By: Fred Holmes/2009-2010 AESC President
March/April 2010

This same alarm is being heard throughout the country. From Washington, D.C., to every state and local government that produces oil, our voice is loud and is being heard. The oil industry and the people who work in the industry want to save jobs and the U.S. economy. Everyone needs to not only hear the alarm but to also get involved and stay involved in government — a government that is making decisions and laws that will affect our very lives and livelihoods.

Fred S. Holmes, 2009-2010 AESC President, Key Energy Services, Taft, California

During my career, I have been a well servicing contractor and an oil well drilling contractor. I am presently an oil producer and an oil operator. My career spans several decades, actually more than I would like to admit. In the early part of my career I tried to read and understand contracts and Master Service Agreements (MSA). Computers and the Internet (thanks Al) were not yet invented, or at least not commonly used. Back then you were on your own to learn by whatever means and methods were available. I would see a lot of terms and words I did not understand, for example: knock for knock, indemnity, negligence, Waiver of Subrogation, named insured, endorsement, peril, hold harmless and the list goes on and on.

Throughout my working career, it has been common knowledge that the IADC drilling contract is a good contract, which is fair and equal to both sides. Along with most other people, I would sign them primarily on faith, believing they were good. As a drilling contractor or as an operator, we would not consider drilling a well without an IADC contract. That brings me to my next point. After the well has been drilled and the drilling rig moved off location and it’s time to bring in the well servicing rig and other services — what about a contract now? As far as contractors and producers are concerned, they are reluctant to enter into any type of contract or Master Service Agreement. Most of us don’t understand the MSA for well service. That’s where the AESC Master Service Agreement can help. It is fair to both sides and is well-suited for both the well servicing contractor and the operator. You, as a contractor or operator, are doing a great disservice to your owners, your companies, your employees and their families by not using the AESC MSA. You may believe that when a contractor is working for an operator and an incident occurs, the two of you can work out the details of who is responsibility for what. That is rarely the case. Our mind-set is that when something unforeseen does happen and a Master Service Agreement is not in place, truth and justice will prevail and everyone will come out okay. This may be the common belief but it is not the common outcome.

I strongly urge all service companies and operators to always use the AESC Master Service Agreement.