Monday, March 4, 2013 Houston, TX 1:00–5:30 p.m. UNDERSTANDING THE OIL AND GAS INDUSTRY AND ITS RISKS Presented by Vance Fairchild John A. Jacobi, P.E., J.D. Bruce M. Laubacher President and Vice President, Vice President Managing Principal Pipeline Systems Compliance ACE Excess Casualty G2 Partners, LLC and Operations Services G2 Parters, LLC J.D. Kern Jacob Parsons Connie Stum Vice President and Principal Director Senior Manager of Insurance G2 Partners, LLC The Claro Group Devon Energy Corporation Brian Twellman Trey Whitley, P.E. John Paul Wiggin Director Vice President and Principal Senior Mgmt. Consultant The Claro Group G2 Partners, LLC G2 Partners, LLC Copyright © 2013 International Risk Management www.IRMI.com Institute, Inc. 1 The first step in setting up an insurance program is identifying the risks that must be managed and insured. One of the keys to identifying the risks and designing a good in- surance program is an understanding of the industry, how it works, and the unique vo- cabulary that goes with it. This primer will help anyone who is new to oil and gas risk management and insurance understand how oil and gas is found, wells are drilled, and production is maintained. Additionally, you will know the risks associated with each step of the exploration, production, and servicing process. Your new knowledge will im- prove your ability to communicate with clients or underwriters and enhance your un- derstanding of how to properly insure the risks associated with oil and gas exploration and production. 2 Today’s energy industry demands a risk management partner who thinks two steps ahead in every area of your business. As a sophisticated global risk management partner, Gallagher Energy provides a broad range of products & services beyond the traditional brokering of insurance transactions. Our industry leading advice and expertise, team-oriented approach, and award-winning service com- bine to provide tailored solutions for your unique business needs. t In-Depth Risk Review t Comprehensive Risk Analysis t Enterprise Risk Management t Detailed Risk Mapping Programs Gallagher ranked #1 in overall client satisfaction among the five largest brokers in Greenwich Associates 2012 Large Corporate Insurance Survey. Gallagher was also named one of the :RUOGnV Most Ethical Companies for 2012 by The Ethisphere Institute. Bill Farnan | Managing Director, Gallagher Energy 713-358-7888 1900 West Loop South [email protected] Suite 1600 www.ajg.com/energy Houston, TX 77027 Minimize your well control risks Travelers has been protecting the oil and gas industry for more than 30 years. Our claim, risk control and product professionals are exclusively dedicated to serving your industry and providing the risk transfer solutions you need. We are the first insurance company to offer such industry-leading innovations as: • “First Sign of Trouble” Endorsement • Free IADC WellCAP® Well Control Certification Training • Well Control Emergency Response Plan • Incident Management Training – Executive & Field Level • Kick Drills & Crew Awareness Training at the Rig Site We’re proud to work with Wild Well Control, Inc. as our preferred well control provider and training resource. Don’t wait for a well control event to occur – contact your agent today or visit travelers.com/oilgas for more information. travelers.com © 2013 The Travelers Indemnity Company. All rights reserved. Travelers and the Travelers Umbrella logo are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries. CP-7853 Rev. 1-13 Notes This file is set up for duplexed printing. Therefore, there are pages that are intentionally left blank. If you print this file, we suggest that you set your printer to duplex. 6 Vance Fairchild President and Managing Principal G2 Partners, LLC Mr. Fairchild serves as president and managing principal of G2 Partners, LLC, leading G2’s strate- gic direction, business service lines, and client development and identifying and forging key part- nering relationships, largely focused on the development of G2’s environmentally distressed as- set business. Mr. Fairchild has 20-plus years’ professional experience, having worked across the entire environmental market spectrum. Mr. Fairchild has worked on permitting capital pipeline and compression projects and managing soil, sediments, surfaces, and groundwater remediation and operational and emergency re- sponse of pipeline disruptions. He also successfully led the financial recovery of environmental expenses through commercial general liability insurance and the Federal Energy Regulatory Commission of hundreds of millions of dollars. Mr. Fairchild has extensive experience in the acquisition of environmentally impaired industrial real estate, fully liquidated liability