BP Files Suit Against Halliburton

BP PLC (BP, BP.LN) said it had filed a lawsuit against Halliburton Co. (HAL), claiming its “misconduct” contributed to last year’s Deepwater Horizon disaster that led to the worst offshore oil spill in U.S. history.

The lawsuit was filed Wednesday, the first anniversary of the blowout on BP’s Macondo well in the Gulf of Mexico that destroyed the Deepwater Horizon rig and killed 11 men. It came shortly after BP filed suit against two other contractors, Transocean Ltd. (RIG), the Deepwater Horizon’s owner and operator, and Cameron International Corp. (CAM), which manufactured a critical safety device called a blowout preventer.

Wednesday saw the expiration of a court-issued deadline to make filings preserving the right to sue companies involved in the spill.

Aside from BP, the main owner of the Macondo well, no company has faced more criticism over the disaster than Halliburton. It designed the failed cement seal that experts think allowed explosive gas to flow into the well and reach the Deepwater Horizon. Halliburton doesn’t deny the seal failed but argues BP should have run tests that would have revealed the problem.

In the filing, BP said its action was to hold Halliburton accountable for “improper conduct, errors and omissions, including fraud and concealment.” In a statement, it said the President Commission that investigated the Gulf disaster concluded that the cement slurry designed, mixed and pumped by Halliburton failed, that the company didn’t provide BP with the results of failed cement tests and that its technicians “missed critical signals that hydrocarbons were flowing into the wellbore.” “The record is clear that Halliburton’s misconduct contributed to the accident and spill,” it said.

Halliburton said it would “vigorously deny these claims.”

A BP spokesman said the company wasn’t suing Halliburton for a particular sum, but would ask for damages of up to the total cost of the spill. Last year, BP set aside $40.9 billion for spill-related costs.

Earlier, BP filed claims against Transocean and Cameron, maker of the blowout preventer, a huge set of valves designed to shut down a well in an emergency. BP contended that if the blowout preventer had functioned properly, the spill could have been largely avoided.

The BP complaint said Transocean was responsible for multiple failures of safety devices and well control procedures. It said BP was seeking at least $40 billion in damages. BP also seeks to force Cameron to contribute all or part of the damages that could be levied against the oil giant by the federal government.

Cameron said in a statement that it was “not surprising” that the companies are filing to protect their indemnity rights, adding that in order to protect itself it had filed counterclaims against other parties to the litigation. A Transocean spokesman called the BP lawsuit “specious and unconscionable.” It said its contract with BP indemnified it against all claims related to pollution and environmental damage.

-By Guy Chazan, The Wall Street Journal

Image via The Street

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