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Halliburton Tries to Get Half Off Its Bribe for Cheney’s Freedom

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As I noted last week, Halliburton is in negotiations to reach a plea deal with Nigeria to drop its bribery charges against Dick Cheney. At that point, Nigeria was demanding $500 million for such a deal, which led Gregg to quip, “So, Cheney Halliburton is bribing Nigeria to drop bribery charges?”

As Reuters reports, Halliburton and Nigeria are getting closer to a deal. Over the course of negotiations, though, it appears Halliburton has asked for half off of Nigeria’s original demand, or a total fine of $250 million.

The Economic and Financial Crimes Commission (EFCC) said it met with officials representing Cheney and Halliburton in London last week after filing 16-count charges at a federal high court in Abuja in a case dating back to the mid-1990s.

Halliburton, which has said the Nigerian charges have no legal basis, could not immediately be reached to comment on the outcome of the meeting. But EFCC spokesman Femi Babafemi said an offer had been made to pay fines totalling up to $250 million.

“They have made offers of fines to be paid in penalties. They offered to pay $120 million in addition to the repatriation of $130 million trapped in Switzerland,” Babafemi said.

“It will need to be ratified by the government and we expect a decision by the end of the week,” he said.

It seems like the value of Cheney’s freedom, like all other goods, declines the closer you get to Christmas. Cheney better hope that Nigeria ratifies this deal soon though, because you never know what happens to goods left on the shelf after the holidays.

Dick Cheney: Wanted for Bribery

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Nigeria has made it official. Today, it charged Dick Cheney with 16 bribery-related charges.

While that’s not unexpected, I’m amused by Dick Cheney’s Defense-Attorney-on-Call Terry O’Donnell’s response to the charges:

Mr Cheney’s lawyer, Terence O’Donnell, said US investigators had “found no suggestion of any impropriety by Dick Cheney in his role of CEO of Halliburton”.

“Any suggestion of misconduct on his part, made now, years later, is entirely baseless,” Mr O’Donnell said.

O’Donnell suggests that because the US conducted its own investigation–mostly during a period when Cheney remained the most powerful man in government and when DOJ was clearly politicized–then Nigeria should be unable to do so, too.

Particularly given Mary’s very intriguing post about competing jurisdictions and missing millions in Switzerland, I find that response particularly notable.

It Starts With: “Hello. I am a Prosecutor in Nigeria …

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[Ed. note: Mary provides some background on what may be up with Nigeria’s announced plan to charge Dick Cheney.]

… ready to sue your Vice President. Please send 130 Million Dollars by reply mail to …”

After the news about charges against Dick Cheney relating to the Nigerian bribery scandal it may be worthwhile to sip some coffee and swap clues on what the heck might (or might not) be going on. Let’s start with a little background on one sliver of a very complicated matter.

In 1995-2004, KBR was involved in a joint venture in Nigeria that included KBR/Halliburton; a Dutch subsidiary Snamprogetti Netherlands B.V/Italian parent ENI S.p.A. (aka Snamprogetti, ENI), a Paris-based oilfield engineering company Technip S.A., and a Japanese company, JGC. The joint venture set up some special purpose corporations (not that unusual when companies joint venture) in Portugal (okay, maybe they don’t always use Portugal). The business entities and structures are pretty much oversimplified here, but since these pretty much track the pleas deals the Department of Justice worked out, let’s not make it more complicated.

This joint venture wanted to split up some liquefied natural gas (LNG) contracts in Nigeria that were going to be worth around $6 billion to them.  Those kinds of big contract almost always get split up, for various (and some actually pretty darn good) reasons.  When the “TSKJ” group was trying to get the liquefied natural gas (LNG) contracts, their bidding rival was another consortium, BCSA (Bechtel, Chiyoda, Spibat, Ansaldo).

Not to jump around, but for context, you need to know how the Nigeria scandal (arrangements to bribe Nigerian officials to get the LNG contract)  was “exposed.”  A former “Director General” of Technip, Georges Krammer, was accused of wrongdoing in a different deal (involving France’s Elf) and argued that he was just following company policy.  Supposedly, Technip hung him out to dry and he decided to return the favor by offering up info against Technip, regarding deals that included the Nigerian LNG bribes.  .

When the French began investigating, the Swiss and US and Nigeria also started investigations.  If, by investigation, you mean the thing that happens when you throw a hunk of raw meat into a pen of well fed dogs and see which one grabs it and growls loudest, whether it plans on doing anything much with it or not.  Read more →

Dick Cheney to Face Criminal Charges

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Not for war crimes or torture, mind you. But for the bribery allegedly committed while at Halliburton that has been bubbling along for years. (h/t scribe)

Nigeria will file charges against former U.S. Vice President Dick Cheney and officials from five foreign companies including Halliburton Co. over a $180 million bribery scandal, a prosecutor at the anti-graft agency said.Indictments will be lodged in a Nigerian court “in the next three days,” Godwin Obla, prosecuting counsel at the Economic and Financial Crimes Commission, said in an interview today at his office in Abuja, the capital. An arrest warrant for Cheney “will be issued and transmitted through Interpol,” the world’s biggest international police organization, he said.

