Halliburton 2013 Annual Report Download - page 72

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60 days. The BSEE has announced that the INCs will be reviewed for possible imposition of civil penalties once the appeal has
ended. The BSEE has stated that this is the first time the Department of the Interior has issued INCs directly to a contractor that
was not the well's operator.
The Cementing Job and Reaction to Reports. We disagree with the reports referred to above regarding many of their
findings and characterizations with respect to our 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 other investigatory bodies
that we believe has been overlooked or omitted from their reports, 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. Also, we believe that BP knew or should have
known about a critical, additional hydrocarbon zone in the well that BP failed to disclose to us prior to the design of the cement
program for the Macondo well.
At this time we cannot predict the impact of the investigations or reports referred to above, or the conclusions or
impact of future investigations or reports. We also cannot predict whether any investigations or reports 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. We intend to
continue to cooperate fully with all 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.
DOJ Investigations and Actions. On June 1, 2010, the United States Attorney General announced that the United States
Department of Justice (DOJ) was launching civil and criminal investigations into the Macondo well incident to closely examine
the actions of those involved, and that the DOJ was working with attorneys general of states affected by the Macondo well
incident. The DOJ announced that it was reviewing, among other traditional criminal statutes, possible violations of and
liabilities under The Clean Water Act (CWA), The Oil Pollution Act of 1990 (OPA), and the Endangered Species Act of 1973
(ESA).
The CWA provides authority for civil penalties for discharges of oil into or upon navigable waters of the United States,
adjoining shorelines, or in connection with the Outer Continental Shelf Lands Act (OCSLA) in quantities that are deemed
harmful. A single discharge event may result in the assertion of numerous violations under the CWA. Civil proceedings under
the CWA can be commenced against an “owner, operator, or person in charge of any vessel, onshore facility, or offshore facility
from which oil or a hazardous substance is discharged” in violation of the CWA. The civil penalties that can be imposed against
responsible parties range from up to $1,100 per barrel of oil discharged in the case of those found strictly liable to $4,300 per
barrel of oil discharged in the case of those found to have been grossly negligent.
The OPA establishes liability for discharges of oil from vessels, onshore facilities, and offshore facilities into or upon
the navigable waters of the United States. Under the OPA, the “responsible party” for the discharging vessel or facility is liable
for removal and response costs as well as for damages, including recovery costs to contain and remove discharged oil and
damages for injury to natural resources and real or personal property, lost revenues, lost profits, and lost earning capacity. The
cap on liability under the OPA is the full cost of removal of the discharged oil plus up to $75 million for damages, except that
the $75 million cap does not apply in the event the damage was proximately caused by gross negligence or the violation of
certain federal safety, construction or operating standards. The OPA defines the set of responsible parties differently depending
on whether the source of the discharge is a vessel or an offshore facility. Liability for vessels is imposed on owners and
operators; liability for offshore facilities is imposed on the holder of the permit or lessee of the area in which the facility is
located.
The ESA establishes liability for injury and death to wildlife. The ESA provides for civil penalties for knowing
violations that can range up to $25,000 per violation.