors lost their lives. All of these
fatalities were related to our work in Iraq.
We are committed to zero incidents and will
not be satisfied until that objective is achieved.
(see Standing By Our Convictions, Page 39)
• We realize the need to increase metrics to
measure our environmental performance and
assess our overall progress with regard to our
commitment to Sustainable Development
principles.
8
9
At Halliburton, we believe that there is no value
more important than integrity. Our ethical and
legal obligations must never be sacrificed in the
name of profits. This belief is reflected in our
Code of Business Conduct – the ethical and legal
foundation of our Company, and the starting
point for every aspect of our business. It influences
the way in which we help our customers to
develop their resources, how we interact with the
communities where we live and work, and how we
behave toward our people and everyone with
whom we come into contact.
GovernanceGood governance is the hallmark of a well-run
company. Halliburton’s board of directors adheres
to a fair and honorable model of governance to
guide its role as the guardian of shareholder
interest. In addition to specifying the rights and
responsibilities of the board, and the board
committees, this general model of governance also
provides the structure through which Company
objectives are set – as well as the means
of attaining those objectives, monitoring
performance and promoting fairness, transparency
and accountability.
Our corporate governance guidelines, originally
put in place in 1997, are reviewed annually to
reflect today’s dynamic and evolving business
environment, to enhance the board’s effectiveness
and to ensure compliance with new regulatory
requirements enacted by the U.S. Securities and
Exchange Commission, the Internal Revenue
Service and others. Recent changes were made to
further clarify policies regarding the board’s lead
director, its independence and communications
with stockholders. Halliburton continually
monitors governance best practices models for
public companies, including those identified by
leading indicators of corporate governance
performance. We revise our guidelines as needed
in order to maintain the highest standards.
The board’s most recent corporate governance
guidelines can be found on the Corporate
Governance page of our Web site
at www.halliburton.com.
Code of Business ConductAll Halliburton directors, executive leadership,
employees and agents are required to abide by
the Code of Business Conduct (COBC)
(www.halliburton.com), a collection of 17 precepts
that serve as a code of ethics for how we do
business, and define the standards that we uphold
in our dealings with the public, the business
community, governments, regulatory authorities
and each other. At every office, field location or job
site, we actively promote our principles of ethical
behavior and enforce our code of conduct to
guide employees in the operating methods and
procedures of their day-to-day activities. COBC
training is available to all employees through
Structuring Our Company for Sustainability
“A corporation must also respond to the concerns and values of all its neighbors in a
respectful and accepting manner according to the needs of each country in which it operates.”
– Dave Lesar, chairman, president and CEO
classroom, CD ROM and online sessions. In 2004,
we recorded 28,000 COBC training course
completions by Company employees and
approximately 29,000 in 2005. We have also
updated our COBC Summary communications,
making it available in 16 languages. In December
2004, we became a charter member of the
Compliance and Ethics Leadership Council of
the Corporate Executive Board. As a Company
providing services to the energy industry and
other industrial and governmental customers,
Halliburton operations can be found in most
places where our customers operate. This
includes countries and regions where there are
geopolitical tensions and environmental and
cultural sensitivities. We respect the laws of the
U.S. government and operate only in countries
where it is legal to do so. Wherever we operate,
our activities are governed and supported by our
Code of Business Conduct and by our
commitment to Health, Safety and Environment,
Service Quality and Sustainable Development
policies. Should a customer request us to perform
activities that are contrary to our values or ethics,
employees are empowered to seek a resolution and,
if necessary, cease work. Employees are required
to report COBC violations to management.
Reports can be made directly or anonymously
through a Company mailbox or through the
Company’s Ethics Helpline, which is available
24 hours a day, 7 days a week, and operated by an
independent company.
We take compliance with our code very seriously,
and, when we find COBC violations, we take
disciplinary action up to and including
termination of employees and suppliers, along with
referral of matters to appropriate authorities for
prosecution. Halliburton expects its Code of
Business Conduct to be followed in all of our
business activities and in every country in which
we operate.
10
11
12
13
Globally Connected,Innovative People
Halliburton people are acknowledged by our
customers for their hard work and dedication, and
their drive to find innovative solutions to whatever
problem is at hand – from creating safe, efficient
technology that helps customers develop their
resources and deliver energy to the world, to
working with leaders in remote villages to provide
the economic and social solutions their citizens
truly need. To attract such people, we must offer
rewarding careers, opportunities for professional
and personal development, equality of opportunity,
flexible compensation and working situations, fair
treatment and the expectation that employees will
be treated with dignity and respect.
Developing InnovativePeopleIn a highly competitive global market, having a
skilled and innovative workforce is more important
than ever. Halliburton offers more than 3,750 active
training courses both online and in classroom
settings to assist employees in their professional
and personal development.
We also continue to expand our Knowledge
Management (KM) initiative aimed at improving
service quality and encouraging innovation. Central
to this initiative are KM communities of practice
formed to address a specific business problem or
opportunity. More than 8,000 participants in 80
countries frequent these communities to connect
with each other about issues that pertain to their
jobs. Communities of practice are also being used
to help drive innovation in our coalbed methane
and water conformance businesses.
An internal survey conducted in November 2004
found that people participate because of the speed
with which they get replies, the quality of the
responses and the varied points of view. This
collaboration enriches client solutions and also
helps to foster greater innovation.
Halliburton monitors each community against
predefined business metrics to ensure that it
continues to provide value and evolves to meet
new business conditions and strategic priorities.
From 2002 to 2004, Halliburton recorded more
than $65 million in business value from 19
communities of practice with a three-fold return
on investment.
Patents and AwardsOne way of gauging our success in encouraging
innovation is our intellectual property. In 2003,
Halliburton was awarded 186 patents, ranking
No. 99 among U.S. companies. In 2004, we had
208 patents and ranked No. 87. Preliminary
figures from the U.S. Patent and Trademark
Office database for 2005 show 195 patents issued
for Halliburton.
Halliburton also receives numerous national and
international awards for technical innovation from
leading professional associations and publications.
“Halliburton is a company of people who, by their knowledge
and their very nature, are driven to find solutions.”
– Dave Lesar, chairman, president and CEO
14
Recent awards include:
• 2004 European Institute (EI) Award for
Innovation. Halliburton was the first service
company to win an EI award.
• 2004 Woelfel Best Mechanical Engineering
Achievement Award from the American
Society of Mechanical Engineers (ASME).
• Six Hart’s E&P Meritorious Awards for
Engineering Excellence in 2004 (the most
Hart’s awards won by a service company).
In 2005, Halliburton won another four
Hart’s awards.
• Two Spotlight on New Technology Awards
in 2004 from the Offshore Technology
Conference, recognizing the most innovative
and significant offshore developments during
the year. Halliburton won another Spotlight
Award in 2005.
• 2004 and 2005 World Oil Best Data
Visualization Solution Awards.
Empowering PeopleHalliburton believes that Health, Safety and
Environment (HSE) and Service Quality (SQ)
excellence is critical to our success and long-term
sustainability. The annual Performance Improvement
Initiative (PII) process, launched in 1997 by the
Energy Services Group, is aimed at continuously
improving our performance in these areas. PII is
not about compliance but solutions, and is an
example of a behavioral-based performance system.
We are keenly aware that no single solution can meet
the needs of a global company whose operations
encompass many different languages, customs, world
views, religions, education and economic status.
With PII, the executive team, along with HSE and
SQ professionals, outline broad strategic objectives
every year and provide tools and guidance to assist
the local teams in meeting these objectives. Each
geographic area or country, with input from its
employees and support from local Energy Services
Group leadership, develops a plan for meeting yearly
targets within the context of its customs, culture
and values. The success of PII in reducing
workplace injuries has been well documented, and
we believe that the PII process helped develop a
learning culture and contributed to these safety
improvements. As shown in the chart above, since
the program began, the Energy Services Group has
seen a reduction in injury rates of 80 percent.
Historically, injury rates were tied to industry
activity as indicated by rig count. Through PII, this
trend has been broken.
In June 2005, the Cambridge Center for Behavioral
Studies (CCBS) Commission on Behavioral
Applications accredited the Halliburton Gulf of
Mexico Operations’ behavior-based safety program.
