We all remember the April 2010 Deepwater Horizon tragedy in the Gulf of Mexico. Yesterday Halliburton, the contractor involved in the drilling of the oil well that exploded, agreed to plead guilty to destroying evidence pertaining to the incident. According to the Justice Department, computer simulations Halliburton performed for months after the accident didn’t match its story that BP PLC, the company that owned the well, was at fault for not following Halliburton’s advice on using certain equipment.
BP hired Halliburton to manage the servicing of the wells to prevent leaks. But investigators discovered that natural gas surged onto the drilling rig and exploded. Not only were 11 people killed in the process, it resulted in the worst offshore spill in the history of this country. For its crime, Halliburton essentially got a “slap on the wrist” by the Justice Department in the form of a misdemeanor, and will pay only $200,000 which is the maximum allowable fine. Additionally, the company is on three years’ probation and the Justice Department will not prosecute the company further. However, as a token gesture of “goodwill,” Halliburton voluntarily contributed $55 million to the National Wildlife Foundation.
The three companies involved in the spill, Halliburton, BP and Transocean, the operator of the rig, have all pleaded guilty to a criminal charge. Prior to the accident, the Justice Department said Halliburton had recommended to BP, the British oil company, that the well include 21 metal centralizing collars to stabilize the cementing. Instead, BP decided to use only six. After the accident, Halliburton told workers to destroy the computer simulations showing little difference between using six and 21 collars. This allowed Halliburton to claim that the spill occurred because BP didn’t follow its advice.
It turns out that the cementing process may have had nothing to do with the spill in the first place. During the trial, Thomas Roth, a senior company executive in charge of the process testified that it “would have a low probability of success” due to the well design and other factors.
Timothy Quirk, a Halliburton laboratory manager, conducted stability tests on cement samples but was instructed not to prepare a laboratory work sheet. He also said he threw out his notes on the test.
In short, the tests showed that the cement was not stable, and the failure of its foam seal, along with a blowout preventer that failed, caused the deluge of oil and gas to explode. It’s hard to believe that Halliburton only received a misdemeanor for its gross irresponsibility and ultimate cover-up.
A civil trial is underway in New Orleans, and legal experts say Halliburton’s guilty plea will most likely work against the company while deciding on damages owed to the Gulf states and businesses affected by the spill. Carl Tobias, a law professor at the University of Richmond, said “This could impact how the civil litigation is resolved, potentially imposing more liability on Halliburton than we originally thought.” It may also work in favor of BP, which contends its share of the responsibility is no greater than that of Halliburton and Transocean.
The Justice Department also filed criminal charges against four BP employees. And Transocean has agreed to plead guilty and must pay $400 million and other penalties.
Prior to the incident, Halliburton was known as a leader in the oil and gas shale drilling business that is making the U.S. less dependent on foreign oil. But recently, the giant services company has been scrutinized over accusations that it performed substandard, overpriced work for the U.S. Military in Iraq, bribed Nigerian officials to win energy contracts and conducted business with Iran during sanctions against the country.
When it comes to big corporations, I’m over the shock of just how corrupt they can be. Nothing they do would surprise me now – absolutely nothing.