assumption, and cost-effective mitigation, land re-entitle- ment, and profitable monetization of real property for highest and best use, including creative ecological and beneficial reuse. Mr. Fairchild has led several as-is real estate acquisitions and successful remediation, regulatory closure, and asset divestitures totaling $150 million of contract and real estate value and has pro- vided principal oversight for the execution of many tens of millions of dollars more of liability transfer, assessment and remediation, facilities demolition, and related environmental services contracts at many sites across the United States. At some of these sites, the highest and best use for previously environmentally impacted properties included integrating “beneficial reuse” (e.g., wetlands, natural resource and habitat mitigation, critical land conservation and enhancement, creative “ready for reuse” of landfills, water quality and quantity enhancements, green and open space, and other beneficial natural resource use). By implementing sustainable and balanced de- velopment, with the extensive use of “green” remediation approaches and technologies, includ- ing phyto-remediation, in-situ treatment, and less energy-intensive passive cleanup approaches, Mr. Fairchild is successful in differentiating projects and properties by setting a “green vision” for the collective benefit of sellers, buyers, and developers and, in the process, builds and sustains grassroots community, public, and regulatory support for the proposed efficient, timely, and cost-effective cleanup and restoration/reuse of prior industrial operations. Most recently, Mr. Fairchild has been managing pipeline data improvement and regulatory com- pliance initiatives supporting natural gas transmission and gas utility companies. These projects include resolving pipeline attribute information, integrating in-line inspection data, and improv- ing data quality for determining maximum allowable operating pressure. 7 John A. Jacobi, P.E., J.D. Vice President, Pipeline Systems Compliance and Operations Services G2 Partners, LLC Mr. Jacobi is an industrial engineer and a licensed attorney with over 30 years of energy industry experience. Prior to joining G2, Mr. Jacobi served as community assistance/technical services manager in the U.S. Department of Transportation’s Office of Pipeline Safety, Southwest Region, for almost a de- cade. He began his career with the U.S. Army Materiel Command with assignments at Red River Army Depot and the Aviation Systems Command before becoming chief engineer, Lake City Army Ammunition Plant. His private sector experience includes 13 years with Tenneco Inc. and Tennes- see Gas Pipeline (TGP), including stints as planning manager, manager of technical services, and attorney dealing with health, safety, and environmental compliance issues for both Tenneco Inc. and TGP. He left Tenneco for a career as an environmental consultant focusing on regulatory com- pliance, pipelines, and energy issues. A former Presidential Exchange Executive, Mr. Jacobi received his Bachelor of Science in mechan- ical engineering (with Honors) from Rose-Hulman Institute of Technology, his Master of Science in industrial engineering from Texas A&M University, and his Juris Doctorate from the University of Missouri - Kansas City. Bruce Laubacher Vice President ACE Excess Casualty Bruce Laubacher serves as vice president in ACE USA’s Casualty Risk Division. Based in Houston, Texas, Mr. Laubacher has responsibility for all aspects of production and development of the ACE Excess Casualty energy product portfolio within the regions of Houston, Southwest (Dallas), Los Angeles, and San Francisco. Mr. Laubacher has served in the insurance industry for more than 36 years. Since 1981, he has mainly been involved in primary umbrella and excess casualty underwriting. Mr. Laubacher joined ACE in 2004 as part of the National Accounts team in New York City. He moved to Houston in 2005 to focus on underwriting excess casualty coverage for the energy industry. Prior to his tenure with ACE, Mr. Laubacher served in various management roles at American In- ternational Group (AIG), Chubb Group of Insurance Companies, Great American Insurance Com- pany, and Prudential Reinsurance. Mr. Laubacher received his bachelor of sciences degree in business administration from San Diego State University. 8 J.D. Kern Vice President and Principal G2 Partners, LLC Mr. Kern focuses on developing and delivering solutions to complex environmental health, safe- ty, and asset integrity issues facing the integrated oil and gas industry (upstream to down- stream). He also serves on development teams for large capital projects where he focuses on de- veloping strategies, plans/schedules to achieve