Case Studies

Experience driven results

Bad BOP Parts Make a Good Insurance Recovery

An oil and gas operator drilling a well in southeast Texas experienced a “kick” of flow coming back up the well to surface. The drilling crew timely activated the pipe rams of the blowout preventer, but it failed to hold pressure, and the kick rapidly became a massive above-ground blowout. The drilling crew and rig personnel were forced to evacuate. A gas cloud formed and subsequently ignited, causing the rig to burn down. The blowout caused the loss of the well bore, drilling rig and equipment and delayed production from the well. Costs to redrill the well, fair market value of the rig and other equipment and deferred oil and gas production exceeded $20 million.

Hall Maines Lugrin represented the operator’s control-of-well insurance underwriters. Our review of the insurance investigation indicated that the defective BOP came from an oilfield rental services company. After scrutinizing the oilfield records, the BOP pipe rams appeared to have been “dressed” with non-OEM packers (non-original equipment manufacturer parts), against recommended oilfield practice, and then delivered to the operator. We employed top-notch metallurgical experts from M.I.T. to inspect the parts, and they determined that a poor fit between the non-standard packers and the ram blocks resulted in a leak and inadequate seal, ultimately causing the BOP to fail.

After insured losses were paid, we recommended and brought a product liability recovery action on behalf of the underwriters, the operator and the working interest owners, against the rental services company and the manufacturers of the non-OEM parts. The case was hard fought, and approximately two months before trial, the defendants agreed to a confidential settlement at mediation. Our depth of technical experience and focus on causation allowed us to identify the product defect, effectively manage the diverse interests of the insurers and the oil well owners as co-plaintiffs, and bring back a recovery satisfactory to all, despite the complex nature of the facts and legal issues. And, we did so while keeping legal fees and costs within budget.

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