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P&I Cover and Decommissioning – How they work together…

20 September 2016 - Houston Marine Insurance Seminar

Fabien Lerede – Claims Director

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Contents

1 P&I cover, Specialist operations and decommissioning

2 P&I cover during transportation

3 P&I cover during plugging and well adandonment

4 P&I cover for the decommissioning of the entered unit

5 First decommissioning work by Pioneering Spirit

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1 P&I cover, specialist operations and decommissioning

• Catalyst – The Great Chicago Flood, 13th April 1992

• Pile-driving

• Approx. US$2bn damage

Such activities are not undertaken by the average shipowner – therefore these are not ‘mutual risks’.

P&I cover and specialist operations

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• No direct reference to “Decommissioning, Dismantling or Removal”

• Scope of Specialist Operations Exclusion is non exhaustive:

Rule 5.11 – Non Exhaustive Definition

‘including but not limited to …. well stimulation, cable or pipe laying, construction, installation or maintenance work….’

• Decommissioning falls within this exclusion from poolable cover

Decommissioning and specialist operations

• Poolable -­‐  Injury, illness or death p.o.b. -­‐ Wreck removal of the ship -­‐ Oil pollution from ship

• Non poolable -­‐  ‘other’ 3rd party liabilities – covered to limits of specialist

operations (NB expect 500m zone indemnity)

• Excluded –  Loss , damage to, ROW or pollution from the contract

works (but covered under DAR policy) –  Failure to perform or fitness for purpose or quality of

member’s work (operational risk)

Cover during Specialist Operations /Decommissioning

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P&I cover during transportation 2

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1.  Movement within 500m Zone – Specialist Operation

2.  Transportation to Shore – Pooling agreement restriction – Heavycon or better

3.  Cargo Barges – We would expect an indemnity for loss, damage or wreck removal of cargo

P&I cover and transportation

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3 P&I cover – Plugging and well abandonment

P&I cover - plugging and wells Abandonment

Excluded under the pooling agreement But covered under SOR – Max $500m

Well intervention vessels. Subject to the specialist operations exclusion

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4 P&I cover – Entered unit being decommissioned

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Cover under the SOR can be maintained to US$1bn

FPSO Hull

Once disconnected cover under OLE to US$5m sublimit

‘Field Property’ excluded

Flowlines, risers umbilical etc.

Entered unit being decommissioned Applicable to entered production units

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Removal of YME by Pioneering Spirit.

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First decommissioning work by Pioneering Spirit

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First decommissioning work by Pioneering Spirit

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First decommissioning work by Pioneering Spirit

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First decommissioning work by Pioneering Spirit

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First decommissioning work by Pioneering Spirit

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First decommissioning work by Pioneering Spirit

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First decommissioning work by Pioneering Spirit

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First decommissioning work by Pioneering Spirit

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First decommissioning work by Pioneering Spirit

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Removal of jacket by Pioneering Spirit

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• P&I cover is designed for marine liabilities

• Obligation to leave a clean sea bed is a field operator’s risk and not to be deferred as a liability under a subcontract

• Market placement of DAR cover is designed to give Marine Contractors access to cover which is excluded under P&I

Summary

The Standard Club Ltd is regulated by the Bermuda Monetary Authority. The Standard Club Ltd is the holding company of the Standard Club Europe Ltd and the Standard Club Asia Ltd. The Standard Club Europe Ltd is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The Standard Club Asia Ltd is regulated by the Monetary Authority of Singapore.

Charles Taylor Services Limited (CTS) is authorised and regulated by the Financial Conduct Authority to carry out general insurance mediation activities for commercial clients. For more details please see www.fsa.gov.uk/register/home.do or call the FCA on 0845 606 1234. CTS is a wholly-owned subsidiary of Charles Taylor Holdings Limited. The ultimate parent and controlling company is Charles Taylor plc.

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Regulatory status

@StandardPandI The Standard P&I Club www.standard-club.com

@ctaylorplc Charles Taylor plc www.ctplc.com

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