NU Online News Service

The firm owning the drilling rig that sank in the Gulf of Mexicocould be liable for millions of dollars depending on its leasingagreement with BP, a lawyer familiar with oil and gas litigationsaid.

Meanwhile, in a filing with the Securities and ExchangeCommission, Transocean, a global provider of drilling managementservices based in Zug, Switzerland, said the insured value of itsdrilling rig was put at $39 billion in aggregate.

Keith B. Hall, an attorney with the law firm Stone PigmanWalther Wittmann LLC in New Orleans, said there are three areas ofliability coming out of this incident:

o Loss of life and personal injury.

o Liability to the government for its emergency response.

o Economic loss to private parties, in this case BP andTransocean.

Energy company BP leased the semisubmersible drilling rigDeepwater Horizon from Transocean.

Its insurance program consists of a combination of commercialmarket and captive insurance policies. The company maintains a $125million per occurrence deductible on its hull and machinery,subject to an aggregate deductible of $250 million, Transoceanreported.

However, in the event of a total loss or a constructive totalloss of a drilling unit, the loss would be subject to a deductibleranging from $500,000 to $1.5 million.

The company also maintains a $10 million per occurrencedeductible on crew personal injury, $5 million deductible onnon-crew claims and aggregate deductible of $50 million.

The company says it carries $950 million of third-partyliability coverage.

Transocean retains the risk for any liability losses in excessof the $950 million limit.

Hall said that of the three concerns, the most expensive couldprove to be the economic loss to BP for loss of production. Whilethe rig was not yet producing, the loss of potential income couldbecome a major issue for the two companies, but that depends on thedesign of the lease which would detail who is responsible for whatin the loss of the rig.

"It will not be clear cut," Mr. Hall noted. "People will look atthis very carefully to see why they should not incur a loss." Andwhen dealing with such significant numbers, the parties will "testand vigorously re-test to find clarity of the agreements betweenthem."

The Deepwater Horizon caught fire and exploded on Tuesday,sinking two days later. The rig was located approximately 41 milesoffshore of Louisiana, Transocean said.

The cause of the fire and explosion remain unknown at thistime.

Transocean said the rig was staffed with 126 crew members.Eleven remain missing and the Coast Guard is continuing searchefforts. However, reports said rescued workers believe the 11 neversurvived the explosion and fire.

Environmental concerns seemed to subside today with reportsthere was no oil leaking from the well site.

The company said in the filing that its customers "generallyassume, and indemnify us against, well control and subsurfacerisks."