MEC&F Expert Engineers : 11/21/14

Friday, November 21, 2014

ENVIRONMENTAL POLLUTION INSURANCE COVERAGE FOR COMMERCIAL REAL ESTATE



ENVIRONMENTAL POLLUTION INSURANCE COVERAGE FOR COMMERCIAL REAL ESTATE

The commercial real estate marketplace in the United States is growing along with the rest of the economy.  For instance, the second-quarter survey by the National Association of Realtors revealed that “sales volumes rose 7% from a year ago,” while year-over year prices increased 3%. Furthermore, a study, “Emerging Trends in Real Estate 2014,” conducted by PricewaterhouseCoopers L.L.P. and the Urban Land Institute, also stated that “2014 may well be the year that the real estate markets recovers” due to the “consistent and growing demand for commercial real estate across all property types.”

Unfortunately, there are still many obstacles to the industry’s growth. Included among these is the ongoing potential for environmental exposures, which have been known to derail the closure of commercial transactions, building new structures or renovation of old ones based on suspicion alone.
This is in large part due to the introduction and strict enforcement of stringent regulations demanding a higher level of transparency among owners and investors as well as the costly cleanup or remediation of any number of environmental threats ranging from the contamination of groundwater to the poor storage of hazardous waste to the identification of mold, bacteria and fungus in ventilation systems.

As a result, contractors pollution liability insurance has become an increasingly viable option for covering bodily injury, property damage, defense and cleanup as a result of pollution conditions caused by contracting operations performed by or on behalf of the contractor or named policyholder. Purchased on a “blanket” or “project” basis, the insurance can include coverage for transportation of waste and materials and the policyholder’s legal liability at nonowned disposal facilities, as well as some level of coverage for the policyholder’s owned/leased locations and “base” job site activities.
In the marketplace, it is estimated that approximately 40 insurers offer some form of contractor pollution liability coverage. The expansion is expected to continue due to the low frequency of claims and the modest loss ratios over the products’ lifetime. As indicated by the “2014 Market Update” developed by New Day Underwriting Managers earlier this year, nearly all insurers also will likely modify or update current policy forms, making it “fun” for even the most experienced insurance professionals to analyze the differences.
With the large number of competitors in the market, the pricing for contractors pollution liability has remained relatively soft over the past five years.

Subsequently, contractors that renew their coverage can expect a flat to a slight 2% to 3% rate decrease — provided that revenue, project type and claims remain static. If significant fluctuations occur with any one of the aforementioned factors, rate increases could exceed 10%. In contrast, the pricing for individual projects will remain aggressive, with limits in excess of $5 million tending to be erratic among different insurers.
Capacity is not an issue and can be as much as $50 million for a single company, although most companies normally top out between $10 million and $25 million. Excess limits typically are available if needed, for both project/practice and project policies.
In addition, contract specifications requiring pollution insurance will be the biggest buying motivator for such coverage among contractors going forward. This will extend to public entity owners, which will increasingly require contractors to purchase pollution legal liability insurance for the real estate risk on which projects sit.

For many insurers offering contractor pollution liability as a package of basic jobsite coverages, the usual expansion of insurance will include:
• Coverage of pollution conditions as a result of claims associated with transportation — either by or on behalf of the named policyholder.
• Coverage of pollution conditions as a result of the named policyholder’s disposal of waste at disposal facilities.
• Coverage of emergency response expenses — or costs incurred by the named policyholder to prevent further damage.
• Some level of pollution coverage associated with the named policyholder’s owned/leased locations, such as maintenance shops/facilities, offices and warehouses related to the construction business.
At this stage, most contractor pollution liability policies are written on an occurrence basis with claims-made triggers, such as pollution legal liability for covering a policyholder’s location.
Mold, microbial matter/bacteria or bacteria are typically insured on a claims-made basis, although some insurers are increasingly offering this insurance on an occurrence basis. Other coverage also is becoming more available for exposures such as low-level radioactive waste, electromagnetic fields and medical/ infectious/pathological wastes.
Furthermore, supplemental coverage that range from $100,000 to unlimited for defense expenses are available from some insurers, with additional enhancements offered as a supplementary limit or a sublimit. These can include:

• Emergency remediation expense: assists with expenses associated with a pollution condition’s cleanup prior to notifying their insurer.
• Crisis management expense: assists with expenses associated with managing the media by providing public relations assistance and media management as a result of a pollution condition.
• Litigation and subpoena expense: assists with the expenses associated with loss of earnings and reasonable expenses, for example attendance at depositions.
• Green building materials: assists with increased expenses for remediation if using such materials to replace standard materials.
• Mediation credit: uses an approved mediator to settle claims disputes, which then could result in a reduced retention for the policyholder.

