The arrangement of insurance should be ascertained whether
- There is any particular insurance legislation in force in the country of operations; and if so, to what extent such legislation may affect the usual insurance programme.
- The Company already carries insurances which could be extended to the new venture.
- If one or more partners is/are involved in the venture, it should be checked whether there are any special insurance requirements which need to be taken into account.
1 Drilling operations insurance (on- and offshore)
Most of the operational insurances will be carried by the various contractors. Nevertheless the company should effect the following catastrophe protection covers on behalf of itself (and partner(s), if required).
General third party liability insurance (GTPL)
It is strongly recommended that cover under the Group GTPL facility is effected. This may be done as direct insurance or as a re-insurance of local insurers if local insurance is necessary by law.
Cost of well control and re-drilling expense insurance
Various financial amounts of insurance and extensions of cover are available, depending on local circumstances such as the concession agreement, local law, the environmental circumstances, the type of well, the availability of additional drilling and clean-up equipment and other risk factors.
Cover may be effected as direct insurance, or as a re-insurance of local insurers if local insurance is necessary by law.
2 Assignment of a drilling unit to other operators
When an offshore unit or land rig is temporarily assigned to another company, the above insurances cannot be transferred and will cease (or preferably be suspended) immediately on handover. Central Offices should always be notified/consulted. The Contractors' insurances may be transferable, but that will be a matter for themselves to check.
3 Construction operations insurance
For onshore construction work it is recommended that the company takes out Construction All-Risks (C.A.R.) insurance itself. Central Office can normally obtain insurance for lower rates than the construction contractor, and it avoids already high rates being included in a lump sum contract on a cost plus basis.
The C.A.R. insurance should however exclude the construction equipment and other property of the contractor, and should be subject to a deductible sum of $10,000, which will be for the contractors account.
4 Materials and transport insurance
5 Contracts/ liabilities
In any operation utilising contractors and sub-contractors there are risks of loss and damage to one or another party, including third parties. Appropriate clauses should be included in the standard drilling and construction contract documents. It should be noted, however, that these clauses are not identical in the two types of contract. This is because each type of contract has evolved independently within the two independent groups of international contractors into the optimum form for the very different operating conditions in which they are applied.
Liabilities of contractors engaged under a one page minor works contract should be consistent with all other contractors on site. This may be achieved by means of CAR insurance.
6 Insurance claims
Notification
Any incident which is likely to give rise to an insurance claim, should be reported as soon as possible to the insurers (in the case of local insurance) or to Central Offices (if insurance has been arranged by them).
No admission of liability should be given to any third party without the prior consent of the insurers. Particularly when third party property is involved, a joint assessment of damage should be obtained from a Lloyds, or independent, surveyor.
Delivery of goods
In the event of non-delivery, short delivery, or delivery of goods in a damaged condition, an immediate protest should be made to the carriers, and confirmed in writing as soon as possible. Under no circumstances should 'clean' receipts be issued in such cases. A joint survey of the damaged goods should be made as soon as possible.
In the event of goods being received in an outwardly good condition, but later found to be defective, the suppliers or the Purchasing Office through which the goods have been purchased, should be informed as soon as possible.
So as not to prejudice any insurance claim on damaged goods, measures should be taken to prevent, or restrict as far as possible, any further damage.
Accidents
Unless another specific claim procedure applies, initial notification of accidents should be made to Central Offices. Information forwarded, should, as far as possible, include:
- a brief description of what happened;
- a brief description of property involved;
-the location of the accident;
- photographs of the accident location and damage sustained;
- an estimate of the loss or damage;
- the probable cause of the accident;
- the measures taken.
7 Cost of control/seepage and pollution/redrilling insurance
In order to establish a limit the following might be considered:
Cost of control
- Availability of equipment/personnel to fight a blow out
- The nature of the well (pressure/contents/depth).
- The area (mob and demob of the equipment/personnel).
- Accommodation costs.
- Fire fighting costs.
Seepage and pollution
- Nature of well. What polluting element (might be) present? (oil, gas, condensate). Different limits - exploration/workover and production, injection etc.
- If blowout, what could be "damaged" (e.g. close to tourist beaches, fishing grounds, bird breeding grounds).
- Multi-well blowout.
- Availability of equipment to fight pollution and cost to get it there. Time between incident occurring until able to mobilise and drill new well(s) to same depth.
- Costs to clean up the pollution.
8 Redrilling insurance
Because in the worst case the whole well has to be redrilled, include the total drilling cost.
9 Possible extensions insurance
- Terrorist cover: Worst case scenario here should include possibility that equipment/personnel on site is damaged so everything has to be brought in again.
- Underground blowout
10 Multi-well blowout insurance
In case of possibility that more than one well involved in blowout, limit should be high enough to take into account multi-well blowout. Please note the limit is per occurrence