In the wake of the Deep Water Horizon oil spill in the Gulf of Mexico in 2010, the United States federal government required companies engaged in drilling operations in the Gulf to create an emergency response system to contain future spills. ExxonMobil, Chevron, ConocoPhillips and Shell joined together to form the Marine Well Containment Company (MWCC) for the purpose of developing and implementing such a containment system to be utilized in the event of a future incident.
The emergency response system developed by MWCC calls for two modular capture vessels (MCVs) to be used for containment operations. The vessels must remain within the Gulf of Mexico so they can quickly reach the scene of a spill so, when not in use during emergency situations, the vessels will be used to perform lightering operations in the Gulf.
When MWCC sought to charter the MCVs for its containment operations, it turned to AET Inc. Limited, a global leader in petroleum shipping and Holland & Knight client. AET would convert two newbuild aframax oil tankers to serve as capture vessels in the event of an incident.
AET chartered the vessels to MWCC in a 20 year time charter agreement. However, because the vessels will be used only in the event of an incident, MWCC then time chartered the vessels back to AET for use in lightering operations in the Gulf of Mexico, with the understanding that the vessels would be made available for emergency response operations within a five day notice.
Holland & Knight's Maritime Team represented AET in its contract negotiations with MWCC, including the drafting and negotiation of time charter agreements as well as agreements to convert the aframax oil tankers into capture vessels.
The transaction included exceedingly complex agreements and required several rounds of long and intensive negotiations. Because the emergency response system is the first of its kind in the world and requires the accessibility of vessels only during unforeseen incidents, there were several unique aspects to the transaction. The innovative approach developed by our team to structure the deal so that it met the business and financial objectives of both parties is expected to serve as an industry model for similar transactions in other oil drilling regions of the world.
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