Houston Marine Insurance Seminar September 17 th , 2007

2. Houston Marine Insurance Seminar September 17th, 2007 T. T. “Tommy” Laurendine, P.E. Risk Engineer Liberty International Underwriters tommy.laurendine@libertyiu.com (713) 470 – 5823

3. Role Offshore Structural Engineering Playsin Understanding Risk

4. Gulf Of Mexico (GOM)RISK is from hurricane WAVES

5. GOM National Treasure 4,000 platforms 35,000 miles of pipelines 15,000 wells 2 Million BOPD 12 Billion SCFD 2nd Largest Source of Income

6. Platform Installations and Removals by Year Average Number of Platforms: Installed = 132 per year, Removed = 129 per year Data as of 04/17/07

7. GOM Structures by Vintage andWater Depth(DATA AS OF JULY 1, 2007)

8. Destroyed by Hurricane Ivan Wave-in-Deck Mudslide Wave-in-Deck Wave-in-Deck

9. Storm Tracks and Extent of Hurricane Winds

10. Moored SEMIS Adrift in RITA Before Rita

11. Platform Destroyed by Drifting SEMI

12. Tension-Leg Platform (TLP) Destroyed by Waves in Hurricane Rita

13. Platforms Destroyed by Katrina / Rita

14. Increased Cost of DecommissioningIncreased Demand on Resources

15. GOM: Unique Challenge

16. API Exposure Categories based on Life Safety and Environmental Pollution • High Consequence • Medium Consequence • Low Consequence

17. Platform Characteristics • Deck Height • Orientation • Exposure Category • Framing • Original Design Criteria • Structure Type • Age • Water Depth • Number of Conductors • Location

18. Deck Height vs. Air Gap Underside of Deck Deck Height Waterline

19. Wave-in-Deck Damage

20. Inadequate Deck Heightdue to Subsidence The seafloor at this location has subsided 10 feet. The (+)10 is at the waterline.

21. Platform Orientation

22. Platform Orientation 300O Platform North 360O True North API BULLETIN 2INT-MET Principal Wave Heading is 290O for this platform.

23. AGE Pre RP 2A 7.6% Failed Early RP 2A 2% Failed Modern RP 2A 1.5% Failed

24. Mitigation • Reduce Consequence of Failure • Reduce Load on Platform • Increase Strength of Platform Before After After 54’ 40’

25. Why Mitigate? Driving force to mitigate was to reduce the chance of having to spend resources dealing with the expensive task of P&A wells on bottom.

26. Contingent Business Interruption

27. API HEAT WORK 290° 270° Principal Wave Heading varies from 270o to 345o by Longitude

28. Five New Recommended Practices

29. Maximum Wave Height by Return Period 130.0 120.0 110.0 10000 Year 100.0 2000 Year 90.0 1000 Year 80.0 200 Year Hmax (ft) 100 Year 70.0 50 Year 60.0 25 Year 50.0 10 Year 40.0 30.0 20.0 100 1000 Water Depth, MLLW (ft)

30. Fixed Structure Wave Force = f(Hmax)2 28% increase in wave height = 64% increase in wave force Structures are typically designed to have a resistance 50 to 67% beyond the design load. 130.0 120.0 110.0 100.0 90.0 0.1% 80.0 Hmax (ft) 1% 70.0 28% 60.0 50.0 40.0 30.0 20.0 100 1000 Water Depth, MLLW (ft)

31. Schedule Issues • Inconsistent Format • Field Name versus Area and Block • Naming • EC, East Cameron, East Cam, E. Cameron • Out of Date Information • Removed platform included in schedule • New Installations not included • Missing Data • Deck Height • Type of Structure • Incorrect Data • Lat/Long Wrong • Wrong Water Depth • Wrong Installation Year

32. Standardize Schedule Format • OSTS Inspection Report • Required by CFR, Annually on Nov 1st • Since 1988 • Each Platform Documented • OSTS Assessment Report • Requested by NTL • Over 75% of platforms documented with the MMS in June 2004 voluntarily by Operators • Complex Id and Structure No. Unique

33. OSTS Inspection Report

34. OSTS Assessment Report

35. Key Stakeholders Risk Manager Adjuster Broker Schedule & Data Risk Engineer Underwriter

36. Benefits of Standardized Schedule • Consistent Format • More Timely Underwriter Response • More Accurate Insurance Policy • Reduce Burden on ALL Stakeholders • Greater Communication • Improve Our Business