IMIA WORKING GROUP : Offshore Oil and Gas platforms WGP 107 (18 ) Participants: Eric Brault – AXA Corporate Solutions - Chairman Martin Kauth - Partner Re Alain Padet - AXA Corporate Solutions Doug Scott - Charles Taylor Consultant Mike McMahon - Charles Taylor Consultant Eve Ong – Helvetia Mark Mackay - AXA Corporate Solutions Mohamed F. El-Ailah - Qatar General Ins Javier Rodriguez Gomez - Reinsurance Consultancy Mexico Roman Emelyanov - SOGAZ Insurance Group Thomas Friedrich – Münich Re Stephan Lämmle – Münich Re – Sponsor Page 1 / 38 IMIA WORKING GROUP : Offshore Oil and Gas platforms Executive Summary Writing this document, group members decided to issue a first overhaul view of the risks concerning the construction of offshore platforms. They deliberately did not focus on subjects such as covers for the drilling of wells, covers of the underground searches and methods for the discovery of new oilfields. The operation of the platforms was also regarded as out of focus as were the topside processes for NG and oil, including different modules, such as pressurizing, storage separation etc. The document which follows is a general overview of the different type of platforms, the inherent risks to anticipate and manage, the construction issues, weather condition impacts, consequences on claims, importance of the safety systems, the detailed MPL scenarios during the construction, putting in place of the platform and starting of operations. The MWS role and its importance is also detailed. Underwriting considerations with specific perils and wordings are proposed. The last chapter is focussed on the capacities, markets, and the tracking of accumulations. Example of losses which may occur during construction and starting operations as well as ramp up of production as the commissioning of the different units is undertaken. At the end of document a list of sources with thanks is provided to be used by the reader to go further in detail. This being a wide, complex activity involving different techniques, diverse knowledge and always pushing the limits of the engineering firms. Complementary studies looking forward to new techniques including, wells and drilling systems and their specific challenges, and operations on long range and permanent exposures, will be necessary to have a comprehensive view. Key words: Fire, explosion, positioning, satellite, welding, modules, pipes, raw materials, seamless tubes, stainless steels, water resist, tightness, pressure, icing, lining, depth, environment, Tension Leg Platform, Spar Platform, Concrete Platform, Turret, Rig, Semi-submersible platform, Production and Drilling, Dynamic Positioning, Base camp platform, Servicing platform, Jackets, Jacket Leg Production Platform, Floating Production,, Storage and Offloading Vessel, Drill Ship, Floated/Field Support Semi-Submersible, Jacket Leg Wellhead Platform, Floating LNG with/without Regasification, Tender Rig Barge, Onshore Gas Separation Plant, Onshore Wellheads, MPL, blow out, valve tree, well, pool fire, leakage, terrorism, piracy. Acknowledgments: We would like to acknowledge and thank all the people who worked on the document answering our questions and allowing participants to get a better view of the systems. Credit must also be given to all the literature existing on subject which can be read on the internet, and in paper documents (especially the historical perspective) and which shows the extent of progress of the industry in general has made, in particular engineering firms, engineers, controllers and others specialists, and for their commitment to upgrade levels of safety . Page 2 / 38 IMIA WORKING GROUP : Offshore Oil and Gas platforms CONTENTS I. Introduction ..................................................................................................................... 4 II. Technologies .................................................................................................................... 4 A. General matters with limits and extent of concerned technologies __________________________ 4 2.1. Definition of the platforms ............................................................................................................ 5 2.2. Type of platforms .......................................................................................................................... 5 2.3 Concrete manufactured platforms: ............................................................................................. 9 B. Description of the construction of offshore platforms ___________________________________ 11 III. Insurance aspects ............................................................................................................ 14 A. Construction Risk _________________________________________________________________ 14 B. Offshore drilling and processing Risk _________________________________________________ 18 C. Natural Catastrophe (Nat. Cat.) / Accumulation Risk _____________________________________ 21 D. Underwriting aspects: _____________________________________________________________ 23 E. MPL considerations _______________________________________________________________ 26 IV. Risk Management: ........................................................................................................... 29 A. Marine Warranty Surveyor _________________________________________________________ 29 B. National specific regulation, Safety and regulation systems _______________________________ 31 C. Markets trends, (capacities, players, structures, wordings…) ______________________________ 32 D. Catastrophic Perils accumulation following up methods __________________________________ 34 V. Offshore Platform covers best practices ........................................................................... 35 VI. Conclusion....................................................................................................................... 38 Appendices............................................................................................................................. 39 Page 3 / 38 IMIA WORKING GROUP : Offshore Oil and Gas platforms I. Introduction Offshore platforms present a wide and complex subject to analyse. The global offshore industry has always provided a testing environment for engineering firms which are always looking to push the limits of the design, raw materials, erection methods, security procedures, detection systems upgrades, range of the operation size of units, all this in an extreme challenging environment. The sea conditions at the platform locations condition the design, the water depths, then the potential thousands of meters bored under the sea bottom provide a daily peril for the men working above. The development of a field is not the simple construction of the different units, which allow a field to start operations, it involves years of digging of wells with special equipment, closing them with caps, layering of pipes, and other works on processes which are done onshore. During the construction of the platforms, due to the size of investment and the possible uncertainty of when production becomes profitable, platforms can be partially sold to owners, leading to a complexity of following up of accumulation for insurance companies. We have focused primarily on the technologies of the platforms, concentrating on their main role and function. We have not studied in detail the processes of oil and NG field industry which in our view would require more research and a separate specific working group paper. Due to the size of the topic, our paper is dedicated to general matters and key issues such as the MWS role, the MPL scenario during the construction and platforms connections. The drilling units are not studied here for their inherent risks, the pure operational risk at full capacity of the field and dismantling are also for the same reasons excluded. All these subject due to the specific nature of the risk could be developed in dedicated future working groups. II. Technologies A. General matters with limits and extend of concerned technologies In the early 1930s, the first platform was developed in the Gulf of Mexico on the Texas coast, at a very shallow water depth. It then served as a wellhead, in the extension of the facilities lying on the ground. After the first oil shock in 1973, European governments decided to develop the exploitation of oil and gas fields in the North Sea. The UK and Norway were then developing offshore drilling and production techniques and building the first oil rigs in this particularly hostile sea. For the first time, these platforms needed to house men to ensure the exploitation of deposits. Safety standards related to the manufacture and installation of oil rigs were put in place in the 1970s and 1980s following accidents. Page 4 / 38 IMIA WORKING GROUP : Offshore Oil and Gas platforms 2.1. Definition of the platforms An oil platform is a unit for extracting, producing or storing oil and / or gas located in seas at sometimes very large depths. The average lifespan of a platform is approximately the same as that of an offshore oil field which is about thirty years. According to national and international legislation, oil companies have the obligation to dismantle oil platforms when they are no longer used. Hundreds of people can work on a platform. During periods of high activity, up to 300 people can live together. A good organization of this micro society and strict security rules are therefore essential to the smooth running of offshore life. It mainly