Peter Long, Cheney’s spokesman, said he couldn’t immediately comment when contacted today and said he would respond later to an e-mailed request for comment.

Obla said charges will be filed against current and former chief executive officers of Halliburton, including Cheney, who was CEO from 1995 to 2000, and its former unit KBR Inc., based in Houston, Texas; Technip SA, Europe’s second-largest oilfield- services provider; Eni SpA, Italy’s biggest oil company; and Saipem Construction Co., a unit of Eni.

You see? I knew that new pulse-less ticker would handily allow Cheney to live long enough to face charges on something!

Stay tuned for the leaked WikiLeak cables showing the Obama Administration pressuring Nigeria to drop these charges.

BP’s Well Failure Due to Effort to Save $10 Million?

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Henry Waxman just put up a letter and a whole bunch of backup documents in preparation for a hearing with Tony Hayward Thursday. In it, he lists 5 shortcuts BP used in the days before the well explosion, all of them with real risks. But BP chose them to save money and time.

Well Design. On April 19, one day before the blowout, BP installed the final section of steel tubing in the well. BP had a choice of two primary options: it could lower a full string of “casing” from the top of the wellhead to the bottom of the well, or it could hang a “liner” from the lower end of the casing already in the well and install a “tieback” on top of the liner. The liner-tieback option would have taken extra time and was more expensive, but it would have been safer because it provided more barriers to the flow of gas up the annular space surrounding these steel tubes. A BP plan review prepared in mid-April recommended against the full string of casing because it would create “an open annulus to the wellhead” and make the seal assembly at the wellhead the “only barrier” to gas flow if the cement job failed. Despite this and other warnings, BP chose the more risky casing option, apparently because the liner option would have cost $7 to $10 million more and taken longer.

Centralizers. When the final string of casing was installed, one key challenge was making sure the casing ran down the center of the well bore. As the American Petroleum Institute’s recommended practices explain, if the casing is not centered, “it is difficult, if not impossible, to displace mud effectively from the narrow side of the annulus,” resulting in a failed cement job. Halliburton, the contractor hired by BP to cement the well, warned BP that the well could have a “SEVERE gas flow problem” if BP lowered the final string of casing with only six centralizers instead of the 21 recommended by Halliburton. BP rejected Halliburton’s advice to use additional centralizers. In an e-mail on April 16, a BP official involved in the decision explained: ” it will take 10 hours to install them . .. . I do not like this.” Later that day, another official recognized the risks of proceeding with insufficient centralizers but commented: “who cares, it’s done, end of story, will probably be fine.”

Cement Bond Log. BP’s mid-April plan review predicted cement failure, stating “Cement simulations indicate it is unlikely to be a successful cement job due to formation breakdown.” Despite this warning and Halliburton’s prediction of severe gas flow problems, BP did not run a 9- to 12-hour procedure called a cement bond log to assess the integrity of the cement seal. BP had a crew from Schlumberger on the rig on the morning of April 20 for the purpose of running a cement bond log, but they departed after BP told them their services were not needed. An independent expert consulted by the Committee called this decision “horribly negligent.”

Mud Circulation. In exploratory operations like the Macondo well, wells are generally filled with weighted mud during the drilling process. The American Petroleum Institute (API) recommends that oil companies fully circulate the drilling mud in the well from the bottom to the top before commencing the cementing process. Circulating the mud in the Macondo well could have taken as long as 12 hours, but it would have allowed workers on the rig to test the mud for gas influxes, to safely remove any pockets of gas, and to eliminate debris and condition the mud so as to prevent contamination of the cement. BP decided to forego this safety step and conduct only a partial circulation of the drilling mud before the cement job.

Lockdown Sleeve. Because BP elected to use just a single string of casing, the Macondo well had just two barriers to gas flow up the annular space around the final string of casing: the cement at the bottom of the well and the seal at the wellhead on the sea floor. The decision to use insufficient centralizers created a significant risk that the cement job would channel and fail, while the decision not to run a cement bond log denied BP the opportunity to assess the status of the cement job. These decisions would appear to make it crucial to ensure the integrity of the seal assembly that was the remaining barrier against an influx of hydrocarbons. Yet, BP did not deploy the casing hanger lockdown sleeve that would have prevented the seal from being blown out from below.

BP willfully ignored numerous warnings in an attempt to save $10 million here and there, and several days of time. And as a result, precisely what they were warned against happened, causing tens of billions of monetary damage and permanent environmental damage to the Gulf.

