Halliburton To Plead Guilty For Destroying Evidence About BP Gulf Oil Spill

Remember that massive BP oil spill in the Gulf of Mexico in 2010? It was the largest oil spill in U.S. history. The U.S. Justice Department announced last week that Halliburton Energy Services Inc. has agreed to plead guilty to destroying evidence related to the massive 2010 British Petroleum (BP) oil spill in the Gulf of Mexico. Halliburton was a contractor to BP.

The announcement said in part:

"Halliburton has signed a cooperation and guilty plea agreement with the government in which Halliburton has agreed to plead guilty and admit its criminal conduct. As part of the plea agreement, Halliburton has further agreed, subject to the court’s approval, to pay the maximum-available statutory fine, to be subject to three years of probation and to continue its cooperation in the government’s ongoing criminal investigation."

The evidence Halliburton destroyed:

"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... in or about May 2010, Halliburton, through its Cementing Technology Director, directed a Senior Program Manager for the Cement Product Line (Program Manager) to run two computer simulations of the Macondo well final cementing job using Halliburton’s Displace 3D simulation program to compare the impact of using six versus 21 centralizers. Displace 3D was a next-generation simulation program that was being developed to model fluid interfaces and their movement through the wellbore and annulus of a well. These simulations indicated that there was little difference between using six and 21 centralizers. Program Manager was directed to, and did, destroy these results."

Similar evidence was destroyed again during June 2010. Reportedly, the fine Halliburton will pay is the statutory maximum $200,000. Halliburton also paid a voluntary contribution of $55 million to the National Fish and Wildlife Foundation.

A criminal investigation is still ongoing by the Deepwater Horizon Task Force, based in New Orleans. BP owned the lease for the drilling site. Transocean Ltd. owned the Deepwater Horizon drilling platform and provided the employees that operated the well. BP hired Halliburton to provide cement to plut the leaking oil well.

The Guardian UK reported:

"... Halliburton recommended to BP that the Macondo well contain 21 centralisers – metal collars that can improve cementing – but BP chose to use six... BP and Transocean Ltd, which owned the drilling rig, have previously entered guilty pleas over other aspects of the Gulf oil spill and agreed to pay respective criminal fines of $1.26bn and $400mn... Halliburton, BP and Transocean are also defendants in a federal civil trial that began in February to apportion blame and set damages for the oil spill."

The massive oil spill resulted in the deaths of 11 workers on the oil platform and millions of barrels of oil poured into the Gulf of Mexico waters, damaging shorelines and fish stocks for months. Determining the exact amount of crude oil spilled has been difficult. One estimate is 3.26 million barrels. Other estimates range from 4.4 to 5.5 million barrels spilled. Determining the number is important since the Oil Pollution Act of 1990 includes fines of up to $1,100 per barrel for negligence; or up to $4,300 per barrel for gross negligence.

Some facts from the official report about the BP oil spill and cleanup (Adobe PDF):

• The spill lasted for 87 days
• 88,522 square miles of fisheries wer closed
• 181 miles of shoreline were heavily to moderately soaked with crude oil
• About 9,000 vessels and 835 skimmers were involved in the cleanup efforts
• 411 situ sites burned off about 250,000 barrels of oil
• 68,530 gallons (1,632 barrels) of dispersant were used during the cleanup
• About 47,000 people worked on the cleanup: on ships drilling relief wells, applying dispersant, applying containment booms, in support aircraft, and performing onshore cleanup

Former Vice President Dick Cheney worked as CEO of Halliburton from 1995 to 2000. In 2012, Halliburton's fiscal year-end revenues were $28.5 billion. For the same period, its net income was $2.6 billion.

Both the fine and the voluntary payment seem miniscule compared to the corporation's revenues. Nor do the fine and voluntary payment seem to be much of a deterrent either to future wrong doing. Hopefully, several senior-level executives will go to prison as a result of the criminal investigation. This type of wrongdoing will stop only when executives know that a fine is insufficient and they will go to prison for a long time.