The accreditation was recommended for a period
of three years.
In their report, the reviewers noted that: “Injury
incident rates are … well below industry comparisons
provided by the Bureau of Labor Statistics.” The
CCBS is the only group providing accreditation for
a behavioral safety process.
Cultivating LeadersDeveloping highly skilled and qualified future
leaders is vital to a company’s sustainability and the
goal of our succession planning and professional
Safety Performance and Rig CountWorld Rig Count ESG Recordable Injury Rate
4,000
3,000
2,000
1,000
0
8
6
4
2
0
‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ’05Rig count source: Baker Hughes
development programs. Each year, Halliburton
selects high-potential senior managers, directors
and first-time executives to participate in the
President’s Leadership Excellence Program, a
year-long leadership development event.
Participants from the Energy Services Group and
KBR are chosen annually for the program,
including employees from finance, legal, sales,
technology and operations groups who, as a whole,
represent the diversity of thought, geography,
operations and functions we find at Halliburton.
The President’s Leadership Excellence Program also
serves as an incubator for new ideas and innovative
processes. Participants work in teams to research
and provide recommendations to our Company’s
critical business issues. Past team projects include:
post-9/11 security of Company resources,
management in a cyclical business, Service Quality,
Sustainable Development, globalization of our
workforce and our annual employee goal-setting
process called People, Performance, Results (PPR).
The Supply Chain Management Program (SCMP).
As a two-and-a-half-year program created by the
Energy Services Group, the SCMP helps recent
college graduates with bachelor of science and
master of science degrees in engineering, as well as
MBAs with technical undergraduate degrees, develop
a broad understanding of the business functions
essential to sourcing, manufacturing and
delivering equipment and products. Started as a
manufacturing management program 11 years ago,
the SCMP has grown in recent years to encompass
a broader supply chain focus. The program has
been a source of managerial talent. Halliburton has
a retention rate of 79 percent of the individuals
who have graduated from the program. Of that
group, 20 now hold positions in management,
ranging from frontline supervisory positions to
director-level positions.
Recruiting for the SCMP occurs on leading U.S.
university campuses. Recently, the program has
begun targeting international students who plan
to return to their home countries to pursue their
professions. These countries include both lower-
cost markets where the Energy Services Group
supply chain will increasingly source products and
components in order to remain competitive in a
global marketplace, as well as countries whose oil
and gas reserves dictate that we will do business
there well into the future.
Building a GlobalWorkforceAs a global company, Halliburton is committed to
developing a workforce that represents the most
qualified personnel from around the world. At the
end of 2004, Halliburton began developing the
Transnational Employee Group (TEG) to recruit
and develop a core group of employees for
international assignments. The goal is for TEG
members to be highly skilled, respected in their
professions and in the industry, and to have the
ability to transfer their knowledge and technical
expertise to our other employees. Recruited
globally and deployed to Halliburton operations
around the world, TEG members will help to
expand our cultural diversity, thus enriching our
Company with the vitality and insights of many
points of view.
In 2005, we defined 18 “pilot” countries and began
mapping employee diversity and skill needs across
multiple managerial levels. A decision was made to
begin the gap analysis and skills assessment phase
in Africa in the first quarter of 2006. At the same
time, Halliburton began to develop partnership
opportunities with local universities in each of the
initial countries to provide employees with
opportunities for additional training. The first
partnerships were unveiled in Villahermosa, Mexico
(2005); Kuala Lumpur, Malaysia (2005); and Cairo,
Egypt (2006).
15
16
CO2 Sequestration
In Algeria, the vast In Salah gas facilities development is located in the midst of a key area for
oil and gas operations in the 21st century. Halliburton has drawn upon its extensive experience in designing CO2
compression systems for fertilizer plants to help design and build the world’s largest system to sequester
and dispose of the CO2 gas being produced. Approximately 1 million tons of CO2 greenhouse gas from the
production will be separated and re-injected into deep wells every year throughout the two decades
of plant operations – about as much CO2 annually as 200,000 vehicles emit.
Supporting Our PeopleIn order to maintain a highly functioning
workforce, we must address the day-to-day stresses
that can affect an employee’s ability to work safely
and productively. Halliburton offers two programs
that deal specifically with employee issues: the
Employee Assistance Program and the Dispute
Resolution Program.
Employee Assistance Program. Halliburton’s
Employee Assistance Program (EAP) organization
is staffed internally in the U.S. by a range of licensed
mental health professionals, including licensed
clinical social workers, licensed professional
counselors, licensed chemical dependency counselors
and certified Employee Assistance professionals.
Provided free of charge to all employees, Halliburton’s
EAP offers 24-hour crisis interventions; individual
consultations on a wide variety of problems, such
as marital troubles, substance abuse, child rearing,
elder care and mental health issues; and stress
management for critical events – thus covering a
whole range of issues that employees and supervisors
may confront in the performance of their duties.
In 2004, the United Kingdom joined Australia
and Western Canada in selecting outside,
independent organizations to administer the
EAP program. Employees located elsewhere contact
the U.S. EAP helpline for initial assistance and
resource identification.
When Hurricanes Katrina and Rita hit the U.S.
Gulf Coast region in 2005, Halliburton established
an around-the-clock call center staffed by our EAP
and Human Resources professionals to provide
assistance to the Company’s employees living in
high-impact areas in Louisiana, Mississippi and
Alabama. The Company also provided on-site
disaster response assistance. With the help of
Halliburton’s Crisis Management System, which
provides a framework for responding to
emergencies and crisis events, we made sure that
our employees were safe and that their basic needs
for food, shelter and clothing were being met. Once
this was done, we set up transitional housing and
financial grants to assist them. In all, 485 hurricane-
impacted families were served by the EAP in the
second half of 2005.
Dispute Resolution Program. Halliburton’s Dispute
Resolution Program (DRP) gives all employees an
improved process and flexible options for airing
and settling workplace conflicts – from minor
everyday misunderstandings to possible violations
of legally protected rights.
The goal of the DRP is to focus on the actual
grievance and to resolve it to the mutual benefit of
all sides – either through internal conferences or
through external means such as mediation or
arbitration. Mediation often results in win-win
outcomes by saving time and money and by
preserving employment relationships – all of which
enhances organizational performance. Should any
employee feel he or she has any legal case against
Halliburton, the Company will pay for the
employee to consult with a legal representative of
the employee’s choosing. This ensures that all
employees, irrespective of individual means, have
access to legal representation.
The DRP, which operates under the strict Code
of Ethics and Standards of Practice of The
Ombudsman Association, has achieved national
acclaim and is now the most widely recognized,
most written about and copied alternative dispute
resolution program in the U.S. In 2005, the U.S.
Equal Employment Opportunity Commission
(EEOC) and Halliburton jointly entered into a
National Universal Agreement to Mediate (NUAM)
to resolve workplace disputes informally through
Alternative Dispute Resolution (ADR) procedures
before an EEOC investigation or potential litigation.
17
18
19
Halliburton’s Code of Business Conduct’s Health,
Safety and Environmental policy states that “… the
goal will be to develop and provide products and
services that have no undue environmental impact,
are safe in their intended use, efficient in their
consumption of energy and natural resources, and
can be recycled, reused or disposed of safely …”
We are committed to being a partner in the pursuit
of sustainable energy solutions through the provision
of services and technologies for maximizing the
recovery of oil and gas in existing reservoirs, and for
developing clean and renewable energy sources for
the future. In 2004, Halliburton spent approximately
$228 million on technology research and
development (R&D) across all four Energy Services
Group divisions. The KBR Energy and Chemicals
Division spent just under $6 million on
technology research and development. Total
technology spend for all four Energy Services
Group divisions in 2005 was $218 million. The
KBR Energy and Chemicals Division spent just
over $2 million.
Maximizing ConventionalEnergy ResourcesToday, oil and natural gas represent two-thirds
of the world’s energy consumed to generate power
and fuel our cars. They also provide the raw materials
for chemicals, plastics, pharmaceuticals and almost
any synthetic item that contributes to our quality
of life. Halliburton’s advanced technology and
processes are enabling the energy and chemical
industries to keep pace with growing demand for
oil and natural gas.
