After the oil spill commission released a report saying the cement mix used in the Macondo well was unstable, Halliburton (NYSE:HAL) took a big hit, but began to almost immediately fight back, hoping to hold onto their indemnity from their contract with BP (NYSE:BP).
The question which will determine liability and whether or not Halliburton will remain protected would be the quality of work performed.
Here's the agreement:
COMPANY shall save, indemnify, release, defend, and hold harmless CONTRACTOR GROUP against all claims, losses, damages, costs (including legal costs) expenses and liabilities resulting from:
(a) loss or damage to any well or hole (including the cost to re-drill);
(b) blowout, fire, explosion, cratering, or any uncontrolled well condition (including the costs to control a wild well and the removal of debris);
BP is the company mentioned and Halliburton the contractor group, which I put in capital letters.
Already admitting they didn't completely finish the testing on the final cement formulation used, it's unknown at this time if that does anything to void the above agreement between the two companies.
Consequently, until that is sorted out, Halliburton will have this hanging over them, and more than likely their share price will swing in both directions on bits and pieces of news as it emerges, as well as rumors.
At this time it seems there are questions as to whether the indemnity will hold. But that's a long way from a certainty.
Showing posts with label Cementing jobs. Show all posts
Showing posts with label Cementing jobs. Show all posts
Friday, October 29, 2010
Halliburton (NYSE:HAL) Admits Skipping Major Test on BP (NYSE:BP) Cement Job
While disputing some of the allegations concerning the cement mixture used to seal the BP (NYSE:BP) oil well before it failed, Halliburton did admit they didn't perform a critical test on the final cement formula used on Macondo before it blew.
Tests performed by the oil spill commission have shown the cement formulation used was unstable.
The final cement mix used wasn't tested concerning its stability for use.
BP, as well as others, have pointed to the cement mix as one of the key elements as to why the accident happened. With Halliburton being the cement contractor, it could end up costing them into the billions as a result, although the investigation is far from over and conclusive, as Halliburton still maintains the mixture asserted to be unstable isn't the same mixture they used.
Halliburton said in a statement: "Contrary to the letter...the slurry tested in February was not 'a very similar foam slurry design to the one actually pumped.'"
Tests performed by the oil spill commission have shown the cement formulation used was unstable.
The final cement mix used wasn't tested concerning its stability for use.
BP, as well as others, have pointed to the cement mix as one of the key elements as to why the accident happened. With Halliburton being the cement contractor, it could end up costing them into the billions as a result, although the investigation is far from over and conclusive, as Halliburton still maintains the mixture asserted to be unstable isn't the same mixture they used.
Halliburton said in a statement: "Contrary to the letter...the slurry tested in February was not 'a very similar foam slurry design to the one actually pumped.'"
Halliburton (NYSE:HAL) Under Fire Over BP (NYSE:BP) Cementing Job
In what could be extraordinarly costly to Halliburton (NYSE:HAL), findings by the oil spill commission point to the cement mixture used to seal the BP (NYSE:BP) oil well was faulty.
The findings contradict prior statements made by Halliburton which asserted the well design of BP was at fault in the crisis.
Investigators said the tests performed by Halliburton, and their results, should have raised flags as to its viability.
Halliburton has claimed their tests results revealed the cement mix was stable for use.
According to the panel, of the four tests performed in February and April, only one of them has results which had the mix holding up. Even worse, the results may not have been shared with BP, or possibly even Halliburton before the cement had been pumped into the well, according to chief investigative counsel Fred H. Bartlit Jr.
When the well exploded, BP had a single result of the four tests available to them.
"Halliburton should have considered redesigning the foam slurry before pumping it at the Macondo well," Bartlit concluded.
Internal tests by BP and an independent test conducted by Chevron (NYSE:CVX) on behalf of the commission reached the same conclusions, that the cement pumped into the well was flawed.
It appears BP hadn't received reports on the tests until after the accident.
This could be devastating to Halliburton depending on the consequences of the determination.
The findings contradict prior statements made by Halliburton which asserted the well design of BP was at fault in the crisis.
Investigators said the tests performed by Halliburton, and their results, should have raised flags as to its viability.
Halliburton has claimed their tests results revealed the cement mix was stable for use.
According to the panel, of the four tests performed in February and April, only one of them has results which had the mix holding up. Even worse, the results may not have been shared with BP, or possibly even Halliburton before the cement had been pumped into the well, according to chief investigative counsel Fred H. Bartlit Jr.
When the well exploded, BP had a single result of the four tests available to them.
"Halliburton should have considered redesigning the foam slurry before pumping it at the Macondo well," Bartlit concluded.
Internal tests by BP and an independent test conducted by Chevron (NYSE:CVX) on behalf of the commission reached the same conclusions, that the cement pumped into the well was flawed.
It appears BP hadn't received reports on the tests until after the accident.
This could be devastating to Halliburton depending on the consequences of the determination.
Monday, May 24, 2010
Transocean: (NYSE:RIG) Cement Work Cause Of Blowout
While many are pointing the finger at BP (NYSE:BP) others are investigating what is showing a common thread with improperly oil well cementing jobs. Sealing offshore oil wells has failed numerous times in the past according to the American Press Association.
Another example of poor regulations is federal regulators giving drillers a free hand in crucial safety steps. These federal regulators leave the decision of what type of cement is used up to the oil and gas companies. There are simple guidelines from the American Petroleum Institute that drillers are encouraged to follow.
Yet, state and federal standards and controls are comparably much more strict on cement projects such as bridges, roads, and buildings. Transocean feels that the cement work is one of the main causes for of the blowout.
An AP review of the federal accident and incident reports on offshore wells shows that there have been at least 34 times the cementing process has been implicated since 1978. Many of the reports simply state the cause as "poor cement job."
Another example of poor regulations is federal regulators giving drillers a free hand in crucial safety steps. These federal regulators leave the decision of what type of cement is used up to the oil and gas companies. There are simple guidelines from the American Petroleum Institute that drillers are encouraged to follow.
Yet, state and federal standards and controls are comparably much more strict on cement projects such as bridges, roads, and buildings. Transocean feels that the cement work is one of the main causes for of the blowout.
An AP review of the federal accident and incident reports on offshore wells shows that there have been at least 34 times the cementing process has been implicated since 1978. Many of the reports simply state the cause as "poor cement job."
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