On Thursday, the Department of Justice announced that Halliburton had agreed to plead guilty to criminally destroying evidence in the investigation of the BP Gulf oil spill in 2010. The company “signed a cooperation and guilty plea agreement,” will pay the maximum fine of $200,000, and undergo three years of probation. It also had already made a $55 million voluntary contribution to the National Fish and Wildlife Foundation.
Halliburton was the oil services company that oversaw the cement pouring while the Macondo well was drilled. The well malfunctioned on April 20, 2010, causing an uncontrolled blowout on the Deepwater Horizon rig and an explosion that killed 11 people and caused the largest oil spill in U.S. history.
As an oil services company, Halliburton “was responsible for conducting the cement job” according to the final investigation into the disaster. BP and Halliburton had a disagreement over how many centralizers to use on the well, which help keep the wellbore centralized. After the accident, Halliburton tried to find out what happened, according the the Justice Department press release:
On or about May 3, 2010, Halliburton established an internal working group to examine the Macondo well blowout, including whether the number of centralizers used on the final production casing could have contributed to the blowout. A production casing is a long, heavy metal pipe set across the area of the oil and natural gas reservoir. Centralizers are protruding metal collars affixed at various intervals on the outside of the casing. Use of centralizers can help keep the casing centered in the wellbore away from the surrounding walls as it is lowered and placed in the well. Centralization can be significant to the quality of subsequent cementing around the bottom of the casing. Prior to the blowout, Halliburton had recommended to BP the use of 21 centralizers in the Macondo well. BP opted to use six centralizers instead.
That same month, Halliburton did some sophisticated 3D simulations of the final cementing job, using 6 and then 21 centralizers. The simulations, however, showed that there was little difference between the two scenarios, suggesting that Halliburton’s recommendation to BP that the well should have 21 centralizers instead of 6 was irrelevant. The Senior Program Manager who conducted the simulations was directed to destroy the results. The same simulations were run a month later, and again the person who conducted the simulation was directed to “get rid” of the results.
This is relevant because when the 2011 Bureau of Ocean Energy Management, Regulation and Enforcement report on the spill found that BP and Halliburton shared responsibility for the spill, Halliburton denied responsibility. Halliburton spokeswoman Beverly Stafford said the report “incorrectly attributes the operation decisions to Halliburton,” and that “Every contributing cause where Halliburton is named, the operational responsibility lies solely with BP. Halliburton remains confident that all the work we performed with respect to the … well was completed in accordance with BP’s specifications for its well construction plan and instructions.”
In 2011, BP filed court papers that accused Halliburton of having “intentionally destroyed evidence” related to the explosion aboard the rig. When BP made these allegations, the Halliburton spokeswoman responded that “we believe that the conclusions that BP is asking the court to draw is without merit and we look forward to contesting their motion in court.”
A year and a half later, Halliburton agreed to cooperate with the ongoing investigation, pay the maximum fine, plead guilty, and undergo three years of probation. Corporate probation is often used when the prosecution defers prosecution, or tries to get a corporation to change practices. It is unclear why probation was used in this case — it is possible that penalties will be higher for future violations within the three years, in addition to an agreement to cooperate with the investigation. The settlement still requires court approval.
TransOcean, the company that leased the Deepwater Horizon rig to BP, has already admitted criminal and civil violations and settled with the federal government to the tune of $1.4 billion. BP, of course, already pled guilty and agreed to pay $4.5 billion in fines and penalties.
In June, BP decided to stop sending crews to Gulf Coast beaches, even as tar balls continue to wash ashore.