In the future, the trend toward the migration of only contractor pollution liability insurance to a combined professional and contractor coverage will continue to evolve in relation to the ever-changing professional liability risks of contractors. This alone may significantly affect premium writings/volume. Consequently, as the number of insurers offering contractor pollution liability coverage expands, the number of experienced underwriters per company will decrease, leading to the use of underwriters with little experience as the expansion outruns the talent pool. This, in turn, will have a direct effect on responsiveness, as most insurers commonly rely on experienced, in-house contractor pollution liability staff and/or vetted claims providers rather than “generic” professionals to promptly and appropriately fulfill claims.

Despite these challenges, the availability of contractor pollution liability insurance will remain plentiful with soft and competitive premiums. This also will include enhancements and supplementary coverage that are likely to continue well into the future.

HIGH PRESSURE INSIDE A HEATER-TREATER CAUSED THE DEATH OF AN OIL & GAS MAINTENANCE WORKER IN THE GULF OF MEXICO ON NOVEMBER 21, 2014



HIGH PRESSURE INSIDE A HEATER-TREATER CAUSED THE DEATH OF AN OIL & GAS MAINTENANCE WORKER IN THE GULF OF MEXICO ON NOVEMBER 21, 2014




Fieldwood Energy LLC Press Release re West Delta 105 "E" Deadly Incident that Killed a Worker and Injured 3--November 21, 2014; 10:00 a.m. central





At Fieldwood Energy, our top priority is the safety of our employees and contractors. We regret that yesterday afternoon there was an incident at our West Delta 105 "E" platform that occurred when employees of Turnkey Cleaning Services were cleaning a heater treater, which is a piece of equipment that separates oil from water and other liquids. Turnkey Cleaning Services is a Louisiana based industrial cleaning service company that specializes in the cleaning of offshore facilities, including the cleaning of heater treaters.



During the cleaning process, one Turnkey employee was fatally injured and a second suffered visible injuries. The Turnkey employee who suffered visible injuries was immediately flown to West Jefferson Hospital for evaluation and treatment. Two other individuals who were on the platform complained of ringing in their ears, so they also were flown to the same hospital to be evaluated. All three of these individuals have been evaluated and released from the hospital. All other personnel on the platform have been accounted for and are safe.





The West Delta 105 "E" platform has not been producing oil or gas for over a week, as the facility was undergoing routine maintenance operations when the incident occurred. There were no wells that were producing at the time of the incident. The explosion that was mentioned in the initial reports was not a well explosion or well blowout. Instead, it was an isolated pressure event that occurred inside the heater treater and did not result in a fire on the platform. This incident was not related to a drilling operation but, instead, occurred during maintenance operations at the platform. There was no oil spill or pollution that resulted from this incident and it was contained immediately after it occurred with no damage to the environment, the platform, or the platform�s wells.



We do not have additional details at this point. We are working hand in hand with BSEE, the Coast Guard, and Turnkey Cleaning Services to investigate this incident fully. We will post additional information on our company website as we learn more details. Our thoughts and prayers continue to be with the family of the deceased Turnkey Cleaning Services employee.






What is a Heater Treater?





A heater-treater is a device used to remove contaminants from the natural gas at or near the well head before the gas is sent down the production line to the gas plant. Generally, the contaminants include liquid hydrocarbons and water. The composition of the liquid hydrocarbons (oil and condensate) can vary by gas field but the majority of gas wells in Colorado are located in the Denver-Julesburg (DJ) Basin which produces a condensate liquid.



The heater-treater is a combination of a heater, free-water knockout, and oil/condensate and gas separator. It prevents the formation of ice and natural gas hydrates that may form under the high pressures associated with the gas well production process. These solids can plug the wellhead. Since chokes in the wellhead restrict the flow of the oil and gas from the well, temperatures may drop due to the pressure changes of the choke. This may cause the water or hydrates to freeze and plug the well, thereby slowing or stopping the condensate and gas production. Two diagrams at the end of this document show examples of heater-treaters.



Information regarding heater-treater emissions and control strategies is scarce.







