BP Can’t Use Transocean Insurance for Gulf Spill

A federal judge rejected BP Plc’s bid to use insurance coverage from Transocean Ltd to cover costs stemming from last year’s record oil spill in the Gulf of Mexico.

The decision by U.S. District Judge Carl Barbier in New Orleans rejected BP’s bid to win access to $750 million of insurance coverage under nine policies.

The Deepwater Horizon drilling rig’s April 20, 2010 explosion caused 11 deaths and led to the largest offshore oil spill in U.S. history.

Transocean owned the rig, while BP owned a majority of the Macondo well whose blowout led to the spill.

“BP, under the drilling contract, assumed responsibility for Macondo well oil release pollution liabilities,” Barbier wrote. “The Deepwater Horizon incident entailed a subsurface release; thus, Transocean did not assume pollution liabilities arising from the incident.”

BP has also sued Halliburton Co., which did cement work, and Cameron International Corp., which made a blowout preventer, to share in spill costs.

Last month, Anadarko Petroleum Corp., which owned 25 percent of the Macondo well, agreed to pay BP $4 billion toward clean-up costs and victims compensation.

Transocean Chief Executive Steven Newman said that his company plans to invoke indemnity provisions as a basis for any settlement with BP. He called BP’s contractual promise to cover clean-up costs as “iron-clad.”

It was the second recent legal setback that Barbier dealt BP. The judge also said Alabama and Louisiana may seek punitive damages from BP and other companies for spill damages, though he dismissed some of the states’ other claims. Alabama and Louisiana are seeking money for damages to natural resources and property, economic damages such as lost tax revenue, cleanup costs and damages to reputation.

Barbier said the states can pursue claims for negligence and products liability, as well as punitive damages, under general maritime law. He dismissed other claims, including claims under state law and claims alleging nuisance and trespass.

Barbier had in August allowed thousands of individuals and business owners claiming damages to also pursue punitive damages.

Barbier oversees hundreds of lawsuits arising from the spill. He has set a February 2012 start date for a trial.