Underwriters weigh design, construction of offshore oil platforms

By T.T. "Tommy" Laurendine | April 9, 2007

Recent hurricane activity suggests old standards for wave height requirements should be reevaluated

Not all offshore platforms are created equal, which is why one platform will survive a storm unscathed while another nearby is completely obliterated. In order to appropriately underwrite offshore platform risk, underwriters need to take into account platform design and construction differences.

Overall, offshore platforms in the Gulf of Mexico are extremely safe for day-to-day operations and historically perform at an acceptable rate of failure. However, the risks change dramatically with hurricane-generated waves, as demonstrated by the destruction caused by hurricanes like Hilda (1964) with 14 destroyed platforms, Betsy (1965) with eight destroyed platforms, Andrew (1992) with 28 destroyed platforms, Katrina (2005) with 46 destroyed platforms and Rita (2005) with 68 destroyed platforms. And these numbers from the Minerals Management Service (MMS) only include multi-leg platforms. Caissons destroyed were not included and the results are based upon the MMS initial findings of destroyed platforms. Additional platforms may have been decommissioned later as a result of the hurricanes.

Recent hurricanes — Ivan, Katrina and Rita — all produced waves that exceeded the offshore platform design wave height requirements, prompting review of platform standards. While exceeding the design wave height alone does not damage offshore platforms, for fixed platforms the wave height is the most important parameter and recent hurricane activity suggests that the old standards should be reevaluated.

Inspection and assessment reports
When reviewing offshore platform business, there are two documents underwriters should request from insureds — the annual structural inspection report, known as the Minerals Management Service OSTS Inspection Report, and the annual platform assessment report, known as the OSTS Assessment Report. Combined these two documents give an underwriter almost all the information necessary to evaluate offshore platform risks, including:

Platform identification –area code, block number, structure name, complex identification number, structure number, field, installation date, authority type, authority number, and authority status.

Platform type — structure type, water depth, longitudinal framing, and transverse framing.

Platform design — exposure category, deck height (distance from waterline to underside of deck), soil data, number of decks, number of well conductors.

Platform manning — number of beds and type.

Platform assessment initiator — addition of personnel, addition of facilities, increased load, inadequate deck height, and damage.

Platform assessment method — pass/fail screening, design level check results, ultimate strength check, assessment alternatives and mitigation alternatives.

Corrosion Protection — underwater corrosion protection survey result summary, above-water corrosion protection survey results summary.

Overall Platform Condition.

When reviewing these documents, underwriters should pay close attention to deck height information, as well as details on platform age and subsidence.

Deck height
Deck height is the vertical distance from the still water surface to the underside of the lowest deck structural element on the platform. It is important to construct oil platform decks high enough above the water’s surface to avoid waves washing over the top, which could overload the platform and destroy it. While deck heights can be too low for several reasons, the two most common are:

Age — Older platform decks were set low because of available construction equipment at the time and because of a lack of knowledge of wave heights in the Gulf of Mexico and;

Subsidence — Some areas of the Gulf of Mexico floor have experience several feet of subsidence, or settling, related to production.

Usually, significant settling is found in older platforms because it can take 20 years to obtain 8 to 12 feet of subsidence. For example a platform installed in 250 feet of water 35 years ago may have been installed with a deck height of 45 feet. But after 20 years of production from multiple wells, there may be 10 feet of subsidence that reduces deck height to, say, 35 feet — leaving the platform more vulnerable to wave-in-deck loads never considered in the original design.

Whereas it would take a 75-foot wave height to reach the original deck when it was 45 feet above the still water surface, it would only require a 58-foot wave to reach the same point on the deck with 10 feet of subsidence. The chance of a 75-foot wave occurring at a platform site in the Gulf of Mexico in any given year is about 1 percent while the chance of a 58-foot wave is about 6 percent — placing the subsided platform at a significantly higher risk.

If underwriters have the original platform configuration and design, they can then determine if modifications have occurred that increase or reduce the probability of structure failure.

For example, if the original platform was built to support 12 well conductors and there are now 16 well conductors, the wave load from the four additional conductors increases the likelihood that the platform will have wave loading beyond the its capacity. Documentation concerning what metocean conditions were used during the original design can help underwriters determine the likelihood of the wind speed, wave height, and current originally used being exceeded, which can be used to understand the risk.

Today, the required deck height for newly constructed platforms is a nonlinear curve that varies from a low of 42 feet in 25 feet of water to a high of 53.5 feet in 90 feet of water with the deep water deck height requirement of 48 feet.

Consequence criteria
An offshore oil platform’s requirement to survive a hurricane is also a function of its level of consequence criteria, determined by the wells, pipelines, equipment and oil storage supported by the platform. The consequence of failure is intended to be an indication of the pollution risk and platform importance to the infrastructure. These categories take into account the design loads on the structure and the placement of wells, pipelines and facilities to determine whether a platform has a high, medium or low consequence criteria.

Consequence criteria level is determined by the platform’s exposure based on life safety and consequence of failure.

For example, because there are no platforms in the Gulf of Mexico today that are planned to be manned during a design-impacting event like a hurricane or a loop current, all offshore platforms are rated medium consequence for manned evacuated or low consequence for unmanned. However, platforms should receive a high consequence rating if use of their pipelines would be significantly deferred by collapse during a hurricane.

Platform structure type and framing pattern

Underwriters can also estimate a platform’s risk level by the type of structure and how the structure’s lateral bracing is framed. The simplest platform is a single pipe structure, sometimes called a mono-pile but most commonly know as a caisson.

Framing pattern describes the structural element arrangement on the face of the space frame structure — these platform pipe brace members will normally see their maximum forces in the Gulf of Mexico due to hurricane created waves.

Underwriting offshore oil platforms in the Gulf of Mexico encompasses a different set of responsibilities and requires an understanding of engineering detail not found in other risks. But knowing what information to ask for and what details to look for, will help underwriters better protect the assets of their client and their company.

T.T. “Tommy” Laurendine, P.E., is the head of risk engineering for U.S. Exploration and Production for Liberty International Underwriter.

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Insurance Journal West April 9, 2007
April 9, 2007
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