BP M4 Spoliation Sanctions Against HESI [Rec Doc 8977} With Attachments Amd Memo

7/29/2019 BP M4 Spoliation Sanctions Against HESI [Rec Doc 8977} With Attachments Amd Memo

1/85

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

IN RE: OIL SPILL BY THE OIL RIG

DEEPWATER HORIZON IN THE

GULF OF MEXICO, ON APRIL 20, 2010

THIS DOCUMENT RELATES TO ALL

CASES

*

*

*

*

*

*

MDL NO. 2179

SECTION: J

JUDGE BARBIER

MAGISTRATE JUDGE SHUSHAN

****************************************************************************

BPS MOTION FOR SANCTIONS RESULTING FROM HALLIBURTONS

DESTRUCTION AND SPOLIATION OF EVIDENCE

BP Exploration & Production Inc. and BP America Production Company (BP)

respectfully move this Court, pursuant to Federal Rule of Civil Procedure 37 and this Courts

inherent authority, for sanctions resulting from Halliburton Energy Services, Inc.s destruction and

spoliation of evidence. As confirmed by Halliburtons own employees and documents, Halliburton

has destroyed and spoliated critical evidence concerning the role of the Halliburton cement slurry

design in the events of April 20, 2010. Halliburtons conduct has undermined the integrity of these

proceedings and severely prejudiced BP and the other parties. This prejudice to BP and other

parties has been reaffirmed and magnified by events during the trial, including Halliburtons recent

disclosure that it has just discovered a cement sample taken off the Deepwater Horizon rig from

the same batch used in the Macondo cement job.

WHEREFORE, for the foregoing reasons and those set forth in the accompanying

Memorandum in Support of Motion for Sanctions Resulting from Halliburtons Destruction and

Spoliation of Evidence, BP respectfully requests that the Court enter an order: (1) finding that

Halliburtons final cement design was unstable and caused hydrocarbons to enter the wellbore,

(2) finding that the off the side tests conducted by Rickey Morgan and Tim Quirk in April/May

Case 2:10-md-02179-CJB-SS Document 8977 Filed 03/21/13 Page 1 of 3


2/85

2

2010 establish that the cement used on the Macondo well on April 20, 2010 was not stable, and

(3) allowing opinion testimony by deposition designations of Greg Garrison and Craig Gardner

regarding their post-incident testing.

Dated: March 21, 2013 Respectfully submitted,

/s/ Don K. HaycraftDon K. Haycraft (Bar #14361)R. Keith Jarrett (Bar #16984)LISKOW & LEWIS701 Poydras Street, Suite 5000

New Orleans, Louisiana 70139-5099Telephone: (504) 581-7979Facsimile: (504) 556-4108

J. Andrew Langan, P.C.Matthew T. Regan, P.C.Hariklia Karis, P.C.KIRKLAND & ELLIS LLP300 North LaSalle StreetChicago, IL 60654312-862-2000 (Tel)312-862-2200 (Fax)

Robert C. Mike BrockCOVINGTON & BURLING LLP1201 Pennsylvania Avenue, NWWashington, DC 20004-2401202-662-5985

Attorneys for Defendants BP Exploration &Production Inc. and BP America ProductionCompany



3/85

CERTIFICATE OF SERVICE

I hereby certify that the above and foregoing pleading has been served on All Counsel by

electronically uploading the same to Lexis Nexis File & Serve in accordance with Pretrial Order

No. 12, and that the foregoing was electronically filed with the Clerk of Court of the

United States District Court for the Eastern District of Louisiana by using the CM/ECF System,

which will send a notice of electronic filing in accordance with the procedures established

in MDL 2179, on this 21st day of March, 2013.

/s/ Don K. Haycraft



4/85

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

IN RE: OIL SPILL BY THE OIL RIG

DEEPWATER HORIZON IN THE

GULF OF MEXICO, ON APRIL 20, 2010

THIS DOCUMENT RELATES TO ALL

CASES

*

*

*

*

*

*

MDL NO. 2179

SECTION: J

JUDGE BARBIER

MAGISTRATE JUDGE SHUSHAN

****************************************************************************

BPS MEMORANDUM IN SUPPORT OF MOTION FOR SANCTIONS RESULTING

FROM HALLIBURTONS DESTRUCTION AND SPOLIATION OF EVIDENCE

The Court will never see certain critical evidence relating to the failure of Halliburtons

cement at the Macondo well on April 20, 2010. As confirmed by Halliburtons own employees

and documents, Halliburton has destroyed and spoliated that evidence. Halliburtons conduct has

undermined the integrity of these proceedings and severely prejudiced BP and the other parties.

This prejudice has been reaffirmed and magnified by events during the trial, including

Halliburtons recent disclosure that it has just discovered a cement sample taken from the

Deepwater Horizon rig from the same batch used to cement the Macondo well.

Under well-established case law, Halliburtons preservation and discovery dutieslike

those of all other partiesextend beyond issuing a litigation hold to its employees. Halliburton has

a duty to take appropriate affirmative steps to monitor the preservation and production of evidence.

Halliburton has failed to do so here. Indeed, this rig sample was responsive to subpoenas and

Halliburton should have produced it years ago so that it could have been tested on a timely basis

for use at trial and before it deteriorated further.

This is BPs second motion for sanctions relating to Halliburtons destruction of evidence in

this case. In 2012, the Court granted-in-part BPs initial motion, ordering forensic testing and

Case 2:10-md-02179-CJB-SS Document 8977-1 Filed 03/21/13 Page 1 of 25


5/85

2

modeling but denying BPs request for an adverse inference based on Halliburtons destruction of

the results of post-incident cement testing. In denying BPs request for an adverse inference at that

time, the Court found [f]or the reasons presented by Halliburton, BP has not demonstrated that it

has been prejudiced. (Order at 1, Jan. 20, 2012, Rec. Doc. 5307 (Rec. Doc. 5307).) One of the

reasons presented by Halliburton in opposing BPs adverse inference request was that the test

results Halliburton destroyed were not critical because they were done on a cement sample made

using ingredients from a lab (lab stock) and not a sample actually taken from the rig (rig stock

or rig blend) and, thus, the destroyed test results could be replicated using additional available

lab stock. (Halliburton Energy Services, Inc.s Surreply in Oppn to Mot. for Spoliation Sanctions

at 4, Jan. 5, 2012, Rec. Doc. 5082 (The lab stock that was used for the post-incident tests was not

used in either the final pre-incident testing or in the Macondo well itself. And because the lab

stock differed in composition from the rig stock, tests using lab stock cannot evidence how the

slurry pumped on April 19, 2010, performed downhole.).)1

Notably, in opposing BPs prior sanctions motion in December 2011, Halliburton assured

the Court that the actual rig samples that it contends are critical were preserved: Shortly after the

Incident, HESI also secured all sample cement ingredients received from the Deepwater Horizon

under lock and key. (Halliburton Energy Services, Inc.s Resp. in Oppn to Mot. for Spoliation

Sanctions at 9, Dec. 19, 2011, Rec. Doc. 4961 (Rec. Doc. 4961) (emphasis added).) However, as

has now been revealed in the midst of trial, Halliburton did not disclose until March 13, 2013 that a

1 According to Halliburton, Halliburtons position is that [rig stock is] the most relevant for testingpurposes. (Tr. 3172:23-24) (emphasis added). But, even if Halliburton were correct that rig stock is

the most relevant, that certainly does not mean that lab stock is irrelevant. BPs position is that the lab

stock testing is highly probative evidence. Indeed, Halliburton employee Tommy Roth testified thatresults of lab stock testing would be good information to know. (Tr. 3266:4).



6/85

3

significant amount of the sample cement ingredients received from the Deepwater Horizon had

in fact notbeen produced.

Since BPs first sanctions motion, the prejudice to BP from Halliburtons conduct has been

reaffirmed and magnified by subsequent events, including:

First, on March 13, 2013nearly three years after the blowout and three weeks into the

Phase One trialHalliburton disclosed that it had discovered a sample of cement taken from the

Deepwater Horizon rig, which it referred to as Kodiak well cement. (Exhibit 2, E-mail from D.

Godwin to J. Shushan (Mar. 13, 2013).) Five days later, on March 18, 2013, in an unsigned and

unverified update, Halliburton disclosed that this Kodiak well cement (Sample #63981) was, in

fact, a sample of the cement blend used at the Macondo well that had traveled with theDeepwater

Horizon from the Kodiak well to the Macondo well on January 31, 2010.2

(Exhibit 3, E-Mail from

Jenny Martinez to J. Shushan (Mar. 18, 2013) (HESI Update Regarding Kodiak Materials).)

Sample #63981 was then sent to the Halliburton laboratory on February 23, 2010. Id. A

photograph produced with the update shows that the 5-gallon bucket of undisclosed cement was

labeled From DW Horizon. (Exhibit 4, D-3257 (TREX-023056).) Compounding the

significance of this disclosure, Halliburton has asserted since 2010 that the Cementing

Components deteriorate over time. (Rec. Doc. 494 at 5) (emphasis added). Needless to say, the

newly disclosed Sample #63981 likely has been deteriorating over time according to Halliburton.

