By Tony Hall,
CEO Welaptega Marine
Hurricane Isaac has caused an estimated $500 million to $1 billion in damages to the offshore energy sector in the Gulf of Mexico.
According to the catastrophic risk modelling firm Eqecat this includes lost production and fixed platforms, floating facilities and subsea infrastructure.
Hurricane Isaac did not inflict the damage on Gulf of Mexico offshore infrastructure that hurricanes Ike and Gustave did in 2008.
In that year, 60 offshore platforms were destroyed and more than 100 were damaged, this despite the fact that many damaged platforms were designed with hurricane forces in mind.
But Hurricane Isaac is yet another wake up call to offshore oil and gas sector, insurance companies, regulators and investors.
Huge costs of damage and lost production
Isaac brought offshore oil and gas production to a near standstill in the Gulf of Mexico. According to the Bureau of Safety and Environmental Enforcement, all US Mobile Offshore Drilling Units are keeping station.
The damage that occurred in 2008 and in storms of 2005 were also wake-up calls for the offshore oil and gas sector in the Gulf of Mexico. Continue reading “Hurricane Isaac costs Gulf of Mexico $500 million to $1 billion” »
Nearly all offshore oil operations in the Gulf of Mexico have halted as Hurricane Isaac approaches the Louisiana coast.
More than 93 percent of Gulf oil production capacity has been shut in, the U.S. Bureau of Safety and Environmental Enforcement said Tuesday.
Offshore platform operators have evacuated more than 84 percent of their facilities in the Gulf so far, according to the bureau.
Oil production from the Gulf has been cut by 1.3 million barrels a day, while gas production has fallen 67 percent, the bureau said.
Insurance premiums for offshore oil and gas companies in the Gulf of Mexico are 5 to 10 higher in 2012 than they were the same time last year, according to Andrew Steptowe, insurance broker and risk advisor Marsh Inc.,
Drilling contractors are paying 20 percent higher and third party liability insurance for both E&P companies and drilling contractors has risen.
Deepwater Horizon drove up insurance costs
The Deepwater Horizon incident was a large single-claim event costing $2 billion to $3 billion.
Following Macondo, several insurance companies stopped offering third party liability insurance for the offshore oil and gas market.
Insurance rates have increased due to Macondo as well as other big losses experienced by the global oil and gas industry, including the loss of the floating production storage and offloading (FPSO) vessel Maersk Griffin in the North Sea last year.
Oil and gas companies are doing a terrible job of disclosing climate and deepwater drilling risks, even in light of the tragic Gulf of Mexico oil spill, according to a new report.
While companies are making extensive capital investments related to climate change and deepwater drilling, they are generally failing to adequately disclose the associated risks in a manner consistent with US Securities and Exchange Commission’s (SEC) rules and growing investor expectations, according to a report co-authored by Boston-based investor coalition Ceres and advisory firm David Gardiner & Associates.
Disclosure on risk exposes investors
The report evaluated SEC filings for the 10 largest US-listed oil and gas companies – Apache, BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Marathon, Shell, Suncor and Total – none of which received an excellent rating in the report.
“We didn’t find any of the disclosure really valuable enough to help investors understand the risks,” said Jim Coburn, senior manager of investor programmes for Ceres.
BP, Eni and Suncor provided relatively better climate risk disclosure than other companies reviewed, while Apache and ExxonMobil provided the lowest quality disclosure, according to the report.
Investors want assessment and disclosure to weather risks
The 10 companies were evaluated in six categories and, of the 60 total ratings, only five were marked as ‘good’ and 34, more than 50%, were ranked poor or undisclosed.
Physical risks got short shrift in most filings, with six companies providing no disclosure, three offering poor disclosure and only BP making fair disclosure, the report stated. But investors want these companies to assess and disclose how vulnerable their operations are to extreme weather events such as increasing storms, rising seas and severe droughts, Coburn said.