Southern Oil of Louisiana, LLC filed a complaint seeking to recover damages from, among others, Alliance Offshore and the M/V MR CADE after the M/V MR CADE allided with Southern Oil’s fixed, charted offshore oil platform located in Main Pass Block 45 (the “Corvus platform”) on December 2, 2021. The allision resulted in the Corvus platform being shut-in from December 2, 2021 until March 20, 2022 during repairs.
Southern Oil’s petroleum engineer expert Whitney Louis Belanger, Jr. issued an expert report on June 13, 2022, concluding that Southern Oil’s economic losses from the allision (i.e., deferred production and damage to the reservoir), was $216,511, which discounted at 10% per annum resulted in the present value, as of December 1, 2021, at $227,468. Belanger issued a supplemental report on May 31, 2024, opining that Southern Oil’s economic loss is $4,346,175, which discounted at 10% per annum, resulted in the present value, as of December 1, 2021, at $2,428,804. Belanger’s supplemental opinion noted a decline in production beginning in December 2022, which he opined was not caused by a variety of factors and then attributed the decline to the December 2021 allision for which repairs were completed in March 2022.
Alliance filed a motion to exclude Belanger’s supplemental report and testimony related to same under Federal Rule of Evidence 702.
Petroleum Engineering Expert Witness
Whitney Louis Belanger, Jr. is a highly experienced petroleum engineer with a distinguished career in the oil and gas industry. He holds a Bachelor of Science in Petroleum Engineering from Louisiana State University and an MBA from the A.B. Freeman School of Business at Tulane University. He is also a licensed Professional Petroleum Engineer in Louisiana.
Discussion by the Court
Alliance argued that Belanger’s opinions are unreliable because he failed to explain the methodology supporting his May 31, 2024 conclusion that the 9.24% decrease in production that began in December 2022, over a year after the allision, was caused by the allision and fails to identify any causal link between same.
Specifically, Alliance disputed the suggestion that the December 2022 downturn in production resulted from the December 2021 allision. Alliance does not appear, however, to dispute the methodology employed by Belanger, or the conclusion reached in his initial report using that same methodology.
Belanger’s initial report explained that he estimated future cash flows for two scenarios, pre- and post-allision, to determine the “present value” of the economic loss on December 1, 2021. He based the pre-allision cash flow on the long-term decline trend in production of 6% per annum since 2014, which trend he identified by reviewing daily records of production provided by Southern Oil. Belanger based the post-allision cash flow calculations on (1) actual production volumes for December 2021 through May 2022 followed by (2) volumes forecasted based on a predicted steep decline in production through October 2022 followed by the long-term decline trend of 6% per annum.
Belanger’s supplemental report again based his pre-allision cash flow projection on the long-term decline trend in production of 6% per annum. For the post-allision calculation, he again used a two-step approach, first using actual production volumes, this time for the December 2021-March 2024 period, followed by forecasted volumes.
The Court held that Alliance’s objection to Belanger’s conclusion that the December 2022 decline in production relates to the 2021 allision is appropriate for cross-examination.
Held
The Court denied the motion to exclude or limit Whitney Louis Belanger’ s testimony.
Key Takeaway:
Challenges to the inputs used by an expert rather than his methodology are fodder for cross-examination instead of grounds for exclusion. Alliance’s objection to Belanger’s conclusion does not, however, implicate the reliability of his no incident/incident approach to calculating economic loss and thus does not affect the admissibility of his testimony. Alliance will have ample opportunity to explore those conclusions on cross examination and to present countervailing evidence to demonstrate that the decline is due to other causes and thus not compensable damages in this case.
Case Details:
| Case Caption: | Southern Oil Of Louisiana Llc V. Alliance Offshore, L.L.C. Et Al |
| Docket Number: | 2:21cv2337 |
| Court: | United States District Court, Louisiana Eastern |
| Order Date: | August 09, 2024 |
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