Deepwater Horizon

October 8, 2013

Colorado flooding implicates insurance coverage for energy companies

Source: http://www.lexology.com, September 30, 2013
By: John D. Shugrue, Kevin B. Dreher and Emily Garrison, Reed Smith LLP

The damage caused by the recent flooding in Colorado is catastrophic and has evermore changed the lives of many who live in and around the affected communities. As the waters recede, the impact of the destruction is being uncovered. Many roads, houses, and businesses have forever been washed away, and the recovery effort will take years to rebuild what has been lost.

Among the businesses hit the hardest were the oil and gas industry. There are about 20,000 oil and gas wells across Weld County, Colorado, and about 1,900 of them had to be closed off — “shut in” — as the floodwaters poured down from the mountains and spread out across the plains. When the floodwaters reached Colorado’s drilling center, they poured into wells, broke pipes and swept huge oil tanks off their foundations. The state has counted at least a dozen “notable” spills stemming from the catastrophic floods. According to officials, the heavy floodwaters caused more than 37,000 gallons of oil to spill into or near rivers, and the state’s oil and gas industry is racing to assess and fix the damage to wells, pipelines, and storage facilities that occurred during the storm.

While the resulting environmental impact caused by the recent Colorado flooding may pale in comparison to other catastrophic disasters, such as the Deepwater Horizon blowout or the Exxon Valdez oil spill, the physical damage and loss of operations sustained by many oil and gas companies that operate in the affected area will be significant. Fortunately, the affected companies likely have insurance coverage in place to assist with physical repairs to wells, pipelines, and storage facilities, as well as coverage to assist with any environmental cleanup, resultant third-party claims, and loss of business income and production.…

October 4, 2013

Can bacteria combat oil spill disasters?

Source: Web Newswire (India), September 29, 2013
Posted on: http://envfpn.advisen.com

Until now, chemicals have often been used to clean up oil disasters, to break up the oil/water emulsion, making oil more soluble and thus removing it from the surface water. According to data from the US Environmental Protection Agency (EPA) around seven million litres of such chemicals were used to combat oil pollution in the Gulf of Mexico, resulting from a spill of about 700,000 tons of crude oil into the sea from the offshore oil drilling platform Deepwater Horizon in 2010. Some of the most well-known of these were dispersants with the brand name Corexit – developed following the notorious tanker accident of the Exxon Valdez in Alaska in 1989. These substances have been heavily criticised however because of their side effects on humans and the environment. In the context of the EU-project BACSIN, scientists from different countries have therefore been investigating alternatives. One approach for example could be to stimulate oil-degrading bacteria in their growth or for example by making them easier to use by freeze-drying so that they can be sprayed more easily than powders over the oil slick, explains Dr. Hermann J. Heipieper from the UFZ. However, there are still lots of details that require fine-tuning before the day arrives when they can be used to combat damage from oil spills. The precautionary principle should therefore be given priority. No matter how concerted efforts are, nature will never completely return to its original state, not to mention the fact that the mitigation of environmental damage from oil spills is much more costly than its prevention.…

September 13, 2013

BP toxic gas trial is first of many

Source: Houston Chronicle, September 10, 2013
Posted on: http://fpn.advisen.com

Tons of toxic gases spewed from a tower at BP’s Texas City refinery for more than 40 days in 2010 without warning to the public. This week four of more than 48,000 residents who sued BP claiming health damage from the release will be the first to have their day in court.

They are asking a jury to give each of them up to $200,000 and to punish BP by awarding 10 percent of its estimated $147 billion net worth. The punitive damages would be given to charity, said attorney Tony Buzbee, who represents the four Galveston County residents.

The lawsuit alleges that BP could have shut down a unit that caused the release but refused to do so because it would have cost $20 million in lost revenue.

Jury selection began Monday in the trial, which is expected to set the tone for many trials to follow.

“These test cases are all bellwethers,” Buzbee said. “Whatever decision is made by the jury will not be binding on any clients but these, but it will give a strong indication of the … value of the cases.”

