Halliburton 2011 Annual Report Download - page 45

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The NAS Report also set forth the following observations, among others: (1) there were
alternative completion techniques and operational processes available that could have safely prepared the
well for temporary abandonment; (2) post-incident static tests on a foam cement slurry similar to the slurry
pumped into the Macondo well were performed under laboratory conditions and exhibited the settling of
cement and nitrogen breakout, although because the tests were not conducted at bottom hole conditions “it
is impossible to say whether the foam was stable at the bottom of the well”; (3) the “cap” cement slurry
was subject to contamination by the spacer or the drilling mud that was placed ahead of the cap cement
slurry and, if the cap cement slurry was heavily contaminated, it would not reach the strength of
uncontaminated cement; (4) the numerous companies involved and the division of technical expertise
among those companies affected their ability to perform and maintain an integrated assessment of the
margins of safety for the Macondo well; (5) the regulatory regime was ineffective in addressing the risks of
the Macondo well; and (6) training of key personnel and decision makers in the industry and regulatory
agencies has been inadequate relative to the risks and complexities of deepwater drilling.
The NAS Report recommended, among other things: that all primary cemented barriers to flow
should be tested to verify quality, quantity, and location of cement; that the integrity of mechanical barriers
should be verified by using the best available test procedures; that blowout preventer systems should be
redesigned for the drilling environment to which they are being applied; and that operating companies
should have ultimate responsibility and accountability for well integrity, well design, well construction, and
the suitability of the rig and associated safety equipment.
The Cementing Job and Reaction to Reports. We disagree with the BP Report, the National
Commission, Transocean’ s report, the BOEMRE Report, and the NAS Report regarding many of their
findings and characterizations with respect to the cementing and surface data logging services, as
applicable, on the Deepwater Horizon. We have provided information to the National Commission, its
staff, and representatives of the joint investigation team for the Marine Board Investigation that we believe
has been overlooked or selectively omitted from the Investigation Report and the BOEMRE Report, as
applicable. We intend to continue to vigorously defend ourselves in any investigation relating to our
involvement with the Macondo well that we believe inaccurately evaluates or depicts our services on the
Deepwater Horizon.
The cement slurry on the Deepwater Horizon was designed and prepared pursuant to well
condition data provided by BP. Regardless of whether alleged weaknesses in cement design and testing are
or are not ultimately established, and regardless of whether the cement slurry was utilized in similar
applications or was prepared consistent with industry standards, we believe that had BP and Transocean
properly interpreted a negative-pressure test, this test would have revealed any problems with the cement.
In addition, had BP designed the Macondo well to allow a full cement bond log test or if BP had conducted
even a partial cement bond log test, the test likely would have revealed any problems with the cement. BP,
however, elected not to conduct any cement bond log tests, and with Transocean misinterpreted the
negative-pressure test, both of which could have resulted in remedial action, if appropriate, with respect to
the cementing services.
At this time we cannot predict the impact of the Investigation Report, the BOEMRE Report, the
NAS Report, or the conclusions of future reports of the Chemical Safety Board, Congressional committees,
or any other governmental or private entity. We also cannot predict whether their investigations or any
other report or investigation will have an influence on or result in us being named as a party in any action
alleging liability or violation of a statute or regulation, whether federal or state and whether criminal or
civil.
We intend to continue to cooperate fully with all governmental hearings, investigations, and
requests for information relating to the Macondo well incident. We cannot predict the outcome of, or the
costs to be incurred in connection with, any of these hearings or investigations, and therefore we cannot
predict the potential impact they may have on us.