Court Rules on Offshore Injury Case
The U.S. Fifth Circuit Court of Appeals has limited the potential liability of an offshore platform owner for injuries to an employee of its independent contractor performing wireline perforation.
In the case of Roberts v. Cardinal Services and Oryx Energy Company (now Kerr-McGee Corp), the Fifth Circuit found that wireline perforation, a common procedure used in the drilling, maintaining and plugging of oil wells, is not an "ultrahazardous activity" for which a principal can be held strictly liable for the negligent acts of its independent contractor.
The Court's decision is a significant victory for Kerr-McGee, who, as the proprietor of the platform, would have been strictly liable for all damages suffered by the plaintiff, despite the fact that the injury was caused by the negligence of its independent contractor. Adams and Reese LLP represented Kerr-McGee in this matter.
"This decision is significant for the oil and gas industry in Louisiana and nationwide by establishing parameters for the potential liability of oil platform proprietors," said Robert A. Vosbein, Jr., partner in the Litigation Practice Group at Adams and Reese.
The key issue in the decision was whether wireline perforation is ultrahazardous. Adams and Reese argued on behalf of Kerr-McGee that wireline perforation is routinely done on a worldwide basis without injury. Therefore, it cannot be said that the activity "can cause injury to others, even when conducted with the greatest prudence and care," which is required for an activity to be considered ultrahazardous. Adams and Reese also relied on U.S. Fifth Circuit law holding that "drilling operations" are not ultrahazardous.
The Fifth Circuit agreed. In ruling that wireline perforation is not ultrahazardous, the Court noted that wireline perforation is a "common activity in the oilfield industry and safely performed thousands of times per year on a worldwide basis." The court explained that wireline perforation, although involving firing of charges from a perforation gun, does not constitute "blasting with explosives", which is ultrahazardous. The court also noted that its ruling was consistent in its prior holdings that drilling operations and their components are not ultrahazardous.