Saltwater Disposal Well Insurance
According to the Texas Railroad Commission there are close to 50,000 disposal and injection wells serving more than 214,000 oil and gas wells in Texas. With so much exploration and production creeping closer to the cities, recent seismic activity, and main street media trying to create hysteria about ground water pollution, people are looking to point the finger at someone. Unfortunately, a lot of people are trying to find blame in the E&P space. Whether there is negligence on your part or not you need to have defense cost coverage; a well designed oil and gas insurance program can offer both indemnity and defense for your asset's exposures. Unfortunately, not all policies are written the same. If you are an owner or operator of a saltwater disposal well you need to make sure you understand your operation's insurance program. Every good salter water disposal well insurance program should include the following policies: - Inland Marine & Property Insurance - Pollution Liability & Cleanup Insurance - General Liability Insurance - Commercial Auto Insurance - Workers Compensation
In addition to basic coverage, you should carefully understand each policy. For example, make sure the inland marine & property policies specifically and correctly address exposures related to property on your operations site. The property can include the property permanently on the site, or the property temporarily designed to service operations.
The pollution policy should address not only sudden and accidental leaks but also continuous or on-going leaks. Many saltwater disposal pollution policies will only cover sudden and accidental losses. With sudden accidental coverage you have to notice the loss and report a claim in a very limited period of time. Defending an alleged ongoing leak into a water table would not be covered if a claim was not reported immediately, and on-going leaks are typically not claimed soon enough to qualify for coverage. Also, some pollution policies only covered a designated premise or liability only. Pollution should also be included coverage while in transit, losses away from your premise, and cleanup to your locations and adjacent locations.
Commercial auto is a very important component to any saltwater disposal well insurance program. The cost of the trucks transporting the saltwater and underwriters past experience insuring disposal trucks can make pricing unusually high. Additionally, trucks are often driven on underdeveloped roads at all times of the day, and the trucks are subject to turnover or collision with deer or other animals. The way to combat the expensive coverage is to be able to clearly communicate the loss control strategies used to avoid a loss.
With all of the auto losses, workers compensation is a very important component to a saltwater disposal well's insurance coverage program. Like any business workers compensation protects the assets of the business and its investors and should be included in any good risk management program.
Underwriters experience – historically for this class of business – has changed in the insurance market for insuring saltwater disposal wells. It is important to make sure your coverage is placed well and marketed by an agent that understands the risks. The underwriter must understand that the management team operating the well is experienced and effective at minimizing losses. If the past experience, current operation and future safety plans can be communicated clearly to the underwriter, then a valued priced insurance program can be developed for any saltwater disposal risk.