The mixture of gases escaped through a flare, a tower designed to burn away pollutants released into the air, between April 6 and May 22, 2010.…

August 30, 2013

Heriot-Watt University: The Vital Role of Bacteria During Oil Spills

Source: UAE Government News, August 28, 2013
Posted on: http://envfpn.advisen.com

An international team of scientists, led by Dr. Tony Gutierrez of Heriot-Watt University, has revealed the first evidence that certain species of bacteria thrived on the oil that was released into the Gulf of Mexico during the Deepwater Horizon spill.

The Deepwater Horizon Spill

The blow-out of the Deepwater Horizon oil rig off the Louisiana coast on April 20 of 2010 is marked as the worst environmental disaster in US history and one of the most devastating maritime accidental spills worldwide.

Around 700,000 tonnes of crude oil leaked into the Gulf of Mexico over a period of nearly three months, impacting vast stretches of coastline and open waters in the Gulf. Microbes, in particular bacteria, are known to perform a fundamental role in the degradation and ultimate removal of oil after it enters the marine environment, and this was certainly the case at Deepwater Horizon.
How the microbial community responded

Several scientific publications have described how the microbial community in the Gulf responded to the massive influx of oil released from the Deepwater Horizon blowout, however, little evidence was presented to confirm that any of the identified bacteria were capable of degrading the oil.

Using sophisticated molecular techniques and a collection of hydrocarbon molecules containing specially-labelled carbon atoms, the international team of scientists identified various species of bacteria in surface oil slicks and deeper waters in the Gulf and confirmed their ability to degrade the oil.

This work presented unequivocal evidence on the capacity for some of the most dominant bacteria found in the Gulf during the spill to have contributed a significant role in the removal of the oil. The team is also the first to report on the isolation of the most dominant oil-degrading bacteria from the surface oil slicks.

The important role of micro-organisms

Dr Gutierrez’s team’s findings further increase our understanding on the fate of the oil that spilled into the Gulf of Mexico, and reinforces the important roles that micro-organisms play in our environment, such as in cleaning up oil spills. Without oil-degrading bacteria, the Gulf of Mexico, and the world’s oceans and seas for that matter, would be continuously covered in a slick of oil.

 …

February 6, 2013

Environmental Oversight

Source: Property Casualty 360, January 2013
By: Dave Lenckus

While Pollution Coverage Is Gaining Traction Among Discretionary Buyers, Many Businesses Remain Underinsured and at Risk

AIDED BY LOW PRICES—AND LARGE UNCOVERED LOSSES CAUSED BY RECENT EVENTS—ENVIRONMENTAL CARRIERS AND PRODUCERS SEE OPPORTUNITY TO EXPAND PURCHASES BY NEW BUSINESS CLASSES, INCLUDING HEALTH CARE, HIGHER ED & HOSPITALITY

When it comes to potential growth areas for the insurance industry, Cyber liability, a relatively new coverage area, has been getting much of the recent attention.

But Environmental insurance—which is now many decades old—may also represent a very real chance for carriers and producers to significantly increase their premium volumes—if they can succeed in convincing a broad swath of commercial buyers that coverage is necessary, even for organizations that don’t consider themselves polluters.

For some select classes of business, the financial backstop of pollution insurance has long been a mandatory buy. under the 1976 Resource Conservation and Recovery act, owners of landfills; underground storage tanks; and hazardous waste treatment, storage and disposal facilities must provide financial responsibility assurances to cover remediation and third-party damages stemming from a pollution incident.

Many lenders on real estate deals—whether for acquisitions or new developments—also demand that borrowers secure insurance to protect against unforeseen site contamination. And construction-project owners will frequently insist their contractors acquire the coverage.…

March 9, 2011

BP Fined $62 million for Blast and Spill Under Deal with U.S.