New technologies; new ways of thinking. The high-
performance visualization and volume interpretation
technologies marketed under our Landmark and
GeoGraphix brands, together with our “real time”
drilling technologies and services, are enabling
operators to dramatically improve operating
efficiencies by reducing the time required to evaluate
prospects and to plan and drill wells. The use of
these technologies and our innovative workflows
in our Real Time Operating Centers is resulting
in considerable operational cost savings due to
shortened planning cycle times and decreased time
to production. These benefits are well-documented
in multiple industry papers.
Drilling and recovery techniques such as
multilateral wells and Geo-Pilot® – our slim-hole,
point-the-bit rotary steerable solution capable of
significantly extending horizontal production
sections and reaching small targets from existing
structures – are enabling customers to drill fewer
wells, often from single-well sites, and to maximize
the resources recovered from each reservoir.
The WellDynamics group, with its SmartWell®
technology, is a pioneer in intelligent completions.
WellDynamics – a joint venture with Shell, in which
Halliburton owns a 51 percent share – is an
example of innovative efforts to bring technology to
the industry. SmartWell intelligent completions,
which provide remote, downhole monitoring and
Sustainable Energy Solutions“We believe that Halliburton has a considerable part to play in
finding solutions to some of society’s most pressing concerns.”
– Dave Lesar, chairman, president and CEO
control capabilities, are acknowledged within the
industry as a key enabling technology in the
pursuit of best-practice reservoir management.
The technology enables the remote control of
multi-zonal production for more efficient asset
management, which can delay the production of
water, thus increasing the net present value of the
asset. It also reduces well intervention costs and
extends the life of existing infrastructure.
Solid expandable tubular (SET™) technology –
developed by Enventure, another Halliburton/Shell
joint venture company, is a technology whose most
significant legacy to sustainable development is the
monodiameter well. A radical departure from
conventional wells, monodiameter wells utilize a
single size of casing for the entire length of the
well, enabling operators to drill substantially deeper
than ever before, faster and more cost-effectively.
The slim profile – which utilizes smaller vessels,
lighter rigs and smaller risers – requires less rock to
be excavated and less use of steel, cement and other
materials. However, the biggest benefactor may be
the environment – from the reduced environmental
footprint to the decrease in energy expended to
produce each barrel equivalent of fluid.
Natural gas production. Halliburton is also
contributing to energy sustainability through the
development of clean energy technology that
builds on our traditional strengths in natural gas
production and development. Worldwide, increasing
natural gas demand is coming up against declining
productivity in mature reservoirs and barriers to
the development of new gas infrastructure.
Halliburton is helping its customers find solutions
to maximize gas production and recovery to feed
the increasing global demand for this clean-
burning fuel. Trillions of cubic feet of natural gas
around the world are “stranded” in remote areas
isolated from traditional gas infrastructure and are
consequently considered too remote for economic
development via traditional means such as
pipelines. Liquefied natural gas (LNG), which is
natural gas that has been cooled and condensed to
a liquid about one six-hundredth the volume of
gaseous natural gas so that it’s easier to transport,
is an effective method for commercializing these
resources. LNG can be transported safely and
economically on specially designed tankers to
import terminals in major world markets where it
is converted back into gas. For this reason, LNG is
one of the biggest growth areas in the natural gas
20
market. Halliburton’s KBR subsidiary is a world
leader in constructing plants for LNG and, alone
or in joint venture, is responsible for building more
than 55 percent of the world’s operating LNG
capacity in the last 25 years. KBR is also at the
forefront of designing “mega-trains” that
increase efficiency and lower construction and
operating costs.
We are at the forefront of constructing the
facilities for the emerging gas-to-liquids (GTL)
market. GTL involves the conversion of natural gas
directly into premium, environmentally friendly
transportation liquids. KBR is currently providing
design and engineering services for GTL facilities,
including a development in Qatar.
Additionally, Halliburton offers technology solutions
for low-energy, low-cost hydrogen plants and has
been involved in the design and/or construction of
34 refinery hydrogen plants.
DevelopingUnconventional ResourcesAs conventional oil and gas reserves are being
depleted, Halliburton is helping customers pursue
options for unconventional fuels sourced from oil
sands, shales and coal beds, either from in-situ
production of methane or gasification of mined
coal – and is also involved in the production of
geothermal power.
In addition to our in-house R&D, Halliburton
works with a variety of other companies and
organizations on the technical and economic issues
surrounding heavy oil, tight gas and coalbed
methane. One such effort is the Halliburton Center
for Unconventional Resources of the Crisman
Institute for Reservoir Management at Texas A&M
University. The center’s mission is to increase the
ability to characterize unconventional reserves and
to develop new, more efficient ways to reduce costs
and improve recovery. Halliburton also helped
create the Gas Technology Institute (GTI) at the
New Mexico Institute of Mining and Technology,
which is working on an unconventional gas
“roadmap” to identify unconventional gas
R&D needs.
Recently, Halliburton’s Magnetic Resonance
Imaging Logging-While-Drilling (MRIL®-WD™)
system helped BP estimate the viscosity of heavy oil
in its reservoirs at the North Slope in Alaska.
21
Because viscosity can vary by orders of magnitude
in individual reservoirs, techniques such as this are
needed in order to rank the reservoirs and map the
“sweet spots” that contain lower-viscosity oil. This
will enable the optimization of well spacing and
potentially reduce the number of wells needed to
produce the asset.
The International Energy Agency (IEA) estimates
that heavy oil will represent 10 percent of the
world’s daily oil production by 2030. Refineries and
upgraders worldwide are using our cost-efficient,
market-leading ROSE™ deasphalting technology to
process heavy crude oils into high-value transportation
fuels. A byproduct of the process is asphaltene,
which one operator in Europe is converting to
syngas for power generation. ROSE™ technology
is also being used to refine tar sands found in
Alberta, Canada, which represent as many as 300
billion recoverable barrels of petroleum, along with
another potential trillion-plus barrels that could
one day be reached using new retrieval methods.
Alberta plans to increase heavy oil production from
tar sands from the current 1 million to 3 million
barrels a day by 2015.
Clean CoalThe use of coal as an energy resource is now
considered less desirable because burning coal
produces more carbon dioxide per unit of energy
than oil or gas. Coal also produces emissions, such
as sulfur oxide (SO2), nitrogen oxide (NOx) and
mercury, which can pollute the air and water.
Yet, some 60 percent of the world’s fossil energy
reserves are in coal, which is located in areas
where the energy demand is greatest – including
North America, Europe, Russia and Asia.
Halliburton technologies are helping to tap this
valuable resource while eliminating some of its
harmful effects.
Methane recovery from coal. One of the ways we
are doing this is through the development of
technologies for enhancing and enabling coal mine
methane (CMM) and coalbed methane (CBM)
development around the world. Coalbed methane
is methane contained in coal seams, and is often
referred to as virgin coalbed methane, or coal
seam gas. Coal mine methane involves methane
extraction via hydraulic fracturing technology in
advance of coal mining operations. During this
process, methane – a greenhouse gas with 21 times
the potency of carbon dioxide – is captured and
used as a resource rather than being emitted to the
atmosphere as a waste product. When converted
into energy, methane is one of the cleanest-burning
fossil fuels available in its natural form.
The U.S. has made substantial progress in recovering
and using CMM. Of the 142 billion cubic feet (Bcf)
of CMM liberated from underground mines in one
year alone, about 42 Bcf is used as an alternative
energy source, most of which incorporates some
22
form of production enhancement technologies.
U.S. coal mines recently recovered 86 percent,
or 36 Bcf, of the gas liberated through drainage
systems – the equivalent of removing 3.2 million
cars from the road.
Halliburton continues to strategically focus on
technology to help unlock the vast potential of CBM
and CMM that represents up to 10,000 trillion cubic
feet of natural gas potential. We are also working to
advance industry knowledge of coalbed methane
development. Halliburton’s CBM experts have
shared their knowledge with our employees around
the world via an in-depth Intranet information
resource. This site enables our employees to
interface with operators and better optimize
development of CBM assets.
