DRILLBITS – November 2012
This Month’s Articles
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IADC files amicus brief in Nabors v Encana
IADC has filed an amicus brief in support of Nabors Drilling USA’s request to reverse a portion of a judgment that awarded Encana Oil & Gas more than $2 million in damages on indemnity claims, as well as related attorneys’ fees, costs and interest for those discrete claims.
State District Judge John Fostel of Wise County, Texas, granted partial summary judgment in favor of Encana. Encana was seeking indemnification from Nabors for Encana’s contractual indemnity obligations with its other contractors in two separate personal injury lawsuits, expenses that Encana incurred before tendering indemnity to Nabors. Encana contended that Nabors breached the daywork drilling contract by refusing to indemnify Encana for claims paid under separate master service contracts.
IADC is concerned about the result of the trial court’s ruling and how it could adversely affect the oil and gas industry and other industries that use similar contracts, since the interpretation of the indemnity language will affect countless contracts and companies. IADC advises that a reversal is warranted because the trial court misapplied contractual construction rules and incorrectly applied the express negligence doctrine, according to the amicus brief.
The appeal involves a version of a model IADC contract – the Drilling Bid Proposal and Daywork Drilling Contract – US. Although Encana modified the model IADC contract form, the pertinent indemnity language at issue was not changed, the brief states. IADC has a compelling interest in this appeal to ensure that the indemnity provisions in its model drilling contracts areconsistently applied in accordance with industry practice and applicable law.
IADC’s model contracts are intended to fairly allocate risks commercially, not only to the party most able to manage the risk but also in accordance with the ability of the parties to insure or undertake to accept the risk. Upsetting the balance that has been established and that has been accepted as custom for decades threatens to jeopardize the livelihood of many drilling contractors and small operators upon whom the industry depends, the brief states.
IADC suggests that a discussion of the IADC model drilling contracts and land drilling operations will benefit the Court and will demonstrate how the trial court’s overly broad and incorrect construction of the Daywork Contract will adversely impact other drilling contracts in use throughout the US land and offshore operations.
For more information about the amicus brief, please contact Jason McFarland at ext 214 (jason.mcfarland@iadc.org).
OGP publishes well control recommendations
The International Association of Oil and Gas Producers (OGP) has issued a report on recommendations for enhancements to well control training, examination and certification that is available online.
The Human Factors Task Force of the OGP Wells Expert Committee prepared the report with input from IADC and the International Well Control Forum (IWCF). The well control training syllabi of IADC and IWCF were reviewed to develop the recommendations.
The document contains recommended improvements to current well control training, examination and certification processes, as well as related philosophies for adoption throughout the industry to improve well control preparedness and performance for all types of operations conducted on all wells worldwide.
Key recommendations include:
The document highlights improvement that are expected to be adopted by well control training, examination and certification bodies, and management from operators, drilling contractors and service companies are asked to demonstrate support. They can be found at www.ogp.org.uk/pubs/476.pdf.
For details, contact Steve Kropla at ext 211 (steve.kropla@iadc.org).
IADC provides updates on FCPA, local content at Drilling Africa
Brian Petty, IADC executive VP – government affairs, provided updates regarding the US Foreign Corrupt Practices Act (FCPA) and local content requirements in Africa at the IADC Drilling Africa 2012 Conference in Lisbon, Portugal, 24-25 October.
Since the FCPA issue was raised at the first IADC Drilling Africa conference a few years ago, pressure has remained from the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) on its enforcement, Mr Petty stated. To address the issue on a global scale, to promote compliance and to allow the drilling contractor community to share lessons learned, IADC soon established the Ethics Committee. The group is now chaired by James Sanislow of Noble Drilling Services.
Mr Sanislow met with the DOJ and SEC earlier this year to discuss FCPA enforcement guidance, providing background on complexities in compliance and risk management arising from issues such as a lack of clarity around the definition of a “foreign official” and successor liability.
Local content requirements also remains a major issue in the Nigerian market. Mr Petty notes that IADC has organized a coalition that has received support from the US government, as well as the EU. IADC continues to meet with Nigerian legislators and authorities to work out practical solutions and also has met with a delegation from Ghana to discuss similar local content legislation in that country.
For more information, please contact Brian Petty at +1/202-293-0670 (brian.petty@iadc.org).
IADC report on standards developments
The newest edition of IADC’s semi-annual report, International Standards Activities Affecting the Offshore Oil and Gas Industries, is available for download.
This report provides a reference to standards development activities of various organizations with the potential to affect offshore oil and gas operations, e.g., the International Maritime Organization, International Labour Organization, the International Organization for Standardization and various international trade associations.
The report includes information on the International Maritime Labour Convention, MARPOL Annexes V (garbage) and VI (air pollution), the Ballast Water Management Convention, MODU Code amendments for confined space entry rescue drills, new IMO requirements for lifting appliances and newly issued ISO standards on conformity assessment, quality management and site assessment for jackups.
