Insurance Costs to Rise Under New UK Rules

UK-licensed explorers and producers face high insurance requirements under new regulations being introduced by the Department of Energy and Climate Change.

Companies already have to demonstrate they have $250 million on hand to deal with problems, under what is known as the Offshore Pollution Liability Agreement (OPOL).

But, according to the Financial Times, explorer/producers will now have to show they have sufficient insurance cover to pay for speedy capping of uncontrolled wells and drilling of relief wells. “This could easily be $100m or more depending on the nature of the well,” expert Judith Aldersey-Williams told the newspaper. She was a member of a working party at industry group Oil & Gas UK that liaised with DECC over the new requirements.

Aldersey-Williams suggested the new financial requirement could be as much as $500m above the previous sum.

See earlier story: British Energy Minister Welcomes Review