Halliburton has agreed to plead guilty to destruction of critical evidence after the Gulf of Mexico oil spill in 2010, the Justice Department announced on Thursday.
The oil services company said it would pay the maximum allowable fine of
$200,000 and will be subject to three years of probation. It will also
continue its cooperation in the government’s criminal investigation.
Separately, Halliburton made a voluntary contribution of $55 million to
the National Fish and Wildlife Foundation.
The Justice Department filed one criminal charge against the company. In
a statement, Halliburton said that the violation was a misdemeanor
associated with the deletion of records created after the accident.
Additionally, the company said, “The Department of Justice has agreed
that it will not pursue further criminal prosecution of the company.”
Halliburton has suffered enormous damage to its reputation — as have BP
and Transocean, the operator of the Deepwater Horizon rig — in the
explosion that killed 11 workers and soiled hundreds of miles of
beaches. All three companies have pleaded guilty to a criminal charge
related to the spill.
The Justice Department said Halliburton had recommended to BP, the
British oil company, before the drilling that the well include 21 metal
centralizing collars to stabilize the cementing. BP chose to use six
instead. During an internal probe after the accident, Halliburton
ordered workers to destroy computer simulations that showed little
difference between using six and 21 collars, the government said, after
which the company continued to say that BP was neglectful to not follow
its advice.
The development was not entirely unexpected after the first phase of the
civil trial in New Orleans. Lawyers representing businesses and others
that suffered from the spill had long accused the company of conducting
undocumented cement tests and hiding the results. BP had accused
Halliburton of destroying evidence of its cement testing.
But during the trial this year Thomas Roth, a senior company executive
who was in charge of cementing operations when the spill occurred,
acknowledged that because of the well design and other factors, “the
cement placement was going to be a job that would have a low probability
of success.”
Timothy Quirk, a Halliburton laboratory manager, testified that he
conducted stability tests on cement samples from a similar blend that
had been used in the well after the accident. Following instructions
from a colleague, he said he did not prepare a laboratory work sheet.
“It was unusual,” he said. He also acknowledged that he had thrown out
his notes.
Later tests showed that the cement was not stable.
The failure of the cement foam seal set off a complex and ultimately
deadly cascade of oil and gas up the well casing that exploded into
flames to engulf the Deepwater Horizon rig. The blowout preventer, which
is supposed to contain a well bore breach, also failed.
The presidential commission that investigated the accident reported that
Halliburton officials knew before the explosion that the cement mixture
they planned to use to seal the bottom of the well was unstable but
still went ahead with the cementing.
The commission also found that at least one of three laboratory tests
was given to BP, the operator of the drilling site, but it neglected to
respond.
“There is no indication that Halliburton highlighted to BP the
significance of the foam stability data or that BP personnel raised any
questions about it,” the report said.
Legal scholars said the guilty plea would probably work against
Halliburton in the civil trial in New Orleans to determine the share of
damages owed to the Gulf states and businesses affected by the spill.
“This could impact how the civil litigation is resolved, potentially
imposing more liability on Halliburton than we originally thought,” said
Carl Tobias, a law professor at the University of Richmond.
It may also work in favor of BP, which has argued that while it made
serious mistakes it shares responsibility for the accident with
Halliburton and Transocean.
Last November, BP agreed to pay $4.5 billion in penalties and pleaded
guilty to 14 criminal charges related to the explosion.
The Justice Department also has filed criminal charges against four BP
employees in connection with the accident. Transocean agreed to plead
guilty this year. The company was sentenced to pay $400 million and
other penalties.
In recent years, the giant energy services company has had remarkable
success as a leader in the oil and gas shale drilling revolution that is
making the United States less dependent on foreign energy supplies.
But in the not-to-distant past, Halliburton found itself under scrutiny
over accusations that it performed shoddy, overpriced work for the
United States military in Iraq, bribed Nigerian officials to win energy
contracts and did business with Iran at time when it faced sanctions.
“It’s another bad day for Halliburton and a very good day for BP,” said
Fadel Gheit, a senior oil analyst at Oppenheimer.