Umbrella Policy Excluded Coverage for Costs Incurred in Aftermath of Gas Well Blowout

A federal district court in Louisiana has ruled that an umbrella insurance policy excluded coverage for costs incurred in the aftermath of a gas well blowout.  

The Case 

Pioneer Exploration, LLC, operated a gas well in Louisiana under a mineral lease. The well suffered a blowout. After Pioneer incurred costs to remediate the damage and contain the pollution, it sued its commercial umbrella insurance carrier to recover those costs. 

The insurer moved for summary judgment. 

The Court’s Decision 

The court granted the insurer’s motion. 

The court first pointed out that the policy precluded coverage for costs Pioneer incurred in performing remediation on land it “rented” or “occupied.” Thus, the court decided that the portion of the costs Pioneer incurred to remediate the land that it “rented” or “occupied” through the mineral lease were not covered by the policy. 

The court then ruled that the policy also precluded coverage for costs incurred in containing/removing pollutants and preventing damage to third parties’ property. The court said that Pioneer’s argument that a finding of no coverage on this issue would encourage oil companies to allow contamination to spread until it seeped onto third party land (as opposed to containing the contamination) was “immaterial.” Finding the terms of the policy “unambiguous” and declaring that they pointed to “exclusion of prevention of contamination costs,” the court determined that summary judgment was appropriate in favor of the insurer on this issue. 

Accordingly, the court concluded that the policy excluded coverage for the costs Pioneer incurred in the aftermath of the well blowout. 

The case is Pioneer Exploration, LLC v. Steadfast Ins. Co., No. 2:09-CV-00308-PM-KK (W.D. La. July 11, 2013).