A Difference of Opinion - Major Offshore Incident

International Mediation, North America

The responsibility for damages pursuant to an offshore oil and gas production platform explosion and fire resulted in a dispute between the insurers regarding cause and origin. Baker & O'Brien was engaged to test two different expert opinions developed during the incident investigation through a review of cited evidence and extensive operating records. Following an open pre-mediation expert conference and supplementary written reports, the dispute was quickly resolved in an international mediation.

It is common for a major incident to result in more than one investigation and expert report. In these situations, expert findings may diverge due to the background of the investigators and the evidence available to the parties. In insurance disputes, each insurer is required to examine a claim based on its own contract language and may have its own expert examine the evidence and offer conclusions on the cause of the incident.

In one such incident, a gas release, explosion, and fire occurred on an offshore oil and gas production platform. There were multiple fatalities and the platform suffered extensive damage. The damages claims involved multiple layers of insurers including layers that reinsured one another. A dispute arose between insurers, whose experts offered different opinions supporting two alternative cause and origin scenarios that resulted in the explosion and fire.

Baker & O'Brien was engaged to review the two investigation reports and supporting evidence in order to determine which investigator had the more compelling opinion and why. One of the experts followed a standard root cause analysis methodology and opined that the cause was hydrogen sulfide-induced corrosion inside a gas line. The other expert used an inductive approach based upon observations and impressions and opined that a mechanical failure occurred due to an improperly supported valve. Baker & O'Brien consultants reviewed an extensive dataset which included: key process temperatures, pressures, flowrates; operator logs; installation, maintenance, and inspection records; gas analyses; and the overpressure protection system design and operation.

A pre-mediation meeting was arranged by video conference between Baker & O'Brien and the other experts to review and challenge the evidence and basis for the opinions. Following the issuance of rebuttal and supplementary reports to insurers, the dispute was quickly resolved in an international mediation.

Melvin M. Sinquefield

Senior Consultant

Oil & Gas Production
Standard of Care / Insurance Claims / Accident / Incident Investigation / Technology Assessment / Litigation / Expert Witness Testimony / Operations and Maintenance / OSHA-related / Forensic Analysis / Offshore
North America