Lois Capps: Booms Will Only Collect 15% of Spilled Oil

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The eye-popping part of this exchange is the news that all the efforts to protect the Gulf Coast are only going to collect a fraction of it from reaching the shore.

But the whole comment is worthwhile, because Capps expresses so well the outrage we should all be expressing about the inefficacy of oil spill recovery.

CEO Mud Wrestling

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One of the key moments of yesterday’s Environment and Public Works hearing on the BP Disaster came when Tom Udall tried to pin the CEOs down on whether, as reported by WSJ, at BP’s direction, Halliburton swapped out the drilling mud for seawater prematurely–something we’ve looked at as well.

BP, the well owner, blames the failure of a big set of valves on the sea floor, known as the blowout preventer, to halt the blowout once it started.

A different account comes from Halliburton, a contractor in the drilling. This account is corroborated to some extent by Transocean, as well as by two workers on the drilling rig, The Wall Street Journal has determined.

This account describes a failure to place a cement plug within the well. The plug is designed to prevent gas from escaping up the pipe to the surface.

Before such a plug is placed, the job of keeping underground gas from coming up the pipe is done by heavy drilling fluid inside the well, commonly known as “mud.”

The plug is normally put in before the mud is removed, but according to the account of Halliburton, Transocean and the two workers, in this case, that wasn’t done—drilling mud was removed before a final cement plug was placed in the well.

It is not clear why such a decision would have been made. Rig owner Transocean says that BP, as owner of the well that was just being completed, made key decisions on how to proceed. BP declined to comment on this account of the drilling procedures.

Predictably, no one really wanted to go on the record whether that was one of what appear to be numerous problems that contributed to the spill. Equally predictably, no one seems to have the well plan that would make this all clear.

Halliburton: We Worked to Spec

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As oil continues to gush into the Gulf, I’ve been haunted by the statement Halliburton put out about the Deepwater Horizon spill.

Here’s the statement, dated April 30, in its entirety.

Halliburton (NYSE: HAL) confirmed today its continued support of, and cooperation with, the ongoing investigations into the Deepwater Horizon drilling rig incident in the Gulf of Mexico earlier this month. Halliburton extends its heartfelt sympathy to the families, friends and our industry colleagues of the 11 people lost and those injured in the tragedy.

As one of several service providers on the rig, Halliburton can confirm the following:

  • Halliburton performed a variety of services on the rig, including cementing, and had four employees stationed on the rig at the time of the accident. Halliburton’s employees returned to shore safely, due, in part, to the brave rescue efforts by the U.S. Coast Guard and other organizations.
  • Halliburton had completed the cementing of the final production casing string in accordance with the well design approximately 20 hours prior to the incident. The cement slurry design was consistent with that utilized in other similar applications.
  • In accordance with accepted industry practice approved by our customers, tests demonstrating the integrity of the production casing string were completed.
  • At the time of the incident, well operations had not yet reached the point requiring the placement of the final cement plug which would enable the planned temporary abandonment of the well, consistent with normal oilfield practice.
  • We are assisting with planning and engineering support for a wide range of options designed to secure the well, including a potential relief well.

Halliburton continues to assist in efforts to identify the factors that may have lead up to the disaster, but it is premature and irresponsible to speculate on any specific causal issues.

Halliburton originated oilfield cementing and leads the world in effective, efficient delivery of zonal isolation and engineering for the life of the well, conducting thousands of successful well cementing jobs each year. The company views safety as critical to its success and is committed to continuously improve performance. [my emphasis]

HAL’s first concern, in its statement, was to invoke “its cooperation” in the investigation. Only after that did it mention the casualties from the explosion. Then, it described (sort of) its role on the rig, stating that their work was:

  • Consistent with that utilized in other similar applications
  • In accordance with accepted industry practice approved by our customers
  • Consistent with normal oilfield practice

You get the feeling that HAL wants to cement (heh) the impression that everything it was doing on the rig was all standard practice? You get the feeling that HAL wants you to know that everything they were doing on the rig had been approved by BP?

And it took them a full week to come up with that statement.

All of which leads me to wonder whether–though mind you, I’m just wondering–HAL (which did, after all, originate oilfield cementing) did something that may well have met BP’s specifications, but which HAL, with its expert knowledge of what it should do in conditions like those at the Deepwater Horizon site, might be rethinking. That is, the tone and content of their statement suggests HAL is preparing a defense that it met spec, regardless of whether that spec was appropriate to the conditions involved.

BP Oil Slick The Result Of Republican DOJ And Regulatory Policy

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The economic and environmental damage resulting from the exploding fireball compromise of the Deepwater Horizon oil platform may be unprecedented, with the potential to emit the equivalent of up to four Exxon Valdez breakups per week with no good plan to stop it. There will be plenty of finger pointing among BP, Transocean and Halliburton, while it appears the bought and paid for corporatist Congress put the screws to the individual citizens and small businesses by drastically limiting their potential for economic recovery; all in the course of insuring big oil producers like BP have effectively no damage liability for such losses.

