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CONTRACTS INVOLVING OIL AND GAS OPERATIONS ON NAVIGABLE WATERS

In In re Crescent Energy Servs., LLC, 2016 U.S. Dist. LEXIS 154038 (E.D. La. Nov. 7, 2016), at issue before the court was whether the contract between Crescent and Carrizo was a maritime or non-maritime contract. If the contract was non-maritime, the Louisiana Oilfield Indemnity Act (LSA-R.S. 9:2780) would void the indemnity agreement. On the other hand, were the contract maritime, then the indemnity agreement would be enforceable

In this matter, a Complaint for Limitation was filed by Crescent Energy Services, LLC after one of its employees was injured aboard the S/B OB 808 during plug and abandon operations on a well owned by Carrizo. Carrizo filed a cross claim for indemnity against Crescent. Both Carrizo and Crescent filed cross-Motions for Summary Judgment on the enforceability of the indemnity provision.

The court noted that a contract is maritime if it has a "genuinely salty flavor." Determination of the nature of the contract depends in part on historical treatment in the jurisprudence and in part on a fact-specific inquiry. In Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313 (5th Cir. 1988), the Fifth Circuit indicated that, in addition to looking at the historical jurisprudential treatment of similar contracts, courts should consider six factors in making such a fact-specific determination: (1) what does the specific work order in effect at the time of injury provide; (2) what work did the crew assigned under the work order actually do; (3) was the crew assigned to work aboard a vessel in navigable waters; (4) to what extent did the work being done related to the mission of that vessel; (5) what was the principal work of the injured worker; and (6) what work was the injured worker actually doing at the time of injury.

In reaching its conclusion that the contracts were maritime, the court chose to follow the precedent of both Clay v. ENSCO Offshore Company, 146 F.Supp.3d 808 (E.D. La. 2015) and Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313 (5th Cir. 1988) distinguishing Thurmond v. Delta Well Surveyors, (836 F.2d 952 (5th Cir. 1988) on which Crescent relied for its proposition that the work to plug and abandon a well is non-maritime. In doing so, the court stated that Thurmond did not address the use of a vessel in the wireline operations. In the case at bar, the work could not have been performed "without the use of a vessel as a work platform."

The judge then applied the six factors enumerated in Davis and concluded that the plug and abandonment operations "were inextricably related to the mission of the OB 808, giving the contract the requisite salty flavor."

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