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Firms in gulf drilling are working to limit liability in spill

Workers prepare to lay out new lines of boom to prevent oil from the BP Deepwater Horizon wellhead from reaching the wetlands in Cocodrie, La.
Workers prepare to lay out new lines of boom to prevent oil from the BP Deepwater Horizon wellhead from reaching the wetlands in Cocodrie, La. (Chris Graythen/getty Images)

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Transocean took a similar position after the Coast Guard served notice April 28 that one of its subsidiaries was a "responsible party." Transocean said in a securities filing that it has no such responsibility because discharges "are occurring nearly a mile below the surface of the water."

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The insurers contesting BP's claims in the Houston court have written policies for Transocean totaling $750 million. The company has about $1 billion of liability insurance.

Potential defenses

Several companies linked to the operation have disclosed their connection in investor reports, describing to varying degrees their potential defenses, insurance coverage and loss exposure.

Halliburton, an oil services company, said in a securities filing that its work was "in accordance with the well owner's instructions."

Halliburton, which carries about $600 million in insurance, said its contracts indemnify it against "all potential claims and expenses" -- except those for its employees and property. In an investor briefing, a Halliburton executive qualified that explanation, saying the company faces damages if proved grossly negligent.

Cameron, manufacturer of the rig's critical blowout preventer, reported that it has insurance totaling about $500 million. Cameron said in a securities filing that it was too early to measure potential liability.

BP's partners in the venture were Anadarko, with a 25 percent stake, and a subsidiary of Mitsui, with a 10 percent stake.

Mitsui said in a regulatory filing that it is too soon to gauge the spill's impact.

Anadarko fired a rhetorical shot at BP last week, saying the tragedy resulted from BP's recklessness.

BP's contract with Anadarko says the companies bear responsibility for damages in proportion to their stake. But it adds that each party bears sole responsibility for damages resulting from its own "gross negligence or willfull misconduct."

Anadarko said BP's actions probably met that test, but BP countered that the partners agreed to share the cost of cleaning up "any spill."

Anadarko chairman and chief executive James T. Hackett said in a statement "that ultimately we have obligations under federal law" but that his company "will look to BP to continue to pay all legitimate claims."

The Moody's debt rating agency has downgraded Anadarko, citing the company's "relatively small liability coverage of $178 million." Anadarko's ultimate liability "rests on its yet-untested ability to prove that BP was negligent, and that Anadarko should be held blameless," Moody's wrote.

Weatherford International, which helped place piping in the well, has been named as a defendant in lawsuits and as a "party-in-interest" in an investigation by the Coast Guard and the Bureau of Ocean Energy. It has made no explicit reference to the disaster in recent securities filings, and a Weatherford spokesman said the company declined to comment.

As companies argue over responsibility, they could be providing ammunition for lawyers pursuing suits on behalf of spill victims. Sidney Jackson, an Alabama lawyer who has sued BP, Transocean, Halliburton Energy Services, and Cameron, said recent congressional testimony by company executives will become a part of lawsuits.

"I don't think they were thinking about how their finger pointing could play out," Jackson said. "They were under oath, and that is admissive evidence."

Research editor Alice Crites contributed to this report.


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