Energy sector losses

The most common cause of the largest property losses in the global energy industry over the last 40 years has been the failure of multiple process and safety systems. In a report titled The 100 Largest Losses, Marsh explores the largest property damages losses to impact the hydrocarbon extraction, transport and processing industry since 1974.

What’s the damage

The report estimates that the global energy sector has sustained property damage losses in excess of US$ 34 billion since 1974, based on current estimated values; with the majority attributable to offshore and refining incidents.

Andrew George, Chairman, Marsh Global Energy Practice said, ‘the global energy sector is becoming increasingly sophisticated in its approach to risk management, most notably in the deployment of new technologies and in emerging markets.

‘However, none of the losses detailed in Marsh’s report should be considered black swan events. These accidents generally occurred because of the failure of a number of inter linked control barriers within process and safety management systems.

‘The proper maintenance of these barriers depends not only on them being routinely inspected and audited, but also on senior management’s clear support of the safety processes. Continued risk minimisation in the global energy sector depends on maintaining vigilance on new and developing threats, and forming strategies to prevent and mitigate their impact.’

10 largest losses

The 10 largest losses of the last 40 years are listed below. All property losses are listed in US$ millions.

1. 7/7/88 – Upstream explosion/fire. Piper Alpha, North Sea, UK. Property loss = 1,810.
2. 23/10/89 – Petrochemical vapour cloud explosion. Pasadena, Texas, USA. Property loss = 1,400.
3. 19/1/04 – Gas processing explosion/fire. Skikda, Algeria. Property loss = 940.
4. 4/6/09 – Upstream collision. Norwegian Sector, North Sea. Property loss = 840.
5. 19/3/89 – Upstream explosion/fire. Gulf of Mexico, USA. Property loss = 830.
6. 15/5/01 – Refinery explosion/fire. Mina Al-Ahmadi, Kuwait. Property loss = 820.
7. 15/5/01 – Upstream explosion/fire/sinking. Campos Basin, Brazil. Property loss = 790.
8. 25/9/98 – Gas processing explosion. Longford, Victoria, Australia. Property loss = 750.
9. 24/04/88 – Upstream blowout. Enchova, Campos Basin, Brazil. Property loss = 700.
10. 21/9/01 - Petrochemical explosion. Toulouse, France. Property loss = 680.

Adapted from a press release by Claira Lloyd.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/19032014/energy_sector_losses_marsh285/