Halliburton Co.’s role in the Deepwater Horizon rig disaster is facing fresh scrutiny after federal investigators this week raised new questions about a well-cementing job the company performed at BP’s ill-fated Macondo well.
While the findings may have spooked investors, they are unlikely to expose the oil field services giant to additional liability in the accident, analysts and legal experts said Friday.
Not only does Halliburton’s contract with BP on the project offer it broad protections, the National Oil Spill Commission’s findings leave room for doubt as to whether the company did anything wrong, they said.
“It certainly implicates Halliburton more in public opinion, but not in terms of absolute liability,” said Kent Moors, a professor at the Graduate Center for Social and Public Policy at Duquesne University in Pittsburgh and president of ASIDA, an international oil and gas consulting firm.
In fact, the commission’s findings may at the end of the day be more damaging to BP than to Halliburton, he said. That’s because they could reinforce the idea that BP’s oversight of contractors on the project was lax and contributed to the disaster.
“In a relationship like this, the operator has to call the shots, and the operating company, BP, essentially dropped the ball on this,” Moors said.
On Thursday, the White House-appointed spill commission said Halliburton scientists knew of problems with the cement mix used to seal the Macondo well weeks before the April 20 blowout that killed 11 workers and launched the nation’s worst oil spill.
Only one of four company lab tests conducted in February and April showed the mixture would be stable, and the results of that test may not have been available at the time the cement was pumped into the well, according to a letter by Fred Bartlit, head of the commission’s investigative team.
Further, Chevron Corp. scientists found a similar foam-injected cement mix to be unstable when they tested it in labs at the commission’s request, Bartlit wrote.
The findings seemed to bolster BP’s claim that a faulty cement job by Halliburton enabled volatile gas to escape up the 13,000-foot well and ignite on board the Deepwater Horizon drilling rig.
The report prompted a sharp sell-off of Halliburton stock Thursday, sending shares down 8 percent. The stock recovered slightly Friday to $31.86, up 18 cents.
Late Thursday night, Halliburton issued a detailed statement that questioned several of the commission’s key findings. It said commission scientists may not have been able to prove the cement mix was stable because they tested a mixture of off-the-shelf materials rather than the “unique blend of cement and additives” on the rig before the accident.
A federal judge in New Orleans on Wednesday ordered Halliburton to submit actual cement samples used in the Macondo well to federal investigators with the Coast Guard and the Department of the Interior.
In addition, Halliburton said the commission mis- characterized its four internal tests of the cement mix. The two in February were preliminary because final well conditions were not yet known. A third test in April was “irrelevant” because of a lab error. And the last showed stability, but the blend then was altered at the instruction of BP and the new blend not fully tested, the company said.
Halliburton said BP might have been able to detect potential problems with the cement even after it was in the well if it had performed a widely used “cement bond log” test to confirm its integrity, and if rig personnel had properly interpreted the results of another crucial test. That might have prompted crews to take remedial action.
Halliburton also repeated criticisms of BP’s well design, which it said provided fewer barriers to block gas flow than another design common in the Gulf. A BP spokesman declined to comment.
Even if all the commission’s findings prove true, Halliburton has strong provisions in its contract with BP on the project that protect it from liability in an accident, said Jeffrey Spittel, an oil field services analyst at Madison Williams in Houston. He continues to advise investors to buy the stock.
John Zavitsanos, an oil and gas litigator and partner at Ahmad, Zavitsanos & Anaipakos in Houston, said that the contract indemnity could change only if Halliburton were deemed “grossly negligent” in performing its work, but the commission’s findings do not appear to rise to that level.
“I did not see anything in there that indicates that the indemnity is going to be affected in any way,” Zavitsanos said.
