Halliburton Pleads Guilty to Destroying Evidence After Gulf
Spill
By CLIFFORD KRAUSS
Published: July 25,
2013
Halliburton Company
The oil services company said it would pay the
maximum allowable fine of $200,000 and will be subject to three years of
probation. It will alsocontinue its
cooperation in the government’s criminal investigation. Separately, Halliburton
made a voluntary contribution of $55 million to the National Fish and
Wildlife Foundation.
The Justice Department filed one criminal
charge against the company. In a statement, Halliburton said that the
violation was a misdemeanor associated with the deletion of records created
after the accident. Additionally, the company said, “The Department of Justice
has agreed that it will not pursue further criminal prosecution of the
company.”
Halliburton has suffered enormous damage to its reputation —
as have BP and Transocean, the operator of the Deepwater Horizon rig — in the
explosion that killed 11 workers and soiled hundreds of miles of beaches. All
three companies have pleaded guilty to a criminal charge related to the spill.
The Justice Department said Halliburton had recommended to
BP, the British oil company, before the drilling that the well include 21 metal
centralizing collars to stabilize the cementing. BP chose to use six instead.
During an internal probe after the accident, Halliburton ordered workers to
destroy computer simulations that showed little difference between using six
and 21 collars, the government said, after which the company continued to say
that BP was neglectful to not follow its advice.
The development was not entirely unexpected after the first
phase of the civil trial in New Orleans
But during the trial this year Thomas Roth, a
senior company executive who was in charge of cementing operations
when the spill occurred, acknowledged that because of the well design and other
factors, “the cement placement was going to be a job that would have a low
probability of success.”
Timothy Quirk, a Halliburton laboratory manager, testified
that he conducted stability tests on cement samples from a similar blend that
had been used in the well after the accident. Following instructions from a
colleague, he said he did not prepare a laboratory work sheet. “It was
unusual,” he said. He also acknowledged that he had thrown out his notes.
Later tests showed that the cement was not stable.
The failure of the cement foam seal set off a complex and
ultimately deadly cascade of oil and gas up the well casing that exploded into
flames to engulf the Deepwater Horizon rig. The blowout preventer, which is
supposed to contain a well bore breach, also failed.
The presidential commission that investigated the accident
reported that Halliburton officials knew before the explosion that the cement
mixture they planned to use to seal the bottom of the well was unstable but
still went ahead with the cementing.
The commission also found that at least one of three
laboratory tests was given to BP, the operator of the drilling site, but it
neglected to respond.
“There is no indication that Halliburton highlighted to BP
the significance of the foam stability data or that BP personnel raised any
questions about it,” the report said.
Legal scholars said the guilty plea would probably work
against Halliburton in the civil trial in New Orleans Gulf states
“This could impact how the civil litigation is resolved,
potentially imposing more liability on Halliburton than we originally thought,”
said Carl Tobias, a law professor at the University
of Richmond
It may also work in favor of BP, which has argued that while
it made serious mistakes it shares responsibility for the accident with
Halliburton and Transocean.
Last November, BP agreed to pay $4.5 billion in penalties
and pleaded guilty to 14 criminal charges related to the explosion.
The Justice Department also has filed criminal charges
against four BP employees in connection with the accident. Transocean agreed to
plead guilty this year. The company was sentenced to pay $400 million and other
penalties.
In recent years, the giant energy services company has had
remarkable success as a leader in the oil and gas shale drilling revolution
that is making the United States
But in the not-to-distant past, Halliburton found itself
under scrutiny over accusations that it performed shoddy, overpriced work for
the United States Iraq Iran
“It’s another bad day for Halliburton and a very good day
for BP,” said Fadel Gheit, a senior oil analyst at Oppenheimer.
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