The controversial cement mix used by Halliburton (NYSE:HAL) in the BP (NYSE:BP) oil well, and labeled as unstable by several sources, has been ordered to be tested by U.S. District Judge Carl Barbier.
Barbier said the components of the mix could be "deteriorating over time" and the tests should be done as soon as possible on it.
According to Kenneth E. Arnold, who advised the U.S. Department of Interior, and is a member of the National Academy of Engineering, it may be too late for the cement test to do much good, as "The samples are old now," Arnold said. "Whatever tests they do now are going to be open to interpretation."
As Halliburton also claims, it's difficult to simulate the exact formula under laboratory conditions which was used inside the Macondo well, added Arnold.
This was all started from the release of results from the oil spill commission that siad the test performed on the cement mix before the accident found the mix to be unstable, bringing the actions of Halliburton into question.
Halliburton continues to claim the test done on cement formulas found to be unstable aren't the exact mix used to seal the oil well. They do acknowledge that several tests on the cement mix were unstable, other than one test result which showed the mix to be stable.
The result of this will probably be my expert against your expert thing, and in court, it's a toss-up as to who will ever win one of those.
Showing posts with label Halliburton Cement. Show all posts
Showing posts with label Halliburton Cement. Show all posts
Tuesday, November 2, 2010
Monday, November 1, 2010
BP (NYSE:BP) Starting to Escape "Gross Negligence" Label?
With one of the two key pieces of the failure of BP (NYSE:BP) in relationship to the Gulf oil spill having come to light - the poor cement mixture used by Halliburton (NYSE:HAL) to seal the Macondo oil well - BP could be one step closer to saving billions in fines connected to the Clean Water Act.
The second piece of the puzzle, the blowout preventer, which was provided by Cameron International (NYSE:CAM) is next to be decided upon, and once that is completed, BP will probably be exonerated as far as being considered grossly negligent, as the failure will end up being from contractors rather than BP itself.
That of course doesn't excuse BP from its oversight in the matter, which is where in fact it did fail.
Other major oil companies have noted the same thing, that they will have to be much more diligent in managing contractors than in the past, as that would probably have saved BP from even having experienced what they're now going through.
The second piece of the puzzle, the blowout preventer, which was provided by Cameron International (NYSE:CAM) is next to be decided upon, and once that is completed, BP will probably be exonerated as far as being considered grossly negligent, as the failure will end up being from contractors rather than BP itself.
That of course doesn't excuse BP from its oversight in the matter, which is where in fact it did fail.
Other major oil companies have noted the same thing, that they will have to be much more diligent in managing contractors than in the past, as that would probably have saved BP from even having experienced what they're now going through.
Will Market Punish Halliburton (NYSE:HAL) Over Potential Liability in BP (NYSE:BP) Cement Job?
Some analysts are attempting to circle the wagons around Halliburton (NYSE:HAL) after the devastating conclusion from the National Commission on the BP Deepwater Horizon Oil Spill, concluded the cement mixture used to seal the Macondo well of BP's was unstable.
Questions as to whether or their indemnity agreement with BP will hold is being bantered about, along with potential exposure to lawsuits which could weigh on the company for years if Halliburton isn't able to wiggle its way out of this.
At this time there is uncertainty because of the mixed reports, with some implying the mixtures being tested were different than the actual mixture used by Halliburton, although independent tests from Chevron (NYSE:CVX) ended up with the same conclusion, that the mixture was indeed unstable and shouldn't have been used.
The worst case scenario so far is Halliburton could be on the hook for fines and/or fees as high as $2 billion. That wouldn't include paying BP anything or lawsuits which would inevitable come about from the incident.
Halliburton's job will be to counter the allegations and conclusions in order to clear themselves of wrongdoing. If they can't, there will definitely be far more liability incurred by them than just though a week ago.
Questions as to whether or their indemnity agreement with BP will hold is being bantered about, along with potential exposure to lawsuits which could weigh on the company for years if Halliburton isn't able to wiggle its way out of this.
