Halliburton used flawed cement on BP well: panel

HOUSTON Thu Oct 28, 2010 6:02pm EDT

Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon, off Louisiana, April 21, 2010. REUTERS/U.S. Coast Guard/Handout

Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon, off Louisiana, April 21, 2010.

Credit: Reuters/U.S. Coast Guard/Handout

HOUSTON (Reuters) - Halliburton Co. used flawed cement in BP Plc's doomed Gulf of Mexico well, which could have contributed to the blowout that sparked the worst offshore oil spill in U.S. history, a White House panel said on Thursday.

Halliburton's shares tumbled as much as 16 percent after the National Oil Spill Commission released a letter detailing the panel's findings, before recovering to close down nearly 8 percent at $31.68 per share on the New York Stock Exchange. BP's U.S.-listed shares closed up 1.3 percent at $40.60 per share.

While not absolving BP of responsibility, the report heaped criticism on Halliburton's cement job, raising investor concerns it could be forced to bear some of the clean-up costs. BP has taken a $32.2 billion earnings charge to cover the cleanup.

The cost to insure Halliburton's debt jumped on the news.

Halliburton had run a series of tests that showed the material was unstable in the weeks before the April 20 explosion on the Deepwater Horizon rig, which killed 11 workers and spurred a temporary ban on deepwater U.S. drilling.

In an emailed statement, Halliburton said it is reviewing the report and will publish a response later on Thursday. A BP spokesman declined to comment.

Both Halliburton and BP were aware of flaws in the cement slurry, similar to the one used to seal the mile-deep Macondo well, as early as March 8, over a month before the spill, "but neither acted upon that data," according to National Oil Spill Commission chief counsel Fred Bartlit.

"The fact that BP and Halliburton knew this cement job could fail only solidifies their liability and responsibility for this disaster," said Rep. Edward Markey, a Democratic lawmaker who has criticized BP and its well partners.

The industry has developed tests to identify faulty cement jobs in offshore wells, but "BP and/or Transocean personnel misinterpreted or chose not to conduct such tests at the Macondo well," Bartlit wrote.

Tests conducted by industry cement experts show "the foam cement used at Macondo was unstable," Bartlit wrote in a letter to co-chairs Bob Graham and Bill Reilly. "Halliburton (and perhaps BP) should have considered redesigning the foam slurry before pumping it at the Macondo well."

The report supports claims by BP that it shares the responsibility for the disaster with its Macondo partners, including Swiss-based Transocean Ltd, which owned the Deepwater Horizon rig.

In an interim report BP issued in September, it said Halliburton used an "unstable" cement mixture that allowed hydrocarbons to flow up the drill pipe and onto the floor of the rig, where they ignited.

The resulting spill marred the coasts of four U.S. Gulf states, prompted a ban on new deepwater drilling and left BP's image in tatters in the United States, home to 40 percent of the London-based oil giant's business.

(Additional reporting by Anna Driver in Houston, Braden Reddall in San Francisco and Ayesha Rascoe in Washington; Editing by Stacey Joyce and Jerry Norton)

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Comments (16)
JackMack wrote:
Clearly, what we need is less regulation of business.

Oct 28, 2010 2:27pm EDT  --  Report as abuse
Shota wrote:
Hope that the independent investigation will take place and politics will not be part of it. I understand the universe of challenges that my hope faces.

Shota
www.ranxem.com

Oct 28, 2010 2:54pm EDT  --  Report as abuse
GA_Chris wrote:
it sure sucks when the government you bought gets voted out and there is no one to cover up your corrupt tracks…

Oct 28, 2010 3:08pm EDT  --  Report as abuse
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