Energy Review 02-2019

07 March 2019

For many people, sport is a welcome distraction from their daily woes. Be that the Super Bowl in the States, the Six Nations Tournament in Europe, various international cricket matches in different parts of the world, tennis or golf, it is a good excuse not to get stressed out by State of the Union bluster, Brexit shadow boxing, Russian meddling and Chinese posturing. The events – or rather, the lack of real progress – in Venezuela are frustratingly sad.

People cling to hope, and we read that the offshore drilling rush could transform South Africa, more oil discoveries have been made in Guyana, a large well commences oil production in Brazil, and the Glengorm area will likely be an industry hotspot in the UK. Often, one man’s loss is another man’s gain and we hear that the US oil sanctions on Venezuela could be an energy windfall for India and China. Nigeria has earned US$1billion from the renewal of 22 oil blocks. Despite some significant oil and gas discoveries, the man on the street very rarely sees short-term benefits as a result.

Give or take a few dollars, the price of oil has remained fairly stable. There are still many opportunities to earn (even more) money. The future of the energy industry looks pretty good: a recent report states the oil industry is to hike investment and grow its workforce in 2019. What we still have not seen are viable and acceptable plans for a successful wide-ranging transition from the use of fossil fuels to renewables such as solar and wind energy. That said, the signs are out there. According to a leading English newspaper, “renewable energy employment will triple to 30 million by 2030” and so, the future looks very promising.

Touch wood, the insurance industry is doing pretty well, at the moment. The major carriers are making money, the intermediaries are providing effective services, and the premium- and fee-paying customers are spoiled for choice. There is, however, a problem lurking around the corner, and that is, of course, Brexit. The financial services industry is being left out in the cold but while there is much uncertainty about a hard or soft Brexit, or even another referendum in the UK, brokers, carriers and customers have been looking around and making their contingency plans. When cross-border business looks imperilled, who would trust a politician and wait for them to come up with a solution? The latest news looks awfully outdated only days after it comes out, but a postponement of Article 50 does look like it could happen. As one London Market observer commented: “whatever happens, the City boys will sort something out”.

Our newsletter contains quite a bit of news relating to oil spills and piracy. Also, there were some large fines imposed, years after major oil spills took place.

One can take heart, however, especially in the northern hemisphere: Spring is around the corner!

We trust our readers find our articles interesting and we look forward to helping you with our ideas and solutions to your needs and requirements.

Energy Casualties

Crude oil spills in northern Oklahoma; clean-up underway

Crews are working to contain thousands of gallons of crude oil which leaked into a creek in northern Oklahoma.

Oklahoma Corporation Commission spokesman Matt Skinner said oil extends for about five miles in Black Bear Creek in rural Garfield County.

Mr Skinner said the spill was reported on 5th February by Great Salt Plains Midstream of Oklahoma City, a pipeline operator. The oil apparently leaked from an open valve on a tank.

He said about 750 barrels, or 31,500 gallons, leaked and that crews are “working around the clock” to remove the oil. Mr Skinner says there was no threat to those people who live in the area.

Offshore worker dies on Total’s Culzean field off UK

An offshore worker has died after falling into the North Sea while working on the Total-operated Culzean field.

According to media reports, a worker was reported missing on 24th January, at around 11am. The body of the worker was later found, and the family of the man was informed.

“Police can sadly confirm that the body of a man was recovered in the North Sea on Thursday, the 24th January during efforts to locate a person who had been reported missing.

“Emergency services were contacted at around 11 and a subsequent search was launched led by the Maritime and Coastguard Agency (MCA). Inquiries are ongoing to confirm the identity of the man,” a Police Scotland spokesperson told Scottish TV.

Discovered in 2008 by Maersk Oil, Culzean is an HPHT gas condensate field in the East Central Graben area of the central North Sea, located 260 kilometres off the coast of Aberdeen.

With resources now estimated at 250-300 million barrels of oil equivalent, Culzean is the largest UK gas field to be sanctioned for a quarter of a century. Its production is expected to start in 2019 and continue for at least 13 years, providing 5% of total UK gas demand. Total took over the field through the acquisition of Maersk Oil in 2018.