The importance of Halliburtons disclosure is heightened by the fact that, in its Opening

Statement and throughout the trial, Halliburton has contended that Non-Rig Samples Are Not

Representative of Rig Cement Testing. (Exhibit 1, D-8008.1;see also Tr. 183:21-184:2). In other

2 As discussed below, Halliburtons March 18, 2013 disclosure incorrectly asserts that theDeepwaterHorizon arrived at the Macondo well on February 20, 2010.



7/85

4

words, Halliburton has used the availability of rig samples for testing as both a sword and a shield:

while contending that only testing on rig samples is relevant, Halliburton has prevented testing of

the undisclosed and deteriorating rig blend through an affirmative decision to exclude those

materials from the materials that were produced to the United States Government. (Tr. 4920-

4922.)

Moreover, Sample #63981 was by far the largest (over 3.75 gallon) rig sample available for

testing in 2010more than twice the size of the identical (1.5 gallon) sample Halliburton turned

over in November 2010 to the USCG/BOEM Joint Investigation Team (JIT) for testing (Sample

#67314) by Oilfield Testing & Consulting (OT&C). Because the volume of Sample #67314 was

very limited, it severely restricted post-incident testing on and investigation of the rig blend.

(See, e.g., E-mail from Sarah Himmelhoch, DOJ, to Rob Gasaway (May 31, 2011), Rec. Doc.

2830-9 (You are asking us to choose BPs proposed 60% gas content testing over the JITs choice

of tests for use on a very limited amount of sampleapprox. 1.5 gallons of Rig Sample . . . .)

(emphasis added).) If the newly disclosed sample of rig stock had been available, the testing

requested by BP and other additional testing could have been conducted for use at trial.

Second, Tommy Roth, Halliburtons Vice-President of the Cementing Product Service Line

at the time of the incident, provided new information at trial about post-incident tests that

Halliburton failed to disclose to Congress and other investigative bodies during the May-September

2010 period. (Tr. 3250-3264). Roth testified that his notes of those tests, documenting WHEN

ATTEMPT WAS MADE TO FOAM THE CEMENT, SLURRY WOULD NOT FOAM, were

created in October 2010and provided to Halliburtons attorneys by at least March 2011. (Tr.

3279:8-20; 3281:1-2). Yet Halliburton waited to produce Roths notes until October 17, 2011



8/85

5

after the July 2011 deposition of Roth and those of other Halliburton fact witnesses knowledgeable

about testing issues. (Exhibit 5, E-mail from S. Kena Lopez to Anthony Irpino (Oct. 17, 2011).)

Third, as the Court is aware, Halliburton conducted Displace 3D modeling of the cement

job in May 2010, to determine if the spacer was sufficient to sweep the channel. After Halliburton

evaluated the results of the Displace 3D Modeling, it deleted them. (Rec. Doc. 4961 at 9). When

BP asked Halliburton for the Displace 3D modeling, Halliburton simply responded that it was

gone. (Letter from Barbara Harding to Jenny Martinez (Nov. 11, 2011), Rec. Doc. 4799-12.) In

its January 20, 2012 order, the Court granted BPs request for forensic examination of the computer

hard drives used in the modeling. (Rec. Doc. 5307 at 2-3.) Since then, it has become clear that

Halliburtons deletions left no remaining evidence: forensic examination of the hard drives yielded

no trace of the Displace 3D modeling that Halliburton deleted. (Order [Regarding Jan. 20, 2012

Order on BPs Mot. for Spoliation Sanctions (Rec. Doc. 5307)], Rec. Doc. 7127 (Rec. Doc.

7127).)

The cumulative effect of Halliburtons pattern of destruction and spoliation of evidence has

been to deprive the Court and the parties of significant post-incident evidence relevant to the

inherent quality and performance of the cement Halliburton provided for the job at the Macondo

well, and the role of that Halliburton slurry design as a cause of the events of April 20, 2010.

Accordingly, for the reasons explained further below, BP seeks appropriate sanctions including an

order finding that:

Halliburtons final cement design was unstable and caused hydrocarbons to enter thewellbore on April 20, 2010;

The post-incident tests conducted by Rickey Morgan and Tim Quirk in April/May 2010the results of which were destroyed by Halliburtonestablish that the cement used on the

Macondo well on April 20, 2010 was not stable; and



9/85

6

The opinion deposition testimony of Chevron and OT&C witnesses regarding their post-incident testing that Halliburton moved to exclude should now be admitted in light of the

gap in cement testing evidence created by Halliburtons conduct.

I. BACKGROUNDA. Events Leading Up To The Courts January 2012 Ruling On BPs December

2011 Spoliation Motion.

On April 29, 2010, BP requested that Halliburton provide Halliburton Cement samples and

data . . . Cement and additive samples used in the 9-7/8 x 7 casing string. (These are required for

laboratory testing of the cement slurry.) (Exhibit 6, E-mail from James Lucari to James Ferguson,

Rec. Doc. 8878-1.) Halliburton declined. (Letter from Stephanie Bragg to James Lucari (July 15,

2010), Rec. Doc. 8757-4.) BP then sought the JITs assistance. On August 24, 2010, at a JIT

hearing, BPs counsel asked whether the rig stock being held could degrade over time and Jesse

Gagliano responded: Yes, they could potentially degrade over time, yes. (Exhibit 7, Gagliano

MBI Testimony at 300:10-16.) BP then appealed to the JIT panel: I think the witness has given

me the answer that the sooner the test is run, the better, since it has the possibility of degrading . . .

over time. (Id. at 301:14-17.)

The JIT issued a subpoena to Halliburton for the cement on August 12, 2010. The JIT

subpoena requested materials identified in Attachment C to Halliburtons Response to a U.S.

Chemical Safety & Hazard Investigation Board subpoena. In Attachment C, Halliburton stated that

HESI has secured the following physical samples from theDeepwater Horizonproject, but

Halliburton failed to identifyDeepwater Horizon Sample #63981 (the sample Halliburton recently

disclosed). On August 30, 2010, Halliburton received a separate subpoena from the United States

Office of the Inspector General, which requested all cement or cement samples or fragments from

the Block 252 Lease or the Deepwater Horizon. (Exhibit 8) (emphasis added).



10/85

7

After numerous delays (detailed in BPs March 12, 2013 timeline submission (Rec. Doc.

8878)), Halliburton on November 16, 2010 provided Sample #67314 (approximately 1.5 gallons)to

the United States. But Halliburton did not provide the United States with Sample #63981

(approximately 3.75 gallons), even though it also was from theDeepwater Horizon and taken from

the same batch of cement blend as Sample #67314.

In December 2011, BP brought to the Courts attention that Halliburton had destroyed

evidence of various post-incident cement tests.

First, in late April or early May 2010, Halliburton manager Ronnie Faul contacted RickeyMorgan in Halliburtons Duncan facility, and asked him to test the Macondo well cement

design. (Exhibit 9, Morgan Dep. 15-16.) Roths notes describing this testing contradictHalliburtons litigation position that the cement slurry design used at the Macondo well

formed a stable foam: WHEN ATTEMPT WAS MADE TO FOAM THE CEMENT,

SLURRY WOULD NOT FOAM. (TREX-007718). Morgan did not document the test

and threw out the slurry afterward. Morgan admitted that part of the reason for doing so

was because [he was] worried about it being misinterpreted in the litigation. (Exhibit 9,

Morgan Dep. 101:9-23.)

Second, after hearing of the failed test in Duncan, Faul contacted Tim Quirk atHalliburtons Broussard Lab to request further testing on the Macondo well cement design.

(See Tr. 4757:7-4758:9; Exhibit 10, Faul Dep. 263:12-265:6.) Faul instructed Quirk to

conduct the tests off the side, which Quirk found a little unusual. See Tr. 4769-70;

(Exhibit 10, Faul Dep. 387:1-388:8). Although Quirk made notes of his testing, he threw

the notes in the trash after reporting the testing results to Faul over the phone. (See Tr.

4767.) Likewise, Quirk discarded the physical cement test samples after the tests. (Id. at

4769:8-11.)

Third, in May 2010, Tommy Roth requested that Mark Savery conduct Displace 3Dmodeling of the Macondo well cement job. (Tr. 3169:20-22.) After Halliburton ran the

Displace 3D modeling, it deleted the results. When BP requested the documents,

Halliburtons attorney reported that they were gone. (Rec. Doc. 4799-12).

