Halliburton and the Gulf Spill

Controversy is erupting over whether to investigate Halliburton’s work for the massive oil spill in the Gulf of Mexico. Here is my attempt at a remix of the topic.

A report, quoted in the Atlantic, says cementing failure is the most common cause for spills:

According to the Wall Street Journal, “a 2007 study by three U.S. Minerals Management Service officials found that cementing was a factor in 18 of 39 well blowouts in the Gulf of Mexico over a 14-year period. That was the single largest factor, ahead of equipment failure and pipe failure.”

That is not a good sign for Halliburton, who does a huge amount of cementing work for oil rigs and had just finished cementing the day before the blast on the Gulf rig. The Atlantic takes a report from the New York Times to point out Halliburton has had major cementing failures in the past, including a ten week oil spill in Australia last year.

…while 199 barrels of cement should have been used to achieve the “top of cement” standard practice on the Montara well, only 133 barrels were used. Even more mistakes appear to have occurred when that cement casing was tested. Extra cement was pumped into the well in a test designed to check if the casing was full. When the liquid flowed back as expected, it was thought to be pure cement. It has now emerged that the fluid was contaminated with seawater. That mistake significantly weakened the strength of the casing as a barrier.

Ok, so cementing failures are common, and Halliburton is a major cementing company. It makes statistical sense that they have a good chance of failure. Since they already have been found responsible for recent and catastrophic failures it makes even more statistical sense to investigate them. The probability of blame for the Gulf incident increases further as experts have testified that this particular failure was probably caused by a “poor cement job”. Add to this mix that Halliburton management has been accused of a pattern of fraud due to audits in Iraq and Afghanistan that turned up billions in questioned and unsupported costs.

Just when you think there is more than ample cause for concern and investigation it turns out even a Halliburton powerpoint presentation has warned that cementing risks include…a blow out:

Challenges

” Shallow water flow may occur during or after cement job
” Under water blow out has happened
” Gas flow may occur after a cement job in deepwater environments that contain major hydrate zones.
” Destabilization of hydrates after the cement job is confirmed by downhole cameras.
” The gas flow could slow down in hours to days if the de- stabilization is not severe.
” However, the consequences could be more severe in worse cases.

This makes it basically indisputable that an investigation into Halliburton is required. It reminds me of another catastrophe related to risk management — the Space Shuttle Challenger O-ring disaster.

Questions need to be asked of Halliburton whether engineers knew the risks, whether the risks were communicated well to management, and whether management failed to understand or make the right decisions.

Tufte’s close analysis demonstrates that the engineers had the information they needed–that O-ring failure rates rose as temperature declined–but didn’t display it clearly. Seven astronauts’ lives could have been saved with a simple graph of previous O-ring damage level against temperature (Allison, 2).

The necessity of perspicuous representation is seen most clearly in such cases as the Challenger, Tufte argues. The engineers at Morton Thiokol failed to display the data clearly, he claims, and so the astronauts died.

Nonetheless there is a group that stands against any investigation of Halliburton. It seems to be represented by the telegenic daughter of the former CEO of Halliburton (and former US Vice President) Dick Cheney.

I find it difficult to fathom, given the above details on cementing risks and the difficult questions related to risk management, how and why the Cheney family would want to fight against the investigation of Halliburton.

When Liz Cheney appeared on ABC’s “This Week” she took the odd position that criticism of Halliburton is just a “Left talking point” and the investigation of Halliburton is a blame shift.

“It is truly amazing, I actually heard that George Bush was responsible for the breakup of Tipper and Al Gore’s marriage, too. It’s incredible, the extent to which people are now trying to shift blame. … The left — you guys have for years been demonizing Bush and Cheney, and I’m sure you’ll be demonizing them for years going forward. But we have a catastrophe on the Gulf coast, a catastrophe that happened on this administration’s watch, which this administration is failing to clean up.”

There really is no logic there. When talking about the cause of the spill and accountability for the cause she immediately shifts attention away and tries to talk about the clean up. She gets herself in further trouble by claiming the Halliburton’s fraud charges have “no relationship to the facts”.

Mediamatters.org provides overwhelming evidence that Cheney is factually wrong in her statements. The fraud charges are indisputable.

Instead of giving good reason to exclude Halliburton from blame for the spill, she clearly appears to be the one who tries to shift blame to the White House by using a dishonesty campaign.

Liz Cheney practically lives on cable news. She also lies routinely, accuses the president of helping terrorists, and is so mindless in her attacks on the nation’s elected leadership, she’s something of a national embarrassment. And for Republican recruiters, apparently she’s perfect.

I would like to steer clear of the politics. However, that seems impossible with the Cheney family especially since they appear to be trying to influence public opinion and votes through false statements. Remember when Dick Cheney said the insurgency in Iraq was over in 2005 and he said he believed the US would be greeted as liberators? Liz now seems to be following a similar path of confusion with the facts.

The Bluffton Today gives an amusing take on the this habit of glossy and confused leadership:

BP blamed Transocean because it was their platform, Transocean blamed Halliburton because it’s trendy, and Halliburton blamed everyone else because they’re not even sure how they got into the oil industry. “I thought we were a security company or something,” said one confused Halliburton executive.

The cause is still unknown and Halliburton’s work is suspect (not least of all because it is experimental and very high-risk), which is why they definitely should be included in the investigation. If Halliburton, and Liz Cheney, are so confident they have no blame then they also should have no opposition to the investigation that will help prove cementing was not the cause of this spill. After all, cementing was not a factor in 21 of 39 well blowouts in the Gulf of Mexico over a 14-year period…

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