Halliburton pleads guilty to destroying Gulf spill evidence

Halliburton knew (Photo credit: Marcellus Protest)

Halliburton Co has agreed to plead guilty to destroying evidence related to the 2010 Gulf of Mexico oil spill, the U.S. Department of Justice said on Thursday.

The government said the guilty plea is the third by a company over the spill, and requires the world's second-largest oilfield services company to pay a maximum $200,000 statutory fine. Halliburton also made a separate, voluntary $55 million payment to the National Fish and Wildlife Foundation, the Justice Department said.

Halliburton also agreed to three years of probation, and to continue cooperating with the criminal probe into the April 20, 2010 explosion of the Deepwater Horizon drilling rig.

Court approval of the settlement is required. A Halliburton spokeswoman did not immediately respond to requests for comment.

The disaster caused 11 deaths and triggered the largest U.S. offshore oil spill following the rupture of the Macondo oil well, which was 65 percent owned by BP Plc. Halliburton had earlier provided cementing services to help seal the well. Read more >>

Tony Hayward, Goldman Sachs, Wachovia, Wells Fargo, UBS, all dumped BP stock before well blowout

Image by Getty Images via @daylife

Excerpted from Darren Weeks, newswithviews
We now know from John Byrne at Raw Story that prior to the Gulf oil mess, not only did Goldman Sachs short shares of TransOcean, the owner of the failed Deepwater Horizon rig, they also ditched 4,680,822 shares of BP stock, worth $250 million and representing 44% of their holdings. “Goldman’s sales were the largest of any firm during that time,” writes Byrne. “Goldman would have pocketed slightly more than $266 million if their holdings were sold at the average price of BP’s stock during the quarter.”

Byrne also noted other financial institutions that also dumped BP holdings.

“Other asset management firms also sold huge blocks of BP stock in the first quarter — but their sales were a fraction of Goldman’s. Wachovia, which is owned by Wells Fargo, sold 2,667,419 shares; UBS, the Swiss bank, sold 2,125,566 shares.”

If that weren’t enough of a “coincidence,” we also had The Telegraph out of London reporting that the chief executive of BP, Tony Hayward, also sold 223,288 shares, worth £1.4 million of stock in his own company (over $2 million) on March 17th — only weeks before the BP Gulf mess. The paper noted that by doing so he “avoided losing more than £423,000 ($614,449) when BP’s share price plunged after the oil spill began six weeks ago.”[13] He took the money and paid off the mortgage on his family mansion in Kent.

At this point, a question should be coming to mind: What did these people know that the rest of us didn’t? How is it that stock in BP and Transocean suddenly seemed so unattractive to those closest to the disaster? Ah, the coincidences! But it gets even better.

On April 10th, The Houston Chronicle reported that Halliburton — the company of which former Vice-President Dick Cheney was CEO — was in the process of acquiring Boots & Coots. Reuters reported that the deal was announced on Friday, April 9th — just eleven days prior to the explosion.[14] The Chronicle noted that “Boots & Coots has become well known for putting out some of the world’s largest oil and gas fires.”[15] The company’s website lists services they provide, including “deepwater application and well inspections, as well as blowout prevention and control counsel or assistance…”[16] According to the Orlando Sentinel, their expertise is already being put to use in the Gulf, as they are “one of two primary companies designing relief-well strategies for the BP blowout.”

So when the acquisition deal is formerly approved by the government, Halliburton — the company famous for profiting from no-bid government contracts in war zones — will have collected for themselves yet another “slick” profit.

This is especially intriguing in light of the fact that, according to NPR, Halliburton’s cementing work — completed only hours prior to the explosion — has become a “central focus” of the Congressional investigation.[18] The Wall Street Journal quotes unnamed “experts” as saying the timing of the cementing in relation to the blast “points to it as a possible culprit.”

But Halliburton isn’t the only company that stands to make a killing off the crisis. The Times Online out of the UK reported that TransOcean itself took out a $560 million insurance policy on the Deepwater Horizon rig. The dollar amount was well above the rig’s value. According to the paper, insurance payouts amounted to a $270 million profit from the disaster.

“The windfall, revealed in a conference call with analysts, will more than cover the $200m that Transocean expects to pay to survivors and their families and for higher insurance costs.”

A number of people have questioned why Corexit — a chemical banned in the UK[21] and is much more toxic than the oil itself — was used as a dispersant in the Gulf. Assuming for the moment that chemical dispersants had to be used, the New York Times reported on May 13th:

“Of 18 dispersants whose use EPA has approved, 12 were found to be more effective on southern Louisiana crude than Corexit, EPA data show. Two of the 12 were found to be 100 percent effective on Gulf of Mexico crude, while the two Corexit products rated 56 percent and 63 percent effective, respectively. The toxicity of the 12 was shown to be either comparable to the Corexit line or, in some cases, 10 or 20 times less, according to EPA.”