Gas tanker explosion off Crimea kills 14

At least 14 people died off the coast of Crimea after two gas tankers sailing under the Tanzanian flag were engulfed by fire on 21st January. Five sailors were still missing.

Alexei Kravchenko, of Russia’s maritime agency, said that the fire had begun as one vessel passed fuel to another and both crews – made up of nationalities including Indian and Turkish – jumped overboard.

The tankers were near the Kerch Strait, which has become a flashpoint between Russia and Ukraine after Russia seized three Ukrainian navy vessels in November in the first open military incident since Russia annexed the Crimean Peninsula in 2014.

Enbridge gas pipeline fire causes damage in Ohio

First responders were called to a fire at an Enbridge Inc. natural gas pipeline in Noble County, Ohio, on 21st January, several news outlets reported.

A tweet posted to Enbridge’s Twitter page stated that Enbridge personnel were responding to an “incident” on its Texas Eastern pipeline system.

According to Reuters, who quoted Chasity Schmelzenbach, Emergency Management Director for Noble County, Ohio, as of 2pm CST, the explosion appeared to have destroyed two homes.

Ms Schmelzenbach said they received reports of flames shooting up to 200 feet which could be seen from up to 15 miles away.

She added that one person was taken to a hospital with what appeared to be minor injuries.

The primary fire on the pipeline had been extinguished.

Enbridge has said it will provide updated details as they become available.

The fire at Enbridge comes just days after there was a pipeline explosion at Pemex due to fuel theft. It was reported that at least 89 people died from that explosion.

Equinor in Barents Sea well control incident

Norwegian oil and gas giant Equinor reportedly suffered a well control incident during exploration drilling in the Barents Sea.

The Norwegian oil industry safety watchdog, PSA Norway, said the incident had occurred on 16th January 2019, aboard the Seadrill-owned West Hercules semi-submersible drilling rig, which was drilling for Equinor.

“This incident occurred in connection with drilling the 7132/2-1 exploration well in the Barents Sea,” the PSA said.

“During the drilling operation, the lower marine riser package (LMRP) on the blowout preventer (BOP) was unintentionally disconnected and the work, therefore, had to be halted.

No personal injuries or environmental discharges have been reported as a result of the incident. Its cause is so far unknown,” the PSA said.

The PSA also said it has informed the police of the incident and will provide them with technical support, should this be requested.

The safety authority said it would carefully review and clarify the course of events and uncover and describe the actual and potential consequences of the incident.

The PSA Norway has said it will apply necessary enforcement powers to correct possible breaches of the regulations.

The investigation results will be made public; however, the PSA did not provide the expected timeline of the release of the incident report.

The well in question, named Gjøkåsen, sits in the production licence 857. Equinor is the operator of the licence with an ownership interest of 40%. Other licensees are Aker BP, Lundin and Petoro with a 20% interest each.

Last year Norwegian energy intelligence group Rystad Energy in August said the Gjøkåsen prospect had a billion-barrel potential.

Morten Eek, Equinor spokesperson, said that Gjøkåsen operations had been halted and “would remain so until we know the cause of the disconnect.”

“Rig owner Seadrill has initiated an investigation on the incident, where Equinor participates,” the spokesperson said.

Cable and pipe-laying ship capsizes near Singapore after tanker collision

An undersea cable and pipe-laying ship, the Vanuatu-flagged MV Star Centurion, capsized in the Indonesian waters of the Singapore Straits after a collision with a tanker on 13th January, with no fatalities.

The Singapore Straits are one of the world’s busiest shipping zones with hundreds of container ships, oil and fuel tankers and dry bulk carriers daily traversing the waters which connect east Asia to Europe, India and Africa.

The collision happened just north of Bintan, an Indonesian island in the Riau Islands province which lies opposite the city-state of Singapore.

“It’s already capsized,” Samsul Nizar, the Head of Operations at the Indonesian coast guard base at Tanjung Uban on Bintan, said, “but it hasn’t sunk completely”.

Coast guard vessels were monitoring the ship, Nizar said, and all crew were in a safe condition and had been rescued by Singaporean authorities.

