Advertise
Resources
Member, Beacon International Group, Ltd.
HOUSTON — The ongoing shift of energy production techniques presents challenges for risk managers and underwriters alike.
Technologies that enable hydraulic fracturing, vertical drilling and offshore operations are being used in new ways, panelists said Thursday during a discussion held at the International Risk Management Institute Inc.’s Energy Risk and Insurance Conference in Houston.
Scott Cruce, Houston-based vice president of risk management for offshore drilling contractor Noble Corp., noted that his company is operating in deeper waters and in countries once thought too politically unstable, such as Myanmar.
“Oil that was once too hard to get to isn’t that hard to get to anymore,” he said. “The biggest challenge from a risk management perspective is doing it as safely as possible.”
Paul Benevides, Pembroke, Bermuda-based senior vice president of excess casualty for Axis Insurance, a unit of Axis Capital Holdings Ltd., said one challenge for underwriters is understanding how the separate extraction technologies interrelate with the challenges onsite and making sure that energy companies adhere to best practices.
“It’s about risk selection,” he said. “Our clients need to convince us they are doing the right thing.”
Mr. Cruce said the problem is not as much new technologies than the people using them.
“The technology is there,” he said. “But it is operated by humans, who sometimes screw up.”
Many of the risks involving the energy industry are linked to transporting oil and gas off-site, Mr. Cruce said. A company can use the most advanced drilling technology but still run into problems due to aged infrastructure or if the conductor of a train, transporting crude oil away from the extraction region is under the influence of drugs, he said.
“Often the risk is more of a transportation industry problem than an energy industry problem,” he said. “The rail infrastructure in parts of the country is very old.”
HOUSTON — The boom in energy production from shale deposits has spurred economic growth in Texas but is facing constraints on several fronts, according to an energy industry economist.