Coal gasification. Halliburton is also at the center
of initiatives to develop clean coal technologies for
power generation. KBR has been selected by the
U.S. Department of Energy (DOE) under the Clean
Coal Power Initiative (CCPI) to build an advanced
285-megawatt coal gasification facility in central
Florida. The project, which uses our transport
gasifier technology, is a commercial demonstration
of advanced coal-based gasification technology.
The KBR transport gasifier, derived from our fluid
catalytic cracking technology, is a simple and robust
design that operates at a much lower temperature
than commercially available alternatives. It effectively
handles low-rank coals, including sub-bituminous
coal and lignites that make up half the proven
worldwide coal reserves. These coals might otherwise
remain uneconomical as energy sources due to
high moisture and ash contents. Direct combustion
of low-grade coals in traditional coal-fired plants
burns up much of the carbonaceous energy to
eliminate the moisture. In the KBR process, the
moisture actually constitutes a useful reactant.
High ash content also doesn’t pose a problem for
the KBR process – it’s the only gasifier in which ash
is recovered in solid form rather than as a molten
slag. Using data derived by the Electric Power
Research Institute (an independent, nonprofit
center for public interest energy and environmental
research), it has been estimated that the KBR
process is expected to deliver power commercially
from sub-bituminous coal at a cost of 3.6¢ per
kilowatt hours (kWh) compared to 3.8¢/kWh from
the most advanced coal-fired plants, and with
superior emissions characteristics.
Capable of both air- and oxygen-blown operation,
the KBR gasifier is not only cost-effective for power
production, but it can also adapt to other applications,
such as the chemical production of fertilizers and
methanol, as well as clean-burning hydrogen for
tomorrow’s automobiles and power-generating fuel
cells. In the shorter term, di-methyl-ether (DME),
derived from syngas (synthetic gas, which is a
23
24
Mid-Continent Region
Pampa, Texas, is part of Halliburton’s Mid-Continent Region, which was the winner of
Halliburton’s 2004 PII Environmental Award. The region won the award by meeting its targets
for environmental performance improvement, sustainable development and
International Organization for Standardization (ISO) education. Evaporation ponds constructed in
off-channel areas, such as the one shown above, provide storage for produced water
and a relatively low-cost disposal method.
mixture of carbon monoxide and hydrogen), offers
the potential of a high-efficiency, cleaner, partial
replacement for diesel in conventional engines.
Renewable resources. Renewable energy sources
are defined as energy that comes from ongoing
natural processes such as sun, wind, flowing water,
biological processes and geothermal heat flow.
Halliburton’s high-temperature cementing and
completion solutions are being used to drill into
geothermal aquifers and to bring steam or hot
water to the surface for power generation.
Geothermal power plants have minimal or no
impact on the environment, while production of
individual fields can be sustained for decades and
even centuries.
During the last four years, KBR has applied its
extensive experience in designing, building and
maintaining offshore oil platforms to take a leading
role in the development of offshore wind power in
the U.K. KBR is presently part of a joint venture
with a turbine manufacturer to construct a wind
farm off the northwest coast of England. This wind
farm will have an installed capacity sufficient to
provide power to approximately 70,000 homes.
Addressing EnvironmentalChallengesWe cannot rely on conservation alone to solve
environmental challenges. Technology must play a
leading role. In our capacity as a provider of services
and technologies, Halliburton is actively developing
solutions for our clients that contribute to a cleaner
environment. Our efforts reduce the impact of
energy exploration and production activities by
reducing the visible footprint of our activities, and
by reducing emissions that may be contributing to
climate change or potential surface water and
groundwater pollution.
Drilling technologies. Eighty percent of future gas
in the Lower 48 states lies beneath protected lands.
Halliburton’s Geo-Pilot point-the-bit rotary
steerable drilling system, and the Landmark
DecisionSpace® suite of technologies are ideally
suited for such environmentally sensitive areas.
The Geo-Pilot system reduces environmental
impact by enabling operators to drill multiple
long-distance wells in all directions from a single drill
pad, and Landmark’s DecisionSpace visualization
technologies illuminate the drilling environment
so accurately that drilling work can often now be
performed more safely and efficiently away from
the drill site.
Gas flaring. One source of gas flaring occurs during
drillstem testing, which is used to evaluate the
potential of a new reservoir. After the borehole has
penetrated a potential productive zone, the drill bit
is removed and drillstem test tools are attached to
the drillstring and inserted back into the borehole.
25
26
Gas produced during a drillstem test is flared.
Halliburton’s alternative for drillstem testing, the
FasTestTM system, captures reservoir information
downhole, which eliminates the need to produce
hydrocarbons to the surface and any resulting
oil or gas flaring during testing operations.
The FasTest system has been tested and proven
in the Gulf of Mexico and offshore Brazil.
CO2 sequestration. One of the most challenging
aspects of the oil and gas industry is the amount
of CO2 produced, not only in downstream refining
but also during a variety of processes used to
deliver cleaner gas. Halliburton is helping to
mitigate CO2 emissions, either by injecting CO2
to enhance oil and gas recovery, or by storing CO2
in suitable underground formations.
Halliburton is currently working with the U.S.
Department of Energy and other industry partners
on CO2 sequestration technologies through the
FutureGen project. One of the findings of the
FutureGen project is that CO2 is much more
economically sequestered downstream of a
coal gasifier than from a direct-fired plant.
Halliburton is also involved in what is currently
the world’s largest CO2 capture and storage project
now under way at the In Salah gas development
project in Algeria. Rather than venting the associated
CO2 gas into the atmosphere, the project – a joint
venture between Sonatrach (Algeria’s national
energy company), BP and Statoil – is using a
method known as geologic storage to capture and
isolate excess carbon dioxide and inject it into a
brine formation a mile below the surface.
Managing produced water. Water produced during
hydrocarbon exploration and production is one of
the largest environmental challenges faced by the
petroleum industry. The average volume of produced
water in 1999 was estimated at 210 million barrels
of water each day worldwide, or approximately 77
billion barrels of produced water for the entire
year. As assets mature, the ratio of produced water
per barrel of oil produced increases.
Produced water may include dissolved salts and
organic compounds, hydrocarbons, trace metals,
suspended solids and other substances that can
have significant environmental effects. Treatment
and disposal of produced water within increasingly
strict regulatory standards represent a huge
technical and financial challenge for the industry.
We are addressing these problems through a variety
of solutions, both chemical and mechanical, for
water cleanup and re-injection, and for reducing
the amount of water produced. Halliburton set up
a water management advisory board in 2003.
Representatives from major and independent
operating companies meet two to three times a
year to share information related to the field of
water management and to identify potential
solutions to the ever-growing problem of produced
water. Through the direction of the board,
Halliburton is building an information resource
portal containing best-practice methods, research
on water management activities and design
mechanisms for identifying solutions.
Halliburton has led efforts recently to optimize the
environmental profile of its drilling fluid products
used to enhance production in unconventional gas
in the U.S. Our Zero-D™ application replaces
diesel-based additives previously used for hydraulic
fracturing operations with nondiesel-based
products in order to mitigate the remote risk of
contamination of groundwater sources.
Over the last two years, the Company has pioneered
a number of chemical products to meet or exceed
U.S. and European water quality standards. In
addition to developing products for meeting or
exceeding surface discharge requirements where
applicable, we’re replacing chemical additives and
developing chemical products with significantly
reduced environmental impacts.
27
28
29
Connecting with Communities“In today’s global society, the role of a corporation goes beyond providing returns
to shareholders, wages to employees, and products and services to its immediate customers.”
– Dave Lesar, chairman, president and CEO
The origin of the word community is the Latin word
munus, which means “the gift,” and cum, which
means “together, among each other.” Community
literally means, then, to give among each other.
Contributing to the communities in which we
operate, which is one of the fundamental concepts
of our Corporate Sustainability strategy, can take
many forms. At its most basic, it can be expressed
as “first do no harm.” For Halliburton, this means
upholding the highest standards with regard to
such key areas as workplace safety and
environmental protection.
