MAJOR LOSSES IN THE HYDROCARBON INDUSTRY 03 JULY Jonathan Carter, Global Energy Risk Engineering London

Transcription

1 MAJOR LOSSES IN THE HYDROCARBON INDUSTRY 03 JULY 2014 Jonathan Carter, Global Energy Risk Engineering London

2 Introduction to Marsh Introduction to Insurance Risk Engineering Marsh 100 Largest Losses 23 rd Edition What s in it? The 10 Largest Losses What s not in the document? Recent losses Trends in the losses Uses for the document Any Question? 1

3 Marsh & McLennan Companies Marsh & McLennan Companies Marsh Guy Carpenter Mercer Oliver Wyman A world leader in delivering risk and insurance services and solutions to clients A leading risk and reinsurance specialist A leading global provider of consulting, outsourcing, and investment services Delivering advisory services to clients Oliver Wyman A top-tier global management consulting firm NERA Economic Consulting Competition, regulation, public policy, finance, and litigation Lippincott Corporate branding, identity, and image 08/07/2014

4 Marsh Global Over 24,000 Colleagues and 400 Offices in 130 countries Marsh Owned/Controlled Office Affiliate Correspondent No Marsh Office 08/07/2014

5 Marsh: A Leader in Scale and Scope 2010 Revenue: USD 4.8 billion 11% Asia Pacific 48% U.S. and Canada 6% Latin America 35% EMEA Presence: Marsh Owned/Controlled Office Affiliate Correspondent Marsh serves 87% of the Fortune Global 500 and manages three or more lines of coverage for 92% of the Fortune 100. Circa USD 40 billion in premium placed. Extensive global footprint with operations in more than 130 countries. Over 24,000 employees and 400 offices worldwide. 4

6 Energy Marsh s Energy Practice is at the forefront of advising energy companies on risk and insurance issues impacting operational success. Our network of over 350 energy specialists is globally coordinated from ten strategic hubs. We manage over USD 2 billion of insurance premiums in the energy markets for over 1,000 clients. Value Proposition Our leverage with global markets enables us to reduce the cost of a client s risk by identifying opportunities in existing programs. Access to our market-leading claims team ensures you benefit from our worldwide experience in maximizing policy indemnity and swift recovery. Our market-leading risk engineering team provides quality risk assessment and improvement advice, benchmarking data, and adaptability to new industry technologies. Our powerful analytics and benchmarking capabilities allow us to support clients through all phases of investment. Capabilities Negotiating ability Market knowledge Contract review Risk consulting Engineering Ability to access key international markets Energy insurance training courses Crisis management Claims management Strong benchmarking data 08/07/2014

7 Insurance Risk Engineering Supporting the communication between insured and insurers Making judgements on the quality of risk management practices Making estimates of the magnitude of potential insured losses Making recommendations on good loss control standards Promoting improvements in process safety standards Acting and technical resources for brokers and underwriters Ensuring lessons from energy industry losses are shared across the industry 6

8 Marsh s 100 Largest Losses 7

9 From a database maintained by Marsh for nearly 40 years Now has nearly 10,000 entries Latest edition the 23 rd published in March Largest Losses based on the estimate of a Ground Up property damage loss Adjusted to equivalent of 2013 value No Business Interruption / Liability / Cost of Well Control etc. Covers the period 1974 to

10 Categories Refining Petrochemicals Gas Processing Terminals and Distribution Upstream 9

11 Included in the 23 rd Edition Forward by Professor Sam Mannan New losses added since the 22 nd edition published in 2011 Up-dating of losses with up-to-date information on loss values and causes Summary of other recent major losses Summary of recent Natural Catastrophe losses 10