BPs initial sanctions motion requested an adverse inference as well as forensic testing. In

January 2012, the Court granted-in-part BPs motion, ordering the forensic testing but not the

adverse inference. (See Rec. Doc. 5307.) To the extent the Court denied BPs motion, it relied on



11/85

8

the reasons presented by Halliburton. (Id. at 1.) As discussed above, in opposing BPs motion,

Halliburton repeatedly stressed that the testing performed by both Morgan and Quirk was on lab

stock not on rig stock:

[T]he post-incident tests were performed on lab samples, not the actual ingredients

contained in the slurry that was tested before the incident or that was pumped in the

Macondo well. . . . The lab samples differ in composition from the rig stock that was

tested pre-incident and pumped into the well. Therefore, as inZubulake, the

materials BP complains of are not direct evidence of the main claims in this suit,

and sanctions are not warranted.

(Rec. Doc. 5082 at 5.) Although Halliburton had contended in its December 2011 response that

only rig stock matters, it did not disclose that it had failed to produce the largest sample of that rig

stock (Sample #63981) to the JIT for testing. Halliburton instead stated exactly the opposite: that it

had secured all sample cement ingredients received from theDeepwater Horizon under lock and

key. (Rec. Doc. 4961 at 4). Halliburton neither identified nor provided all samples for testing,

and instead left critical rig stock from theDeepwater Horizon deteriorating in Halliburtons

possession in contravention of the Courts preservation order. (Pretrial Order #1, Setting Initial

Conference, Rec. Doc. 2 at 9-11 (PTO No. 1).)

B. Events Since BPs First Motion Reaffirm The Significant Prejudice to BP.Since the Court ruled on BPs sanctions motion in January 2012, events have reaffirmed the

significant prejudice to BP and the other parties from Halliburtons destruction and spoliation of

evidence.

1. On March 13, 2013, Following Questions By Judge Barbier, HalliburtonAnnounced the Discovery Of A Sample Taken From The DeepwaterHorizon.

a. Halliburtons Discovery Of The Additional Rig SampleAfter Halliburton continued to stress during trial the importance of rig stock, Judge Barbier

asked Halliburtons counsel on March 12, 2013: What happened to the sample from the rig, the



12/85

9

rig sample itself? (Tr. 3172:16-17.) Halliburtons counsel responded: It is in the possession of

the U.S. government. (Tr. 3173:3-4.)

One day later, at 10:53 p.m. on March 13, 2013, Halliburton announced by email that it had

discovered a rig sample from theDeepwater Horizon (Sample #63981) that was not in the

possession of the U.S. government, contrary to what Halliburton had told the Court only a day

earlier. Rather, Sample #63981 was still in Halliburtons possession. Halliburton represented,

however, that this rig sample was Kodiak well cement. (Exhibit 2.)

On March 14, 2013, Judge Barbier questioned Halliburtons counsel about the significance

of that in relation to the trial, noting that we know from the prior testimony that there was, quote,

leftover cement from the Kodiak well that was ultimately used to create the slurry for the Macondo

well. (Tr. 3861:12-21.) Halliburtons counsel responded that our judgment is they have nothing

to do with this trial. (Tr. 3862:11-13.)

On March 18, 2013, Halliburton disclosed that the so-called Kodiak well cement in fact

had the same chemical composition as the cement blend used on the Macondo well. (Exhibit 3.)

Halliburton also admitted that the Kodiak well cement had in fact been brought onshore from the

Deepwater Horizon when the rig was at the Macondo well. (Id. at 2.) But Halliburtons March 18

disclosure was still inaccurate: Halliburton claimed that the Kodiak well cement was only at the

Macondo well for three days (February 20-23, 2010) when, in fact, Sample #63981 was at the

Macondo well for over three weeks (January 31, 2010-February 23, 2010). See discussion infra.

Halliburtons nearly three-year delay in disclosing Sample #63981 has been profoundly

prejudicial to BP and the other parties. As discussed above, Halliburton has contended since 2010

that the Cementing Components deteriorate over time. (Rec. Doc. 494 at 5;see also Exhibit 7,

Gagliano MBI Tr. at 300:10-16.) By Halliburtons own assessment, the harm to BP and this



13/85

10

proceeding from Halliburtons failure to disclose this sample when it was first requested is

irreparable.

Further, the amount of newly discovered material is significant. According to

Halliburton, Sample #63891 consists of approximately three-quarters of a five gallon bucket,

equating to approximately 3.75 gallons. (Exhibit 3 at 1.) By comparison, the total amount of rig

sample that Halliburton previously produced for testing was only 1.5 gallons. In other words, over

70% of the rig sample available for post-incident testing was withheld by Halliburton for over three

years. The small amount of the previously available sample was significant: because Sample

#67314 was a very limited amount of sample, the U.S. Government declined to run certain tests

requested by BP. (See, e.g., Rec. Doc. 2830-9.)

b. Halliburtons Explanation For Failing To Produce This CriticalEvidence Is Inadequate.

On March 14, 2013, BP asked the Court to require Halliburton to respond to questions

about the newly identified materials. (Exhibit 11 at 2, Letter from Andrew Langan to J. Shushan

(Mar. 14, 2013).) The Court granted BPs request, and Halliburton agreed to respond by Monday,

March 18.3

Halliburton did not respond to several of BPs questions. For example, BPs March 14

letter asked: Why were these materials not produced in response to subpoenas and discovery

requests or at least identified? (Exhibit 11 at 2.) Halliburtons March 18 disclosure states: It is

HESIs understanding that Sample I.D. #63981 was not identified as being responsive to discovery

requests or the DOJs subpoena due to it having been labeled as #2 Kodiak Appraisal material as

opposed to Macondo material. (Exhibit 3 at 3.)

3 (Exhibit 14, March 15, 2013 Working Group Conf. Tr. at 10:21-24 (THE COURT: And in addition, I

assume you are, but would you take a look at and answer the specific questions contained in that March14th letter from BP? MR. GODWIN: Yes, your Honor, we will.).)



14/85

11

Halliburtons response is a non-answer. As Tommy Roth testified, and is well known,

[t]he cement that was used in the [Macondo] production casing was actually transferred from a

prior well, the Kodiak well.4

(Tr. 3052:20-21.) In fact, the Court has aptly observed: we know

from the prior testimony that there was, quote, leftover cement from the Kodiak well that was

ultimately used to create the slurry for the Macondo well. (Tr. 3861:12-15.) Given that

Halliburton knew from the outset that cement from the Kodiak well was used for the Macondo

well, one of Halliburtons first priorities after April 20, 2010 should have been to ensure the

relevant cement from the Kodiak well was made available for testing. Here, Sample #63981 was

from the same batch and had the same composition as the cement used on the Macondo well.

Furthermore, Sample #63981 had gone with theDeepwater Horizon to the Macondo well and

remained there for three weeks before being sent to Halliburtons lab.

More importantly, Tim Quirk testified at trial that, following the incident, Halliburton

Operations Manager Tony Angelle instructed him to gather materials from theHorizon rig. (Tr.

4756.) Quirk inventoried these materialsincluding Sample #63981and stored them in his

office. (Id. at 4757.) After Quirk provided Angelle with a list of everything that [he] had

inventoried, (TREX-048002), Angelle told Quirk we just need to secure the Macondo well

samples. (Tr. 4805.) So Quirk made a new list with just the Macondo well samples and put

those samples into the locker and secured it. Everything else I put back into the storage area in our

storage warehouse. (Id.) Only the materials in the locker were provided to the United States in

response to its subpoenas; the materials in the storage warehouse (including Sample #63981) were

not provided. (Exhibit 12, D-4611 (BP Hand-Drawn Demonstrative Used During Quirk Cross-

4 The cement batch used on the Kodiak and Macondo wells was created in 2009. (Tr. 3128:15-25).



15/85

12

Examination).) This occurred at the express direction of Mr. Angelle, who had received the

original list. (See TREX-048002.)

Halliburton failed to take necessary and appropriate steps to monitor compliance with its

preservation duties and production obligations. Quirk was not shown the subpoenas issued to

Halliburton. (Tr. 4922-25.) He was not provided clear guidance on what to preserve and testified

that he misunderstood Angelles instructions. (Tr. 4801-02.) In fact, Quirk was not even told

that the Kodiak cement was used at the Macondo well. (Tr. 4787.) Quirk does not recall seeing

any Halliburton attorneys involved in or supervising the gathering or preservation of evidence. (Tr.

4919-22; 4925-26.) Instead, he followed the directions of senior management. When Angelle

asked Quirk to secure the Macondo samples, Quirk separated Sample #63981 (the newly-

disclosed sample) from the other bucket of identical Kodiak cement used at the Macondo well.

When Quirk was told to turn over the contents of the secure locker, he turned over those contents.

(Tr. 4919-22, 4925-27.) A photo that Halliburton produced on March 18, 2013 shows that the 5-

gallon bucket of missing content was clearly labeled From DW Horizon. (Exhibit 4, D-3257

(TREX-023056).) It also had the date of February 23, 2010 on it. And it was used for testing in

the Halliburton lab on March 7, 2010. (TREX-005595.) Had Halliburtons lawyers or

management undertaken a reasonable search of the lab or consulted appropriately with Quirk, this

rig sample would have been located and disclosed to the parties years ago.

