You may have purchased well control insurance because your financial advisors said to do so, but Barry Insurance Group, serving Pearland, TX, wants you to understand why you need it and when it kicks in. Owning an oil company or prospecting for oil tends to start with exploring land or working as a landsman. You may wonder what the well control policy covers, so you know why you need it.
Items Covered by Well Control Policy
If you have worked in the oil and gas industry for a long period, you know the egregious problems that a well blowout causes. Your well control policy covers the costs of a well blowout. In a blowout, the crude natural gas and oil expel from the well in an uncontrolled manner. This saturates the ground around the well. The typical cause of a blowout is a failed pressure control system.
The blowout causes more than just a loss of raw materials from which you could have made money. Its ground saturation causes ecological issues for which you must apply mitigation. A blowout can cause fires, explosions, or other related issues that also cause damage. In addition to shutting down production, blowouts can also cause injuries or deaths among the well workers. While worker’s compensation covers the medical costs of these injuries or death, liability insurance covers the associated costs of personal injuries.
Cleaning Up a Blowout
While you still have the responsibility for the cleanup and the costs of injuries or death, obtaining a well control policy lets you transfer the cost and risk of a blowout to the third-party insurance company in exchange for a fee – your monthly premium. The well control policy covers the costs of:
- Assuming control of the well, including temporary capping and/or repair of the pressure control system, etc.
- Pollution abatement
- Reinstate the well to proper working order, including redrilling
You can only claim this insurance policy if you own an oil or natural gas well that experiences a blowout. Contact Barry Insurance Group, serving Pearland, TX, for more information on how you can protect your working wells.