Halliburton to Plead Guilty to Destroying 2010 Oil Spill Evidence

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July 26, 2013

The Deepwater Horizon on fire in April 2010.

By Jef Feeley and Margaret Cronin Fisk

July 26 (Bloomberg) — A Halliburton Co. unit will plead guilty to destroying tests on cement work done on a BP Plc-owned oil well that exploded and caused the 2010 Gulf of Mexico oil spill, federal prosecutors said.

Officials of Halliburton Energy Services Inc., which worked on BP’s Macondo well, will plead guilty on the unit’s behalf to one count of destroying evidence for failing to preserve computer models examining the final cement job on the well after the April 2010 explosion that killed 11 workers and sent millions of barrels of oil pouring into the gulf, the U.S. Justice Department said yesterday in a statement.

“Efforts to forensically recover the original destroyed 3D computer simulations” for a liability trial over the spill earlier this year were unsuccessful, federal officials said.

The Halliburton unit will plead guilty to one misdemeanor violation “associated with the deletion of records created after the Macondo well incident,” pay the statutory maximum fine of $200,000 and accept a term of three years’ probation, the company said in a statement. The plea is subject to court approval.

“The Department of Justice has agreed that it will not pursue further criminal prosecution of the company or its subsidiaries for any conduct relating to or arising out of the Macondo well incident,” Houston-based Halliburton said in yesterday’s statement. “The company has agreed to continue to cooperate with the Department of Justice in any ongoing investigation related to or arising from the incident.”

BP Accusation

BP, based in London, accused Halliburton in 2011 of destroying the test results so they couldn’t be used to show the cement contractor was at fault for the Macondo blowout. The companies have sued each other over liability for the disaster, which sparked the worst offshore oil spill in U.S. history.

Prosecutors said Halliburton supervisors ordered the destruction of computer tests on the Macondo cement work and on whether extra stabilizers would have made the well safer. The tests were conducted in May and June of 2010, the Justice Department said.

The tests were conducted to examine whether Halliburton supervisors should have used six or 21 cement stabilizers in the well.

Halliburton officials said the computer models showed that extra stabilizers would have made “little difference” to the well’s stability, prosecutors said in their statement.

Rig Owner

The spill sparked hundreds of lawsuits against BP, Halliburton and Vernier, Switzerland-based Transocean Ltd., which owned the Deepwater Horizon drilling rig used at the site off the coast of Louisiana.

U.S. District Judge Carl Barbier in New Orleans is trying to decide whether one or more of the companies were grossly negligent in their management of or work on the well. He heard weeks of testimony this year about alleged miscues at the site.

For BP, a finding of gross negligence would mean the company might be liable to the U.S. for more than $17 billion in fines under the Clean Water Act, as well as unspecified punitive damages to claimants who didn’t take part in an $8.2 billion settlement the company reached with most private-party plaintiffs last year.

Transocean and Halliburton could be held liable for punitive damages for all plaintiffs if the companies are found to have handled their duties on the rig in a grossly negligent manner. Both were hired as contractors by BP to work on the well.

Prosecutors said yesterday that Halliburton officials agreed to pay $55 million to an environmental group working to help the gulf recover from the spill. The payment is “not conditioned on the court’s acceptance” of the guilty plea to destroying evidence, they said.

The case is U.S. v. Halliburton Energy Services Inc., 13- cr-00165, U.S. District Court, Eastern District of Louisiana (New Orleans).

Copyright 2013 Bloomberg.

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