Whether Halliburtons failure to provide Sample #63981 for testing was intentional or

unintentional, Halliburtons conduct in an accident of this magnitude is unconscionable. It is well

established that [i]t is notsufficient to notify all employees of a litigation hold and expect that the

party will then retain and produce all relevant information. Counsel must take affirmative steps to

monitor compliance so that all sources of discoverable information are identified and searched.



16/85

13

Zubulake v. UBS WarburgLLC, 229 F.R.D. 422, 432 (S.D.N.Y. 2004);see also Yelton v. PHI, Inc.,

279 F.R.D. 377, 387 (E.D. La. 2011) (Counsel must oversee compliance with the litigation hold,

monitoring the partys efforts to retain and produce the relevant documents.) (quoting Zubulake).

There is no evidence that Halliburtons counsel took such affirmative steps hereindeed,

nobody (counsel or otherwise) even told Quirk that the samples of cement that were from Kodiak

were used for Macondo. (Tr. 4787.)

c. Halliburton Has Failed To Identify The Individuals Who KnewAbout Sample #63981.

BPs March 14 letter also requested that a list should be provided of the individuals at

HESI who were aware of the existence of these materials. That list should indicate when each of

those individuals became aware of the materials. (Exhibit 11 at 2.) Halliburtons March 18

submission disclosed Quirk and Richard DuBois as individuals who were aware of Sample #63981,

but did not provide a comprehensive list of individuals with knowledge or state when they became

aware. The inadequacy of Halliburtons March 18 disclosure became clear on March 19 when,

during his trial testimony, Quirk identified Angelle as having knowledge of Sample #63981. (Tr.

4839-40;see also TREX-048002 (email transmitting list to Angelle).) Angelle was not disclosed

in Halliburtons March 18 submission. At present, it remains unknown who else knew about the

existence of Sample #63981.

d. Halliburtons March 18 Disclosure Contains Numerous OtherDeficiencies.

Halliburtons March 18 update was not signed or verified in any way. It contains

virtually no citations or documentary support.5

Instead, Halliburtons March 18 update contains

5 Halliburtons March 18 submission also does not directly answer a separate question posed in BPs

March 14 letter: When did HESI notify any representative of the United States of the existence of

these materials? (Exhibit 11.) Halliburtons disclosure states only that on March 13, 2013 HESIs



17/85

14

lawyerly phrases such as it is HESIs understanding that . . . . (Exhibit 3 at 3.) The March 18

update also contains statements that are contradictory or contrary to the evidence:

Halliburton asserts that theDeepwater Horizon (carrying Sample #63981) arrived atthe Macondo well on February 20, 2010. In fact theDeepwater Horizon andSample #63981 arrived at the Macondo well on January 31, 2010, meaning that

Sample #63981 was at the Macondo well for over three weeks (through February

23, 2010). (See TREX-041072 at 2.) The accurate dates make clear that the sample

left theDeepwater Horizon when theDeepwater Horizon was drilling at the

Macondo well, as confirmed by the March 7 Weigh-Up Sheet. (TREX-005595 at

1.)

The lab documents relating to the tests on newly disclosed Sample #63981 bear thename Macondo. (TREX-005595 at 1). On page 4 of its March 18 update,

Halliburton claims the March 2010 tests were marked Macondo because Jesse

Gagliano used the Macondo pilot tests lab requests as a template. (Exhibit 3 at 4.)

This assertion is unsupported and unverified.

On page one of Halliburtons update, the 5-gallon bucket containing the D-AIRblend is listed as being approximately 3/4 full, whereas TREX-048002 (used at

trial) lists it as approximately 1/2 remaining. (Exhibit 3 at 1; TREX-048002 at 2.)

Rather than answering the concerns arising out of Halliburtons disclosure of Sample #63981,

Halliburtons March 18 submission raises more questions.

2. Tommy Roths Testimony At Trial Confirms That HalliburtonImproperly Withheld His Notes Of The Morgan Cement Testing.

As discussed in BPs initial sanctions motion, in late April or early May 2010, Ronnie Faul

contacted Rickey Morgan and asked him to prepare a cement slurry with the same composition as

the slurry pumped at the Macondo well. (Tr. 3059:6-12.) Roths notes describing this testing state:

WHEN ATTEMPT WAS MADE TO FOAM THE CEMENT, SLURRY WOULD NOT FOAM.

(TREX-007718 at 1.)

counsel informed Mike Underhill (DOJ) that Sample ID #63981 is located in HESIs Broussard lab.(Exhibit 3 at 3.)



18/85

15

At trial, Roth testified that he did not know about Morgans tests when he made

presentations to Congress and other investigative bodies between May and September 2010. (Tr.

3249:5-3252:1.) Thus, Roth represented to these investigative bodies that a stable foam cement

system was designed, tested, delivered and quality assured. (TREX-000982 at 3.) At trial, Roth

testified that was surprised in October 2010 when he learned of the discarded tests:

Q. When you wrote that [SLURRY WOULD NOT FOAM] down in October2010, you must have been surprised?

A. Yes, sir.

Q. You had spent six months going to Congressional investigators, going to the

National Academy of Engineering, going to the Presidential Commission, talking tothem about this accident, and no one had ever told you this?

A. That is correct.

Q. This indicated to you that there is a problem with the slurry, didn't it?

A. This would not be in keeping with best practice.

(Tr. 3253:9-19.)

Several Halliburton employees who knew about the Morgan cement testingincluding

Ronnie Faul, the person who asked for the off the side testing to be donehelped Roth prepare

for his May-September 2010 Congressional testimony and presentations. But Roth testifiedfor

the first time at trialthat no one told him about the Morgan tests at any time between May and

September 2010. (Tr. 3162:4-13; 3249:5-3252:1.)

When Roth learned in October 2010 about this problemarising from the difference

between what he had represented to Congress and others and what Halliburtons secret internal

tests showedRoth did not keep it to himself. Roth shared the issue with Halliburtons legal

team, whom he trusted to take appropriate steps to rectify those errors:



19/85

16

Q. Now, in October, when you first received the weigh-up sheets, did you requestthe opportunity to go back and make new presentations to the NAE or

Congressional investigators or other bodies to provide that information?

A. I did not.

Q. Did you feel like you had been set up?

A. In October, once I learned that, I was working with our legal team. I had

confidence in our legal team to be able to make those declarations.

(Tr. 3263:22-3264:5.)

Remarkably, at the time of Roths deposition in July 2011, Halliburton still had not

produced, and thus BP did not have, Roths October 2010 notes regarding the Morgan test and its

failed foam stability result. (TREX-007718.) Thus, when BP filed its initial sanctions motion in

December 2011, BP did not know when Roth had provided his notes to Halliburtons attorneys. At

trial, Roth testified that he, in fact, prepared his notes in October 2010, and provided them to

Halliburtons attorneys at least four or five months before his July 2011 deposition (i.e., at least

by March 2011) and possibly in 2010. (Tr. 3280:11-3281:10.) By that point (no later than

March 2011), when Roth was working with [Halliburtons] legal team, alarm bells should have

been going off at all levels of Halliburton to produce Roths notes. Those alarm bells should have

been particularly loud given that Roth was surprised by the information he learned in October

2010 and was working directly with the legal team, who he trusted to notify the investigative

bodies. (Tr. 3253:4-11.)

Despite all this, Halliburton failed to produce the Roth notes until October 17, 2011, one

yearafter Roth prepared the notes and anywhere from six months to a year after Roth provided

them to Halliburtons attorneys. Between March 2011 (the latest possible date that Roth provided

the notes to Halliburtons attorneys) and October 17, 2011 (the date the notes were produced),

numerous depositions relating to cement testing were taken in this case. These included the March



20/85

17

21, 2011 deposition of Tim Quirk, the June 29-30, 2011 deposition of Faul, and the July 25-26,

2011 deposition of Roth, among others.

3. Since BPs Initial Sanctions Motion, The Parties Have Learned ThatThe Displace 3D Modeling Halliburton Deleted Is Unrecoverable.

As the Court is aware, the evidence regarding Halliburtons Displace 3D modeling has

changed significantly since BP filed its initial sanctions motion in December 2011. By way of

background, Roth testified at trial that he asked Halliburton employee Mark Savery to run Displace

3D cement modeling in May 2010. (Tr. 3168:22-3169:22.) The purpose of the modeling was to

be able to determine did the fluids space out and was there sufficient spacer to prevent the

displace the base oil and the cement from coming into contact. (Tr. 3168:22-3169:19;see Rec.

Doc. 7127 at 2.) After Roth and Savery viewed the results, someone at Halliburton deleted them.

(Tr. 3171:13-19.) Halliburton has never disclosed the identity of the person(s) who deleted the

Displace 3D modeling results, or who was aware of the deletion.