For more information about the report, please contact Alan Spackman at ext 207 (alan.spackman@iadc.org).
Senator questions BSEE jurisdiction expansion
In response to the US Bureau of Safety and Environmental Enforcement’s (BSEE) release of an interim policy document in August on “Issuance of an Incident of Non Compliance (INC) to Contractors,” (IDP No. 12-07) US Sen. David Vitter (R-La.) recently revisited the concern of the expansion of current regulatory authority to include contractors.
In a letter to BSEE director James Watson, Sen. Vitter referred to a December 2011 letter that concluded the department’s “legal authority over all activities conducted under federal offshore leases, whether such activity is engaged in by lessees, operators, or contractors.” Sen. Vitter also repeated a request for the legal analysis upon which the decision was based. “You declined to provide the Department’s legal analysis as ‘an internal process to facilitate decision making,’ which denies Congress, which has oversight responsibility of the Outer Continental Shelf Lands Act, of any practical understanding of BSEE’s rationale for its action,” Sen. Vitter wrote.
He requested BSEE to initiate a formal rulemaking process to ensure transparency and the ability of all stakeholders to provide their input before proceeding with enforcement.
For details, contact Brian Petty at +1/202-293-0670 (brian.petty@iadc.org).
IADC hires director of external relations
Amy Rose has joined IADC as director of external relations, reporting to IADC group vice president/publisher Mike Killalea. Ms Rose will be responsible for public relations, education initiatives and media outreach.
Before joining IADC, Ms Rose managed national and international media relations activities for the University of Pittsburgh Medical Center, a major multi-center nonprofit hospital system. Ms Rose was instrumental in developing and implementing a media relations strategy that resulted in high-profile media placements in print and television.
“Amy brings to IADC the precise experience and energy we need to raise IADC’s public profile,” Mr Killalea said. “We welcome Amy enthusiastically to the IADC team.”
Ms Rose is a graduate of John Carroll University with a bachelor’s degree in communications and is a member of the Public Relations Society of America.
Amy Rose can be reached at ext 415 (amy.rose@iadc.org).
MARPOL Annex V goes into effect in January
IADC reminds its members that the revised MARPOL Annex V on Prevention of Pollution by Garbage from Ships enters into force on 1 January 2013. The Convention is applicable to MODUs. The revised regulations include:
For more information, please contact Alan Spackman at ext 207 (alan.spackman@iadc.org) or John Pertgen at ext 203 (john.pertgen@iadc.org).
Val Hood, ‘backbone’ of IADC NSC, passes away
Val Hood
The IADC North Sea Chapter (NSC) has been left greatly saddened by the death of Val Hood on 15 September after her long battle with cancer. Ms Hood was 55.
Ms Hood was born in Arbroath, Scotland, and moved to Aberdeen to study languages at Aberdeen University before working for several years with Chevron. She then took a break to raise her family and started work with the NSC in January 1999.
Ms Hood played a key role in bringing the local drilling community together to discuss key issues, as well as organizing events, including the IADC NSC Annual Safety Awards to recognize safety achievements in the drilling industry.
“She was the backbone of the IADC here in Aberdeen, and her passing is a massive loss to us. I believe I speak for all of my drilling colleagues when I say that we – the North Sea drilling community – owe Val a huge debt of gratitude and appreciation,” said Darren Sutherland, director of European operations at Prospector Offshore Drilling and current NSC co-chairman. “Messages have been coming in from individuals around the world expressing their sadness but also their thanks for her tremendous support and guidance over the years.”
Ms Hood was involved in charity donations through IADC and personally. Donations are being accepted in her memory; they can be made online at www.justgiving.com/Val-Hood.
Ms Hood is survived by her husband George, son Adam and daughters Leanne and Steph.
Nelson recognized for IADC service
Ernie Nelson (left) and Ken Fischer (right)
Ken Fischer, IADC vice president of international development, presented an Exemplary Service Award to Ernie Nelson, vice president of contracts with Nabors Drilling USA, for his leadership as vice chairman, land, of the IADC Contracts Committee. Mr Nelson joined Nabors in 1992. He is responsible for all contracting activities for Nabors’ Lower 48 operations. “Ernie has been an integral part of every IADC land model contract revision in recent years,” Mr Fischer said. “Supported by Nabors, Ernie’s individual leadership and dedication of efforts and time have made a significant contribution to our industry.”
Accreditation Updates
DIT Programs
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Safety Alerts
For the latest safety alerts, visit www.iadc.org/safety-alerts
Alert 12-25: Snagged hoist line results in fractured vertebrae.
Alert 12-26: Gloved hand caught in pipe spinner results in injury.
Alert 12-27: Hidden welding lead results in minor electrical shock.
Reminders
Rigs Receive ISP Certificates
For certificates received since last LTI (in years):
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New IADC Members
IADC welcomes 39 new members:
DRILLBITS Volume 22, Number 11
Dan Rabun, Chairman • Stephen Colville, President and CEO • Linda Hsieh, Editor
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