Yet, despite the EPA data ranking it “far above dispersants made by competitors” for toxicity, BP chose to dump more than 400,000 gallons of Corexit into the Gulf, order 805,000 more gallons with plans of hundreds of thousands of additional gallons should the spewing continue. Why? More...

Even The Relief Well May Blow Up

Image by uscgd8 via Flickr

May 19th, 2010 report from Solveclimate.com

Did Deepwater Methane Hydrates Cause the BP Gulf Explosion?

According to the National Academy of Sciences, which published a bullish report on the energy potential of methane hydrates,

"Industry practice is to avoid methane-bearing areas during drilling for conventional oil and gas resources for safety reasons."

Professor Sum explained that because "with oil there is usually gas present," it is possible for methane hydrates to form in the pipe even when not drilling through hydrate-bearing sediments. The pressure and cold of the deepwater create conditions that encourage gas flowing into the pipe to form hydrates, and if the rate of crystallization is rapid enough, the hydrates can clog the pipe.

The cofferdam that BP lowered over the broken pipe gushing oil to contain the spill was almost immediately clogged by methane hydrates, which formed spontaneously. Gas escaping with the oil from the well, when trapped in the steel structure with cold water under great pressure, rapidly accumulated into an ice-like matrix.

Documented Explosive Hazard

In a book about methane hydrates, which Professor Koh co-authored, brief mention is made of a case in which methane hydrates caused a gas pipe to rupture on land, leading to loss of life.

Two workers were attempting to clear a line in which a hydrate plug had formed. The authors say that "the impact of a moving hydrate mass" caused the pipe to fail. The explosion caused a large piece of pipe to strike the foreman, killing him. The book then quotes from the Canadian Association of Petroleum Producers Hydrate Guidelines to describe proper procedures for safely removing a hydrate plug in a pipe on land.

SolveClimate was not able to find more detailed public documentation of this incident in Alberta, but mention is made in an article in a publication of the Oak Ridge National Laboratory, a federal research center associated with the Department of Energy, of a different unspecified incident on a drilling rig.

"Forces from methane hydrate dissociation have been blamed for a damaging shift in a drilling rig's foundation, causing a loss of $100 million," the article reports.

Although public discussion of damage from methane hydrate accidents appears to be minimal, the danger is well-recognized within the industry. Last November, one Halliburton executive gave a presentation before a meeting of the American Association of Drilling Engineers in Houston, titled "Deepwater Cementing Consideration to Prevent Hydrate Destabilization."

It recognizes that the cementing process releases heat which can destabilize methane hydrates, and presents something called Cement System 2 as a solution to the problem. One of the graphs shows that the system doesn't achieve gel strength for four hours.

Yet according to an eyewitness report broadcast on Sunday on 60 Minutes, BP managers made the decision to decrease pressure in the well column by removing drilling mud before the cement had solidified in three plugs Halliburton had poured.

When a surge of gas started shooting up the well, a crucial seal on the blowout preventer at the well head on the ocean floor failed. It had been damaged weeks before and neglected as inconsequential by Transocean managers, according to the CBS news broadcast, even after chunks of rubber emerged from the drilling column on the surface.

According to the Associated Press, the victims of the Deepwater Horizon explosion said the blast occurred right after workers "introduced heat to set the cement seal around the wellhead." It is not known if Halliburton was employing Cement System 2, and testifying before the Senate last week, a Halliburton executive made no mention of methane hydrate hazards associated with cementing in deepwater.

A Promising Substance

Professors Koh and Sum are concerned that a focus on the dangers of methane hydrates in deepwater drilling will obscure their promise as an energy solution of the future. They are conducting research in the laboratory to create methane hydrates synthetically in order to take advantage of their peculiar properties. With their potential to store gas (both natural gas and hydrogen) efficiently within a crystalline structure, hydrogen hydrates could one day offer a potential solution for making fuel cells operate economically. Still at the fundamental stage, their work on storage is not yet complete enough to apply to commercial systems.

At the same time, there is an international competition underway to develop technology to harvest the vast deposits of methane hydrates in the world's oceans. Japan has joined the US and Canada in pursuit of this energy bonanza, motivated by the $23 billion it spends annually to import liquefied natural gas.

According to a Bloomberg News article called "Japan Mines Flammable Ice, Flirts with Environmental Disaster," the Japanese trade ministry is targeting 2016 to start commercial production, even as a Tokyo University scientist warned against causing a massive undersea landslide that could suddenly trigger a massive methane hydrate release.

The U.S. has a research program underway in collaboration with the oil industry, authorized by the Methane Hydrate Research and Development Act of 1999. The National Methane Hydrates R&D Program is housed at the National Energy Technology Laboratory (NETL) of the Department of Energy.

The National Academy of Sciences provided a briefing for Congress last January on the energy potential of methane hydrates based on its report which asserts that "no technical challenges have been identified as insurmountable" in the pursuit of commercial production of methane hydrates. More...