At trial, Roth testified about his conclusions based on the Displace 3D results:

So my statement here, spacer volume was sufficient to sweep the entire annulus ofvolume, as such -- and I probably could have used a more demonstrative to say

spacer would be more than sufficient to sweep the channel that was in place in the

well. This would be what we saw in the Displace 3D. I make the statement,

subsequent testing with 3D confirmed statement that spacer was sufficient.

(Tr. 3176:5-25.)

Because Halliburton deleted the results of the modeling, no one will ever know whether the

results support or disprove Halliburtons litigation positions. Nor can BP confirm or challenge

Roths testimony by reviewing the modeling. When BP filed its initial sanctions motion, the

parties hoped that forensic testing would recover the remnants of the Displace 3D modeling on



21/85

18

Saverys computer. But the forensic testing ordered by the Court failed to locate any traces of the

3D modeling; all of the evidence had been deleted.6

(Rec. Doc. 7127 at 2.)

II. ARGUMENTA. Sanctions Are Warranted Based On Halliburtons Destruction And Spoliation

of Evidence.

A partys duty to preserve evidence arises when the party has notice that the evidence is

relevant to litigation or when a party should have known that the evidence may be relevant to

future litigation. In re Enron Corp. Sec. Derivatives & ERISA Litig., 762 F. Supp. 2d 942, 963

(S.D. Tex. 2010) (internal quotations and citations omitted).

Halliburton has long known that evidence relevant to determining the cause of the

incidentand in particular to assessing whether failures of Halliburtons cement contributed to the

Deepwater Horizon explosionwould be relevant to issues in pending litigation. Halliburton also

knew quite well that such evidence included samples from the Kodiak well. (See Tr. 3191; Exhibit

13, Quirk Dep. 549:23-550:4.) And no later than April 30, 2010, Halliburton claimed the cement

slurry design was consistent with that utilized in other similar applications. (TREX-002013.)

Against this backdrop, the Courts remedial authority derives from two sources. As an

initial matter, Halliburtons conduct violates Pretrial Order No. 1, which directs all parties to take

reasonable steps to preserve all documents, data and tangible things containing information

potentially relevant to the subject matter of this litigation, and warns that[f]ailure to comply

6 In its initial sanctions order, the Court also instructed the parties to meet and confer to determinewhether Halliburtons modeling could be replicated. (Rec. Doc. 5307 at 2-3). That effort was also

unsuccessful. After it became clear that Halliburton was attempting to turn its sanctionable

conductdestruction of evidenceinto a tactical advantage by generating self-serving evidence after

the close of discovery, BP sought further relief from the Court: (a) an order deeming the evidence of

the attempted recreation of the missing modeling inadmissible at trial, and (b) an order requiring

Halliburton to bear 100% of the costs of the forensic examination and attempted replication. (Rec. Doc.

7127 at 1-2). On August 16, 2012, the Court granted BPs requested relief. (Rec. Doc. 7127 at 2).



22/85

19

[could] lead to dismissal of claims, striking of defenses, imposition of adverse inferences or other

dire consequences. (PTO No. 1 at 14 (emphasis added).) Where, as here, a party has destroyed

evidence in violation of a specific court order, the court may impose sanctions under Rule 37(b).7

See FED. R. CIV. P. 37(b)(2)(A). Such civil sanctions may include (among others) barring the

disobedient party from introducing evidence or directing that certain facts shall be taken as

established for purposes of the action. FED. R. CIV. P. 37(b)(2)(A)(i). Such sanctions may also

include striking the disobedient partys pleadings, dismissing the action, and rendering a default

judgment against the disobedient party. FED. R. CIV. P. 37(b)(2)(A)(i)-(vi). Rule 37(b)(2)

contains two standardsone general and one specificthat limit a district courts discretion. First,

any sanction must be just; second, the sanction must be specifically related to the particular

claim which was at issue in the order to provide discovery. See Ins. Corp. of Ir., Ltd. v.

Compagnie des Bauxites de Guinee, 456 U.S. 694, 707 (1982).

In addition, discovery sanctions may be based on the Courts inherent power to control the

judicial process and prevent its abuse. See generally Chambers v. NASCO, Inc., 501 U.S. 32

(1991) (inherent power to sanction not displaced by federal statute or rules of procedure); Yelton v.

PHI, Inc., 279 F.R.D. 377 (E.D. La. 2011). In order for this Court to impose sanctions under its

inherent power, however, it must find bad faithwhich is not required under Rule 37. Yelton v.

PHI, Inc., 278 F.R.D. 377, 387 (E.D. La. 2011).

In Yelton, for example, this Court concluded that the evidence submitted leans toward a

finding of a significant degree of culpability. Id. at 391. Like Halliburton, the defendant in Yelton

was far from forthcoming with respect to post-litigation tests:

7 The relief that BP requests is also authorized under Rule 37(c)(1)(C), which expressly permits the Courtto impose any sanctions available under Rule 37(b)(2)(A)(i)-(vi).



23/85

20

The simulation results also raise[] the specter that Sikorsky did not want the

findings, or the data used, to be readily available. Dr. Kims deposition testimony

underscores the point, as he testified that, on more than one instance, Mr. Potts

requested that he delete reference to the S92 data used in his bird strike simulation

analysis, and that he complied.

Id. Yelton was affirmed in pertinent part by this Court. See Yelton v. PHI, Inc. 284 F.R.D. 374

(E.D. La. 2012) (Barbier, J.).

The sanctions requested below are authorized under both Rule 37 and the Courts inherent

power. Halliburton has repeatedly violated PTO 1, and, as required by Rule 37, the sanctions are

just and related to the particular claim that was the subject of the discovery violations. The

sanctions also are authorized under the Courts inherent power. See, e.g., Yelton v. PHI, Inc., 279

F.R.D. 377, 392-94 (E.D. La. 2011).

B. The Court Should Order Appropriate Remedies For Halliburtons Conduct.According to Halliburton, rig samplesnot lab stockare what matter. (Rec. Doc. 4961 at

12, 18). But, based on Halliburtons failure to disclose Sample #63981 for nearly three years and

Halliburtons own position concerning the deterioration of cement over time, most of the

available rig sample was not produced for testing before trial. Through its conduct, Halliburton is

solely responsible for the deterioration of what it claims is the most important piece of evidence

concerning the role of the Halliburton cement slurry design in the events of April 20, 2010. The

prejudice to BP and the other parties is beyond dispute.

Halliburton engaged in a pattern of destruction, spoliation, and withholding of critical

evidence, including the following illustrative examples:

(1)Halliburton withheld the rig sample (Sample #63981) from April 2010 to March2013, during which time it deteriorated according to Halliburton;

(2)Halliburton destroyed the Morgan testing sample that showed a failure to foam inApril/May 2010;



24/85

21

(3)Halliburton withheld the Roth notes regarding the failure of the Morgan testing fromOctober 2010 through October 2011, after Roths deposition;

(4)Halliburton destroyed the testing sample used in connection with the Quirk tests inApril/May 2010;

(5)Halliburton destroyed the notes taken by Quirk documenting the results of histesting in April/May 2010; and

(6)Halliburton deleted the Displace 3D modeling from Saverys computer, which wasirretrievable notwithstanding the forensic testing ordered by the Court.

Viewed cumulatively, Halliburtons bad-faith conduct significantly limited the parties ability to

present evidence of post-incident cement analysis. In light of Halliburtons destruction and

spoliation of critical evidence, BP requests the sanctions set forth below.

First, as permitted by Rule 37(b)(2)(A)(i) and the Courts inherent authority, the Court

should make an adverse factual finding that Halliburtons final cement design was unstable and

caused hydrocarbons to enter the wellbore. No one will ever know whether the undisclosed and

missing evidence would have further supported a conclusion that Halliburtons cement caused the

April 20, 2010 blowout. But, given Halliburtons conduct here, it should not be permitted to argue

that the missing evidence would have been helpful to its case. To the contrary, the law is clear in

these circumstances that the presumptions and inferences go against the spoliator. As the Court

explained in Yelton:

Unfortunately, it is impossible to know the extent of the prejudice suffered by PHI

as a result of the loss of Dr. Kims data files, because they have been permanently

lost due to Sikorskys conduct. . . .Dr. Kims data files may have been helpful to PHI, or of no value to any party. As a

result of Sikorskys misconduct and intentional destruction of the data files,however, the Court will never know. However, given the facts and circumstancespresented here, the Court finds that PHI has carried its limited burden of

demonstrating that the lost documents would have been relevant . . . .

[B]ased on the record in this case, the Court makes the preliminary findingsnecessary for the spoliation evidence to be submitted, and an adverse inference

instruction given to the jury.



25/85

22

279 F.R.D. at 392-94.

Accordingly, the Court should make an adverse factual finding that Halliburtons final

cement design was unstable and caused hydrocarbons to enter the wellbore. This sanction is

merited both by the individual instances of Halliburtons misconduct cited above, and by the

cumulative effect of that misconduct. SeeResidential Funding Corp. v. DeGeorge Fin. Corp., 306

F.3d 99, 112-13 (2d Cir. 2002);Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 436 (S.D.N.Y.

