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Challenging Times For The North Sea Offshore Industry: An Underwriter’s General Update
Bin Wang, Underwriter, Norwegian Hull Club
Offshore Energy, Builders Risk & Special Risks
2016 Houston Marine Insurance Seminar
Monday, 19 September 2016, Houston TX
e24.no/spesial/2014/feltutbygginger 21 June 2014 USD 114.88/barrel
e24.no/spesial/2014/feltutbygginger 20 January 2016 USD 27.72/barrel
e24.no/spesial/2014/feltutbygginger 9 September 2016 USD 48.93/barrel
CommodiZzaZon of specialty lines: What does the future hold for the marine/energy underwriter?
fortune.com October 14, 2015 Top 10 disappearing jobs in America
xe.com
Here’s what it takes to be a marine/energy underwriter in today’s challenging market:
mariZme.no 7 January 2016
dailymail.co.uk 21 January 2016 The Cromarty Firth
A quesZon of lay-‐ups
• A quesZon of cost reducZon • The hot vs. cold lay-‐up • LUUR vs. LUNUR • Challenges on the lay-‐up return – One return does not fit all • The unforeseen aggregaZon • The shipyard lay-‐up (lay-‐up slips vs. slow-‐downs in
construcZon) • The reacZvaZon survey vs. lay-‐up plan
Hot or cold?
• Hot lay-‐up The machinery is kept in operaZon for the sake of fast re-‐commissioning
Measures may be taken to reduce various operaZonal costs
Lay-‐up Zme is usually less than 12 months and relevant cargo may be kept on board
• Cold lay-‐up The machinery is taken out of service and the unit is kept “electrically dead,” with the
excepZon of emergency power Lay-‐up Zme is usually more than 12 months and manning is reduced
• Does a hot lay-‐up become “cold” at some point in Zme? When? What are the criteria? Class maintained?
• When is a third-‐party lay-‐up plan/lay-‐up MWS necessary/prudent? (NMIP 2016, Cl. 3-‐25/26) Rule of thumb: If asking for a lay-‐up return, should have a lay-‐up plan!
Guidelines for lay-‐up
DNV GL • Lay-up site • Mooring arrangements • Ballasting • Power availability • Safety precautions
- Manning - Explosions and fire - Flooding - Communication - Navigation - Lifesaving equipment
• Anti-pollution measures • Security • Stability • Preservation
- Hull - Engine and boiler rooms - Machinery - Boilers and steam systems - Electrical installation - Instrumentation and automation
• ISM and ISPS certification • Re-commissioning
ABS • Lay-up procedure
requirements - Requirements regarding fire, communication, power, drains, valves, mooring etc.
• Preservation and maintenance
- Hull and deck equipment - Machinery - Boilers - Electrical Installation - Elevating and skidding systems - Control Systems - Drilling Equipment - Lay-up location and mooring - Cranes - Documentation and Certificates
• ISM and ISPS certification • Reactivation
Lloyd’s Register • Location considerations • Mooring arrangements • Manning levels • Record keeping • Navigation • Safety equipment, systems
and alarms • Protection during lay-up
- Ballast tanks - External hull protection - Internal hull protection - Deck equipment - Accommodation - Outfitting - Machinery - Steam plant - Water systems - Propeller and shafting
• ISM and ISPS certification
The shipyard lay-‐up: An underwriter’s view:
As a lay-‐up facility
• Lay-‐up plan/third-‐party MWS?
• Class? Local rules/regulaZons?
• PreservaZon?
• Security? Manning? • Fire risk? Water-‐Zght integrity?
• Any (minor) works? Contractors?
• LocaZon? Nat Cat risk? Mooring? Sea-‐floor?
• Hot or cold?
• How long? • ReacZvaZon requirements?
• H&M lay-‐up? Port risks?
• Annual Survey?
As a BAR extension
• Slow-‐down in ConstrucZon? Yay! Extension premium!
More thoughts about lay-‐ups:
• The lay-‐up return How can underwriters price the return in view of the so many different types of lay-‐ups
possible today?
• AggregaZon Super yachts in Monaco
Careful monitoring of E&P GoM NWS aggregaZon
What about the Norwegian nords? The Cromarty Firth?
• Workforce cuts/re-‐organizaZon – Increased risk? • Theory
Nordic Plan historically emphasized technical monitoring of the entry into lay-‐up (NMIP 2016, Cl. 3-‐25/26, lay-‐up plan, etc.)
Today, increased focus on re-‐acZvaZon requirements is necessary
Rigs are now entering into unprecedented duraZons in lay-‐up. What are the risks? Do we need to update industry-‐wide definiZons/standards? CEFOR? JRC? Class?
How many of these rigs will work again?
Relevant Quay-‐Side Incidents
offshoreenergytoday.com 31 May 2013
gcaptain.com 28 December 2013
Lay-‐up incident 1 (DOL 2 June 2016)
• Semi-‐sub cold stacked and resZng on seabed
• 2 drillships broke moorings, driped and 1 collided with the semi-‐sub
• Minor damage, no breach of hull or impact on water integrity
Damage of U-‐Light (A1 – Stbd)
Damage of Ver9cal frame and its bracings. Steering room (A1 – Stbd)
Lay-‐up incident 2 (DOL 9 July 2016)
• Semi-‐sub cold stacked and resZng on seabed
• Monthly inspecZon revealed that a pump room had flooded
• Leaking sea chest valve caused water ingress