Refinitiv Eikon shipping data showed the Star Centurion, a 13,000-deadweight-tonne ship specialising in laying cables and pipes on the ocean floor, was anchored in the Horsburgh oil prospecting lease (OPL) zone, an area in which ships take on marine fuel, on the eastern edge of the Singapore Straits.

Meanwhile, the Antea, a 40,000-deadweight-tonne oil product tanker, was steaming past it.

The Antea’s registered owner is Pertamina.

It was not immediately clear who owns the Star Centurion, which also goes by the name of Lewek Centurion.

Insurance News

John Neal reveals new geographical focus for Lloyd’s

John Neal, the new Chief Executive of Lloyd’s of London, has promised a “new geographical focus,” marking an end to the Corporation’s office-building around the world and a renewed focus on its traditional growth markets, such as the United States.

David Duclos joins as Non-Executive Chairman of Lloyd’s Global Network. Mr Neal said “he brings with him an incredible wealth of knowledge and insight which will be of huge value in the months ahead as we put in place a new geographical focus, concentrating on the developed markets that have the greatest potential for future growth.

“We’ll be looking at new opportunities in the US, in Europe through Lloyd’s Brussels, together with those emerging markets where we are likely to see the best return on our investment.

“Lloyd’s international network is a strong and much-admired asset for the market, and I will bring my experiences in global insurance to further strengthen Lloyd’s position in the US and across the world,” Mr Duclos commented.

UK financial sector wants deeper EU access than non-EU countries after Brexit

Britain’s financial sector needs stability to secure its future, along with deeper access to the European Union market after Brexit than what non-EU countries normally get, a senior industry official said on 30th January.

Britain is due to leave the bloc on 29th March but has yet to agree the terms of its divorce after Parliament rejected the deal negotiated by Prime Minister Theresa May with the EU. On 29th January Parliament told Mrs May to renegotiate aspects of her deal, although the EU has ruled out any changes.

“We want markets to continue to operate smoothly, without disruption,” said Paul Manduca, Chairman of TheCityUK’s advisory council, told the promotional body’s annual dinner.

“As we get closer to the 29th March the need for clarity is becoming ever more urgent.”

Mr Manduca, who also chairs insurer Prudential, said the financial sector wants market access for both Britain and the EU that has more “depth and certainty” than the bloc’s existing “equivalence” trading regime.

The EU is Britain’s biggest financial services customer.

“Any new arrangements should be as robust as the EU regime which we have helped build as members. But we must also have the flexibility to ensure our regulatory system reflects the unique aspects of the UK economy and the global opportunities ahead,” Mr Manduca said.

TheCityUK had proposed “mutual recognition,” a broad form of EU market access based on each side accepting each other’s rules.

Brussels rejected this proposal and instead offered equivalence, a patchier, less predictable system of market access whereby the EU alone decides if a foreign financial firm can serve customers on its turf in limited areas of finance.

Many banks, insurers and fund managers in London have instead opted to open hubs in the EU by March to avoid potential loss of access to continental clients.

Mr Manduca said that creating a stable and welcoming business environment and a globally competitive tax system will provide firms with the confidence they need to invest in Britain.

“We know markets take a long time to move elsewhere, but alongside the risks associated with Brexit, the large financial centres in Asia are rapidly emerging as genuine contenders to compete with us and New York,” Mr Manduca told the event, which was attended by British Finance Minister Philip Hammond.

(Article dated 31 January)

EU subsidiaries: Travelers, AXA and North P&I Club in Ireland

Travelers gains approval for Brexit subsidiary in Dublin; names CEO

Property/casualty insurer Travelers Europe has set up a new subsidiary in the Republic of Ireland in response to Brexit, which will be led by James Liston as CEO.

The insurer said that it has received all approval from the Central Bank of Ireland and the new subsidiary is expected to commence writing business at the end of March 2019.

Based in Dublin, Travelers Insurance DAC will enable the company to continue to serve its customers and broking partners in Ireland and across Europe when the UK exits the European Union, as is currently planned on the 29th March.

Travelers said its significant UK-based operations, comprising its general insurance business and its Lloyd’s syndicate, will continue to operate under the existing UK licences.

“During the Brexit negotiations, our priority has been to ensure that we are positioned to continue meeting the needs of our policyholders who have assets and business across Europe,” said Matthew Wilson, CEO of Travelers Europe.

