We present a method based on covariance intersection for cooperative localization with pairwise range-only relative measurements. Our method was designed for underwater robots equipped with an acoustic communication and ranging system. Range measurements are not sufficient to compute a complete relative $3$D position. Therefore, covariance intersection is performed in a transformed space along their relative estimated positions, while preserving cross-correlations between other state variables. Given the characteristics of the acoustic channel, only one robot can transmit data or a ranging request at a time, hence the pairwise limitation. We also present a heuristic for choosing a peer robot for a range measurement by maximizing mutual information. Our method places no further restrictions on the order, timing or scheduling of relative measurements. We evaluated our method for accuracy and consistency, and present results from simulations as well as outdoor experiments.