1 / 30

Aon’s 11 th Energy Insurance Training Seminar

Aon’s 11 th Energy Insurance Training Seminar. Overview of Energy Insurance Euan Nicholson. Upstream, Midstream & Downstream. Onshore….. Downstream / Midstream. Midstream Definition: After initial production until point of sale ( processing, storage, transportation and marketing)

ernst
Download Presentation

Aon’s 11 th Energy Insurance Training Seminar

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Aon’s 11th Energy Insurance Training Seminar Overview of Energy Insurance Euan Nicholson Upstream, Midstream & Downstream

  2. Onshore….. Downstream / Midstream Midstream Definition: After initial production until point of sale ( processing, storage, transportation and marketing) Downstream definition: After Production phase until point of sale

  3. Where does Offshore end and Onshore begin? • Rig – Tanker – Processor • Oil is onshore as soon as it leaves the flange of the tanker. • Rig – Pipeline – Processor • If the pipeline goes straight from the rig, offshore market can provide cover all the way to the refinery.

  4. History of Refining • First ever refineries…. • Jaslo, Austrian Empire (now Poland) in 1854-56 • Small refineries. • Whaling • Kerosene for lamps. • The process has become increasingly complex …

  5. Onshore Facilities: Types of Plant • Types of Non-Marine onshore plants: • Refineries • Ethylene Plants • Aromatics • Oil/Gas Stabilisation • Oil/Gas Storage • Pipelines • Transportation

  6. Onshore Facilities: Chemical Plants • Downstream derivatives: • Polyethylene • Polypropylene • PTA (Pure Terephthalic Acid) • MTBE (methyl tert-butyl ether) • Synthetic Rubber • VCM (Vinyl Chloride Monomer)

  7. Why Refine? • Crude Oil needs to be processed. • Oil Products: • Gas • Naptha • Kerosene (Aviation Fuel) • Light and Heavy Gas Oils • Lubricants • Gasoline • Tar • Coke

  8. Why Insure? • Onshore hazards: • Fire • Explosion • Lightning • Aircraft • Storm • Flood • Earthquake • Machinery Breakdown • Sabotage, riots, strikes, civil commotion, malicious damage… • War, terrorism

  9. Resulting damage… Big Spring 2008

  10. Resulting damage… Big Spring 2008

  11. Big Spring loss 2008 • Loss Limit • US$350,000,000 • EML now clearly too low • Loss Cost • Vastly in excess of US$350,000,000

  12. Closer to home… • Coryton Refinery • Partial Loss in October 2007. • Small fire in dehexaniser column. • Affected production but not distribution. • Buncefield storage depot, December 2005 • Physical Damage loss. • Damage to surrounding property. • Negligence!

  13. Major losses in modern history • Flixborough (1974) • 28 killed, 36 injured. • Poor engineering planning. • BIG loss at the time. • Phillips 66, Pasedena Chemical Complex (1989) • 23 killed, 130-300 injured. • Including BI, loss over US$1,000,000,000. • Toulouse Fertiliser Plant (2001) • 29 killed, 700 injured. • Including BI, loss over US$1,000,000,000 All VAPOUR CLOUD EXPLOSIONS

  14. Insurance • The pooling of fortuitous losses by transfer of such risks to insurers, who agree to indemnify insureds for such losses, to provide other pecuniary benefits on their occurrence, or to render services connected to the risk • So it is the transfer of loss and sharing of losses with others • Risk Transfer

  15. Key Features of Insurance Contracts • Indemnification • Valuation of Insured Losses • Replacement Cost • Actual Cash Value (ACV) • Agreed-upon Value • Deductibles

  16. Physical Damage & Business Interruption • Covers: • All Physical onshore assets, including: • Refinery • Pipelines • Jetty • Storage tanks • Vehicles • Unprocessed Oil and its products • Premium setting: • Insurers will apply a rate to the sum insured to reach the premium.

  17. Long term consequences • Shareholder dissatisfaction • Lender dissatisfaction • Loss of continuity of market • Potential for sale & take-over of the business • Deferral of expansions

  18. Upstream: Exploration & Production

  19. Offshore Production and Drilling Platforms • Tension Leg Platform • Deepwater • Tension legs permanently moored to seabed • Hull is a buoyant structure • Concrete gravity based structure • Relies on weight to keep stable • Made of steel and concrete • Up to 300m jacket height • SPAR • Deepwater • Oil storage in hull • Mooring lines connect platform to seabed • Conventional Platform • Steel jacket supporting topsides • Jacket legs piled into seabed • Shallow – medium depth water

  20. Offshore production and drilling platforms cont. • FPSO (Floating Production Storage Offloading) • Deepwater or isolated areas • Low cost option • Ability to weather vane • FLNG (Floating Liquefied Natural Gas) • Gives access to stranded gas reserves that cannot be transported to land • Liquefaction process takes place on board • Deepwater and problematic areas can be accessed • LNG takes up less space than natural gas

  21. Offshore production and drilling platforms cont.

  22. The scale of the industry

  23. Increasingly Complex risks

  24. Offshore Construction: Different Phases Engineering Testing and Commissioning Installation Procurement Offshore transits Hook-up Fabrication Design Project Management

  25. Offshore Construction

  26. Deepwater Repair

  27. Deepwater Drilling Challenges

  28. Life is Risky….

More Related