Hurricane IVAN Lessons Learned Energy Loss Adjusters Perspective. Bryan C. Johnson

Transcription

1 Hurricane IVAN Lessons Learned Energy Loss Adjusters Perspective Bryan C. Johnson

2 I. Lessons Learned - Adjustment Process II. Lessons Learned - The Storm

3 Lessons Learned - Adjustment Process Issues Regarding Reserve Estimation Supply and Demand Effects on Oil & Gas Prices

4 Lessons Learned - Adjustment Process Ivan

5 Lessons Learned - Adjustment Process Issues Regarding Reserve Estimation Supply and Demand Effects on Oil & Gas Prices Service and Equipment Price Spikes (Inflation) Following Catastrophic Loss

6 Lessons Learned - Adjustment Process Ivan

7 Lessons Learned - Adjustment Process Ivan

8 Lessons Learned - Adjustment Process Ivan

9 Lessons Learned - Adjustment Process 2005 worldwide mobile rig demand forecast Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Month Demand Market Total Rigs

10 Lessons Learned - Adjustment Process Issues Regarding Reserve Estimation Supply and Demand Effects on Oil & Gas Prices Service and Equipment Price Spikes (Inflation) Following Catastrophic Loss Time Delays due to Unavailability of Contractors

11 Lessons Learned - Adjustment Process

12 Lessons Learned - Adjustment Process Issues Regarding Reserve Estimation Supply and Demand Effects on Oil & Gas Prices Service and Equipment Price Spikes (Inflation) Following Catastrophic Loss Time Delays due to Unavailability of Contractors Under-estimated Reserves if Using Established Prices

13 Lessons Learned - Adjustment Process Issues Regarding Reserve Estimation Supply and Demand Effects on Oil & Gas Prices Service and Equipment Price Spikes (Inflation) Following Catastrophic Loss Time Delays due to Unavailability of Contractors Under-estimated Reserves if Using Established Prices Seat of the Pants Engineering

14 Lessons Learned - Adjustment Process Range of Estimates Underwriters might use worst case until clarity on extent of loss

15 Lessons Learned - Adjustment Process Range of Estimates Low High Probable Leg/Spud Can Repair/Rebuild $20.0 MM $25.0 MM $23.0 MM Jacking System Repairs $4.0 MM $7.0 MM $6.0 MM Substructure/Drilling Floor/Derrick $3.0 MM $5.0 MM $4.0 MM Main Crane $.75MM $1.5 MM $1.5 MM Control Room/Lower Rooms/Water Damage $2.0 MM $5.0 MM $4.0 MM Structural Damage $2.0 MM $4.0 MM $3.0 MM Total Physical Damage Estimate Range $31.75MM $47.5 MM $41.5 MM Sue & Labor Expense $12.0 MM $13.0 MM $12.0 MM Total Estimated Costs of Recovery and Repair $43.75MM $60.5 MM $53.5 MM

16 Lessons Learned - Adjustment Process Range of Estimates Underwriters might use worst case until clarity on extent of loss Salvage values can be surprisingly good to help loss situation

17 Lessons Learned - Adjustment Process Salvage Value Damaged Drilling Unit Example: CTL $45.5 MM IV $19.5 MM Total $65.0 MM Salvage Value ($26.0 MM) Net $39.0 MM

18 Lessons Learned - Adjustment Process Information / Cooperation from Assured SEC concerns Catastrophes can affect stock price

19 Lessons Learned - Adjustment Process Expert Resources Old vs. New Damage Metallurgical Experts Failure Analysis Experts Reservoir Engineers (LOPI ) Salvage

20 Lessons Learned - Adjustment Process Recoveries - Good Money After Bad? Time & Material vs. No Cure No Pay Example: Jackup Legs Rigs to Reef 3 Leg Above Jack House 49 Hull & Jack House +/-47 Air Gap 301 Water Depth 477 Total Leg Le ngth 77 Leg Penetration

21 Lessons Learned - Adjustment Process Business Relations / Economics of Assured Priority Conflicts Decisions can be based upon Assured s business or economic issues as opposed to minimizing claim: Ex: drilling contractors/other contractors left on standby Properties which have greater impact on bottom line may be priority - not necessarily insured properties