In a broader sense, it can take the form of hiring
and training local workers and supporting local
businesses – either by using as many local goods and
services as possible, or by “seeding” new business
ventures and providing the management expertise
and guidance to ensure success. On some projects,
community involvement has included building
infrastructure for schools, roads and medical clinics.
Giving back to communities is clearly the right
thing to do. But there’s also a business case for
acting responsibly. If a community sees a company
as a fair employer and positive citizen, it’s more
likely that its projects will achieve consistent and
sustainable performance, and that the company
will be welcomed back by the community for
future engagements.
Woven into the Fabric of a CommunityThe ways Halliburton connects with communities
depends on the community, and on the nature of
our business there. For project-based assignments,
our involvement in a community often lasts only
for the duration of the project. When Halliburton
establishes operations in a country, we’re usually
there for the long term, as is the case with
Halliburton de Mexico, established in 1956 as a
Mexican company. Today, more than 89 percent
of our 1,810 employees, including management,
are Mexican, and some are third-generation
Halliburton employees. The community considers
us as one of its own, and we honor that trust. The
Halliburton office in Ciudad del Carmen has
received clean industry certifications from the
government agency PROFEPA/SEMARNAT and
our driver safety training programs have become
community mainstays. Our employees also
contribute to a variety of programs, sponsor local
schools, volunteer for charitable organizations and
reach out to neighbors with the greatest needs.
Through a program Halliburton designed with the
United Way in Mexico, the Company has provided
funding for 85 institutions throughout the country
since 2002. The United Way manages and distributes
the funds based on recommendations from a
Community Team at each Halliburton location,
which researches the organizations and follows up
on how the money is spent. The program is run
the same as other Performance Improvement
Initiative processes with a yearly plan and
internal performance reviews. During 2004-2005,
approximately 11,800 people directly benefited
from the program.
Clearly, Halliburton de Mexico is woven into the
community. But everywhere we go, and for however
long, we are guided by the same principle: to leave
every place as good as, or better than, we found it.
Local ContentHiring and training a country’s local workforce
and developing its local suppliers contribute to the
country’s sustainable economic growth. It’s also
essential for the long-term sustainability of
Halliburton in today’s global marketplace. By
transferring valuable skills to local workers and
businesses, we help create greater economic
opportunities for the entire community.
In Chad, where we have been the contractor for
the massive Chad-Cameroon oil development
project since 2000, we have implemented a
complex social economic program. With project
owners, KBR and its partners developed on-the-job
training programs that transformed inexperienced
Chadian employees into skilled, certified craftsmen
who helped the project set a truly impressive safety
record – more than 40 million work hours without
a lost-time incident.
When we started working here, Chad didn’t have
many subcontractors, but it did have people with
initiative. KBR registered more than 1,328 Chadian-
owned businesses to provide services and supplies,
and then helped them develop their businesses.
Currently, as the sole contractor on the Nya/Moundouli
satellite reservoir development, we are employing
many of the Chadian workers we previously
trained and certified, as well as a number of these
local subcontractors. All of our rented equipment,
sand and aggregates also come from local sources.
Community DevelopmentThe Chad project has also helped to improve the
quality of life for people in the project areas
through better housing, improved diets, malaria
prevention, vaccinations and health education.
In 2004, after months of field research and some
4,000 interviews in the villages of southern Chad,
a research team, employed by the World Bank’s
environmental and socioeconomic monitoring
group, concluded that the Chad-Cameroon project
30
has significantly improved living conditions for
residents in the oilfield and pipeline areas.
The finding was based on a village-by-village
socioeconomic index score similar to the United
Nations Human Development Index. Project-area
villages scored in a range that was about twice as high
on the socioeconomic index as the study’s control
villages, which are located outside the project area.
Supplier DevelopmentWe are committed to supplier diversity and to
being recognized as a global leader in supplier
development among oilfield service companies.
In support of this vision, we seek to maximize
opportunities for diverse business owners wherever
we operate in the world.
We accept third-party certifications for minority-
and women-owned businesses, along with small
business enterprises (M/W/SBEs) according to strict
standards established by recognized government and
nonprofit organizations within the U.S., Canada
and the U.K. These certifying agencies provide
Halliburton with assurances that our supplier
diversity initiative benefits those small, diverse
businesses for which it is intended.
In 2005, we redefined our supplier diversity initiative
by expanding our focus to global markets and
implementing process improvements to enhance
our reporting systems. These changes provide
increased visibility of our procurement processes,
diverse suppliers and expenditures.
31
2005 M/W/SBE Expenditure for ESG M/W/SBE ESG Spend $ M/W/SBE % of Total ESG Spend
$900 M
$800 M
$700 M
$600 M
$500 M
$400 M
$300 M
$200 M
$100 M
0
18%
17%
16%
15%
14%
13%
2003 20052004
32
The preceding chart captures Energy Services Group
global spend with minority- and women-owned
businesses, along with small business enterprises
for the U.S. and U.K. from 2003 through 2005 as a
percentage of overall procurement expenditures,
showing a steady increase in expenditures with
diverse suppliers.
Among our most notable accomplishments this
past year, Halliburton was recognized as a Trailblazer
by Minority Business News, which named the
Company as one of the top 50 corporations in Texas
for supplier diversity. We were also privileged to be
nominated by the National Minority Supplier
Development Council (NMSDC) for its prestigious
Corporation of the Year Award. Comprised of
more than 3,500 major corporations, NMSDC is
one of the leading business membership
organizations in the U.S.
In 2006, we plan to deploy strategic sourcing and
procurement programs to support our supplier
development initiative throughout the Energy
Services Group, and to increase the exposure of
diverse suppliers to key buyers and decision
makers. In addition, we will begin second-tier
diversity training for our key strategic suppliers,
ensuring that supplier rationalization efforts have a
minimal impact on our supplier diversity strategy.
One of our challenges is to expand the program to
address the need for local content no matter where
we work. We have gained valuable experience
developing local content in Mexico, Chad and
Nigeria. We hope to apply lessons learned and best
practices from these experiences to develop more
comprehensive global solutions for our long- and
short-term endeavors. In Nigeria, for instance, the
Energy Services Group has established a “local
content project team” to oversee local content
initiatives and to assure alignment with
governmental local content legislation.
In Bonny Island, Nigeria, where a KBR joint venture
has built four processes of the Nigeria liquefied
natural gas (NLNG) plant since 1995 and is now
working on processes 5 and 6, we have trained
2,100 workers in crafts and computer skills, and
have plans to train 3,000 more. We have also made
significant investments in Nigerian contractors
and suppliers by playing a prominent role in the
development of their businesses and by helping
them expand their pressure vessel and structural
steel manufacturing capabilities and facilities.
Our relationship with NETCO, Nigeria’s first
national engineering company, began in the early
phases of NLNG process 1. NETCO engineer
training programs in London have exceeded 50,000
hours in various engineering disciplines. Over the
years, their participation has grown – from front-
end engineering and design (FEED) to some
detailed engineering and design. Approximately
185,000 hours of work have been executed in
33
NETCO’s offices in support of the LNG processes
at Bonny Island. The relationship has been
productive for both NETCO and KBR, and we
will continue to expand NETCO’s role in NLNG
and other Nigerian projects.
In January 2005, KBR Energy and Chemicals began
another project in Nigeria, providing topside
engineering design and procurement services for
the 30,000-ton Agbami floating production, storage
and offloading (FPSO) vessel.
Throughout the 12 months of the contract,
NETCO’s 70 employees expended some 130,000
hours, more than doubling the firm’s original
contract for 57,000 hours of detail design.
KBR also provided supplemental training in its
Houston offices for NETCO engineers, helping them
advance their design capabilities from structural
elements to more complex processing units. This
enabled NETCO to execute 3-D duplicate designs
of two of the FPSO vessel’s gas injection modules
and to subcontract some of the basic design work
to a newly formed Nigerian engineering firm.
By strengthening the country’s indigenous design
resources, the Agbami project is enabling Nigeria
to play a greater future role in monetizing its rich
hydrocarbon reserves.
Technology Solutions toCommunity ChallengesOften, our contributions are the result of the work
that we do. Our expertise as one of the world’s
leading engineering and infrastructure firms is
providing communities with significant benefits
to their quality of life.
