Haynes and Boone, LLP Partner Jeff Nichols talked with Law360 about Hurricane Ida’s legal ramifications on the oil and gas industry.
Below is an excerpt:
Ida, which struck the Louisiana coast on Sunday, forced the shutdown of offshore drilling in the Gulf of Mexico as well as that of several refineries, petrochemical facilities, pipelines and a major port in the Bayou State.
The industry, which is largely still in damage assessment mode, has learned from past Gulf storms to craft tighter contractual and insurance provisions to deal with damages and service disruptions. Still, attorneys say there are enough gray areas that significant litigation remains likely in the future… .
A hurricane "may temporarily excuse you for performance, but you're expected to be prepared to perform," said Jeff Nichols, who co-heads Haynes and Boone's energy industry group. "Winter Storm Uri was much more of a shock to the system in terms of legal documentation. People were much more aware of hurricanes being force majeure issues, but nobody was really prepared for a winter storm outage."
As always, litigation will usually come down to the specific language in a contract. Attorneys say hurricanes might not necessarily be a force majeure issue in some contracts, while others may be written loosely enough to create an expectation that companies will still be able to find other ways to transport gas or petroleum products if a storm has disrupted the main supply route
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