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Offshore Outlook

Offshore companies fight back


June 14, 2010

The BP oil spill already has resulted in several lawsuits filed by fishermen and other businesses that operate along the Gulf Coast. Now, several oil service companies and a shipyard are suing the Department of Interior claiming that the federal government illegally ordered the six-month deepwater drilling moratorium and putting a halt to exploratory drilling by 33 deepwater rigs. A hearing in federal court is set for June 21 in New Orleans.

Hornbeck Offshore Services initiated the lawsuit, which was joined by Edison Chouest Offshore and several its companies, and Bollinger Shipyards. The suit claims that Interior Secretary Ken Salazar’s report to the president, which was the basis for the moratorium, does not contain any findings or evidence of a “systemic” failure by rig operators, drillers or other participants in offshore drilling operations to comply with current regulations or existing permits.

Courthouse News said the suit cites a May 11 Minerals Management Service inspection report of the deepwater rigs and found that 27 of 29 rigs inspected had no violations, and the other two had only minor violations.

Hornbeck stated in the suit that an operator of a well that was ordered to halt operations indicated that it intends to cancel its vessel contract as a result of the moratorium. Hornbeck believes more operators will do the same. Hornbeck said in the suit that cancellation of its contracts by operators coupled with a lack of new prospects in the Gulf would cause irreparable harm to the company.

Meanwhile, other companies are standing firm against operators invoking force majeure clauses in contracts. Anadarko sent notifications of force majeure to drilling contractors of three of the company’s contracted rigs in the Gulf of Mexico. The company has one remaining rig under contract in the Gulf. Based upon directives from the MMS, Anadarko plans to utilize this rig to continue its completion, workover and other non-drilling activities on existing wells during the moratorium.

One of those rigs is the Noble Amos Runner. The contractor said it “advised Anadarko that it does not believe the moratorium constitutes force majeure.” Noble said that its drilling rigs are ready and able to drill and “Anadarko is not prevented from using the unit on a variety of activities permissible under the contract, the moratorium or otherwise in their deep and diverse portfolio of international properties.”

Noble said that it does not believe a force majeure event exists as a result of the moratorium or the oil spill. The company said, “it plans to enforce its contractual rights.”

Expand/View Comments -  2 Comments
05/31/2011 05:46:13 Timothy Axelsson says:

Government stoppage is in most cases listed as a Force Majeure event. And most contracts that I have negotiated state clearly: "Force Majeure means any event beyond the reasonable control of the Party claiming to be affected thereby including without limitation acts of God, war, fire, national or industry-wide strikes, acts of the public enemy, insurrections, riots, or rules or regulations of any governmental authority asserting jurisdiction or control, compliance with which makes continuance of the Vessel’s operations (“Work”) impossible." This is taken out of a typical GoM OSV contract. Seems pretty clear to me that the government moratorium meets the definition of force majeure.

05/31/2011 05:46:12 David Krapf says:

Sure does. Let's hope OSV companies won't have to resort to using force majeure. I hear that some oil companies are keeping boats under contract and they are going in warm stack because they worry that when the moratorium is lifted, there will be a shortage of boats.

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