LOGA Industry Report - Winter 2009 - (Page 17) the world’s primary energy source. There is no room for unwarranted speculation and manipulation of the market. It is hard to imagine that such fundamental market dynamics can be easily manipulated without any oversight or protection within the market. Bill Mahler Wild Well Control, Inc. Wind Shears from Underwriters What is in store for the future of Offshore Wind Insurance? At a recent meeting held in London between insurance brokers and major underwriters, the future of wind insurance and control of well insurance for E&P companies was the hot topic. Consequentially, with the reinsurance treaties that renew on January 1, it’s time to pay attention. It is apparent that remarkable changes will be taking place in the upcoming renewal year with respect to the London market. However, domestic markets such and Berksure Hathaway may take a larger role as opportunity to undercut London underwriters for larger sub sequential profit margins could exist if there is no “loss tail” that follows. Presently, storm assessments are interpreted through the Saffir Simpson Scale. This scale is the way current hurricanes are rated through categories one through five. One particular lead underwriter that controls a large amount of exposure would like to see another way of measuring the power of storms in the Gulf, because the models they have used based upon the Saffir Simpson Scale failed to indicate how bad Ike was going to be. One model ironically is called I.K.E., meaning internal kinetic energy. This is measured as the power within the storm in lieu of simply the wind speed, and by this measurement Hurricane Ike would have ranked at the same power level as Katrina. This means a Category 2, a much more common storm than a Category 5, can be much more destructive than wind speed might indicate. This is bad news for the insurance industry. So, what to do? Do you want to pay more premiums due to rate increases or consider yourself a co-insurer on your millions of physical property values? During the aftermath of hurricanes Katrina and Rita, retentions only increased to 5 percent and 7 percent. Thoughts are that retentions could rise to the magnitude of between 25 percent and 50 percent, depending on exposure considering proximity and concentration location of property. One other troubling fact could be the extracting of Extended Redrilling/Making Wells Safe coverage due to wind claims and rating it separately as a physical damage exposure. Additionally these coverages would remain unchanged under the control of well section to address “blow out” issues. Obviously, not only America will be getting change, but expenses for E&P companies will have to be looked at with a larger, more powerful microscope. Consequentially, with the price of oil hovering at a lower price per barrel, E&P and drilling companies will be forced to reduce costs. Are you ready for change? Ben Thibeaux, Jr. Regions Insurance Group Lafayette, LA Venice Port Complex Prepares for Eastern Gulf With the opening of the eastern Gulf and the increased interest in drilling in the east central Gulf, the Venice Port Complex (VPC) is poised for an economic boom. Located in Southeastern Louisiana on the edge of the birdfoot Delta that extends into the Gulf of Mexico, the VPC is in a prime location to take advantage of the increase in oil and gas exploration in the Gulf. With more than 60 current tenants, the port is already on the map for its contribution to the energy industry. We provide the shortest deepwater access to present and future eastern Gulf of Mexico fields. With more than 1,500 acres of developed and undeveloped property, the VPC has plenty of potential to be the one stop shop for serving the eastern and east central Gulf. To capitalize on the increase in oil and gas drilling activity in the eastern Gulf, infrastructure upgrades and improvements are presently under way. One such improvement is the widening and raising of Tidewater Road to + 5 (MSL), which is a vital link between State Highway 23 and the VPC. It is set for completion in the spring of 2009. Another upgrade is the recently competed re-dredging of Baptiste Collette Bayou and its planned deepening to a depth of 27 feet. These improvements, combined with over $30 million in planned upgrades and improvements to facilities, are aimed at increasing deep-water capabilities in Venice. Tenants such as Halliburton Energy Services are building a new state-of-the-art facility, and Tetra Technologies just signed a long-term lease with plans for extensive infrastructure upgrades. Investments by the federal and state governments combined with tenant and port upgrades are aimed at creating a one-stop-shop for supply vessels serving the Gulf Coast. This would allow vessels a deep-water port to refuel, restock, and load cargo for a quick turnaround to access the east central and eastern Gulf. The fact that Venice is only 70 miles to the eastern Gulf — closer by some 50 to 60 miles than any other port to the newly opened acreage, which is a huge plus — combined with the existing oil and gas infrastructure already located here, make Venice an important access point for those interested in servicing the Eastern Gulf. George Pivach, II Vice President and General Counsel, VPC Give LOGA your opinion! Original letters (300 words or less) and guest columns (500 words) are welcome and should be submitted to Ben Broussard at ben@loga.la. With each submission, please include your address and daytime phone number. We edit for space, clarity and fair play. Publication of letters, columns and other material is not an endorsement of the opinions of the writers, nor is publication of letters a validation of facts or statements contained in the letters. Private solicitations, poetry, personal attacks, unfair criticism of private individuals, businesses or organizations or inappropriate language will not be considered. Letters to the editor, opinion and editorial columns and articles submitted may be published or distributed in print, electronic or other forms. www.loga.la | 17 http://www.loga.la
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.