Halliburton gets heat for failure to test cement used in Gulf oil well

FORT WORTH, TX -JULY 10: A sign for of Halliburton Co. is seen June 10, 2002 in Fort Worth, Texas. Halliburton's third-quarter earnings fell 38 percent, but its revenue was up, largely due to government contracts in the Middle East. The company was formerly run by U.S. Vice President Dick Cheney.

The oil services contractor Halliburton Co. admits it never performed a crucial test of the final cement mixture used on the Gulf of Mexico oil rig that exploded in the largest offshore oil spill in U.S. history.

In a six-page statement released Thursday, Halliburton said oil well owner BP instructed it to change the formula of the cement mixture, adding more of a certain ingredient, at the last minute. Halliburton said it did not perform a stability test on that new mixture.

The company came under increased scrutiny when investigators from the president's oil spill commission revealed Thursday that tests, conducted before the deadly explosion, showed the cement to be unstable.

Nick MacGregor, oil analyst with broker Redmayne Bentley, says the findings could lighten BP's burden of responsibility.

"This is the first independent confirmation we've had of BP's view that some of the contractors involved shared liability for the chain of events that led up to the blow out in the Gulf of Mexico," MacGregor said. "And financially this may well mean they are now able to involve those parties in paying the bill for all of this."

The panel said that of four tests Halliburton conducted in February and April, only one showed the mix was stable. Further, the results of that test -- the last one conducted --- were not shared with BP, and may not have reached Halliburton decision makers internally before the cement was pumped into the well, Chief Investigative Counsel Fred H. Bartlit Jr. wrote in a letter sent to commissioners Thursday.

In its response, Halliburton said it performed a successful test on a mixture that was different than the one later used on the well. Some tests were conducted on the new mixture requested by BP, but those did not include a foam stability test, the company said.

The panel also found that BP only had results from one of the four tests. That particular test showed the cement could fail. Still, there was no indication that BP raised any concerns, Bartlit said in the letter.

"Halliburton (and perhaps BP) should have considered redesigning the foam slurry before pumping it at the Macondo well," Bartlit wrote.

In the letter, Bartlit also revealed findings of the independent tests conducted for the commission by Chevron. Chevron's tested a nearly identical cement mixture, and found it to be unstable, he wrote.

Halliburton took issue with Chevron's testing methods in its written statement Thursday. The company said "significant differences" between its tests and Chevron's are in part due to differences in the cement materials used.

Halliburton's shares dropped Thursday from near $34 to below $30 in New York trading in the half hour after the commission released its finding. The shares recovered a bit, and closed at $31.68, down $2.74, or 8 percent.

BP shares rose on Thursday from $40.38 to $41.28, then quickly reversed course and fell to $40.28. The shares finished trading with a gain of 49 cents at $40.59.

Marketplace reporter Stephen Beard contributed to this report.

The Associated Press contributed to this report.

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