2004).

Second, in light of the recent information that the majority of the available rig sample has

been spoliated (according to Halliburtons documents and witnesses), the other cement testing data

in the case becomes far more relevant and critical. This includes the lab testing by Morgan and

Quirk. Accordingly, the Court should find that the post-incident tests conducted by Rickey

Morgan and Tim Quirk in April/May 2010the results of which were destroyed by Halliburton

establish that the cement used on the Macondo well on April 20, 2010 was not stable.

Third, and also to fill the cement testing evidentiary gap created by Halliburtons conduct,

the Court should permit the deposition opinion testimony of the Chevron and OT&C witnesses

(Gardner and Garrison) regarding their post-incident testing.8

Gardner (Chevron) performed post-

incident cement testing using lab stock from Halliburton for the Presidential Commission, while

Garrison (OT&C) performed post-incident testing using lab stock from Halliburton and rig stock

for the JIT. The testing-related deposition opinion testimony of Gardner and Garrison is relevant

and should be allowed at trial.

8 BP requests this relief to the extent that Halliburtons use of Chevron and OT&C testimony has not

already opened the door to such evidence over the Courts ruling in Rec. Doc. 5810. (See Tr. 2542-43(the Court overruled Halliburtons objection to use of OT&C testimony)).



26/85

23

III. CONCLUSIONThe preservation of evidence is crucial to a fair and just proceeding, and accordingly a court

may impose severe sanctions against a party that engages in spoliation. Halliburton has destroyed

and failed to produce the very cement samples and documentary evidence at the heart of the

parties claims in this case. [T]he Court will never know what this evidence would have showed

had it been preserved. Yelton, 279 F.R.D. at 392-94. The prejudice in terms of BPs ability to

defend itself is severe, and appropriate sanctions are warranted.

For the foregoing reasons, BP respectfully requests that the Court enter an order:

(1) finding that Halliburtons final cement design was unstable and caused hydrocarbons to enter

the wellbore; (2) finding that the off the side tests conducted by Rickey Morgan and Tim Quirk

in April/May 2010 establish that the cement used on the Macondo well on April 20, 2010 was not

stable; and (3) allowing opinion testimony by deposition designations of Chevron and Oilfield

Testing & Consulting witnesses (Gardner and Garrison) regarding their post-incident testing.



27/85

24

Dated: March 21, 2013 Respectfully submitted,

/s/ Don K. HaycraftDon K. Haycraft (Bar #14361)

R. Keith Jarrett (Bar #16984)LISKOW & LEWIS701 Poydras Street, Suite 5000New Orleans, Louisiana 70139-5099Telephone: (504) 581-7979Facsimile: (504) 556-4108

J. Andrew Langan, P.C.Matthew T. Regan, P.C.Hariklia Karis, P.C.KIRKLAND & ELLIS LLP300 North LaSalle StreetChicago, IL 60654312-862-2000 (Tel)312-862-2200 (Fax)

Robert C. Mike BrockCOVINGTON & BURLING LLP1201 Pennsylvania Avenue, NWWashington, DC 20004-2401202-662-5985

Attorneys for Defendants BP Exploration &Production Inc. and BP America ProductionCompany



28/85

CERTIFICATE OF SERVICE

I hereby certify that the above and foregoing pleading has been served on All Counsel by

electronically uploading the same to Lexis Nexis File & Serve in accordance with Pretrial Order

No. 12, and that the foregoing was electronically filed with the Clerk of Court of the United

States District Court for the Eastern District of Louisiana by using the CM/ECF System, which will

send a notice of electronic filing in accordance with the procedures established in MDL 2179,

on this 21st day of March, 2013.

/s/ Don K. Haycraft



29/85

EXHIBIT 1



30/85

Daryl KellingrayBP Cementing Sector

Specialist / SETA

Non-Rig Samples Are Not Representativeof Rig Cement Testing

Greg GarrisonOTC; Performed Cement

Testing for JIT

Craig GardnerChevron; Performed Cement

Testing for National

Commission

Ronald CrookBP Cement Expert

Glen BengeU.S. Dept. of Justice

Cement Expert

Source: See pages 2-6.



31/85

EXHIBIT 2



32/85

From: Martinez, Jenny [mailto:[email protected]]

Sent: Wednesday, March 13, 2013 10:53 PM

To: 'Sally Shushan'; [email protected]; 'Horizon Defense Liaison Counsel

([email protected])'; 'James Roy'; 'Steve Herman ([email protected])';*[email protected]; '[email protected]'; *[email protected]; 'Trey Phillips'

Cc: Godwin, Donald; Bowman Jr., Bruce

Subject: Kodiak Well Cement

Sent of Behalf of Donald E. Godwin:

Your Honor:

HESI would like to bring a recent development to the Court's immediate attention. During itscross-examination of Tim Probert on March 11, 2013, the PSC referenced TREX 48002 andTREX 3110. TREX 48002, which is entitled "Materials currently in lab for BP, TransoceanHorizon Rig," lists certain cement materials associated with the Kodiak well and the Macondowell being held in HESI's lab. TREX 3110 is a similar document entitled "Materials

currently Locked in Cabinet for BP, Transocean Horizon Rig," however, that document identifiesonly materials associated with the Macondo well (not the Kodiak well). Neither document isdated, and both are attached hereto for your reference.

After the PSC questioned Mr. Probert about TREX 48002 and TREX 3110, counsel for HESI,who was unaware that any materials associated with the Kodiak well were in HESI's possession,consulted with HESI's lab personnel and discovered that the materials associated with the Kodiakwell that are referenced in TREX 48002 are still being held at HESI's lab. The lab wasimmediately instructed to photograph the materials and to continue to hold them. HESI iscurrently investigating whether the materials are in fact associated with the Kodiak well, and ifso, whether such materials are responsive to any previously issued subpoenas. We have been

informed that no post incident testing utilized any materials identified in TREX 48002. Counselfor HESI has informed the United States of the foregoing, and will continue to cooperate withthe United States regarding any previously issued subpoenas.

Respectfully,

Donald E. Godwin

Jenny Martinez, ShareholderIn Dallas [email protected]

Direct: 214.939.4620Fax: 214.527.3119

www.GodwinLewis.comToll Free: 800-662-8393



33/85

Dallas1201 Elm StreetSuite 1700Dallas, Texas 75270

214.939.4400

Houston1331 LamarSuite 1665Houston, Texas 77010

713.595.8300

Plano - By Appointment Only5700 Granite ParkwaySuite 450Plano, Texas 75024

214.939.4500

This electronic transmission (and/or the documents accompanying it) may contain confidential information belonging to thesender that is protected by the Electronic Communications Privacy Act, 18 U.S.C. Sections 2510 and 2521 and may be legallprivileged. This message (and any associated files) is intended only for the use of the individual or entity to which it isaddressed and may contain information that is confidential, subject to copyright or constitutes a trade secret. If you are not thintended recipient you are hereby notified that any dissemination, copying or distribution of this message, or files associatedwith this message, is strictly prohibited. If you have received this communication in error, please notifyGodwin Lewis PCimmediately by telephone (800.662.8393) and destroy the original message. Messages sent to and from us may be monitored



34/85



35/85



36/85



37/85TREX-03110



38/85



39/85

EXHIBIT 3



40/85

12117230 v224010/0002 MEMO

UPDATECONCERNINGDRYBLENDINHESISBROUSSARD/LAFAYETTELAB

DateofUpdate: March 18, 2013

Natureof

Update: On March 14, 2013, HESIs Lab Manager, Richard Dubois,

reviewed physical materials and storage conditions at HESI's Broussard/Lafayette

lab, at which time photographs were taken; he reviewed select Viking projects to

track project numbers and use of blend samples and retarder lots; and reviewed the

Viking database for the reasons set forth herein.

The following is a description of the contents currently located in a locked and

secure cabinet at HESI's Broussard/Lafayette Lab:

15 gal. bucket containing dry blend cement. The bucket is approximately full and labeled with marker as being from DW Horizon and the #2 Kodiak

Appraisal well. Also written on the bucket in marker is "Cement Sample 122709." A paper label affixed to the bucket identifies it as SampleI.D.#

63981, with a "Date" of "23 02 2010." The label also identifies the following

blend information:

Material/LotNo Conc.

Lafarge Class H

LOCATION

DAir 3000 0.25% BWOC

BLENDED

EZ FLO 0.07 % BWOC

KCL (Potassium Chloride) 1.88 lb/sk

SaltBLENDED

SA541 0.2% BWOC

BLENDED

SSA 1 (Silica Flour) PB 20.0% BWOC

BLENDED

SSA 2 (100 Mesh) PB 15.0% BWOC

BLENDED

On the outside of the bucket, there is a notation for Project # 66689.

31 gal. buckets containing SCR100L. The respective buckets are labeled asfollows: Sample I.D. #61160 from Lot # H8436264; Sample I.D. #61161 from

Lot #H8432117; and Sample I.D. #61162 from Lot #H8434781.