Heated Separation Process



The operating conditions in the heater treater must be adequately monitored to ensure operational productivity and safety.  If increases or decreases in temperature or pressure are reported, operators must take the appropriate steps to return the vessel to an optimal operating range.  At this time, we do not know iof the correct procedures were followed, but since one person was killed by a high pressure event and 3 were injured, most likely the proper procedures were not followed or the employees were not properly trained.



Without jumping the gun, we often see migrant workers getting killed in these maintenance operations.  These are very dirty jobs under very tough conditions, dealing with rusty and corroded and clogged equipment.  Only some poor migrant worker would do this type of work.  A trained engineer would know that the first thing you do with heaters-treaters is to check the temperature and pressure.  The pressure relief valves on these equipment fail quite often and do not show the correct pressure inside the vessel.






Metropolitan Engineering, Consulting & Forensics (MECF)
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Tenafly, NJ 07670-0520
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2 WORKERS CRITICALLY BURNED AT A COMPRESSOR STATION IN GUYMON OKLAHOMA GAS PLANT EXPLOSION



2 WORKERS critically burned at a compressor station in Guymon Oklahoma gas plant explosion




GUYMON, Oklahoma - Two men were critically injured in an explosion at the DCP Straight Compressor station near Guymon, Oklahoma.


According to the Guymon Fire Department, at about 3:20 p.m. Thursday, crews responded to the report of an explosion at the DCP Straight Compressor station, located at mile 32N and County Rd. 7. The station is located about 13 miles northeast of Guymon.


Crews quickly located a worker on site who could give firefighters account of the incident. According to that worker, four DCP workers were at the site when the building that housed drying operations suddenly exploded. Two of the workers were in the building at the time of the explosion and escaped out an exit.


Another worker outside the building extinguished both men, who were still on fire as they got out of the building, according to fire officials. Both burn victims were placed in a company vehicle and transported to Memorial Hospital of Texas County before Fire and EMS arrived on scene. 


Both victims were later transferred in critical condition to the Burn Unit in Lubbock, Texas.



“Cause of the explosion and fire is unknown at the time and being investigated by DCP Officials”, said Assistant Chief Wadley. 


Firefighters allowed the fire to burn itself out. DCP officials were able to isolate the building and its contents from the rest of the plant site. 


The Straight Elementary School was quickly evacuated for precautionary measures at the time of the explosion. No children or school officials were injured.


Emergency Services Departments that responded included the Guymon Fire Department with EMS, Hooker Fire Department, Hooker EMS, Texas County Sheriff Office, OHP, Texas County District #1 and #2, and Texas County Emergency Management. Units remained on scene for over an hour as DCP continued to isolate and investigate this incident.


Authorities have not identified the two burn victims at this time.





Posted: Nov 21, 2014 12:00 PM EST Updated: Nov 21, 2014 1:55 PM EST


By: Austin Prickett, Assignment Editor


Two workers were critically burned following an explosion at a Guymon gas plant Thursday.

According to Guymon Fire Department Assistant Fire Chief Grant Wadley, around 3:30 p.m. Thursday Guymon Fire responded to an explosion call at the DCP Gas Plant at Straight.

"Upon emergency services arrival, found an isolated building on site with fire and smoke coming from inside," Wadley said.

Emergency responders found a DCP worker on site who said four DCP employees were on site when the building that housed drying operations suddenly exploded. Two workers were inside the building when it exploded and were able to escape out an exit.

Wadley says the two workers escaped the plant but were on fire. The employees were quickly extinguished by another employee. The two burned men were placed inside a company vehicle and transported to Memorial Hospital of Texas County before emergency crews arrived on scene.

The men were later transferred in critical condition to the burn unit in Lubbock.

Wadley says the cause of the explosion and fire is currently being investigated by DCP officials. Crews allowed the fire to burn itself out. Wadley says Straight elementary School was quickly evacuated following the explosion as a precautionary measure.

The plant is located approximately 13 miles northeast of Guymon. 







Metropolitan Engineering, Consulting & Forensics (MECF)

Providing Competent, Expert and Objective Investigative Engineering and Consulting Services

P.O. Box 520
Tenafly, NJ 07670-0520
Tel.: (973) 897-8162
Fax: (973) 810-0440
We are happy to announce the launch of our twitter account. Please make sure to follow us at @MetropForensics or @metroforensics

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