In December 2004, KBR and the City of Salisbury,
near Adelaide, Australia, jointly won an Engineering
Excellence Award from Engineers Australia, South
Australia Division, for the Parafield Storm Water
Harvesting Project. KBR undertook the design of
the project, which has transformed management of
storm water from a 1,600-hectare (4,000-acre)
urban catchment that extends north from
Parafield Airport, one of Australia’s busiest
general aviation airfields.
Formerly, much of the catchment’s storm water
flowed straight to the sea – carrying with it litter,
suspended solids, oil, animal feces, metals,
fertilizers, chemicals and other pollutants. Now,
70 percent of the water is diverted to a series of
birdnetted capture and holding basins on the edge
of the airport, before being directed through a
densely planted bed of reeds for final filtration
and cleansing.
The 1,100 megaliters (300 million gallons) per year
of recycled water – cheaper and less saline than
Adelaide’s mains water – are then used by local
industry, irrigators and the community, which frees
up potable water for other uses. An aquifer storage
34
and recovery facility, the largest of its kind in
Australia, is used to even out seasonal variation in
rainfall. Any surplus water is injected via wells into
an aquifer to be recovered in drier months.
The local marine environment is another
significant beneficiary of the project: Almost
90 percent of pollutants are removed from
the unused storm water that is directed to
the ocean.
Employee InvolvementHalliburton people routinely solve problems and
find solutions for our customers – a quality that
carries over to their volunteer activities. Around
the world, Halliburton employees contribute many
hours to the betterment of their communities.
Quite often, they are involved with small local
projects – planting trees; cleaning parks and repairing
playground equipment; adopting schools; and
visiting the ill, the elderly or the forgotten. These
are projects and causes that may, on the face of it,
seem modest, but they are ones for which employees
have a real passion. Collectively, their efforts add up
to thousands of hours of volunteer service in
hundreds of communities. Volunteer efforts by
Halliburton employees are being further
encouraged and facilitated through Halliburton
Volunteer Councils, the Company’s program to
help organize volunteer activities and raise
awareness of community needs within the
employee base. The program exists within the U.S.
and Canada at present and Halliburton will further
expand it internationally in 2006.
Here are a few examples of employee involvement
from 2004 and 2005:
Overcoming disaster. Over the past three years, a
number of Halliburton employees have worked
in Quang Ngai, Vietnam, on an AusAID project
designed to improve natural disaster management,
especially for flooding, in this central coastal
province. AusAID is the Australian Government
agency responsible for managing the Australian
Government’s official overseas aid program.
Teaching the people of this fishing community
how best to survive extreme weather conditions
– including floods, typhoons and droughts – is an
important part of the project. A program called
“Eat Waves, Speak Winds” was implemented as
part of the community education program.
Strong medicine. When KBR staff reassignments
left 100 beds free, employees at the PCO Oil South
Camp in Basra, Iraq, found a way to make good
use of them. Following a government-approved
process, employees delivered the beds to a local
hospital. Earlier, South Camp employees donated
boxes of surplus first-aid supplies to local clinics.
The efforts are part of a “Hands Across the Seas”
program started by the U.S. Army Corps of
Engineers to help needy families in Southern Iraq.
35
Trees for communities. Halliburton Venezuela
employees pitched in to make their environments a
little greener during the country’s 2005 Arbor Day
Campaign. Employees joined forces with other
volunteers, donating and planting more than
2,000 trees in the communities of Caracas, Maturín
and Santa Rita.
Aiding future scientists. The 2004 Stephens County
Science Fair in Oklahoma had a more professional
look to it this year. A group of volunteers from the
Duncan Technology Center in Duncan, Oklahoma,
worked to make the fair a success by serving as
judges, Web experts and mentors to area science
students. “The mentoring program is something
that I’ve dreamed about for a long time,” wrote an
appreciative fifth-grade science teacher, “and now it
has become a reality.”
Recycling for children. Members of the Barracuda
and Caratinga project team in Rio de Janeiro, Brazil,
started a paper recycling initiative that benefited
both the environment and the community. The
group collected almost seven tons of paper from
Halliburton’s Assembleia office for recycling, and
received a check for R$2,088 (around U.S.$700)
for it. The money was donated to the Creche Viva
Association, a local charity that runs daycare centers
for 200 children, to rebuild a kitchen in one of the
centers. The Creche Association works in the
largest disadvantaged area in Latin America.
Teaching safety. Members of Halliburton’s Restore
Iraqi Oil (RIO) team hosted a five-day seminar in
Baghdad for Iraq’s Ministry of Oil. Presenters
focused on our safety culture and provided helpful
pointers to teach the Ministry how to implement
these practices within its own organization. More
than 75 Ministry employees – from engineers to
plant managers to research doctors – attended the
seminar. “The concept of truly preventing all
injuries intrigued and excited the Iraqis,” noted
one of the organizers of the event.
Marathoners for causes. Four Halliburton employees
in the U.K. ran the Edinburgh, Scotland, marathon,
losing a few pounds and gaining many more. The
Halliburton runners raised £2,686 to be divided
evenly between the Friends of Stonehaven’s
Carronhill School, to upgrade facilities for students,
and the Friends of the Anchor Unit, to purchase
equipment to improve the diagnosis, treatment and
care of patients with cancer, leukemia and blood
disorders such as hemophilia.
Breaking the cycle. In 2005, Energy Services Group
Information Technology employees in Houston
donated 500 computers loaded with software to the
nonprofit Skills for Living, Inc. “20-20” financial
literacy program. The program helps low-income
Houston families plan for and accomplish financial
goals with the hope of ultimately breaking the cycle
of poverty.
36
Rescuing wildlife. When an oil spill from a train
derailment near Lake Wabamun in Alberta,
Canada, affected 235 area birds, members of
Halliburton’s Nisku Manufacturing and Technology
Environmental Team volunteered to help. Contacting
the local bird reclamation center, the team spent
the afternoon cleaning the distressed birds and
hand-feeding them through syringe tubes.
Responding in a crisis. 2005 was marked by natural
disasters, and Halliburton employees stepped up
with donations of money and much more. After
Hurricanes Katrina and Rita struck the U.S. Gulf
Coast, affecting more than 700 members of the
Halliburton family, employees donated enough
clothes and other necessities to stock a temporary
“store” from which storm victims could find
necessary items to help rebuild their lives. Employees
also gave generously to victims of the earthquake
in Pakistan, and of the tsunami that struck 12
countries on two continents. In addition to
contributing to the Halliburton Tsunami Relief
Fund, a number of employees traveled to the
affected areas, volunteering their time to help
the people there.
Corporate GivingHalliburton has a long tradition of giving back to
the community – both through Company-sponsored
programs and through the volunteer efforts of
Halliburton employees around the world. The
Halliburton Education Assistance and Resource
Team (H.E.A.R.T.) program provides processes and
guidelines for identifying, approving and funding
community projects in support of our global focus
on health and education. Halliburton began
reporting global charitable donations in 2003 in
accordance with standards set by the Committee to
Encourage Corporate Philanthropy (CECP), a
U.S.-based national forum of business CEOs and
chairpersons focused on corporate philanthropy.
Halliburton uses the CECP’s data collection,
reporting and benchmarking system to track our
year-over-year giving trends. Here are some of the
highlights of our Corporate Giving programs in
2004 and 2005:
• In 2003, Halliburton started a new employee
giving program, known as Giving Choices,
within the U.S. It is designed so that employees
can make contributions to the local, national
or international charity(ies) they designate.
Halliburton absorbs all of the administrative
costs of the program and adds a 10 percent
Corporate Giving
Halliburton Foundation (cash)in thousands of U.S. dollars
Total Contributionsin thousands of U.S. dollars
$4,196
$2,817
$2,512
2005
2004
2003
2005
2004
2003
2005
2004
2003
2005
2004
2003
Direct Cashin thousands of U.S. dollars
$136,253
$227,115
$144,301
In-Kind Donations (non-cash)in thousands of U.S. dollars
$2,232
$1,995
$1,603
$142,681
$231,927
$148,416
matching donation for annual employee
contributions of $50 or more. Employees
may donate to multiple organizations,
either through a one-time contribution or
through payroll deductions.