32 gal. buckets containing mud labeled as being from Kaskida. All threebuckets bear Sample I.D. # 65501.



41/85

22117230 v224010/0002 MEMO

TimelineforSampleID#63981:

DATE DESCRIPTION/EVENT

December 27, 2009 Dry blend, labeled with SampleID

#

63981, is sampled on the rig and placed

in 5gal bucket with identifying

markings (hereinafter, "Sample ID #

63981")

December 29, 2009 Dry blend, labeled with Sample ID #

59335, is logged into lab and used for

"pilot testing" on production casing

cement job at Macondo

February 20, 2010 DeepwaterHorizon arrives at Macondowell

February 23, 2010 SampleID

#

63981, which is sent in

from rig, is logged into lab.

March 5, 2010 (on or about) Weigh Up sheet for Request ID 68156,

part 1, is printed requesting testing on

"Foamer 760" surfactant using blend

with Sample ID # 59335 (same sample

used for pilot testing).

Notation on Weigh Up sheet crosses out

Sample ID # 59335, and the following is

written by Richard Dubois: "Sample

marked out of stock." Handwritten

notation identifies blend sample to be

used for "Foamer 760" tests as Sample

ID#63981.

March 7, 2010 (on or about) Weigh Up sheets for Request ID 68156,

parts 1 and 2, are printed for Foamer

760 tests. Tests identified on sheets

indicated thatSampleID#63981 is the

blend sample used for these tests.

April 5, 2010 New blend sample from rig (Sample ID #

67314) is logged in to lab and used for

operational testing on production casingcement job at Macondo

April 20, 2010 DeepwaterHorizon IncidentImmediately after April 20, 2010 All materials in lab related to Deepwater

Horizon were collected in Tim Quirk's

office and organized by well (Macondo,

Kodia, Kaskida, etc.).

Immediately after April 20, 2010 to SampleID#63981, bearing label "#2



42/85

32117230 v224010/0002 MEMO

March 12, 2013 Kodiak Appraisal," is stored in lab and

placed on top shelf in adjacent

warehouse.

March 11, 2013 SampleID#63981 is identified in a

document during Tim Probert's

testimony.March 12, 2013 Richard Dubois is instructed to search to

ascertain ifSampleID#63981 is

currently in HESI's lab. Mr. Dubois

confirms that he found it stored in

warehouse. Mr. Dubois is instructed to

place SampleID#63981 and any other

material samples from DeepwaterHorizon, regardless of well label, into

locked and secure storage cabinet. He

promptly does so.

March 13, 2013 HESI's counsel informed Mike Underhill(DOJ) that Sample ID #63981 is located

in HESI's Broussard lab.

SummaryofotherinformationregardingSampleID#63981,labeledas"#2

KodiakAppraisal":

According to Richard Dubois, up until March 12, 2013, when it was locked upat the Broussard lab, Sample I.D. # 63981 was stored on the top shelf of the

climatecontrolled warehouse connected and immediately adjacent to the

lab. According to Richard Dubois, it was placed there by himself and TimQuirk. Mr. Dubois is very confident that it was never used for any testing

after the April 20, 2010, incident. It is HESI's understanding that Tim Quirk

also would testify, if asked, that he is unaware of Sample I.D. #63981 having

ever been used for any testing after the April 20, 2010, incident.

It is HESI's understanding that Sample I.D. # 63981 was not identified asbeing responsive to discovery requests or the DOJ's subpoena due to it

having been labeled as "#2 Kodiak Appraisal" material as opposed to

"Macondo" material.

After a document reference to Sample ID # 63981 came up in Tim Probert'stestimony on March 11, 2013, Richard Dubois was contacted and instructed

to search for the blend sample. When Mr. Dubois confirmed that he had

located the blend sample, he was instructed to immediately lock it up, and

any other material samples identified as having come from the DeepwaterHorizon (regardless of well), in a locked and secure cabinet in the lab. Mr.

Dubois locked up the material identified above in a secure cabinet on March

12, 2013.



43/85

42117230 v224010/0002 MEMO

Viking indicates that Sample ID # 63981 was only used for testing RequestI.D. 68156, parts 1 and 2, which are the March tests that, per his deposition,

Jesse Gagliano requested to be conducted at the behest of Daryl Kellingray of

BP. Per his deposition, Jesse requested the tests using the Macondo pilot

tests as a template but switched out the ZoneSealant 2000 for a different

surfactant called Foamer 760. Per Jesses deposition, Foamer 760 wasnever contemplated for use at Macondo and, despite the lab documents

bearing the name Macondo (because he used the Macondo pilot tests lab

requests as a template) this test was for BP informational purposes only and

had nothing to do with testing Foamer 760 for actual use at Macondo. (See

Dep. of Jesse Gagliano (Feb. 7, 2010), 134:19138:24))

The notation of Project No. 66689 on the bucket containing Sample ID #63981 appears to be an error. Viking identifies Project 66689 as being

testing on a potential 18 shoe squeeze job. However, the blend sample used

in that test is identified in Viking as being Sample I.D. # 59335 (the blend

sample used for pilot testing), not Sample I.D. # 63981. A review of theViking database also confirmed that Sample I.D. # 63981 was not used in the

lab for any testing other than on the two slurries prepared for "Foamer 760"

testing.

ReviewofSCR-100LLotNumbers.

The Lot #s for SCR100L are not specific to a rig, well or even customer. Lot

numbers are used to identify large bulk orders of SCR100L, and smaller

volumes of the larger bulk order can be delivered to different rigs and different

labs. A Lot of SCR100L could be used for approximately one year in the

Broussard lab, depending on the volume of the Lot. For example, the Februarypilot tests used SCR100L from Lot #H8432117 (2117). The April operational

tests used SCR100L from Lot #H8436264 (6264). It would be common and

expected to find various other tests, even for other customers, identifying the

use of SCR100L from Lot # 6264.



44/85

EXHIBIT 4



45/85

Case 2:10-md-02179-CJB-SS Document 8977-5 Filed 03/21/13 Page


46/85

EXHIBIT 5



47/85

1

Maher, Erin

From: Lopez, S. Kena [[email protected]]Sent: Monday, October 17, 2011 11:41 AMTo: [email protected]; Pixton, Allan; [email protected]; [email protected];

Bowman, Bruce; [email protected]; [email protected];[email protected]; [email protected]; [email protected];Maher, Erin; [email protected]; Hartley, Jr., Floyd; Hill, Gavin;

[email protected]; [email protected]; [email protected];[email protected]; [email protected]; [email protected]; York, R.

Alan; [email protected]; [email protected]; [email protected]; Nelson,Thomas; [email protected]

Subject: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico on April 20, 2010, MDL2179

Counsel,

Halliburton Energy Services, Inc. ("HESI") has uploaded to its FTP site Volume 63, which includesdocuments from the custodial files of James Bement, Thomas Roth and Sarah Sanders . The Batesrange for this production is HAL_1236476HAL_1244101.

We have previously provided login credentials and instructions to access HESI's FTP site. If you haveproblems accessing HESI's FTP production, please contact Michelle Macleod [email protected] or Alison Battiste [email protected].

HESI produces these documents subject to the terms of applicable pre-trial orders, including Pre-TrialOrders Nos. 13, 14, and 16. This document production is made subject to all general and specificobjections as contained in Defendant Halliburton Energy Services, Inc.'s responses and objections toall discovery requests to date.

Regards,

Kena Lopez

S. Kena Lopez1201 Elm Street, Suite 1700Dallas, Texas 75270-2041214.939.4435 Direct (800.662.8393 Toll Free)214.527.3143 [email protected]

GodwinRonquillo.com

This electronic transmission (and/or the documents accompanying it) may contain confidential information

belonging to the sender that is protected by the Electronic Communications Privacy Act, 18 U.S.C. Sections2510 and 2521 and may be legally privileged. This message (and any associated files) is intended only for the

use of the individual or entity to which it is addressed and may contain information that is confidential, subject

to copyright or constitutes a trade secret. If you are not the intended recipient you are hereby notified that anydissemination, copying or distribution of this message, or files associated with this message, is strictly

prohibited. If you have received this communication in error, please notify Godwin Ronquillo PC immediately

by telephone (800.662.8393) and destroy the original message. Messages sent to and from us may be monitored



48/85

2

IRS Circular 230 Required Notice--IRS regulations require that we inform you as follows: Any U.S. federal taxadvice contained in this communication (including any attachments) is not intended to be used and cannot be

used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or

recommending to another party any transaction or tax-related matter[s].