12 Ten Largest Losses Location Country Date Incident Type Property Loss (USD million 2013) Piper Alpha, North Sea UK 1988 Explosion / Fire 1,810 Pasadena USA 1989 Explosion 1,400 Skikda Algeria 2004 Explosion / Fire 940 Ekofisk, North Sea Norway 2009 Collision 840 Gulf of Mexico USA 1989 Explosion / Fire 830 Mina Al-Ahmadi Kuwait 2000 Explosion / Fire 820 Campos Basin Brazil 2001 Explosion / Sinking 790 Longford Australia 1998 Explosion 750 Campos Basin Brazil 1988 Blowout 700 Toulouse France 2001 Explosion

13 What isn t in the publication? Bhopal Mexico City, Pemex Limited Property Damage loss Limited Property Damage Loss Feyzin Prior to 1974 Buncefield Limited Property Damage to the first insured 12

14 Where are they? Macondo / Deepwater Horizon 14 th USD 600 million (2013 USD value) Loss of the drilling rig only Flixborough 40 th Estimated Loss Value inflated to 2013 USD 270 million 13

15 New Incidents Since Explosion and Fire at Petrochemical Site Map Ta Phut, Thailand 2012 Explosion and Fire at Oil Refinery Bangkok, Thailand 2012 Explosion at oil refinery olefins storage plant Falcon State, Venezuela 2013 Refinery fire following major flooding La Plata, Argentina 2013 Explosion and fire on an ethylene cracker Louisiana, USA 2013 Sinking of a jack-up rig Off-shore Angola 2013 Blow-out on a drilling rig Gulf of Mexico, USA 14

16 Recent incidents not included West, Texas Ammonium Nitrate Explosion Elgin Platform Gas Leak, North Sea Lac Megantic, Quebec, Canada oil train explosion 15

17 Recent Natural Catastrophe Losses Superstorm Sandy Flooding in Thailand Typhoon Haiyen in the Philippines 16

18 Distribution of Losses 17

19 Losses over USD 130 million (2013 value) Increase in activity in the sector Average daily production of crude oil million barrels million barrels Concentration of major losses in 1980s (Piper Alpha, Philips Pasadena, Gulf of Mexico) More frequent large losses (over USD 130 million) in last 15 years 18

20 Distribution by Sectors 19

21 Dominated by upstream and refining Upstream High value High pressures and temperatures Unknowns of natural reservoirs Corrosion and erosion risks Refining High value Heating / cooling / reacting Corrosion risks Large inventories 20

22 Petrochemicals High value (and value concentration) High pressures / temperatures / reactions Refined feedstocks Lower inventories of flammable and explosive materials Gas Processing Lower value concentration (in general, but some exceptions) Less high temperature processing (more low temperature processing) Distribution Lower value concentration No heating / cooling / reacting Generally pre-processed 21

23 Use of the document It can t happen here I ve never heard of that happening That couldn t happen in a company like ours Black Swans 22

24 What is a Black Swan? Hard-to-predict, rare events beyond the realm of normal expectations an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. it carries an extreme impact. in spite of its outlier status, explanations after the event make it explainable and predictable. Are these losses Black Swans? 23

25 Reminders for HAZOP teams Starting points for Process Safety meetings Reminders of the importance of process safety barriers A reminder to finance and risk managers of the potential impact of process safety failures 24

26 Judith Hackett June 2014 One of the biggest challenges in the world of real health and safety and preventing catastrophes is getting people to recognise what could happen, and to learn from past events even if they have never been close to such a disaster themselves. 25

27 Link to the document Losses-in-the-Hydrocarbon-Industry aspx. Or type Marsh 100 Largest Losses Into a search engine 26

28 ANY QUESTIONS? 27

29 To carry on the discussion Follow the link to a Linkedin discussion group s-tile-flipgrp 28

30 Safety & Loss Prevention SIG Confirmed Q3 Events High reliability organisations: one day seminar, London 24 July 2014 Committee meeting and AGM combined with workshop on Integrating SIL into safety management 11 September 2014, Portland Place London 2015 programme underdevelopment Regionally based committee meetings & evening talk Webinars One day seminars 29

31 Registered in England and Wales Number: , Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU. Marsh Ltd is authorised and regulated by the Financial Conduct Authority.