WASHINGTON, D.C. – (RealEstateRama) — Black Elk Energy Offshore Operations LLC (BEE), a privately held limited liability company headquartered in Houston, Texas, was sentenced today on eight felony violations of the Outer Continental Shelf Lands Act (OCSLA) and one misdemeanor count of violating the Clean Water Act before the Honorable U.S. District Judge Jane Triche Milazzo, announced Acting Assistant Attorney General Jeffrey H. Wood of the Justice Department’s Environment and Natural Resources Division and Acting U.S. Attorney Duane A. Evans for the Eastern District of Louisiana.
The charges stemmed from events causing an explosion in November 2012 on an offshore oil production platform that resulted in the deaths of three workers and injuries to several others. This case is also related to the recent conviction of Wood Group PSN in the Western District of Louisiana for their role in operations on the platform.
In accordance with a plea agreement, the Court ordered BEE to pay a $4.2 million monetary penalty. However, due to BEE’s bankruptcy, the $4.2 million agreed monetary penalty will be a general unsecured claim against BEE’s bankruptcy estate entitled to a pro rata distribution from the trust with other allowed unsecured claims against BEE. On Aug. 11, 2015, four of BEE’s creditors filed an involuntary chapter 7 bankruptcy case against BEE in the U.S. Bankruptcy Court for the Southern District of Texas. The case converted to a voluntary chapter 11 case shortly thereafter. Under a Chapter 11 plan of liquidation confirmed on July 13, 2016, BEE’s assets were transferred into two trusts, and a trustee will administer distributions to creditors from funds in one of the trusts.
According to the court documents, beginning on Nov. 3, 2012, after pipeline repairs, BEE undertook platform repairs to include replacing equipment and installing a divert valve on the platform’s Lease Automatic Custody Transfer (LACT) unit and tying it into the sump line piping. The LACT system was the last point in the production process prior to the oil leaving West Delta 32 and entering the sales transmission pipeline.
Some of the construction projects on West Delta 32 required “hot work,” or welding, grinding, and/or any other activity that may produce a spark. Hot work on an oil production facility is a hazardous activity capable of causing injury or death. Title 30 of the Code of Federal Regulations requires that written permission, commonly referred to as a “hot work permit,” be issued by the welding supervisor or designated person in charge (PIC) before any hot work on a production platform begin. At a maximum, a hot work permit is valid for 12 hours. Once a hot work permit expires, all the precautionary steps should be complete before a new hot work permit is issued.
Starting on or about Nov. 8, 2012, Christopher Srubar, a co-defendant and Wood Group PSN employee and West Delta 32 PIC, issued hot work permits for the construction work related to the West Delta 32 projects. However, Srubar stopped issuing hot work permits and conducting all-hands safety meetings and instead delegated the permitting to the Wood Group PSN “C” operator. Neither Srubar nor the “C” operator conducted a daily pre-work inspection with the construction crew, staffed by Grand Isle Shipyards (GIS), nor did they designate a fire watch for the hot work areas.
On or about Nov. 15, 2012, hot work commenced on the LACT unit with the knowledge of co-defendants Don Moss and Curtis Dantin. Moss and Dantin did not ask Srubar if he completed a safety check of the area. In addition, they did not complete a pre-work inspection or issue a warning to the GIS crews to step welding on the sump line piping. Instead, Dantin instructed some of the crew to begin the welding of the sump line piping for the LACT unit upgrade. The single hot work permit the “C” operator issued for Nov. 16 did not state that the LACT unit or sump line piping as areas that were safe for hot work.
Workers started to make cuts to the sump line piping leading to the Wet Oil Tank, causing liquid to spill from the piping. At approximately 9:00 a.m., hydrocarbon vapors that escaped from the Wet Oil Tank ignited, causing a series of explosions in the three oil tanks on the platform. The fire and explosions resulted in the deaths of GIS employees Avelino Tajonera, Elroy Corporal, and Jerome Malagapo. Other workers were seriously burned and physically injured.
BEE admitted that its employees and agents were negligent in the manner in which they planned and executed the hot work on West Delta 32 platform, and that the acts of their agents and employees violated the regulations in 30 C.F.R. § 250.113 promulgated under the OCSLA.
Co-defendant GIS faces manslaughter charges, and Dantin, Srubar, and Moss face criminal violations of the Clean Water Act in the Eastern District of Louisiana. The OCSLA charges against GIS, Moss, Srubar, and Dantin, were dismissed by the district court and are pending an interlocutory appeal by the government to the U.S. Fifth Circuit Court of Appeals, argued on May 1, 2017.
The U.S. Department of the Interior-Office of Inspector General and the U.S. Environmental Protection Agency-CID conducted the investigations. Assistant U.S. Attorneys Emily Greenfield and Nicholas Moses, and Senior Trial Attorney Kenneth Nelson of the Environment and Natural Resources Division prosecuted the case.