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Halliburton Pleads Guilty to Destroying Macondo Evidence

July 29, 2013
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A unit of Halliburton Co. on Thursday agreed to plead guilty to one misdemeanor count of destroying evidence in connection with the April 2010 Macondo well blowout in the deepwater Gulf of Mexico, the U.S. Department of Justice (DOJ) said. The settlement is subject to district court approval.

The oilfield services giant is to pay the maximum-available statutory fine of $200,000 and be on probation for three years. The destruction of evidence count settlement was filed Thursday in U.S. District Court for the Eastern District of Louisiana, which is handling most of the Macondo-related litigation.

Halliburton Energy Services signed the guilty plea agreement admitted to criminal conduct. The settlement includes an agreement for Halliburton to continue to cooperate in the government's ongoing criminal investigation. Halliburton also issued its 2Q2013 report last week (see related story).

The charges were based on an internal technical review after the well blowout by Halliburton, which designed and built the Macondo well's cement casing for BP plc, which operated the well. The blowout caused a fire on the Deepwater Horizon drilling platform that killed 11 workers. The oil spill from the blowout was the largest in U.S. history.

On 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," DOJ said.

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 attached at various intervals on the outside of the casing. Using centralizers helps to keep the casing centered in the wellbore away from the surrounding walls as it is lowered and placed in the well. Centralization is considered significant to the quality of subsequent cementing around the bottom of the casing.

Prior to the blowout, DOJ said, "Halliburton had recommended to BP the use of 21 centralizers in the Macondo well. BP opted to use six centralizers instead." Following the blowout, Halliburton conducted a post-incident examination of the well. Its cementing technology director directed the senior program manager for the cement product line to run two computer simulations of the final cementing job on the well the company's using Displace 3-D simulation program, which compared the impact of using six versus 21 centralizers.

"These simulations indicated that there was little difference between using six and 21 centralizers," DOJ said. The program manager then "was directed to, and did, destroy these results." Halliburton destroyed similar evidence in June 2010, it said. The cementing technology director "asked another, more experienced, employee (Employee 1) to run simulations again comparing six versus 21 centralizers. Employee 1 reached the same conclusion and, like program manager before him, was then directed to 'get rid of' the simulations." Efforts proved unsuccessful to forensically recover the computer simulations during the ensuing criminal investigation by the Deepwater Horizon Task Force.

"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," Halliburton said. The DOJ "acknowledged the company's significant and valuable cooperation during the course of its investigation, and the company has agreed to continue to cooperate...in any ongoing investigation related to or arising from the incident."

Separately, Halliburton donated $55 million to the National Fish and Wildlife Foundation, which DOJ said "was not conditioned on the court's acceptance of its plea agreement."

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