• In 2004, employees donated more than
$1.7 million to charities. During 2005, after
the program expanded to Australia, Canada
and the U.K., employees pledged in excess of
$2 million to more than 700 charities.
• In 2004, Halliburton donated more than
$2.8 million in cash to charities. In 2005, the
Company donated more than $6.4 million.
• The Halliburton Foundation gave more than
$1.9 million in cash to educational institutions
in 2004. In 2005, the Foundation contributed
more than $2.2 million.
• The Halliburton Foundation funds the
Halliburton Volunteer Incentive Program, also
known as HAL-VIP. The program aims
to encourage volunteer activity by awarding
grants to charities where employees are
volunteering their time. In both 2004 and
2005, grants were provided to more than
200 charities.
• Halliburton was a corporate sponsor for
the March of Dimes, as well as the presenting
sponsor and top corporate fundraiser at the Gulf
Coast Region’s March of Dimes WalkAmerica
2004 event, raising more than $250,000.
• In the aftermath of Hurricanes Katrina and
Rita, Halliburton set up the online Halliburton
Relief Fund. The Company matched employee
contributions dollar for dollar, and $1.25 million
was donated to six agencies assisting with relief.
• In-kind donations in 2004 amounted to more
than $227 million. The bulk of this came from
Digital and Consulting Solutions’ University
Grant Program, which donated more than $200
million of exploration and production software
and services to 38 universities worldwide. The
grants span a three-year period and provide
students with access to Landmark’s drilling,
production optimization, field development
and prospect generation applications. In-kind
donations in 2005 fell to just over $136 million,
reflecting a smaller number of university grants
being processed.
• Since 2002, Halliburton has contributed a total
of $639,000 to student memberships in the
American Association of Petroleum Geologists,
the Society of Exploration Geophysicists and the
Society of Petroleum Engineers.
37
38
Transparency and accountability are at the core of any effective corporate sustainability culture.Stakeholders must have trust in management’sleadership to guide the organization forward andknow that the success of the company is based on a strong foundation of energized employees, high-quality customer service, cohesive strategic direction,innovative research/technology, and vibrant communities where we work and our employeeslive. One way to establish and reinforce this trust is to report accurately on specified metrics thatconnect to our overall business goals/activities andto track progress over time against these metrics.
We are committed to continued development ofthe internal processes necessary to support acceptedsustainability reporting criteria for transparency andaccountability. To this end, Halliburton participatesin the Carbon Disclosure Project and the Dow JonesSustainability Index and also references the Oil and Gas Industry Guidance on Non-FinancialSustainability Reporting published by the AmericanPetroleum Institute (API) and the InternationalPetroleum Industry Environmental ConservationAssociation (IPIECA) in order to identify andimplement metrics that are representative of ourbusiness sector and meaningful to our stakeholdersand our business goals.
Halliburton began reporting our non-operatingperformance in 1992 when we published our firstHealth, Safety and Environmental (HSE) report,and, in 1997, began publishing reports annually,with the exception of the year 2000. (View the
Company’s HSE reports at www.halliburton.com.)In 2004/2005, we began to align our reporting withthe standard Sustainability Reporting Guidelinesoutlined by the Global Reporting Initiative (GRI).The report will continue to evolve as we enhanceour sustainability reporting framework and internalprocesses. Halliburton is currently one of only twocompanies in the oilfield services industry sectorthat publishes this type of report.
Employee SafetyOur most important concern is the safety of each
and every one of our employees. We cannot claim
to move toward more transparency without
addressing employee safety and fatalities. Twenty-six
employees and 24 subcontractors were killed in
2004 – 41 of whom were working in Iraq and Kuwait
in support of Coalition and U.S. troops. In the
Energy Services Group, there were seven employee
fatalities, four in a helicopter crash in the Gulf of
Mexico and three others in road incidents. Eleven
employees and seven subcontractors were killed
in 2005 in Iraq and Kuwait. A single death is too
many; it affects not only family members and
loved ones but also all 100,000 members of the
Halliburton family. KBR is contractually obligated
to work in a number of war zones, and, at
Halliburton, we do not walk away from our
contractual obligations. Significant efforts to
increase protection for our workers have
produced improvements but we continue
to strive for zero incidents.
Standing By Our Convictions“At Halliburton, we understand the power and the opportunity of this globally connected community, and,
despite challenges that we still need to address, we are committed to reaching out and being part of it.”
– Dave Lesar, chairman, president and CEO
39
Our Lost-Time Incident and Total Recordable
Incident rates are compared against the
Construction Industry Institute and the International
Association of Drilling Contractors rates that are
indicative of our industry sectors. Vehicle Incident
rates for 2005 showed an increase of about 20
percent, primarily due to increased incidents
associated with our trucking operations in Iraq.
Greenhouse Gas Emissions
In an effort to assess the significance of our greenhouse gas emissions, Halliburton providedinformation to the Carbon Disclosure Project(CDP) for publication on its Web site. In 2004,Halliburton was the only company in the oilfieldservices industry to make this information public.Emission data being reported for 2005 captures anestimated 85-90 percent of Halliburton’s total directemissions (up from 70 percent for 2003 emissions),not including Energy Services Group offices andfield camps outside the U.S., and work continueson processes to capture the remaining emission information from Company operations. Based on generally accepted calculation criteria,Halliburton’s estimated direct CO2 emissions for2004 is 5.511 million metric tonnes. For 2005, it is6.007 million metric tonnes.
40
Lost Time Incident Ratesper 200,000 work hours (ESG and KBR)
2005
2004
2003
2004
2004
0.41
0.43
0.39
0.33
0.64
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4
CII - Construction Industry Institute Contractors Industry Average
IADC - International Association of Drilling Contractors Industry Average
CII
IADC
Total Recordable Incident Ratesper 200,000 work hours (ESG and KBR)
2005
2004
2003
2004
2004
1.30
1.28
1.05
0.88
2.40
CII - Construction Industry Institute Contractors Industry Average
IADC - International Association of Drilling Contractors Industry Average
CII
IADC
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
2005
2004
2003
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
Recordable Vehicle Incident Ratesper million miles traveled (ESG and KBR)
0.90
0.75
0.69
0
7
1
2005
2004
2003
2005
2004
2003
2005
2004
2003
Fatalities
ESG Employees
11
19
4
7
24
10
Contractors
KBR Employees
0 05 10 15 20 25 30 35
The full text of Halliburton’s response to the third
CDP information request can be accessed at
www.cdproject.net.
Dow Jones SustainabilityIndex ProgressHalliburton continues to report to the Dow Jones
Sustainability Index (DJSI) and made progress in
our overall data capture program for 2004. As a
result, in the 2005 DJSI survey, our total score
improved from 36 points for 2003 data to 56 for
2004 data, compared to the industry sector average
of 43. While Halliburton was not chosen as one of
the three DJSI sector leaders, we are very close to
being considered as a sector leader based on the
range of leader scores from 59 to 66 points. In the
18 categories rated by DJSI, Halliburton scored
best in class for three categories and above the
industry average for 10 others in the 2005 survey.
Our score was significantly and adversely affected
by our inability to report our environmental
performance metrics, and we are committed to
rectifying this for we have much to be proud of in
this category. The DJSI survey will continue to be a
benchmark that we will measure ourselves against.
Environmental IncidentsHalliburton defines an environmental incident as
“any event that causes or has the potential to cause
environmental damage or any non-routine regulatory
inspection, citation or notice of violation.” We
believe that Halliburton’s more stringent internal
reporting requirements, along with the deployment
of a global reporting system, have led to an increase
in the number of environmental incidents being
reported over the past few years. However, we also
believe a plateau has been reached, and the number
of incidents for the Energy Services Group has
dropped 10 percent from 2003 to 2004. We recorded
a slight increase from 604 to 613 incidents in 2005.
