Market News

 September 19, 2013
Halliburton faces judgment day in Gulf oil spill

 For 41 months, Halliburton mostly stood on the outside as its partners on the ill-fated Macondo well project shelled out billions of dollars and admitted criminal liability in the deadly rig explosion and massive oil spill in the Gulf of Mexico in 2010.

The oil field services company's day of reckoning finally comes Thursday, not for conduct leading up to the disaster but rather what it did afterward: destroying what the government regarded as evidence.

Halliburton will end the federal criminal investigation of the company with a guilty plea to a misdemeanor charge. If U.S. District Judge Jane Triche Milazzo in New Orleans accepts the plea, as prosecutors and Halliburton have urged her to do, the company will pay a $200,000 fine and serve three years of probation.

The government could suspend Halliburton from securing new federal contracts, though prosecutors have agreed to advise agencies that the company provided significant cooperation in the criminal inquiry and accepted its responsibility.

Halliburton also faces the possibility of having to pay billions of dollars in civil damages, if U.S. District Judge Carl Barbier declares the company was grossly negligent.

The first phase of a civil trial over the disaster, which dealt with assigning responsibility, wrapped up in April. The second phase, to determine how much oil spilled, starts Sept. 30.

At the time of the disaster, well owner BP was in the process of temporarily abandoning the well. Halliburton supplied the cement used to plug the well. The seal failed to keep oil and gas from entering the well, triggering a blowout and an explosion on the Deepwater Horizon that killed 11 workers.

Federal prosecutors say that after the well blew out, Halliburton looked at whether the number of centralizers used on the final production casing --- pipe cemented into the well bore --- could have contributed to the blowout. Centralizers can be significant to the quality of cementing around the bottom of the casing.

Halliburton had recommended BP use 21 centralizers. BP used six.

Prosecutors say that the month after the blowout April 20, 2010, a Halliburton official told a senior program manager to run two computer simulations. They indicated that there was little difference between using six and 21 centralizers. The manager was directed to, and did, destroy those results, the Justice Department said.

In June 2010, similar evidence also was destroyed when Halliburton's cementing technology director asked an employee to run simulations again comparing six versus 21 centralizers. The employee reached the same conclusion and, like the program manager before him, then was directed to "get rid of" the simulations, federal prosecutors say.