Welcome once more to the Global Energy and Power Review.
There's still plenty to talk about in the upstream and downstream energy markets and the power sector! Offshore wells continue to leak or suffer blowouts. Onshore pipelines likewise leak or are sabotaged. Jackup rigs capsize with alarming regularity. Onshore refineries and storage units catch fire and explode with abandon, and power stations have suffered shutdowns and cat losses.
But while the winds steadfastly refuse to blow with any real enthusiasm in the Gulf of Mexico, the energy and power markets still lack a truly game-changing event to test capacity limits and generate rate increases and greater premium flows. However, it would be a mistake to assume that it's been all quiet on the loss front.
Most shocking, undoubtedly, was the horror that befell the Canadian town of Lac-Mégantic in July after the derailment of a train carrying crude oil, which is believed to have killed 50 people and has devastated dozens of buildings.
The crash quickly generated debate about the transport of crude, with some questioning why pipelines weren't being used instead. It seems doubtful that rail freight of crude is likely to cease any time soon. But given the scale of the anticipated losses (expected to top C$1bn at the time of writing) for liability and environmental clean-up claims - and the bankruptcy filing by train operator Montreal, Maine & Atlantic Railway - the apparent lack of international reinsurance protection for such exposures will be closely examined.
Back in July, Walter Oil & Gas Corporation escaped a significant loss when a gas leak from South Timbalier Block 220 Well A-3 led to a fire aboard the Hercules 265 jackup rig. Fortunately, the rig escaped serious damage, but the long process of drilling a relief well in the Gulf of Mexico, which began in August, is likely to mean continuing activity from the well is halted for at least a month.
And in the onshore market business interruption (BI) remains a major concern, with the loss from the April flood and fire at the YPF La Plata refinery in Argentina advised as $800mn for both BI and property damage.
The loss quantum is believed to relate to a month's worth of BI at around $600mn while the refinery's coker unit was taken offline, which still leaves a significant property damage claim of £200mn.
Finally, the loss of the Perro Negro 6 jackup rig off the coast of Angola at the beginning of July could land the market with an $182mn property claim, after the rig capsized and sank due to the seabed under one of its three legs collapsing.
The owner/operator Saipem's policy terms and conditions are said to be based on the Nordic Marine Insurance Plan of 2013, which is itself built on the "all-risks" principle. This means the claim could be opened up to additional sue and labour expenses, plus the cost of any cargo on board the rig.
As this year's Global Energy and Power Barometer indicates the above losses are unlikely to have a huge impact on energy (re)insurance (over)capacity and generally static rates.
However, a number of building programmes are mooted for floating liquefied natural gas (FLNG) production and storage facilities, while additional mega-projects are planned to swell the existing numbers of LNG tankers, meaning the medium-term opportunities for construction
(re)insurers look promising.
And if the loss experience of floating production, storage and offloading units in the hydrocarbons industry is anything to go by, the opportunities for property carriers are not looking too shabby either...
Enjoy the read!
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