Disaster capitalists: Halliburton to make money off oil spill
By Daniel Tencer | Raw Story
Friday, June 18th, 2010 — 3:10 pm
Does a company that both builds oil rigs and cleans up oil spills have any motivation to prevent oil rig disasters?
That’s the question some people in business and politics are asking themselves after Halliburton’s purchase of an oil clean-up company 10 days before the Deepwater Horizon explosion that killed 11 workers and launched the worst oil spill in US history.
Some observers see a conspiracy in the actions of the company once headed by Dick Cheney. Halliburton, which built the cement casing for the Deepwater Horizon’s drill, announced its purchase of Houston-based oilfield services company Boots and Coots for $240 million on April 9, just 11 days before the Deepwater Horizon explosion.
According to a report at the Christian Science Monitor Friday, Boots and Coots is now under contract with BP to help with the oil spill. The company “focuses on oil spill prevention and blowout response,” CSM reports. Halliburton’s purchase is not yet a done deal — it’s still awaiting regulatory approval, though few observers think the purchase won’t pass muster.
“[Mergers and acquisitions] in the industrial and oil services sectors is totally normal,” writes David Anderson at The Inspired Economist, “but the timing in this case, is not. Boots & Coots sure seems like the perfect company to own if it would soon become necessary to get more involved with some oil disaster.
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“Does this strike readers as a coincidence? If so, it’s a pretty lucky one for Halliburton.”
But could Halliburton have known that an oil disaster was on the horizon, and planned in advance to profit from it? News reports indicate they could have.
The New York Times reported in May that BP was concerned about the rig’s well casing — which Halliburton worked on — as early as June of 2009. The Times also reported that a Halliburton employee warned BP three weeks before the explosion that BP’s use of cement for the well casing was “against [Halliburton’s] best practices.”
But even if the company’s purchase of Boots and Coots was just a “lucky coincidence,” there is still plenty about it to alarm observers. According to CSM, analysts are worried that a company like Halliburton will grow “complacent” in preventing disasters, because there is money to be made from cleaning up the mess — and then rebuilding the oil rig.
“Working on both sides of the fence” is common in the oil industry, University of Louisiana professor Robert Gramling told CSM, but “it makes for a very complex decision-making environment that can become problematic.”
At the very least, Halliburton’s purchase should give the company a revenue boost. While Halliburton has been reporting plummeting revenue in recent quarters, Boots and Coots has been a business success story, with its revenue jumping from $11 million in 2000 to $209 million in 2008, before dropping slightly in 2009.
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