At this time there is uncertainty because of the mixed reports, with some implying the mixtures being tested were different than the actual mixture used by Halliburton, although independent tests from Chevron (NYSE:CVX) ended up with the same conclusion, that the mixture was indeed unstable and shouldn't have been used.
The worst case scenario so far is Halliburton could be on the hook for fines and/or fees as high as $2 billion. That wouldn't include paying BP anything or lawsuits which would inevitable come about from the incident.
Halliburton's job will be to counter the allegations and conclusions in order to clear themselves of wrongdoing. If they can't, there will definitely be far more liability incurred by them than just though a week ago.
Friday, October 29, 2010
What Will Halliburton's (NYSE:HAL) Failure Cost Them? What Will BP (NYSE:BP) Gain?
The narrative has changed quickly concerning the BP (NYSE:BP) oil spill, as the investigation surrounding the cement job performed by Halliburton (NYSE:HAL) could drastically change the liability outlook.
So far BP has rightly been the main focus of investigations, but that couldn't have remained the case throughout the entirety of the story because of there being so many contractors and others whose equipment and actions may have led to the failure on the Deepwater Horizon oil rig.
Investigators from the oil spill commission have determined the cement used by Halliburton was unstable, and Halliburton has admitted the final formulation used wasn't completed checked for its stability.
While Halliburton continues to dispute whether the actual formula they used is the one being tested, it seems it is close enough or accurate enough to make a judgment over, as the commission, and an independent study by Chevron (NYSE:CVX) seems to have confirmed.
With failures to completely test the mixture, there is no doubt Halliburton will incur some liability in the matter. It's only a matter of how much liability, not if they'll face it. There is also the question of whether they're insured enough to cover the liabilities, or it'll cost their bottom line.
It has already pushed up the costs of doing business through the increase in cost of their credit-default swaps, and there will surely be more to come.
For BP, this could be helpful once liability is determined. Whether or not it comes from an insurer or Halliburton directly, it could ease the liability load for them, and release capital over a period of time.
The other major element in liability is the blowout preventer provided by Cameron International (NYSE:CAM), which also failed to do its job. That's being tested at this time as to why it failed.
Concerning liability, BP has probably seen the worst, and anything like this is positive news for them from a financial perspective, but also helps them some reputationally, as people realize they weren't the sole company responsible for the disaster, and in some cases, like with the cement mixture, was out of their hands.
That does bring up something all oil companies said they've learned from this, and that is they must keep a much closer watch on contractors, even those like Halliburton, who had had a pretty good reputation as far as quality work goes.
So far BP has rightly been the main focus of investigations, but that couldn't have remained the case throughout the entirety of the story because of there being so many contractors and others whose equipment and actions may have led to the failure on the Deepwater Horizon oil rig.
Investigators from the oil spill commission have determined the cement used by Halliburton was unstable, and Halliburton has admitted the final formulation used wasn't completed checked for its stability.
While Halliburton continues to dispute whether the actual formula they used is the one being tested, it seems it is close enough or accurate enough to make a judgment over, as the commission, and an independent study by Chevron (NYSE:CVX) seems to have confirmed.
With failures to completely test the mixture, there is no doubt Halliburton will incur some liability in the matter. It's only a matter of how much liability, not if they'll face it. There is also the question of whether they're insured enough to cover the liabilities, or it'll cost their bottom line.
It has already pushed up the costs of doing business through the increase in cost of their credit-default swaps, and there will surely be more to come.
For BP, this could be helpful once liability is determined. Whether or not it comes from an insurer or Halliburton directly, it could ease the liability load for them, and release capital over a period of time.
The other major element in liability is the blowout preventer provided by Cameron International (NYSE:CAM), which also failed to do its job. That's being tested at this time as to why it failed.
Concerning liability, BP has probably seen the worst, and anything like this is positive news for them from a financial perspective, but also helps them some reputationally, as people realize they weren't the sole company responsible for the disaster, and in some cases, like with the cement mixture, was out of their hands.
That does bring up something all oil companies said they've learned from this, and that is they must keep a much closer watch on contractors, even those like Halliburton, who had had a pretty good reputation as far as quality work goes.
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