November 2, 2011 | Mark Paradies

Some Accidents Just Go On and On … PennEnergy Reports: Transocean files motion to compel BP to cover oil spill costs stemming from the Macondo well incident in the Gulf of Mexico

It was over a year ago that the Deepwater Horizon exploded, burned, and sank, but the accident aftermath seems to go on and on.

Here is a link to a recent article about a legal motion to compel BP to live up to their contractual obligations:

http://www.pennenergy.com/index/petroleum/display/7480860726/articles/pennenergy/petroleum/offshore/2011/11/transocean-files_motion.html

As the article says:

The contract between BP and Transocean for the Deepwater Horizon drilling rig contains industry-standard reciprocal indemnity provisions that apportion risk and quantify liabilities between the two companies. In the contract, which was signed in 1998 and extended several times including in 2009, BP agreed to ‘defend, release, protect, indemnify and hold harmless’ Transocean for any and all fines, penalties and damages associated with environmental pollution originating from the well ‘without limit and without regard to the cause or causes’ including negligence, ‘whether such negligence be sole, joint, active passive or gross.‘”

This language seems pretty cut and dried. But as with everything “legal” … sometimes things aren’t so simple.

The article says:

Despite these clear and unambiguous terms, BP has refused to honor its contractual obligations to Transocean stemming from the Macondo well incident in April of 2010. In fact, contrary to its promise to “defend” and “indemnify” Transocean, BP instead filed suit against Transocean on the one-year anniversary of the incident, alleging that Transocean personnel — including those who lost their lives in the incident — had willful and callous disregard for the welfare of their colleagues and the environment.

This legal wrangling over what seems to be a straightforward contractual arrangement makes me wonder if this “standard” contract language will continue to be standard in the future. Even if it is the standard in the future, if it doesn’t hold up here, is it worth the paper it is written on?

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