“The authorisation of our subsidiary means it will be business as usual for our customers and brokers, and we will continue to deliver the expertise they have come to expect from Travelers.”

Brexit prompts AXA to move international risk, reinsurance jobs to Ireland

French insurer AXA plans to move its international risk and reinsurance operations from the UK to Ireland in preparation for Brexit, according to a Reuters report on 10th January.

AXA Chief Executive Thomas Buberl reportedly said that AXA’s newly-acquired XL division had already initiated the plans to move some of its workforce to Dublin from the UK.

AXA acquired Bermuda-based property/casualty commercial lines re/insurer XL Group for US$15.3 billion (€12.4 billion) in cash, earlier in March 2018.

According to the report, the French insurer is also planning to move a handful of Paris-based jobs to Dublin.

Its UK business will be managed by the staff in London, while the European large risks and reinsurance will be handled from Dublin.

Earlier in October, AXA XL announced that it has received authorisation from the Central Bank of Ireland (CBI) to move its principal EU insurance company, XL Insurance Company (XLICSE), from the UK to Dublin in response to Brexit uncertainty.

North P&I Club secures Dublin nod for Brexit hub

Mutual marine liability insurer North P&I has received authorisation from the Central Bank of Ireland (CBI) to operate from Ireland, allowing it to implement its Brexit contingency plan.

The insurer has received approval to set up as a non-life insurance business in Ireland which will allow it to continue its European operations in the event of the loss of existing EU financial services ‘passporting’ rights when the UK leaves the EU on 29th March 2019.

The company’s head office in Dublin will be managed by a team of senior executives who have transferred from North’s UK headquarters in Newcastle. A total of eight people will be based in Dublin by mid-2019.

The company has appointed David Bruce, formerly North’s Group Financial Controller, as the subsidiary’s Chief Executive Officer. Richard Bracken has been named Head of Underwriting, and Geoff Potter as Risk & Compliance Officer.

The board of North of England P&I DAC will include Chairman Pratap Shirke, Paul Jennings and David Bruce as Executive Directors, Caitríona Somers and Rachel Panagiodis as independent Non-Executive Directors, and Peter Johnson and Alexander Lynch acting as Non-Executive Directors.

North said from 20th February 2019, members and policyholders with an EEA (European Economic Area) place of management will be insured by North of England P&I DAC and all documentation for EEA insurance business (including certificates of entry and blue cards) will be issued and administered by that company.

The changes will apply to all classes of business previously underwritten by North and its subsidiary, Sunderland Marine, including P&I, FD&D (Freight, Demurrage and Defence) and Hull. Members and policyholders with a non-EEA place of management will continue to be insured by North and Sunderland Marine.

Piracy in Southeast Asia

The 2017 Annual Report of the International Maritime Bureau (IMB) reported a reduction in piracy incidents worldwide with 180 reported incidents in 2017, down from 191 in 2016 and 246 in 2015.

Despite global trends, the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) reported that, in Asia, there was a 19% increase in the number of piracy incidents in 2017 compared with 2016.

In its Third Quarter 2018 Report, ReCAAP reported a 3% increase in the total number of piracy incidents in Asia from January to September 2018, compared with the same period in 2017.

Notable hotspots include anchorages in Bangladesh and off Samarinda, Indonesia, as well as in respect of ships underway in the Straits of Malacca and Singapore.

In the Philippines, the number of incidents more than doubled from 2016 to 2017, with 22 incidents reported in 2017.

As at the third quarter of 2018, the number had decreased again, particularly at ports and anchorages, but the threat of vessel hijacks and crew abductions in the Eastern Sabah waters and Sulu and Celebes Seas by the ISIS-affiliated Islamist terrorist group, Abu Sayyaf, remains real, if not heightened.

Not only are small fishing boats and slow-moving tug and barges under threat, large bulk carriers and tankers with high freeboards are also potential targets.

The recent increase of pirates operating in the region can likely be attributed to the increase in palm oil prices and the high value of the stolen commodities.

With the scope and nature of attacks ever-changing, it is opportune to consider a hypothetical case study involving a piracy incident set in Thailand and how the club’s P&I cover might respond to the claims.

