| HOUSTON/SEATTLE, April 30
HOUSTON/SEATTLE, April 30 The explosion of the
Deepwater Horizon drilling rig that caused a massive crude oil
slick in the U.S. Gulf of Mexico will cost billions of dollars
for the companies that worked on the rig.
Oil began washing up on Louisiana's coast and commercial
fishing areas on Friday as shrimpers and fishermen and
survivors of the blast flooded courthouses with lawsuits.
"This is a multi-billion dollar event," said Keith Hall, an
attorney with the firm Stone Pigman in New Orleans. "There are
going to be huge environmental clean-up costs."
The explosion killed 11 workers and sank the rig. The oil
well, which the companies have been unable to cap, was gushing
about 5,000 barrels of crude per day.
The rig was owned and operated by Zug, Switzerland-based
Transocean Ltd (RIGN.S). British oil major BP Plc (BP.L) hired
Transocean to drill the well, and oilfield services companies
Halliburton Co (HAL.N) and Cameron International Corp CAM.N
were also doing work on the rig.
BP Chief Executive Officer Tony Hayward told Reuters on
Friday the company will compensate all those affected by the
oil spill. [IDn:nLDE63T1SP] Oil majors generally do not buy
coverage for clean-up costs from spills, as it is too expensive
The other companies on the project do hold insurance, but
Hall said potential liability could outstrip any policy
Transocean said its insurance covers the total loss of the
Deepwater Horizon and wreck removal. The rig had an insured
value of $560 million.[IDn:nN26150882].
Cameron International Corp CAM.N, which supplied the
device that failed to prevent the well blow out said it had a
$500 million policy for any claims. [ID:nWEN3872].
The global insurance industry is already estimating that
property insurance losses will likely exceed $1 billion, while
liability claims could dwarf that and take years to play out.
Plaintiffs attorney have already targeted the companies
with lawsuits seeking compensation for economic loss and loss
of life or injury.
Brent Coon, the Texas lawyer who spearheaded civil
litigation against BP in the aftermath of the 2005 explosion at
its Texas City, Texas refinery that killed 15 workers, said his
firm is representing a worker who survived the explosion in a
lawsuit against BP, Transocean Halliburton and Cameron.
His firm is seeking a temporary restraining order against
the companies to mandate that they preserve all documents and
e-mails related to the disaster in anticipation of drawn-out
Coon's client, Stephen Stone, 24, of Katy, Texas, was
asleep when the explosion happened and escaped on a lifeboat.
"It's like being in a war, to be caught in those kind of
infernos with people screaming and not knowing whether you'll
live or die," Coon said.
At least four lawsuits naming all or some of the companies
have been filed in U.S. District Court in New Orleans, attorney
Shrimpers in Louisiana and Alabama have filed class-action
lawsuits against the companies claiming anticipated economic
losses from the disaster. [ID:nN29134097].
Oilfield service company Halliburton Co (HAL.N) provided
cementing on the well to stabilize its walls.
BP also faces costs related to the U.S. Oil Pollution Act
of 1990 -- enacted after the Exxon Mobil Corp (XOM.N) Valdez
spill -- and the U.S. Clean Water Act.
The Valdez spill of 250,000 barrels of oil into the Prince
William Sound in Alaska cost Exxon about nearly $4 billion in
compensatory payments, cleanup payments, settlements and fines,
according to the company's web site.
Oil rig accidents bring a patchwork of regular insurance
coverage, reinsurance, and self-insurance mechanisms, said
Claire Wilkinson at the U.S. Insurance Information Institute,
the industry's trade group.
"The great unknown here will be the environmental pollution
liability issue. These kinds of events take many years to
unfold," she said. "You could draw a parallel with Exxon Valdez
-- 20 years later, the final costs are still unknown."
Munich Re (MUVGn.DE), the world's biggest reinsurer, has
said it could pay up to $100 million for the accident, but
warned that it is too early to calculate the toll. Bermuda's
PartnerRe PRE.N expects to pay claims of up to $70 million.
Even if losses exceed $1 billion, it does not appear to be
an insurance industry-threatening event.
The closest comparison is the explosion of the Piper Alpha
rig off the British coast in 1988, killing 167, which ended up
costing insurers $3.6 billion in today's dollars, according to
By comparison, insurers put the price tag of the 2001
attack on New York's World Trade Center at $23 billion in
today's dollars. Hurricane Katrina, which ravaged the U.S. Gulf
Coast, cost insurers $71 billion.
(Additional reporting by Kristen Hays)
(Reporting by Anna Driver; Editing by Leslie Gevirtz))