22 II. Lessons Learned The Storm IVAN Hurricane IVAN Hurricane KATRINA

23 KATRINA, 2005 IVAN, 2004

24 Lessons Learned The Storm Hurricane KATRINA

25 Hurricane KATRINA

26 Lessons Learned The Storm Lessons Learned from the Storm Itself Mud Slides: Freak Occurrence or Expected Peril?

27 Mobile, Alabama New Orleans KATRINA, 2005 IVAN, 2004 Mississippi River Delta CAMILLE, 1969 From Fugro Chance, Inc.

28 THE BIRDSFOOT DELTA From Fugro Chance, Inc. Head of Passes Southwest Pass South Pass Pass A Loutre NE Pass SE Pass

29 ~ mi From Fugro Chance, Inc. GROWTH OF THE DELTA

30 Consider this Profile line across the seafloor From Fugro Chance, Inc. GROWTH OF THE DELTA FRONT

31 From Coleman et al, 1980 South Pass Southwest Pass Profile line From Fugro Chance, Inc BATHYMETRY MAP

32 From Coleman et al, 1980 Southwest Pass South Pass Mudflow lobes From Fugro Chance, Inc BATHYMETRY MAP

33 From Coleman et al, 1980 Region of Mudflow Gullies From Fugro Chance, Inc. Region of Mudflow Lobes SEAFLOOR GEOMORPHOLOGY

34 Mudflow Gullies or Channels 6 10 miles Mudflow Lobes From Fugro Chance, Inc. From Coleman et al, 1980

35 Lessons Learned The Storm Lessons Learned from the Storm Itself Mud Slides: Freak Occurrence or Expected Peril? Cause = Threefold 1. Wave activity

36 Of course, the wave is moving Pressure increase So the seafloor pressure is also moving seafloor Pressure Decrease WAVE-INDUCED PRESSURE ON SEAFLOOR

37 Wave Crest Wave Trough Downward Motion Upward Motion seafloor Lateral Motion SEAFLOOR MOTION

38 Lessons Learned The Storm Lessons Learned from the Storm Itself Mud Slides: Freak Occurrence or Expected Peril? Cause = Threefold 1. Wave activity 2. Deposition on shallow areas

39 From Fugro Chance, Inc. Lessons Learned The Storm

40 Lessons Learned The Storm Lessons Learned from the Storm Itself Mud Slides: Freak Occurrence or Expected Peril? Cause = Threefold 1. Wave activity 2. Deposition on shallow areas 3. Potential energy / build up

41 Depth Below Sea Level, Feet Mudlobe Advance = 2.7 mi 1979 Mudlobe in Mudlobe in 1979 Pre-Delta Distance from South Pass, Miles From Fugro Chance, Inc.

42 Lessons Learned The Storm Lessons Learned from the Storm Itself Mud Slides: Freak Occurrence or Expected Peril? Cause = Threefold 1. Wave activity 2. Deposition on shallow areas 3. Potential energy / build up Prevalence

43 Western Limit of Hurricane Force Winds Path of Ivan s Center Mudslide Area From Fugro Chance, Inc.

44 Lessons Learned The Storm Lessons Learned from the Storm Itself Mud Slides: Freak Occurrence or Expected Peril? Cause = Threefold 1. Wave activity 2. Deposition on shallow areas 3. Potential energy / build up Prevalence Predictability (i.e years)

45 Lessons Learned The Storm Effect of Mudslides Pipelines/Infrastructure/Inter-connecting

46 Lessons Learned The Storm

47 Lessons Learned The Storm

48 Lessons Learned The Storm Effect of Mudslides Pipelines/Infrastructure/Inter-connecting Subsea wells

49 Lessons Learned The Storm Effect of Mudslides Pipelines/Infrastructure/Inter-connecting Subsea wells Platforms

50 Lessons Learned The Storm

51 Lessons Learned The Storm 2. Water Depth Issues Repair requirements with water depth:

52 Lessons Learned The Storm 2. Water Depth Issues Repair requirements with water depth: Shallow (0 300 )

53 Lessons Learned The Storm 2. Water Depth Issues Repair requirements with water depth: Shallow (0 300 ) Intermediate (300 1,000 )

54 Lessons Learned The Storm 2. Water Depth Issues Repair requirements with water depth: Shallow (0 300 ) Intermediate (300 1,000 ) Deepwater (1,000 +)

55 Lessons Learned The Storm

56 Lessons Learned The Storm 2. Water Depth Issues Repair requirements with water depth: Shallow (0 300 ) Intermediate (300 1,000 ) Deepwater (1,000 +) Cost v. Water Depth

57 Lessons Learned The Storm Cost vs. Water Depth Cost Water Depth

58 Lessons Learned The Storm Active GOM Leases

59 Lessons Learned The Storm Active GOM Leases

60 Lessons Learned The Storm U.S. Gulf of Mexico Deepwater Production Oil 77% Gas 26%

61 Lessons Learned The Storm 3. Rig Walkabouts Abandon on location vs. tow to safe water Is enough being done? Damage to offshore rigs Damage to offshore property caused by free-floating rigs

62 Lessons Learned The Storm Semi path Viosca Knoll Area Start Finish

63