Energy Insurance Ultimate Risk and Reward Heath Callan Heath Callan Energy Underwriter Argenta PLC
The Energy Industry explained.
Energy Defined The exploration, production and marketing of hydrocarbons and related energy products. Exploration & Production Refining & Processing Petrochemicals Transportation & Storage Utilities
Insurance Market Divisions Upstream Midstream Downstream Utilities
Upstream Seismic Exploration
Seismic Exploration Chase boat Chase boat 1800 3200 meter long towed streamers Chase boat 6-8 meters below sea surface Sound waves. No harmful effects on fish
Upstream Seismic Exploration Drilling Exploration
Drilling Exploration
Upstream Seismic Exploration Drilling Exploration Control of Well (Operators Extra Expense (OEE))
Wellhead How a well is drilled 30 inch 223 m Sealevel Seabed 20 inch 900 m 14 inch 3600 m 10 3/4 inch 7 inch liner 5050 m 5800 m
Upstream Seismic Exploration Drilling Exploration Control of Well Construction
Gas export line Offloading lines Offloading tanker Anchor lines Water injection line SCR Offloading buoy Suction anchors Gas injection well gas injection line Production loop Subsea production well Control umbilical
Upstream Seismic Exploration Drilling Exploration Control of Well Construction Production Risks
Midstream Seismic Exploration Drilling Exploration Control of Well Production Risks Midstream
Refining Seismic Exploration Drilling Exploration Control of Well Production Risks Midstream Refining
Power Generation Seismic Exploration Drilling Exploration Control of Well Production Risks Midstream Refining Power Generation
Underwriting an Energy Portfolio Lloyds advantages Access to business Portfolio Management Clash / Aggregations Realistic Disaster Scenarios Capital Requirements Reinsurance
Current Issues Market performance
20 YEAR OVERALL LOSS/PREMIUM TOTALS US$bn 30 WELD energy losses 1990 2011 (excess of US$ 1m) versus estimated global energy premium income 30 US$bn 25 25 20 20 15 15 10 10 5 5 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11* 0 Losses excess US$1m Estimated Worldwide Premium (US$) * incurred to date Source: Willis Energy Loss Database as at May 13 2011 (figures include both insured and uninsured losses)
Current Issues Market performance Unprecedented run of high value risk losses
Current Issues Market performance Unprecedented run of high value risk losses Capacity
2011 CAPACITY INCREASED US$m 5,000 Upstream Insurer Capacities 2000-2011 (Excluding Gulf of Mexico Windstorm) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Operating Construction 2011 upstream capacity highest since records began Estimated realistic market capacities Source: Willis
Current Issues Market performance Unprecedented run of high value risk losses Capacity Deepwater and subsea risks
Current Issues Market performance Unprecedented run of high value risk losses Capacity Deepwater and subsea risks Shale plays
Current Issues Market performance Unprecedented run of high value risk losses Capacity Deepwater and subsea risks Shale plays Frontier territories
Current Issues Market performance Unprecedented run of high value risk losses Capacity Deepwater and subsea risks Shale plays Frontier territories Political upheavals
Current Issues Market performance Unprecedented run of high value risk losses Capacity Deepwater and subsea risks Shale plays Frontier territories Political upheavals Cost of steel / Rising costs
Current Issues Market performance Unprecedented run of high value risk losses Capacity Deepwater and subsea risks Shale plays Frontier territories Political upheavals Cost of steel / Rising costs Third Party Liability and allocation of contractual risk
Current Issues Market performance Unprecedented run of high value risk losses Capacity Deepwater and subsea risks Shale plays Frontier territories Political upheavals Cost of steel / Rising costs Third Party Liability and allocation of contractual risk OEE - standalone
Current Issues Market performance Unprecedented run of high value risk losses Capacity Deepwater and subsea risks Shale plays Frontier territories Political upheavals Cost of steel / Rising costs Third Party Liability and allocation of contractual risk OEE - standalone OPA / OPOL Pollution coverage
Current Issues Market performance Unprecedented run of high value risk losses Capacity Deepwater and subsea risks Shale plays Frontier territories Political upheavals Cost of steel / Rising costs Third Party Liability and allocation of contractual risk OEE - standalone OPA / OPOL Pollution coverage Hurricane impact.ivan / Katrina / Rita / Ike
Israel Energy Sector Noble / Delek and Leviathan Zion Oil and Gas ATP Development Options? Gas market Recent issue reported at Leviathan Political / Terrorism Risk OPA / OPOL for Israel? Local infrastructure What if...must be considered.
Questions Heath H. Callan heath.callan@argentaplc.com