This may be merely coincidence, but it seems unlikely.
The best performing sector on the benchmark US share index, the S&P 500, is currently energy. Of that sector, it is the oil services companies that are doing best – the ones who might have been hit heaviest had stringent new regulations hampered the way they were able to run rigs.
As I write, the sector as a whole is up 1.5 per cent, with services companies rallying 2.6 per cent. Halliburton is up 3 per cent, while rivals Cameron International and Baker Hughes have risen 4.5 per cent and 3.3 per cent respectively.
The report into the Gulf oil spill, a chapter of which was released last night, made for pretty grim reading for BP and the other companies involved.
Most of the mistakes and oversights at Macondo can be traced back to a single overarching failure – a failure of management. Better management by BP, Halliburton, and Transocean would almost certainly have prevented the blow-out.
Energy analysts are still digesting news from the US last night that the US National Commission investigating the Macondo oil spill had found that both BP and Halliburton had known about problems with the cement used to seal the well, but did not act on the information.
The company itself has come out all guns blazing, issuing a 1,300 word statement contesting the findings of the report. In it, the company states robustly:
Halliburton does not believe that the foam cement design used on the Macondo well was the cause of the incident.
The journalist Andy Rowell wrote a blog last night asking “BP will survive, but what about the others?” He was specifically talking about the rest of the oil industry in north America, but the immediate fallout could yet cause further damage to the other two companies directly involved in the gulf oil spill: Halliburton and Transocean.
Transocean received a reminder that the pain has not yet eneded last month when Moody’s downgraded its credit rating from Baa2 to Baa3. Last night Kenneth Austin from Moody’s explained the ratings agency’s thinking.
“Regardless of the responsibility that Transocean will bear for the Macondo blowout, we do not believe that its risk profile reflects a Baa2 ratings.”
Now we come to what the BP team believes were the causes of the accident, and the first company in the line of fire is Halliburton, which was the contractor responsible for the cement job to seal the well.
There is a heavy emphasis placed on the cement “foam”: cement injected with nitrogen to make it lighter, to avoid damaging the rock formation of the reservoir and making it harder to subsequently produce oil.
Bly goes on to give the 30-second version of the report’s conclusions, which is that there were eight distinct failures that led to the accident, and it was only because all eight of those factors went wrong that the explosion and subsequent leak occurred.
“At the end of the day, all eight of these things had to occur to get from the initiation of this to the end of the accident,” he says.
One member of the accident investigation team worked on the inquiries into the Challenger and Columbia space shuttle disasters, which is highly relevant experience for understanding the failures of complex engineering procedures in the difficult and dangerous conditions in a mile of water and a further 2 ½ miles of rock below the sea bed.
While Iraq is still a difficult place to work, companies continue to persist in getting business there. On Tuesday, Halliburton announced it had been awarded a contract by Eni to provide a range of integrated energy services to help redevelop the Zubair field in southern Iraq.
No details about the value of the countract. Halliburton just said work for the “multi-million dollar contract” is underway. Halliburton is to carry out services such as perforating, acidizing and well-testing on 20 wells for Eni. Halliburton chief executive, Dave Lesar, explains in the news release why Halliburton is interested:
We are committed to providing Eni the critical services required to deliver on its goal of expanding production over the next several years. Halliburton has made a strategic investment in our Iraqi infrastructure, and the award of this contract, coupled with the recent letter of intent awarded by Shell and its partners, demonstrates that we have the technology and people in place to deliver in Iraq.
While Iraq is still a difficult place to find work, companies continue to get business.
On Tuesday, Halliburton announced it had been awarded a contract by Eni to provide a range of integrated energy services to help redevelop the Zubair field in southern Iraq.
Testimony this week in the US Coast Guard and Bureau for Ocean Energy Management investigation has often been tedious and repetitive.
Lawyers, representing more than a dozen clients, are asking the same questions, leading to those overseeing the proceedings to jump in repeatedly, trying to speed things up. But these are top lawyers, used to getting their way, and so the investigators relent, and the testimony drones on. On Tuesday it went over 10 hours.
That said, some nuggets have cropped up. So for those who can withstand the testimony, making it through the day with frequent trips to the back of the room for the hot coffee on offer, the hearing is worth attending. For those who cannot be there in person, it can be watched online.