We also believe, from the success we have had in
setting safety standards and targets for employees,
that the heightened awareness of environmental
incidents, coupled with the initiation of processes
to both identify and eradicate potential incidents,
will ultimately result in fewer occurrences. The
hydrocarbon spills for 2005 also increased from
23 cubic meters in 2004 to 210 cubic meters in
2005
2004
2003
Greenhouse Gasesin million metric tonnes CO2 equivalent
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0
TO COME
5.511
4.494
Reported Environmental Incidents
2005
2004
2003
613
604
675
0 200 400 500300100 600 700
Hydrocarbon Spillsin cubic meters
2005
2004
2003
210
23
45
0.0 30025020015010050
Environmental Reservesin millions of U.S. dollars
2005
2004
2003
$0 $20 $40 $50$30$10 $60 $70
$50
$41
$30
41
2005. Hydrocarbon spills increased from 23 cubic
meters in 2004 to 210 cubic meters in 2005. A large
portion of this increase – 71 percent of the spills,
or 149 cubic meters – occurred in our KBR
Logistics Civil Augmentation Program (LOGCAP)
activities in the Middle East, of which 141 cubic
meters of this percentage were related to six
incidents. The remaining 29 percent, or 61 cubic
meters, of Halliburton's recorded hydrocarbon
spills were reported from other KBR and Energy
Services Group operations worldwide.
Environmental reserves – reserves representing
contingent liabilities related to estimated costs of
investigating or remediating active and divested
properties and superfund sites – have risen in the
past year. We are now including non-U.S. sites in
the environmental reserves that were previously
accounted for in local operational reserves.
Done Right IndexThough a perfect job may seem like an unattainable
goal, Halliburton is working to make it a reality.
In 2003, the Energy Services Group developed the
Done Right Index (DRI), a system for measuring
overall job performance. Based on a composite of
five key indicators – Zero HSE Incidents, Zero Cost
of Poor Quality, Zero Nonproductive Time, Job
Purpose Achieved and Customer Satisfied – the
Done Right Index helps us monitor and improve
the Energy Services Group’s Service Quality and
change behaviors by discovering opportunities
for improvement.
The inclusion of health, safety and environmental
performance recognizes and reinforces that a
“Done Right” job is one that is done right in every
way. By the end of 2004, after six quarters of
measuring results in DRI categories, we have
improved our performance from 88 percent in
2003 to 92 percent in 2004. Performance remained
at 92 percent in 2005.
ISO 14001 and OSHAS 18001ComplianceOur global health, safety and environmental
management system, established in 1996, is ISO
14001 and OSHAS 18001 compliant. Certification
is sought only in cases where a business need has
been established. In other facilities, Halliburton
aims to achieve compliance with ISO 14001
standards as a means of standardizing across all of
its business lines and facilities. While this standard
does not guarantee environmental compliance,
certifying to the ISO 14001 guidelines indicates a
commitment by the Company to third-party
auditing, goal setting, corrective action, management
review and documentation.
In 2004 and 2005, 26 Energy Services Group
locations received ISO 14001 certifications for the
first time. Five locations received OSHAS 18001
certifications for the first time.
42
ISO 9000 and 9001CertificationsThe ISO is an international standards organization,
and the 9000 certification series addresses quality
management issues.
Halliburton is committed to the ISO 9000
principles of quality management and uses a global
management system that is ISO 9000 compliant.
Certification for individual operations and facilities
is based on business needs.
The Energy Services Group and KBR have achieved
numerous ISO 9000 certifications. In January 2004,
Digital and Consulting Solutions achieved ISO
9001:2000 certification for the U.K.-based Hosted
Data and Application Management Services
business – becoming the first vendor-neutral,
multi-client, hosted technology service in the
upstream E&P sector to receive this certification.
Digital and Consulting Solutions’ LMK Resources
affiliate in Islamabad, Pakistan, received ISO
9001:2000 certification for its data management
and archival solutions.
KBR’s entire Energy and Chemicals Division, along
with 10 Energy Services Group manufacturing
facilities and nine Energy Services Group product
service lines, are all currently certified.
Health, Safety andEnvironmental AuditsHalliburton’s Health, Safety and Environmental
Committee, established in 1990 and expanded to
include Sustainable Development in 2004, is
comprised of four outside directors and is one of
five standing committees within Halliburton’s
board of directors. The HSE Committee generally
meets two times each year to receive updates from
the Company’s chief HSE officer and HSE personnel.
The committee also receives written quarterly
reports on HSE issues, including progress on
strategic initiatives, safety performance, significant
compliance issues and an overview of the HSE audit
program. Emerging issue updates are distributed to
the committee throughout the year as needed. For
more information, please see the HSE Committee
charter at www.halliburton.com.
Internal HSE audits are carried out under the
auspices of the board of directors’ HSE Committee
through a Corporate HSE audit group within
Halliburton’s Legal Department. This structure,
which separates the audit function from
Halliburton operations, supports an impartial
audit process. The Corporate audit group furnishes
information to the HSE Committee quarterly and
makes presentations twice each year. HSE audits
are scheduled annually based on a risk-ranking
profile conducted on all Company operations, with
high-risk locations placed on a three-year audit
cycle. In 2004, the Company performed 55
corporate audits and, in 2005, it performed
43
44
48 corporate audits – a significant increase over the
19 audits performed in 2000. In addition, sites are
required to conduct self-assessments using the
same protocol as the Corporate auditors.
The Notices of Violations/Citations chart
represents instances where a governmental agency
inspected Halliburton operations and noted
instances of noncompliance. The reported HSE
notices of violations and citations have increased
over prior years due to a new internal reporting
requirement that captured 244 vehicle citations
in 2005. We are using this data, which we started
collecting in April 2005, to better globally track
and address our driving safety performance. At
this time, most of the data on vehicle citations
are coming from U.S. operations, and worldwide
numbers for vehicle-related incidents are not yet
included in the graph below.
However, the fines or penalties resulting from these
regulatory inspections have declined year over year.
Performance ImprovementInitiative (PII) AwardsWithin the Energy Services Group, at the end
of each calendar year, Halliburton’s Executive
Leadership Team evaluates each region’s
performance and gives out individual awards for
Health and Safety, Environmental and Service
Quality, along with the Chief Operating Officer’s
Award for best overall performance. Awards are
based on plan execution and results, and on
intangibles like employee commitment.
The PII award winners for 2004-2005 were:
Health and Safety
Middle East Northern Gulf Region
Environmental
U.S. Mid-Continent Region
Service Quality
Egypt
2004-2005 PII Chief Operating Officer’s Award
The United Kingdom
HSE Fines/Penaltiesin thousands of U.S. dollars
2005
2004
2003
$0 $20 $40 $50$30$10
$7
$24
$27
HSE Notices of Violations/Citations
2005
2004
2003
0.0 20 40 60 80 100
61
52
46
excluding vehicle-related violations and citations
45
46
47
Buckinghorse River Crossing
In Canada’s pristine Buckinghorse River Crossing, located in northeast British Columbia,
Anadarko Canada Corporation utilized Halliburton technology and services to access stranded
gas reserves. Two wells were drilled to a depth of 1,400 meters, beginning nearly two miles apart
on opposite sides of the gorge and intersecting beneath the river. A cross-disciplinary team of experts
from Anadarko and Halliburton used advanced survey and horizontal drilling techniques to plan,
model and steer the horizontal wells. Halliburton’s Real Time Operations Center in Calgary hosted
the operations, enabling the team to assess and troubleshoot the process, and to make critical decisions in
real time. The innovative approach, akin to designing and constructing the tunnel under the English
Channel, has added 50 million cubic feet/day production capacity from an otherwise unreachable area,
saving the client millions of dollars. What’s more, this was achieved without environmental impact
to the Buckinghorse River, thereby preserving the beauty of this natural setting.
For further information, please contact:
Halliburton
Director, Sustainable Development
10200 Bellaire Boulevard
Houston, Texas 77072-5206
United States
This document was printed using soy inks
on post-consumer recycled material.
The paper is Process Chlorine-Free (PCF),
and no chlorine or chlorine derivatives
were used in pulping the waste fiber
or in the papermaking process.
© 2006 Halliburton
All Rights Reserved
Printed in USA
H04573
Produced by Halliburton Communications
HALLIBURTON1401 McKinney Street
Suite 2400Houston, Texas 77010
www.halliburton.com