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WASHINGTON, D.C.To put out the oil field well-head fires in southern Iraq and modernize antiquated oil industry machinery, the government may well end up calling on Vice President Dick Cheney's old employer, the Halliburton company which owns Kellogg, Brown & Root, a legendary Texas firm skilled in providing services to the petroleum industry. The Defense Department recently announced it has been working with Brown & Root to plan for an oil fire disaster in the Gulf during the war.
Asked for comment, a Halliburton spokesperson said both the parent and its Brown & Root subsidary are required to submit all questions to the Defense Department. Officials there did not respond to telephone calls.
David Usher, president of the Spill Control Association of America, told the Voice today that he is hoping to work, through a contracting firm, with Brown & Root on the Iraqi situation, but doesn't want to send anyone into the area until the fighting there stops.
Meanwhile, news of the oil fires, confirmed by Defense Secretary Rumsfeld, sent the price of crude in New York up over $30 a barrel. Although high, prices over the last few days had been trending downward. OPEC has promised to keep supply stable with member countries by releasing surplus held in storage.
In 1991 Iraq set fire to approximately 700 oil wells in several Kuwaiti fields, and before that, it dumped 11 million barrels of oil into the Gulf, covering some 800 miles of Kuwaiti and Saudi coasts with oil. It was the worst oil spill ever. The Pentagon told reporters recently that Saddam could dump as much as 2 to 3 million barrels a day into the Gulf, imperiling the desalinization plans that Gulf countries use for drinking water. In 1991, a conservative estimate put the cost of the cleanup at $100 million. It probably would cost much more today. Usher said much of the '91 spillage came from tankers captured by Iraqis and forced to dump their oil into the Gulf. This time around, he said, the U.S. has much tighter control of shipping in the Gulf and a repeat of '91 is less likely.
About half of the Pentagon budget goes for logistics and supply. Much of that business has been privatized and shunted to business, with Brown & Root getting a sizable chunk of the business. It builds roads, digs latrines, and provides laundry and kitchen services for the military in the field. During the 1960s, Brown & Root provided logistics for units in Vietnam, and in the 1980s helped the navy build its base at Diego Garcia. After the first Persian Gulf War, the company worked to refurbish damaged buildings in Kuwait.
Since 1992 Brown & Root has grossed $260 million in Pentagon contracts. Fees are based on costs plus 1 percent, with as much as 8 percent added on as incentive fees.
With Cheney in the White House, Brown & Root has flourished. In 2001 the Army's Operations Support Command awarded it an open-ended contract to assist army engineers and "provide for construction of base camps and their infrastructures, including billeting and dining facilities, food preparation; potable water and sanitary systems; showers, laundries, transportation; utilities, warehouses and other logistics support." No one knows how much Cheney's old outfit is making because the figures are classified.
Halliburton goes back a long ways in Iraq, providing Saddam with equipment to repair his antiquated oil machinery. According to a Financial Times report in 2000 the business was done through consortia and overseas subsidiaries "to avoid straining relations with Washington and jeopardizing their ties with President Saddam Hussein's government in Baghdad."