Cleere Drilling Co. v. Dominion Exploration & Prod., Inc.

Cleere Drilling Co. v. Dominion Exploration & Prod., Inc.

Opinion

 [*643]  WIENER, Circuit Judge:

Cleere Drilling Company ("Cleere") appeals the district court's bench trial judgment, which rejected Cleere's claims against Dominion Exploration & Production Inc. ("Dominion") and held Cleere liable to Dominion for almost $ 2 million in damages. These damages resulted from the blowout of Kenaf Industries Unit No. 1 Well (the "Well"), which Cleere had contracted to drill for Dominion. Cleere contends that the district court misconstrued various provisions of the standard form International Association of Drilling Contractors ("IADC") footage drilling contract, July 1998 revision, (the "Contract"), as revised by the parties and entered into by Cleere as contractor and Dominion as operator. Cleere also contends that the district court erred in various findings of fact. We affirm in part, reverse in part, vacate in part, and remand for further proceedings.

 [*644] I. Facts and Proceedings

This action arises from the blowout and resulting total loss of the Well. Central to the action are issues of responsibility [**2]  for several categories of resulting losses and damages.

While drilling ahead at a depth of approximately 2500 feet en route to a "contract footage depth" of 3600 feet, the project got into trouble after Cleere's toolpusher ordered a "short trip," in which "stands" of drill pipe were pulled out of the hole and run back in to ensure the integrity of the pipe. In the course of this operation, Cleere's driller "swabbed" the Well at least twice. ¹ He completed the removal of the pipe despite observing an increase in the flow of drilling mud from the hole. When the driller realized that a potential well-control situation was developing, he had Cleere's crew attempt to activate the blowout preventer. They failed to do so, however, because they did not first close a hydraulic bypass valve, a critical prerequisite to the preventer's effective operation.

 [**3]  Cleere's toolpusher, who had not been present, came to the drill site promptly after being called and was eventually able to activate the blowout preventer and shut down the Well. Cleere's efforts to maintain control were ultimately unsuccessful, however, and the well cratered around its casing seven days after the initial loss of control. The Well eventually blew out through several surface fissures approximately 600 to 900 linear feet from the hole, spewing salt water, gas, sand, and chemically treated drilling mud on and around the drill site. As Cleere had neither the equipment nor the experience and expertise to control and kill the Well, Dominion retained the well-control firm of Boots & Coots to do so, at substantial cost to Dominion.

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