Despite recent general trends indicating a global reduction in the incidents of piracy, the threat of piracy is far from being eradicated.

Incidentally, the use of private maritime security contractors (PMSCs) is not common in Southeast Asia. Regardless, members should continue to exercise vigilance when trading to areas where the threat of attack by pirates and armed robbers exists and comply with the best practices.

A member’s exposure following an incident of piracy or armed robbery at sea could extend to pollution, wreck removal, and General Average losses.

From 1st February 2019, The Strike Club is part of The Standard Club group. The Strike Club’s Marine Delay Insurance provides vessel operators with cover for daily running costs or charter hire when a ship is delayed by a wide range of unexpected perils, including hostile acts.

Pipeline shutdowns cause Canadian crude prices to plummet

Canadian crude weakened after two critical oil pipelines remained partially shut amid an investigation into a possible leak in Missouri.

Heavy Western Canadian Select for March traded at US$10.30 below the calendar average for West Texas Intermediate crude futures, compared with a US$9.40 discount earlier on 7th February, according to data from Net Energy Exchange.

Prices weakened as shutdowns of TransCanada Corporation’s Keystone pipeline and Enbridge Inc’s Platte line on 6th February dragged on and threatened a pile-up of crude in Alberta.

The disruption comes as refiners seek alternative supplies of heavy crude on the US Gulf Coast after sanctions on Venezuela effectively cut access to the country’s oil.

Canada’s oil-sands crude serves as a similar substitute, but Alberta has struggled with pipeline bottlenecks which have forced rationing on export pipelines and prompted the province to impose mandatory production curtailments.

The 590,000-barrel-a-day Keystone line runs from Hardisty, Alberta, to Cushing, Oklahoma, with a segment also connecting Steele City, Nebraska, to Patoka, Illinois.

The Steele City-to-Patoka segment is shut, according to TransCanada.

Keystone’s Hardisty-to-Steele City and Steele City-to-Cushing, Oklahoma, segments are ramping up after resuming service on the night of 6th February, yet flows are still not back to full capacity, according to Ryan Saxton, an analyst at Genscape, Inc., on 7th February.

On 7th February, TransCanada said it would cut the international joint spot rate on the Keystone line from Hardisty, Alberta, to Port Arthur and Houston by about US$1 a barrel, according to a Federal Energy Regulatory Commission filing.

Enbridge restored service on a segment of the Platte pipeline running between Casper, Wyoming, and Salisbury, Missouri, yet the remainder of the line downstream of Salisbury remains shut, according to Devin Hotzel, an Enbridge spokesman, on 7th February.

The Platte pipeline transports as much as 164,000 barrels a day of crude from Casper to Guernsey and 145,000 barrels a day from Guernsey to Wood River, Illinois.

Switzerland and UK agree post-Brexit pact

The UK and Switzerland have signed a deal to ensure insurance businesses from both the countries can continue to trade freely with each other after Brexit.

Existing EU trade rules will be replicated in the new UK-Swiss Direct Insurance Agreement, which was signed in Davos on 25th January.

The deal, agreed by UK Chancellor Philip Hammond and President of the Swiss Confederation and Head of the Federal Department of Finance, Ueli Maurer, will come into force when the UK leaves the EU on 29th March 2019.

Under the arrangement firms will still be able to branch into each other’s jurisdiction as both countries continue to recognise each other’s insurance regulations.

The UK Government’s Treasury said: “It will therefore ensure continuity for UK and Swiss insurers to access each other’s markets both now and in the future, consistent with the terms of the original EU-Swiss Direct Insurance Agreement.”

Switzerland is important to the UK, the Treasury said, because in 2016 investment in the UK’s financial services sector by Swiss businesses was more than £11 billion “making the country one of the world’s largest investors in UK finance – second only to the USA”.

ABI and Swiss Re warn of Brexit threat to London

Although much has been done to ensure a smooth Brexit transition for the UK insurance sector, leaders in the industry warned that EU subsidiaries could take business from London “very quickly” after Brexit.

