Energy
Insurance Lines
There are no significant differences in the principal insurance structure in the energy sector or in the project and infrastructure sectors. (Please see attached web-link.) However, in respect of the insurance lines in Upstream Energy Development and Production, there is a unique line of business in this project field, which is not seen in other project fields. That is “Cost of Control Insurance in Blowout Incidents”. (We call it “COC/COW/OEE” as per below.) Such special insurance will be introduced briefly below.
Brief Introduction of Insurance for “Blowout Incidents”
| Insurance line | Contents of the Terms |
|---|---|
| Energy Exploration and Development
Insurance（COC/COW/OEE) OEE（Operator’s Extra Expense） We describe it as… COC (Cost of Control) COW (Control of Well) OEE (Operator’s Extra Expense) |
This insurance covers the costs which the policyholder paid in respect of controlling the blowout as per below items. ＜Principal terms＞ * Section A -Costs and/or expenses for the control of well a:Cost for the equipment and accessories necessary for the well control b:Cost for the relief well drilling
c:Expenses related to the service of the person or company that specializes in control of the well
* Section B -Re-drilling Expense* Section C -Seepage & Pollution and Clean-up Expense |
■ Covered Wells are all wells in which the insured have their own interests.
* Drilling wells (exploration wells, appraisal wells, development wells), production wells, suspended wells, injection wells, plugged & abandoned wells, workover wells.
* Relief well will be covered subject to prior notice and agreement with insurers.
■ Limit of Liability - CSL: Combined Single Limit
* Limit should be calculated on a combined single limit basis, which also should be summed from Section A to Section C.
* It is generally said that the standard of limit of liability for this coverage is about 3 to 5 times the AFE amount for drilling at a project field, and 4 to 6 times the AFE amount in deep-sea (water-depth more than 1,000m) areas, e.g., the Gulf of Mexico. What amount to set as the limit should depend on project plans and any other factors such as well depth and pressure.
* Drilling wells (exploration wells, appraisal wells, development wells), production wells, suspended wells, injection wells, plugged & abandoned wells, workover wells.
* Relief well will be covered subject to prior notice and agreement with insurers.
■ Limit of Liability - CSL: Combined Single Limit
* Limit should be calculated on a combined single limit basis, which also should be summed from Section A to Section C.
* It is generally said that the standard of limit of liability for this coverage is about 3 to 5 times the AFE amount for drilling at a project field, and 4 to 6 times the AFE amount in deep-sea (water-depth more than 1,000m) areas, e.g., the Gulf of Mexico. What amount to set as the limit should depend on project plans and any other factors such as well depth and pressure.
