International Arbitration of Oilfield Services Disputes - Chapter 17 - Leading Practitioners’ Guide to International Oil & Gas Arbitration

Author(s):

Derrick B. Carson

Ann Ryan Robertson

David E. Harrell, Jr.

Page Count:

26 pages

Media Description:

1 PDF Download

Published:

August, 2015

PDF604.21 KB

$40.00

Description:

Originally from The Leading Practitioners' Guide to International Oil & Gas Arbitration

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I. UNSUNG WORKHORSES

It is no secret that finding and extracting oil and gas is an

expensive and often dangerous proposition. Somewhat less well

known, however, is the fact that much of the real work of finding

and producing those hydrocarbons is done not by the major

producers but by the “unsung workhorses of the oil and gas

industry”—oilfield service companies.1 Oilfield service companies

include not only drilling contractors that provide the drilling rigs and

expertise to drill the wells but also numerous other types of

companies, providing everything from seismic research to assist

operators in determining where to drill, to the sophisticated tools and

skilled labor that make drilling those wells possible, to ongoing well

maintenance and reservoir monitoring. Moreover, it is the oilfield

service companies that developed the technology to maneuver drill

bits with video-game-like precision, that learned how to fracture shale

formations releasing heretofore trapped reservoirs, and that are now

capable of drilling in offshore depths that can make space exploration

seem simple by comparison.

The focus of this chapter will be to address a few of the unique

substantive issues arising in disputes involving these unsung

workhorses and to identify certain procedural issues that can

complicate international arbitrations relating to those disputes.

Despite the size and sophistication of their business, the truth is

that the oilfield service business remains relationship-driven. While

those relationships are valuable and can facilitate an efficient

contracting process, they can occasionally cloud that process,

resulting in an inordinate number of disputes regarding whether a

contract exists or, if a contract exists, what are its applicable terms.

The very nature of those contracts also discourages the use of

express statements of performance standards, potentially giving rise

to difficult contract interpretation questions and problems

establishing breach of those standards. In addition, due to the innate

dangers associated with the oilfield services business, it is not

surprising that many disputes focus on indemnities and other

allocations of risk. Because of the inherent complexity in oilfield

service contracts, there are numerous opportunities for

knowledgeable counsel to add value at every stage: the contracting

process, the period when the dispute first arises, institution of the
arbitration, and the efficient conduct of the arbitration itself.