Hess Sues Schlumberger over Faulty Valve

Hess Corporation has announced it plans to take legal action against Schlumberger. Hess is looking for US$40 million from Schlumberger over claims that the company provided Hess with a defective valve which shut down three wells and slowed production at a field in the Gulf of Mexico.

Hess maintains that Schlumberger owes between US$30 and US$40 million for remediation fees related to the shutdown of wells at the Tubular Bells oil field 135 miles southeast of New Orleans. Hess executives also said that the company plans to seek additional compensation from Schlumberger but did not name an amount.

The Tubular Bells field has four wells, and two of those were closed in the second quarter for regular maintenance for 31 days. According to Hess, the faulty valve resulted in the closure of a third well in July. Hess contends that the closure caused it to lower the full-year production guidance for the field from 25,000 barrels per day to 10,000. Hess owns a 57 percent stake in the project, and Chevron holds the balance.

Greg Hill, the chief operating officer at Hess called the situation “extremely disappointing,” adding: “It relates to some quality control and some of the components of the valve.” Hill did not say if his company would seek arbitration or would look for redress through the courts.

Representatives from Schlumberger were unavailable for comment on Wednesday. Nothing had been filed in U.S. courts as of Wednesday. Hess did state that it expects the platform to be back online later in the year. On Wednesday, Hess reported a smaller than expected quarterly loss. Hess, and other oil producers have recently been at odds with Schlumberger and other providers over financial issues, including prices.

By Lincoln Brown for Oilprice.com

More Top Reads From Oilprice.com:

• Crude Rally Unwinds Completely – Expect $40 Oil
• Oil Industry About To Be Burned Again By Fall In Oil Prices
• Oil Heads Lower For Sixth Day In A Row