Speaking in a panel discussion at the Fitch Ratings Insurance Roadshow in London on 24th January, Olga Tschekassin, Economist at Swiss Re, noted that many UK businesses had set up branches as subsidiaries in the EU, which “in general is great for preparation” ahead of the Brexit deadline on 29th March.

“But,” she said, “what does it mean for the market and in the future? UK or EU business which has been written from the UK has moved to the EU branches. If you think about how much effort companies have put into setting up the branches it is very difficult to imagine, even if we get a close alignment with the EU, that those branches will not take over the EU business as well as the UK work”.

UK insurance businesses have been working to minimise the disruption to clients in the last two years and will continue to do, said Huw Evans, Director General of the Association of British Insurers (ABI). But he questioned whether the UK could remain as central as it has been in the global insurance market.

“Most of these EU subsidiaries are there to ensure disruption to customers is minimised and have taken huge amounts of investment to set up over the past two years, they will develop a life of their own. They will be fully staffed, and the people will live there and naturally they will want to make a success of it,” he said.

He went on to suggest that it will sap business away from London “very quickly”.

(Article dated 25 January 2019)

According to The Times newspaper, financial services have already moved £800 million in assets including staff into the EU. The paper also noted that many American and Asian financial companies have used London as their gateway to the EU, propelling Britain’s status as Europe’s financial centre. No single European city has so far emerged as a rival because businesses are choosing different countries to move jobs to. The Times quoted a local expert who maintained that European competitiveness is undermined, and jobs and economic activity will be sucked out of Europe entirely to places like New York, Singapore and Hong Kong.

AM Best warns of increased Brexit uncertainty for UK insurers

AM Best has warned that uncertainty as to the UK’s future trading relationship with the EU has increased following the vote in the House of Commons on 15th January, rejecting the deal terms agreed with the EU by Prime Minister Theresa May’s government.

Historically, Lloyd’s, the London market and other UK-based commercial insurers have underwritten European Economic Area (EEA) business on a cross-border basis. However, if the UK withdraws from the EU without a deal, or at the end of an agreed transition period, passporting rights are expected to cease and UK-domiciled insurers will no longer be able to issue insurance contracts in the EEA, AM Best explained.

In order to continue to provide insurance services to EEA customers post-Brexit, many affected companies have chosen to establish new EU subsidiaries. Others, particularly small insurers who do not have the resources to create additional companies, have formed relationships with local carriers which will be able to front business for them.

AM Best expects rated insurance groups to have these subsidiaries or arrangements in place by 29th March 2019, ensuring that they are able to underwrite EEA business going forward, even in the absence of a trade deal between the UK and the EU.

It is possible that if there is no trade deal, UK insurers will not be able to service existing contracts in certain EEA countries by settling and paying claims, AM Best noted.

It is the hope and expectation of the insurance industry that a political solution will be found to this problem; for example, by allowing the grandfathering of existing contracts, the agency added. Despite this, affected insurers have been putting contingency plans in place and exploring their operational and legal abilities to settle claims and provide other services to policyholders in individual EEA jurisdictions.

The majority of insurance groups which are affected by Brexit and rated by AM Best have either completed or initiated a transfer of their EEA business from their UK insurer to an affiliated EEA insurer under Part VII of the Financial Services and Markets Act 2000.

However, the Part VII transfer process is expensive and time consuming, with transfers subject to extensive regulatory scrutiny and court approval, AM Best noted.

Consequently, a number of Part VII transfers will not be complete by the end of March 2019, the agency noted.

Brexit vote extends uncertainty for UK insurance sector

Uncertainty continues for the UK’s insurance industry after the Government’s Brexit deal was rejected on 15th January in what was dubbed the biggest ever government defeat in history.

There appears to be little hope that Prime Minister Theresa May will pay more than scant attention to insurance as part of the financial services sector.

Shell Offshore agrees to US$2.2 million fine for 2016 Gulf oil spill

Shell Offshore, Inc. has agreed to pay a US$2.2 million civil fine to the Federal Government to settle charges that the company violated the Clean Water Act by spilling 1,900 barrels of oil into the Gulf of Mexico in May 2016 when a subsea pipeline cracked at the company’s Green Canyon oil field.

The fine, announced in the Federal Register on 1st February, will be paid after the expiration of a 30-day comment period, Times-Picayune reported. The money will be deposited in the Oil Spill Liability Trust Fund, which is used to pay for oil spill clean-ups.

