Transcript FPSO “Offshore Producer 1”

Group Work
Offshore Energy Case Study
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Details of the insured interests
UNIT: FPSO “Offshore Producer 1”
Owner: Nilssen Offshore AS
Field: Lovely field – UK sector of the North Sea
Operator: Hammer Oil & Gas Limited
Tied in fields: Friend, East Lovely and Heartbreak
Operator: Hammer Oil & Gas Ltd, but different joint
venturers
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FPSO “Offshore Producer 1”
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FPSO Specifics
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Built: 2007
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Contract duration: 2008-2018 (2025)
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Oil production capacity: 80,000 bbls/d
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Water injection capacity: 100,000 bbls/d
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Gas compression capacity: 10 mmscfd
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Storage capacity: 1,800,000 bbls
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Mooring: Turret
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Hull, Hull Interest and Loss of Hire insurances
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FPSO: USD 625,000,000
(USD 500,000,000 Hull & Machinery + USD 125,000,000 Hull interest),
Mooring system and subsea equipment owned by Nilssen Offshore AS
(4 Risers, riser bases and flowlines, 2 umbilicals on Lovely Field) USD
100,000,000 separate insurance H&M + USD 25,000,000 H.I.
(Other 6 risers and 3 umbilicals and all further subsea infrastructures
were owned by the other field joint ventures, riser/umbilicals value
USD 150,000,000, other subsea equipment value USD 500,000,000)
Deductible USD 10 million per casualty under H&M insurance.
Loss of Hire insured for USD 250,000 per day with 360 days indemnity
per accident and in the aggregate in excess of a 120 day deductible.
Term of Insurance: 1 January 2013 – 31 December 2013
Insured on the basis of the Nordic marine Insurance Plan 2013,
Chapter 18, Sections 1 – 4.
Lead Insurer H&M, H.I. and LOH: Academy Insurance Limited, Oslo,
Norway
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P&I and CGL entry
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P&I insured for a limit of USD 750,000,000, deductible
USD 250,000 per incident (Gard Rules for MOUs)
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CGL insurance for a limit of USD 25,000,000, deductible
USD 50,000, but if incident involves the P&I insurance
the combined deductibles not to exceed USD 250,000.
(Extract of coverage attached)
Entered with Solid P&I Club, Oslo, Norway, for the term:
12 months from 20 February 2013
Hammer Oil & Gas Ltd was a named co-insured under
the H&M and H.I. insurances and Protective Co-Insured
under the P&I and CGL insurances.
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The incident
On 22 February 2013, during hurricane conditions, the
FPSO, due to operator error, lost its heading against the
weather and waves.
This caused first one anchor line to break and further four
more of the 10 anchor chains breaking within the space of 3
hours.
This caused the FPSO to drift 250 meters away from its
station with consequential destruction of the attached risers
and umbilicals and damage to connected subsea flowlines.
Production had been stopped, wellheads closed and risers
depressurised at the onset of the hurricane.
The FPSO had 800,000 barrels of produced oil in the
storage tanks on board. Sales value USD100 per barrel.
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http://www.youtube.com/watch?v=z59Hxoqxavk
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Immediate actions
Tugs and anchor handlers were called in to assist in
holding the FPSO on station and attempt to reconnect the
broker anchor chains.
Due to the threat of further bad weather the decision was
taken to cut the risers, umbilicals and remaining anchor
chains to move the FPSO to port.
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Heads of claims
Salvage/Loss mitigation costs :
Removal of mooring/anchor system:
Removal of Lovely Risers/Umbilicals etc:
Removal of other fields’ risers etc.
FPSO turret damage repairs:
Mooring system (enhanced 12 anchor legs)
Lovely Risers/Umbilicals replacement
Lovely Risers/Umbilical installation
Other fields’ risers etc. repairs/replacement,
incl. installation
Total costs:
USD
USD
USD
USD
USD
USD
USD
USD
15,000,000
5,000,000
10,000,000
15,000,000
12,000,000
18,000,000
80,000,000
25,000,000
USD 180,000,000
USD 360,000,000
It is estimated that repairs will be completed and production to resume
on 22 November 2014
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Group Work
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Group 1 & 2
Consider the Salvage/Loss Mitigation costs claim
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Group 3 & 4
Consider the removal costs claim
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Group 5 & 6
Consider the repair/replacement costs claim
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All Groups
Consider the Loss of Hire claim
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