Source: http://enr.construction.com, October 31, 2007

In two plea agreements with the U.S. Justice Dept., energy giant BP Products North America Inc. agreed on Oct. 25 to pay a $62-million criminal fine for a 2005 explosion at a Texas refinery that killed 15 people and for petroleum pipeline spills last year on Alaska’s North Slope. BP also must spend $415 million on improvements to the refinery and the pipeline. Of the total fine, $50 million is for Clean Air Act violations related to the refinery explosion. The $12-million pipeline fine cites BP’s failure to inspect or clean the corroded pipeline.…

November 29, 2010

More Than Coverage: Environmental Insurance’s Value Proposition

Acknowledgement to XL Environmental

By MaryAnn Susavidge, Executive Managing Underwriter, Environmental

As Deepwater Horizon was added to the list of names — Exxon Valdez, Bhopal, Love Canal — synonymous with environmental disasters, businesses received a stark reminder that their activities have the potential to incur environmental liabilities. While they may have made a mental note of their environmental liability risk, few made a mad dash to buy environmental insurance as some may have anticipated.

A weak economy still weighs heavy on most business’ insurance-buying decisions, and environmental insurance may be on the discretionary luxury list of insurance coverages. However, many experienced buyers see the value beyond the financial claims paying benefit of their pollution coverages. In fact, they are seeing the value of not only their environmental insurance, but the relationship that they have with their carrier, as a survival strategy, helping them take advantage of new business opportunities, get added guidance on their environmental, health and safety initiatives and protect their profitability in the current weak economy.…

September 1, 2010

Tourism hardest hit in the Gulf in BP oil spill aftermath

Acknowledgement to Ironshore Environmental

August 17th, 2010 12:22 pm
By Dominique Doms, International Trade Examiner

The tourism industry in the Gulf of Mexico is normally at its peak around this time of the year, but tourists are few and far between this time around. A stroll around the beaches of the Florida panhandle and the Alabama shore show some sunbathers and visitors but the signs of a suffering Gulf economy are plenty.

Across the Gulf States, the vacancy rates in hotels, inns or condominiums is around 50% and a simple stroll on the beaches or a visit to a local restaurant show why: the number of visitors is a far cry from what local residents and business owners call “a normal season”.

One business owner in Alabama complained that his foreign visitors cancelled their trips after the April 22 collapse of the Deepwater Horizon rig and the start of the oil spill and opted to reschedule their two or three week vacation somewhere else and away from the Gulf.…

July 15, 2010

“Oilicane” in the Gulf?

As we continue to watch the environmental disaster unfold in the Gulf of Mexico, the final impact to the environment, property, and human health has not even begun to unfold.  According to Advisen,  as of July 9, 2010, 13 organizations including BP plc, Transocean, Andarko Petroleum, Cameron, and Halliburton, are named in loss events in legal cases stemming from the Deepwater Horizon oil rig disaster and subsequent spill.  As of early July, over 130 individual loss situations are being tracked and that may be only the beginning.

As claims and lawsuits continue to mount, commercial and habitational real estate owners along the Gulf Coast need to be cognizant that their property and casualty insurance policies may include absolute or total pollution exclusions and therefore will not address any resulting contamination from the oil spill.  With the projected higher than average hurricane season upon us, concerns including storm surge, wind-driven rain and just plain wind-driven oil-contaminated sea water (the potential “oilicane”) onto both coastal and inland, real and personal properties may compound the environmental tragedy.

Pollution Legal Liability (PLL) insurance could assist in mitigating some of the fears property owners along the Gulf may have.  PLL would provide coverage for clean-up of oil-contaminated properties as well as any resultant third-party bodily injury and property damage claims and may even be expanded to include business interruption.  In the event such contamination resulted from the oil spill, the carrier may have grounds to subrogate against BP and perhaps others.

The environmental insurance marketplace is keeping a keen eye on the events unfolding in the Gulf, with a few markets developing exclusions and underwriting restrictions, while others see an opportunity and continue to write business in the region.  New Day can assist you and your real estate clients in understanding the insurance implications of a potential “oilicane” as well the inherent insurance risks that the oil spill in the gulf poses.  Contact New Day to discuss PLL coverage for your real estate clients and allow New Day to assist in developing a comprehensive environmental insurance program.…