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Transocean Asks to Cap Rig Liability at $26.7 Million

Transocean Ltd., the owner and operator of the oil rig leased to BP Plc which exploded last month and killed 11 men, has asked a U.S. judge to limit its liability to $26.7 million.

The request, filed today in Houston federal court under a 150-year-old law originally designed for the shipping industry, applies to all litigation the company faces over the explosion and spill.

“I think there are more than 100 cases now,’’ Guy Cantwell, Transocean’s spokesman, said in a telephone interview.

Transocean and co-owners of the Deepwater Horizon, which now lies wrecked a mile deep in the Gulf of Mexico, say the state-of-the-art drilling rig has zero present value and had accrued $26.7 million in unpaid drilling rental fees.

The company also asked for all litigation against the rig owners to be consolidated before one federal judge in Houston, where Transocean’s U.S. operations are based. Vernier, Switzerland-based Transocean said it would create a court- administered fund, equal to the amount of the unpaid drilling fees, from which all claims against the company could be paid on a pro-rata basis.

Lawyers for victims of the rig disaster and spill said that while Transocean’s move to limit its liability probably wouldn’t succeed, it could cause the oil spill litigation to be consolidated into a single multidistrict proceeding in Houston federal court, as BP has also requested.

Fishermen and Shrimpers

“We expect the court will ultimately lift the limitation,’’ Houston lawyer Mark Lanier, who represents commercial fishermen and shrimpers in several lawsuits over the spill. “The other defendants are more hurt by this than the plaintiffs.’’

BP America Chairman Lamar McKay testified before a U.S. congressional committee yesterday that BP will pay “all legitimate claims’’ for economic damages resulting from the spill, regardless of how high the number grows.

In today’s court filing, Transocean denied responsibility for the explosion and spill and claims the Deepwater Horizon, known as a mobile offshore drilling unit, was “in all respects seaworthy’’ and properly maintained and staffed.

“Any and all injury, loss, destruction and damage arising out of or related to the above described casualty event was not caused or contributed to by any fault, negligence or lack of due care on the part of the petitioners or unseaworthiness or fault of the MODU Deepwater Horizon or any person in charge of her,’’ Frank Piccolo, Transocean’s lawyer, said in the filing.

Injured Crewmembers

Galveston lawyer Tony Buzbee, who represents seven injured crewmembers from the rig, said Transocean’s claim that the rig is worthless “is ridiculous on its face, now that everyone has insurance these days. We know the rig had a value before the accident of between $500 million and $600 million, and we know their insurer has already paid them $430 million for it.’’

Buzbee said, in a telephone interview, that damage limitation motions are usually filed as bargaining ploys to increase settlement leverage. “But it will absolutely factor into the decision about where the MDL ends up,’’ he said. “This will be another argument for putting the entire case in Houston.’

BP, based in London, asked this week that all suits over economic and environmental damage from the spill be consolidated in federal court in Houston. Most of the suits are proposed class actions representing potentially thousands of commercial fishermen, shrimpers, seafood processors, property owners and tourism-related businesses harmed by the spill.

A lawyer representing several hundred of these businesses and individuals has asked for the oil-spill litigation to be consolidated before one of three federal judges in Louisiana.

The case is In Re: The complaint and petition of Triton Asset Leasing GMBH, et al, 4:10-cv-01721, U.S. District Court, Southern District of Texas (Houston).

--Editors: Andrew Dunn, John Pickering

 

Laurel Brubaker Calkins
Bloomberg
May 13, 2010