* Halliburton stock down nearly 8 pct on commission report
* Halliburton, BP aware of cement flaws before blowout
(Recasts lead, adds closing stock prices, lawmaker comment)
By Chris Baltimore
HOUSTON, Oct 28 Halliburton Co. (HAL.N) used
flawed cement in BP Plc's (BP.L) (BP.N) 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
[ID:nN28264019]. 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
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."
(To read the letter, click here)
The report supports claims by BP that it shares the
responsibility for the disaster with its Macondo partners,
including Swiss-based Transocean Ltd (RIG.N), 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)