The energy industry faces new risks associated with decommissioning and dismantling oil and gas platforms as many installations reach the end of their productive life.
In the years ahead a significant number of offshore oil and gas platforms will be decommissioned.
Willis Energy, a division of global insurance broker Willis Group Holdings says it has launced an Offshore Dismantling & Removal Insurance facility with a group of Marine and Energy insurers committed to underwriting this class of business.
In the North Sea alone, for example, the total costs associated with offshore decommissioning could reach an estimated $48 billion over the next few decades, Willis says.
"Dismantling and removing large offshore platforms, particularly those located in inhospitable environments, is a serious operational and logistical challenge. But increasingly legislation compels companies to do this," explains Chris Dear, managing director of Willis Energy. "As a result, energy companies face a number of significant risks, including seepage and pollution and complex contractual liabilities."
The policy is designed to address specific decommissioning risks, including contractual liability exposures. The policy also covers seepage, pollution and contamination risks.
Willis has extended Standard Removal of Wreck cover to also address the high profile "heavy lifting" risks unique to decommissioning projects. Furthermore, the policy provides platform operators with Extra Cost and Expense cover and, if required, Physical Loss and Damage cover. Willis has developed a risk matrix to help clients assess their exposures.
"Members of the Willis team have designed Offshore Dismantling & Removal Insurance programs for some of the largest projects in the world," Dear adds. "We firmly believe that, in conjunction with our Decommissioning Security product, our new Offshore Dismantling & Removal Facility places Willis at the forefront of risk transfer solutions for platform decommissioning activity."