How did this happen? There are, of course, a lot of pertinent factors but, by far, the one constant theme underlying all is the mendacious corporate servitude of the Republican party, their leaders and policies. The arrogance and recklessness of BP and its oily partners gestated wildly under the Bush/Cheney administration.

Until the turn of the decade, BP had a relatively decent safety and environmental record compared to others similarly situated. Then BP merged with American oil giant Amoco and started plying the soft regulated underbelly of Republican rule in the US under oil men George Bush and Dick Cheney. Here from the Project On Government Oversight (POGO) is an excellent list of BP misconduct, almost all occurring and/or whitewashed under the Bush/Cheney Administration. If you open the door, foxes eat the chickens.

But it is not just regulatory policy behind the open and notorious recklessness of BP and its ilk, it is intentional policy at the Department of Justice as well. Here is how the former Special Agent In Charge for the EPA Criminal Investigative Division, Scott West, described the DOJ coddling of BP under the Bush/Cheney Administration:

In March 2006, a major pipeline leak went undetected for days, spilling a quarter-million gallons of oil on the Alaskan tundra. The spill occurred because the pipeline operator, British Petroleum (BP), ignored its own workers warnings by neglecting critical maintenance to cut costs. The spill sparked congressional hearings and a large federal-state investigation. Despite the outcry, in a settlement announced in late October 2007, BP agreed to one misdemeanor charge carrying three-year probation and a total of only $20 million in penalties (a $12 million fine with $8 million in restitution and compensatory payments).

The settlement resulted from a sudden U.S. Justice Department August 2007 decision to wrap up the case, according to West. That precipitous shutdown meant Read more →

BP’s Procedural Spills

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Another thing that happened while I was tromping around one of the most beautiful places on earth (Yosemite) is that the BP drilling rig that had an explosion and fire last week sunk and oil has started to spill into the Gulf (as this dramatic NASA picture makes clear). In the last day, the Minerals Management Service (one of the federal agencies that regulate offshore drilling) has released documents showing that BP was cited in 2007 for training problems related to a similar problem in 2002.

BP Exploration & Production, which owns the deep water rig that exploded last week in the Gulf of Mexico, was cited in 2007 for inadequately training employees in well control, according to the US Minerals Management Service.

The conditions of the training are the same as those suspected in the possible blowout aboard the TransOcean Deepwater Horizon, which left 11 workers missing and presumed dead.

MMS slapped BP with $41,000 in fines in October 2007 after a series of violations related to a near-blowout five years earlier.  In November 2002, the Ocean King rig, operated by Diamond Offshore Drilling, in the Gulf had to evacuate all 65 of its workers for nearly two days after operators detected a dangerous rise in gas pressure.  The rig, which had been drilling at a depth of more than 5,000 feet, didn’t resume work for nearly a week, according to the MMS report.

Unlike last week’s disaster, workers were able to keep the well from leaking by using cement and mud to plug the well.  The same subcontractor, Diamond Offshore, was also used when BP was fined $25,000 in 2004 for bypassing a gas detection system while drilling.  A BP spokesman in London says the company still uses Diamond Offshore as a contractor.

KEY SAFETY PROCEDURES

In the 2002 incident, the MMS said that BP and Diamond Offshore were unaware that some of the key safety procedures they used to initially stop the dangerous rise in pressure could have contributed to a blowout.  The MMS cited BP for what it called “no formal procedures” and “no written guidelines” to follow in case of an emergency.  MMS also cited BP and contract workers in the incident for what they said was a “lack of knowledge of the system, and lack of pre-event planning and procedures.”

Let me give some background on this. In the 1990s, I worked for a company that consulted on safety procedures for the oil industry (a writer who reported to me did some procedures for one Amoco refinery, which was subsequently purchased by BP; we bid on, but did not get, a job that included BP; and we did some procedures for a drilling entity that has since been purchased by Halliburton, which is involved here as well). The way in which the government forces oil companies to operate in ways which minimize the safety and environmental danger of inherently dangerous processes is to ask (either nicely or by mandating) a set of procedures to cover both normal and emergency procedures. It’s a way of setting up documented procedures which can be trained and audited; the procedures allow the government to check whether the operators are operating as safely as possible. Just as importantly, it’s a way of proactively making sure that in case something does go badly wrong, the operator in question–and more importantly, the workers actually doing the work–will have a way of figuring out what to do quickly enough so as to minimize the safety and environmental damage.

MMS is saying that in 2002, BP not only had none of these procedures, but it hadn’t trained the workers and contractors on the rig, and as a result, the workers did the wrong thing to contain the damage. BP got lucky in 2002, because doing the wrong thing did not exacerbate the problems.

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