49/85

EXHIBIT 6



50/85



51/85



52/85



53/85



54/85

EXHIBIT 7



55/85

USCG HEARING DAY 2 8/24/2010

713-653-7100

U.S. LEGAL SUPPORT - HOUSTON

1

1 USCG/ BOEM MARI NE BOARD OF I NVESTI GATI ON I NTO THE MARI NE

2 CASUALTY, EXPLOSI ON, FI RE, POLL UTI ON, AND SI NKI NG OF

3 MOBI LE OFFSHORE DRI LLI NG UNI T DEEPWATER HORI ZON, WI TH

4 LOSS OF LI FE I N THE GULF OF MEXI CO

5 APRI L 21- 22, 2010

6

7

8 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *TUESDAY, AUGUST 24, 2010

9

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *10

11

12The t r ansc r i pt of t he J oi nt Uni t ed St at es Coas t

13 Guar d, The Bur eau of Ocean Ener gy Management , Regul at i onand Enf or cement I nves t i gat i on of t he above- ent i t l ed

14 cause, bef or e Toyl or i a L . Hunt er , Cer t i f i ed Shor t handRepor t er and Regi s t er ed Pr of ess i onal Repor t er , Not ar y

15 Publ i c i n and f or t he St at e of Texas , r epor t ed at t he

Hi l t on Hobby Ai r por t Hot el , 8181 Ai r por t Boul evar d,16 Houst on, Texas 77061.

17

18

19

20

21

22

23

24

25

Case 2:10-md-02179-CJB-SS Document 8878-3 Filed 03/12/13 Page 1 of 4Case 2:10-md-02179-CJB-SS Document 8977-8 Filed 03/21/13 Page 2 of 4


56/85


713-653-7100


300

1 s t i l l .

2 Q. F r om t he cement s l ur r y ac t ual l y used i n

3 Macondo 252 wel l ?

4 A. To my knowl edge, t her e i s some l ef t , yes.

5 Q. And i t ' s cur r ent l y i n your possess i on?

6 A. I t ' s at t he Hal i bur t on l ab.

7 Q. Okay . And you mai nt ai ned i t i n i t s or i gi nal

8 s t a t e ?

9 A. Yes , we i so l at ed al l t he sampl es .

10 Q. Do you know, by t he way, whet her or not t he

11 s l ur r y desi gn sampl es t hat you have, whet her or not

12 t hey' l l degr ade over t i me?

13 A. The ones i n t he l ab?

14 Q. Yes.

15 A. Yes , t hey coul d pot ent i al l y degr ade over t i me,

16 yes.

17 Q. So i f t he boar d, f or exampl e, or t he

18 gover nment want ed t o t est t he s l ur r y desi gn t o det er mi ne

19 whet her i t was as mar ket ed and adver t i sed t o BP, t hey' d

20 need t o t es t t hat sooner r at her t han l at er so t hat i t

21 does n' t degr ade on i t , r i ght ?

22 MR. GODWI N: Wel l , t hat woul d have t o be

23 done pur suant t o t he MDO cour t i n New Or l eans. And

24 we' ve been wor k i ng wi t h sever al par t i es her e r egar di ng

25 t hat , r at her t han havi ng s ever al di f f er ent t es t s t o



57/85


713-653-7100


301

1 f und.

2 J UDGE ANDERSEN: Who - - whoever want ed

3 t o - - I ' m s ur e t he Cour t t her e i s i nt er es t ed on t he of f

4 chance t hat t hat woul d become a subj ect of l i t i gat i on.

5 You know, obv i ous l y what counse l i s sayi ng i s t hat

6 par t i es have a dut y t o pr eser ve. And i f you want t o

7 pr esent t o some ot her f or um, or i f t he gent l emen her e on

8 t hi s boar d dec i de t hey want t o get t es t s , we' l l l et you

9 know.

10 MR. GODWI N: Ther e' s an or der i n pl ace,

11 Your Honor , r egar di ng pr eser vat i on of ev i dence, and

12 Hal i bur t on has and i nt ends t o f ul l y compl y .

13 BY MR. GODFREY:

14 Q. My quest i on was desi gned t o det er mi ne - - and I

15 t hi nk t he wi t ness has gi ven me t he answer t hat t he

16 s ooner t he t es t i s r un, t he bet t er , s i nc e i t has t he

17 poss i bi l i t y of degr adi ng t he sampl e over t i me.

18 MR. GODWI N: That i s - - I ' m goi ng t o

19 obj ect t her e, Your Honor , whet her or not t hi s wi t ness

20 woul d know t hat . He may not have t he qual i f i cat i ons.

21 Ther e' s been no evi dence t hat he' s a chemi st or woul d be

22 someone who woul d do t he t est i ng. He may not - - he may

23 know. He may not know, but t he way i f quest i on i s

24 phr as ed, i t ' s ques t i onabl e.

25 J UDGE ANDERSEN: Okay. I f boar d member s



58/85

EXHIBIT 8



59/85

Case 2:10-md-02179-CJ B-SS Document 494-3 Filed 10/07/10 Page 9 of 9Case 2:10-md-02179-CJB-SS Document 8977-9 Filed 03/21/13 Page 2 of 2


60/85

EXHIBIT 9



61/85

PURSUANT TO CONFIDENTIAL ITY ORDER

1

1 UNI TED STATES DI STRI CT COURT

EASTERN DI STRI CT OF LOUI SI ANA

2

3

I N RE: OI L SPI LL ) MDL NO. 2179BY THE OI L RI G )

4 "DEEPWATER HORI ZON" I N ) SECTI ON " J "

THE GULF OF MEXI CO, ON )

5 APRI L 20, 2010 ) J UDGE BARBI ER

) MAG. J UDGE SHUSHAN

6

78

9

10

11

12

13

14

15

16

17

18

19

20 Deposi t i on of RI CKEY LYNN

21 MORGAN, t aken at Pan- Amer i can Bui l di ng,

22 601 Poydr as St r eet , 11t h Fl oor , New Or l eans,

23 Loui si ana, 70130, on t he 17t h day of Oct ober ,

24 2011.

25



62/85


15

1 awar e t hat Hal l i bur t on was on t hat pr oj ect ?

2 A. I t hi nk t here was an e- mai l came

3 out sever al days l at er t hat sai d Hal l i bur t on

4 was on t he r i g and no one was hur t .

508: 41 Q. No one f r om Hal l i bur t on?

6 A. Yeah.

7 Q. So when di d you become i nvol ved

8 wi t h t he pr oj ect i n any capaci t y?

9 A. When Ronni e Faul cal l ed me.

1008: 41 Q. Tel l us who Ronni e Faul i s.

11 A. He - - as f ar as I know, he' s

12 t he - - ki nd of t he super vi sor down on t he

13 Gul f Coast over t he t echnol ogy engi neer s?

14 Q. I s he an engi neer ?

1508: 42 A. I have no i dea what hi s

16 educat i on i s.

17 Q. I n t he - - t hi s i s now 2010 when

18 he' s cont act i ng you, r i ght ?

19 A. Yes, s i r .

2008: 42 Q. How much af t er t he Apr i l 20t h

21 expl osi on di d he cal l you?

22 A. He cal l ed me t wi ce, I t hi nk.

23 Q. And r oughl y how many weeks af t er

24 or days af t er ?

2508: 42 A. Roughl y t wo weeks, t wo t o f our



63/85


16

1 weeks.

2 Q. So t owar ds t he end of Apr i l , or

3 begi nni ng of May?

4 A. Yes, s i r .

508: 42 Q. And t hat woul d be 2010?

6 A. Yes, s i r .

7 Q. Wher e were you wor ki ng at t hat

8 t i me?

9 A. I was pr i nci pal t echnol ogi st i n

1008: 42 t he cement i ng, mat er i al s, and mai nt enance

11 group.

12 Q. And t he l ocat i on?

13 A. Duncan.

14 Q. Okl ahoma?

1508: 42 A. Yes, s i r .

16 Q. What di d Ronni e Faul want you t o

17 do?

18 A. He asked me t o t ake a l ook at

19 t he Macondo sl ur r y.

2008: 43 Q. What aspect of i t ?

21 A. He di dn' t say. He sai d, j ust

22 t ake a l ook at i t .

23 Q. Tel l us what sl ur r y means.

24 A. Sl ur r y i s t he wet t ed cement

2508: 43 mi xed t oget her . Cement ed mi xed wi t h t he



64/85


17

1 wat er .

2 Q. Now, I ' m goi ng t o ask you t o go

3 back i n t i me r oughl y to t he t i me t hat

4 Mr . Faul - - di d he cal l you, or di d he send

508: 43 you a t ext message?

6 A. Cal l ed. Cal l ed.

7 Q. Or an e- mai l ?

8 A. Cal l ed.

9 Q. Okay. I n t he ol d days we coul d

1008: 43 j ust say t hat he cal l ed you. Now we have

11 f i ve di f f er ent ways he coul d cont act you.

12 A. Exact l y.

13 Q. And what - - t o t he best of your

14 knowl edge, t el l me ever yt hi ng you can

1508: 43

BP M4 Spoliation Sanctions Against HESI [Rec Doc 8977} With Attachments Amd Memo

Documents

Transcript of BP M4 Spoliation Sanctions Against HESI [Rec Doc 8977} With Attachments Amd Memo