The new fine is in addition to US$3.9 million the company agreed to pay to State and Federal agencies in July to settle natural resource damage charges stemming from the spill. About US$3.5 million of that settlement will be used for natural resource restoration projects, with the rest aimed at repaying the agencies’ costs in responding to the spill.

The oil spill was the result of a series of events over several years which resulted in a pipeline installed about 3,000 feet below the surface of the Gulf of Mexico becoming covered with debris and the weight of the debris causing a stress fracture in a joint.

That break allowed crude oil to escape into the water, according to an investigative report released on 9th March 2018, by the Department of Interior’s Bureau of Safety and Environmental Enforcement (BSEE), which oversees safety issues involving drilling in federally-controlled waters offshore.

The six-inch pipeline is described as a “jumper,” which was part of Shell’s complex system used to collect oil from wells in the Green Canyon oil field, where it was transferred to other pipelines leading to the company’s Brutus tension leg platform, seven miles away.

Just after 11pm on 11th May 2016, control room operators overseeing oil production in the pipeline system were warned of “substantial acoustic activity” in the pipe, but believed the noise was caused by a bubble of natural gas moving through the pipe, which had caused similar drops in pressure in the pipe in the past, something they called “slugging”.

When the pressure anomaly did not end by 5am the next morning, the operators asked workers to check for leaks from equipment at the surface associated with the Glider oilfield.

The workers reported no problems, prompting the operators to “shut in” the Glider subsea field, basically turning off the flow of oil into the pipe.

At 7am, a helicopter transporting workers for a crew change on the Glider facility was diverted to look for signs of a leak, and a half hour later reported that they’d spotted an oil sheen on the surface.

“Despite the alarms and sustained pressure loss, Shell continued to actively pump oil through the cracked pipeline for at least another seven and a half hours,” which was in part caused by the company’s failure to provide adequate training for the operators, the civil complaint said.

Under the consent agreement, Shell agreed to improve its leak-detection training program for its operations in the Gulf.

“Since the spill, Shell has provided enhanced training to its control room operators and subsea supervisors,” said the settlement announcement in the Federal Register.

“Shell will now develop and conduct refresher training which focuses on leak detection and includes simulator-based exercises which incorporate conditions experienced during the May 2016 spill.”

People on the Move

Duclos named Non-Exec Chairman of Lloyd’s Global Network

Lloyd’s has named industry veteran David Duclos as Non-Executive Chairman of Lloyd’s Global Network where he will play a key advisory role in the development of Lloyd’s international network.

Mr Duclos has had extensive international industry experience spanning four decades across a number of executive roles, including CEO of QBE North America (2013-2016) and Chief Executive of XL Group’s global insurance operations (2008-2011).

His Non-Executive Director appointment further bolsters Lloyd’s leadership team following the appointment of CFO Burkhard Keese.

Arch hires Travelers’ Boquist to lead new admitted energy platform

Arch Insurance North America has named Eric Boquist Executive Vice President, Retail Energy.

Mr Boquist is based in Houston and will lead a newly-created business unit focused on providing admitted middle market insurance solutions to energy companies in North America.

He will report to Rich Stock, Chief Underwriting Officer of large account casualty and surety.

Mr Boquist comes from Travelers, where he most recently was President of Travelers’ oil & gas unit. He previously held a number of senior insurance roles focused on the energy sector in the US and European markets.

Channel Syndicate names Anderson cyber head

SCOR-managed Channel Syndicate 2015 has appointed Gillian Anderson Head of Technology and Cyber.

Marine insurer North P&I Club boosts loss prevention team in Singapore

Marine liability insurer North P&I Club has bolstered its loss prevention team in the Asia Pacific region by relocating Andrew Glen from its UK-based head office to Singapore.

Mr Glen, a Master Mariner, joined North in 2006 and spent seven years in loss prevention in its UK head office, before being seconded into a project development role in 2013.

His role will now be primarily member-facing, with particular focus on working with North’s membership in China, Japan and South Korea.

He joins Aniruddha Desai who has been with North’s loss prevention team in Singapore since 2015.

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