Halliburton to plead guilty to destroying evidence in BP spill

The oil services giant Halliburton agreed Thursday to plead guilty to destroying evidence during the Deepwater Horizon oil spill disaster in 2010, admitting to one count of criminal conduct and agreeing to pay the $200,000 maximum statutory fine, according to the Justice Department.

In a startling turn in the three-year-old criminal investigation, Halliburton said that on two occasions during the oil spill, it directed employees to destroy or “get rid of” simulations that would have helped clarify how to assign blame for the blowout — and possibly focused more attention on Halliburton’s role.

The explosion at BP’s Macondo oil well on April 20, 2010, killed 11 people, destroyed the Deepwater Horizon drilling rig and ultimately leaked nearly 5 million barrels of crude oil into the Gulf of Mexico.

Halliburton, which has repeatedly denied responsibility and pointed fingers at BP, will be placed on probation for three years. It also agreed to pay $55 million to the National Fish and Wildlife Foundation even if the U.S. District Court in the Eastern District of Louisiana does not accept its plea agreement.

The admission is likely to complicate Halliburton’s efforts to avoid damage payments in civil suits linked to the Deepwater Horizon spill. During the first quarter of this year, the company took a $637 million charge against earnings to increase to about $1.3 billion a reserve set aside for possible Macondo settlement costs.

Other companies, including BP and the rig owner Trans­Ocean, have already reached deals with the Justice Department. In November, BP agreed to pay $4 billion to settle criminal charges, and TransOcean settled civil and criminal charges for $1.4 billion in January.

Halliburton said that the Justice Department agreed not to pursue further criminal prosecution of the company or its subsidiaries and that the department “acknowledged the company’s significant and valuable cooperation.” The company said it would continue to cooperate with any further investigations tied to the incident.

The Houston-based company provided the cement that was supposed to seal the spaces on the outside of the well’s steel drilling pipe, and the quality and drying time of the cement has been the subject of scrutiny.

Halliburton’s simulations examined one of the key decisions in the run-up to the disaster: Whether BP made a serious error by using six centralizers instead of 21; centralizers are metal collars on the outside of the steel pipe that helped stabilize the drill pipe in the center of the hole.

Before the blowout, Halliburton had recommended that BP use 21 of the centralizers. Later, during inquiries about the spill, Halliburton officials repeatedly pointed at a BP executive who gave the go-ahead to use only six centralizers in part because it would have taken additional time to find more.

Now the plea agreement says that on two occasions Halliburton’s simulations revealed that it made little difference whether BP used six or 21. That would have intensified scrutiny about whether flaws in Halliburton’s cement job were more significant.

On or about May 3, 2010, Halliburton established an internal working group to examine the Macondo disaster, including whether the number of centralizers used could have contributed to the blowout. According to the plea agreement, Halliburton’s cementing technology director instructed a senior program manager to run two computer simulations of the Macondo well’s final cementing job. When the simulations “indicated that there was little difference between using six and 21 centralizers,” the program manager “was directed to, and did, destroy these results,” the plea agreement said.

“In or about June 2010, similar evidence was also destroyed in a later incident,” the Justice Department said. Halliburton’s cementing technology director “asked another, more experienced, employee” to run simulations again comparing six vs. 21 centralizers, the department added; that employee “reached the same conclusion and, like the Program Manager before him, was then directed to ‘get rid of’ the simulations.”

The plea agreement comes after a new accident in the gulf, a blowout on a gas well. On Thursday, that fire was extinguished when sand clogged the hole and blocked further leaks. The crew had escaped unharmed.

The latest incident could again focus attention on the blowout preventer, a device designed to clamp shut the well pipe in an emergency. Cameron, a large manufacturer of the devices, made the blowout preventers on both the Macondo well and the gas well that caught fire this week. The investigation of the latest incident is just beginning, and officials said it was too early to assign blame.

Steven Mufson covers energy and other financial news.
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